Polight ASA

Investor Presentation • Aug 17, 2023

Second quarter 2023

¹ Second quarter 2023 - Earnings presentation Earnings presentation 17 August 2023

Disclaimer

This presentation (the "Presentation") has been produced by poLight ASA (the "Company") exclusively for information purposes. This Presentation has not been approved, reviewed or registered with any public authority or stock exchange. Further to the aforementioned, this presentation is the result of an effort of the Company to present certain information which the Company has deemed relevant in accessible format. This Presentation is not intended to contain an exhaustive overview of the Company's present or future financial condition and there are several other facts and circumstances relevant to the Company and its present and future financial condition that not been included in this Presentation. This Presentation may not be disclosed, in whole or in part, or summarized or otherwise reproduced, distributed or referred to, in whole or in part, without prior written consent of the Company.

This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates or intends to operate. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward- looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of its subsidiary undertakings or any such person's officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors

nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation to update any forward-looking statements or to conform these forward-looking statements to our actual results. Furthermore, information about past performance given in this Presentation is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its parent or subsidiary undertakings or any such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.

By reviewing this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the businesses of the Company. This Presentation must be read in conjunction with the recent financial reports of the Company and the disclosures therein. The distribution of this Presentation in certain jurisdictions may be restricted by law. Persons in possession of this Presentation are required to inform themselves about, and to observe, any such restrictions. No action has been taken or will be taken in any jurisdiction by the Company that would permit the possession or distribution of this Presentation in any country or jurisdiction where specific action for that purpose is required.

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By reviewing this Presentation you agree to be bound by the foregoing limitations.

This Presentation speaks as of 17 August 2023. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation. This Presentation shall be governed by Norwegian law, and any disputes relating to hereto is subject to the sole and exclusive jurisdiction of Norwegian courts, with Nordre Vestfold District Court as legal venue.

Today's agenda

Presenting

• Key events
• Introduction to poLight
• Operations and markets review
• Financial review
• Outlook
• Q&A

Dr Øyvind Isaksen

Chief Executive Officer

Dr Isaksen has been CEO of poLight since August 2014. He has previously held several CEO positions, most recently in the publicly listed company Q-Free ASA, which he left in January 2014, after 7 years as CEO. Øyvind Isaksen holds a PhD in Applied Physics.

Alf Henning Bekkevik

Chief Financial Officer

Bekkevik is a senior executive with a background from Arthur Andersen (E&Y), Wallendahl, Fjord Line, Grenland Group and lately from Wood Group Mustang as VP Finance. He holds a Master in Business & Economics (Siviløkonom) degree from NHH and is a state certified public accountant.

Key events in the quarter

• First smartphone, Meizu 20 Infinity, using TLens® in the selfie camera available in the market from June 2023.
• Good feedback on performance of the Meizu selfie camera using TLens®, but sentiment in consumer market is very cost sensitive.
• LLVision augmented reality (AR) enterprise glasses using TLens® released to the market.
• First report under the Norwegian Transparency Act published at the end of June.
• The rights issue was oversubscribed by approximately 25% and generated NOK 125.8 million in net proceeds.

poLight® at a glance

Background & description Geographical footprint

• Global player in tunable optics with applications in mobile, web cam, industrial, augmented reality, medical and others
• Founded in 2005 and has since developed state-ofthe-art expertise in tunable optics, polymers, MEMS technology and image applications and processing
• Holds 21 worldwide patent families, 8 pending applications and 4 registered trademarks
• 37 employees including long-term consultants
• Headquartered in Horten, Norway, with employees in Finland, France, UK, US, China, Taiwan and Philippines.
• Listed in Oslo Stock Exchange (PLT) in 2018

poLight enables unique use cases

TLens® Actuator: Enabling Smallest, Lowest Power, Fastest AF Cameras & Laser Projectors

Implementation
Piezo MEMS film
Glass membrane
Silicon
Polymer
Glass window

From Gel > MEMS Wafer > TLens® > Camera module > OEM

6 Second quarter 2023 - Earnings presentation

poLight products & technology well-suited for several applications

Smartphones, wearables, accessories

• Smartphone represent a large addressable market for which billions of cameras are produced each year
• 1,5 billion phones per year with 1 front camera and an average of 3 back cameras
• Camera function key
• Potential addressable market for TLens®/poLight technology estimated at 3 billion units per year

Barcode/Industrial

• Evolving from 1D laser to 2D imaging barcode readers
• Lasers replaced by camera systems, where autofocus will improve efficiency in scanning and portfolio
• Barcode technology is spreading to new industries
• OEM scan engine vendors today are increasingly looking to enable machine vision capabilities on their current offerings

Augmented Reality (AR)

• AR is expected to to grow significantly as the technology is expanding beyond entertainment and gaming to an increasing number of industrial, commercial, educational applications and later become a consumer device

Other

• New opportunities are emerging that could represent significant potential
• Endoscopy and automobile are two examples of new opportunities for poLight technology

Operations and market review

Use case: Consumer

10 Second quarter 2023 - Earnings presentation

Consumer: Difficult sentiment, but 1st smartphone using TLens® creates interest

• During the quarter, the focus was on smartphone and augmented reality applications
• Other applications, such as webcams, laptop, smarthome, wearable, etc. are also being explored

Design-win	Project	Completed PoC Ongoing PoC		Planning PoC
4 (4)	0 (0)	34 (33)	5 (5)	10 (11)

First smartphone using TLens® on the market

• Meizu 20 Infinity using TLens® in the Selfie Camera
• Achieve the most compact selfie camera, instant and smooth autofocus user experience
• TLens® Camera module (CM) specification
  • 32MP, 1/2.74', F2.5, DFOV: 87.5deg, XYZ size: 8.14 X 7.99 X 5.67mm
  • Bare TLens® Silver Premium added inside fixed focus lens stack
  • Smallest camera module & pupil size with AF on the market
• Meizu 20 Infinity is a flagship phone and is expected to ship in low volume

From Meizu web-page

Feedback so far

• Roadshows ongoing demonstrating the performance of the TLens® selfie camera
• Achieve the most compact selfie camera, instant and smooth autofocus user experience
• Customer like the small nose and hence small hole in the display
• Good feedback on no pumping/breathing, basically better AF
• In general, the improved auto focus enable enhanced user experience using the selfie camera
• Camera module using TLens® in an add-in structure is currently expensive, and not mainly due to TLens® price - sentiment is currently cost sensitive
• Easy to implement all-in-focus algorithm, see pictures

All in focus pictures taken by Meizu phone using Almalence software

Example of all-in-focus pictures using Meizu 20 Infinity having allin-focus software from Almalence

Status on consumer

POC = Proof of Concept, including TWedge®

16 Second quarter 2023 - Earnings presentation

Use case: AR

AR: Strong position in a mega trend

• Why TLens® Key selling points;
  • Enables ultra-compact size camera modules
  • Ultra-low power consumption
  • Fast focusing speed
  • Constant field of view (FOV) and high optical stability
  • No gravity impact even when head is moving
  • Athermalisation robust focusing over temperature range near high heat components (fixed focus camera goes out of focus)
• TLens® camera AR use cases
  • Fast sharp focusing of object/text regardless of distance
  • Fast QR / barcode scanning regardless of distance
  • Hand gesture recognition
  • All-in-Focus still images regardless of where the objects or texts are in the scene
  • Continuous video focus when recording moving objects

4 April-23 : LLVISION confirm releasing enterprise Augmented Reality glasses using TLens®

"TLens® has millisecond-level response time, which can provide fast auto focusing and remote video streaming experience for AR devices that need to move quickly, also allowing AI recognition results to be more accurate and quickly displayed on AR near-eye screens. Also, the low power consumption while used in continues autofocus mode or fixed focus is key for us. So far, we have delivered the glasses to customers such as TBEA (an advanced energy devices manufacturer), SANY Group (a construction machine manufacturer), Southern Airlines (an airline company), and Agile8 (an AR solution company for healthcare in Australia). In the future, we seek to strengthen cooperation with poLight and strive for breakthroughs in cutting-edge technology research such as near-eye display optical engine system and resizing resolution display system," - said Allan Liang, co-founder of LLVISION.

AR market segment continued to develop positively for poLight during the quarter

• TLens® is used/planned for use in both world facing camera applications and display
• The company is currently used in two AR enterprise products already released to market – Magic Leap 2 and LLVision
• Three more products to be launched during 2nd half 2023, if everything goes as planned
• Further a potential new product called TWedge®, enhancing µLED AR display resolution, is receiving good interest

Design-win	Project	Completed PoC	Ongoing PoC	Planning PoC
2 (2)	5 (4)	12 (12)	11 (6)	12 (15)

Status on AR/VR

20 Second quarter 2023 - Earnings presentation

POC = Proof of Concept, including TWedge®

Use case: Industrial

21 Second quarter 2023 - Earnings presentation

Barcode / Industrial

• It will take time to develop this market and will require entry into some broader application areas
• Currently five companies use TLens® in commercially available products (design-wins)
• All five cases are still shipping to customers and are expected to do so for several more years
• New releases with same customer are being discussed, while new companies is in the process of qualifying our technology

Design-win	Project	Completed PoC	Ongoing PoC	Planning PoC
5 (5)	0 (0)	27 (20)	15 (16)	10 (11)

Status on Barcode/Industrial

Use case:

Healthcare & Automotive

Healthcare

• The Xenocor (https://xenocor.com) case ;
  • Human trials to be carried out
  • Expected market release after human trials
• The Kavli case has generated a lot of activity, and similar research cases account for eleven of the company's ongoing PoCs and one design-in
• Increasing number of companies exploring the use of TLens® in commercial products

1 design-win, 2 design-in, 17 PoCs ongoing and 6 planning PoC

Automotive – a nontrivial volume opportunity

• In-cabin camera requirement demand new solution
• Autonomous driving drives step change in camera adoption
• The use case calls for non-mechanical focusing solution
• This market segment will be challenging to penetrate
• There is a need for new technology, and TLens® is one of the solutions being explored
• Market is significant but it will take may years to develop.

0 design-win, 0 design-in, 3 PoCs ongoing and 4 planning PoC

Promising pipeline

	Design-win	Project	Completed PoC	Ongoing PoC	Planning PoC
Consumer	4 (4)	0 (0)	34 (33)	5 (5)	10 (11)
Augmented Reality	2 (2)	5 (4)	12 (12)	11 (6)	12 (15)
Industrial	5 (5)	0 (0)	27 (20)	15 (16)	9 (11)
Other (medical, automotive)	1 (1)	2 (2)	5 (5)	20 (16)	10 (11)
Number in ( ) represents last quarter	12 (12)	7 (6)	78 (70)	51 (43)	41 (48)

Key financials

(in NOK million)	Q2 2023	Q2 2022	FY 2022
Revenue	7.2	2.5	13.4
Cost of sales	-3.5	-0.7	-4.8
Research and development expenses	-8.7	-7.9	-32.9
Sales and marketing expenses	-4.0	-2.9	-13.1
Operational / supply chain expenses	-4.0	-2.7	-9.2
Administrative expenses	-5.0	-2.3	-12.1
EBITDA	-18.0	-13.9	-58.7

• Revenue reflects sales of TLens® and ASICs of NOK 7.2 million for commercial use and to customer development projects
  • NOK 3.8 million of the revenue relates to payment received for pre-production of units meant to be used for the smartphone project which was cancelled in July-2021
• EBITDA loss of NOK 18.0 million vs. loss of NOK 13.9 million in Q2 2022
  • NOK 1.8 million in reversed accrued employer's national insurance contributions (NICs) relating to the share option plan (NOK 3.5 million reversed NICs in Q2-2022)

Income statement Balance sheet summary

(in NOK million)	Q2 2023	Q2 2022	FY 2022
Intangible assets	21.2	28.5	24.9
Inventories	66.3	30.5	45.6
Cash and cash equivalents	153.2	124.4	84.2
Total equity	242.5	178.1	150.7
Total current liabilities	19.8	24.3	24.6
Total equity and liabilities	264.8	205.9	178.2

• Cash position of NOK 153.2 million, compared with NOK 84.2 million at year end 2022
• Inventory of NOK 66.3 million compared with NOK 45.6 million at 31.12.2022.
  • The inventory has increased by NOK 9.5 during the quarter
  • The increase in inventories mainly relates to wafers from ST Microelectronics (long lead-time components)

Cash Flow

• Q2 cash used in operating activities was NOK 25.9 million, compared with NOK 22.8 million in Q2 2022
• The rights issue gave NOK 125.8 million in net proceeds
• Q2 net increase in cash was NOK 99.6 million

Q2 2023 cash flow development

Outlook

• The company will continue to emphasise on the consumer market.
• The consumer market is currently challenging and there are no signs of improvement in the short term.
• poLight will continue to address this market by actively capitalising on its first important smartphone reference.
• Focus on maturing and cost optimise TLens®-based camera module solutions;
  • Addressing both component and system level aspects
  • Continuously enhance important performance parameters
  • Actively develop the capability and relationships with existing and new camera module partners with respect to add-in designs
  • Address higher value applications such as back-facing cameras

Outlook, cont.

• AR will be a key market for poLight going forward.
• Good match between market need and the properties of the TLens®, and potentially also the TWedge® at a later stage.
• Volumes for AR/VR cases are still low, since the majority of the applications relate to the enterprise market.
• poLight aims to establish a strong position at an early stage and grow its business within this area as consumer cases start to be deployed.
• Automotive sector represent another potential high-volume market. poLight is currently engaging with key players in this market to better understand the possibilities and challenges involved.
• Healthcare market increasing number of endoscopy cases.
• Going forward, poLight plans to continue strengthening its organisation to enable it to address all the above-mentioned opportunities and challenges in a professional and robust manner.

Management Team

Dr Øyvind Isaksen Chief Executive Officer

Dr Isaksen has been CEO of poLight since August 2014. He has previously held several CEO positions, most recently in the publicly listed company Q-Free ASA, which he left in January 2014, after 7 years as CEO. Øyvind Isaksen holds a PhD in Applied Physics.

Alf Henning Bekkevik

Chief Financial Officer

Bekkevik is a senior executive with a background from Arthur Andersen (E&Y), Wallendahl, Fjord Line, Grenland Group, and, most recently, as VP Finance for Wood Group Norway AS. He holds a master's degree in business & economics (Siviløkonom) from NHH, and is a certified public accountant.

Pierre Craen

Chief Technology Officer

Craen is a senior executive with more than 20 years' experience in opto-mechanical systems engineering. Prior to joining poLight, he managed product development teams at Varioptic, Barco and Motorola/Symbol. Mr Craen holds an MSc in Optical Engineering from Sup-Optic, as well as an MSc in Applied Physics.

Marianne Sandal

Chief Operating Officer

Sandal is a senior executive with background from Tele-communications (Nera) and Road User Charging (Q-Free). She holds a BSc in Mechanical Engineering in addition to courses from Norwegian School of Management (BI). She has been responsible for world wide operations for more than 15 years.

Board of Directors

Grethe Viksaas – Board Chair, independent

Grethe Viksaas has had a long career in the Northern European managed service provider Basefarm AS. First as founder and CEO, and later as executive chair and member of the board of directors. Prior to Basefarm, Ms Viksaas served as CEO for SOL System AS and held several management positions in IT companies. She has experience from numerous board positions, including Telenor ASA. She is currently a non-executive director on the boards of Link Mobility Group Holding ASA, Crayon Group Holding ASA and CatalystONE Solutions Holding AS. She also chairs Farmforce AS's board of directors. Ms Viksaas has a master's degree in computer science from the University of Oslo.

Ann-Tove Kongsnes – Deputy Chair

Ann-Tove Kongsnes is an Investment Director and Deputy CEO at Investinor AS. Over the course of her career, Kongsnes has gained extensive experience of investment, development, M&A, IPOs and exits of technology companies. Prior to her present position, she worked for seven years in international marketing, and was formerly a Director of Marketing and Operations. Ms Kongsnes has extensive board experience, and currently serves on the boards of six of Investinor's portfolio companies. She also serves on or chairs four nomination committees. She holds an MSc in Economics and Business Administration from HIB and took the Advanced Program in Corporate Finance at NHH.

Svenn-Tore Larsen - Board member, independent

Svenn-Tore Larsen is CEO of Nordic Semiconductor, a position he has held since February 2002. Mr Larsen has broad international experience in the semiconductor business, previously as Director for the Nordic region for Xilinx Inc. He has also worked at Philips Semiconductor. Svenn-Tore Larsen has a degree in Electrical Engineering from the University of Strathclyde, UK.

Thomas Görling - Board member, independent

Thomas Görling is a Senior Investment Director at Stiftelsen Industrifonden (Sweden) and is closely involved in building successful technology companies. Representing Industrifonden, he has served on several portfolio company boards, at present HVR Cardio Oy (Finland) and eBuilder AB (Sweden). Before joining Industrifonden in 1998, Mr Görling held management positions within the European optical instrument and systems industry. He holds a Master of Science degree from the Royal Institute of Technology in Stockholm and studied business economics at Stockholm University.

Statement of

	NOK 000	Note	Q2 2023	Q2 2022	YTD 2023	YTD 2022	FY 2022
income
	Sale of goods		7 192	1 935	14 112	3 407	10 034
	Rendering of services		0	591	201	591	3 328
	Revenue		7 192	2 526	14 313	3 998	13 363
	Cost of sales		-3 496	-746	-7 695	-1 431	-4 826
	Gross profit		3 696	1 780	6 618	2 566	8 536
	Research and development expenses net of
	governmental grants	6,9	-8 708	-7 854	-16 261	-19 604	-32 907
	Sales and marketing expenses		-4 030	-2 864	-7 812	-6 739	-13 122
	Operational / supply chain expenses		-3 989	-2 698	-6 950	-4 330	-9 179
	Administrative expenses		-5 019	-2 284	-7 642	-4 264	-12 068
	Operating result before depreciation and amortisation
	(EBITDA)		-18 050	-13 919	-32 046	-32 372	-58 740
	Depreciation and amortisation and net
	impairment losses	8	-2 315	-2 754	-4 548	-5 741	-10 400
	Operating result (EBIT)		-20 365	-16 674	-36 594	-38 113	-69 140
	Net financial items	7	49	-585	248	-39	1 496
	Loss before tax		-20 315	-17 259	-36 347	-38 152	-67 644
	Income tax expense		-28	-3	-28	-4	-242
	Loss for the period		-20 344	-17 262	-36 375	-38 156	-67 886

Balance sheet	NOK 000	Note	Q2 2023	Q2 2022	FY 2022
	ASSETS
	Property, plant and equipment		10 349	6 498	10 748
	Intangible assets	8	21 218	28 492	24 855
	Right-of-use assets		3 327	4 247	3 871
	Total non-current assets		34 893	39 237	39 474
	Inventories		66 281	30 496	45 577
	Trade and other receivables	9	10 324	8 736	8 386
	Prepayments		103	2 978	557
	Cash and cash equivalents		153 172	124 439	84 249
	Total current assets		229 879	166 649	138 769
	Total assets		264 773	205 886	178 242
	EQUITY AND LIABILITIES
	Share capital		2 647	2 078	2 078
	Share premium		271 038	209 573	145 785
	Reserves		1 552	1 098	1 130
	Retained earnings		-32 701	-34 646	1 699
	Total equity		242 535	178 103	150 692
	Lease liabilities		2 419	3 434	2 970
	Total non-current liabilities		2 419	3 434	2 970
	Trade and other payables	10	17 676	22 869	22 480
	Current lease liabilities		1 142	980	1 100
	Provisions		1 000	500	1 000
	Total current liabilities		19 819	24 349	24 581
	Total liabilities		22 238	27 783	27 550
	Total equity and liabilities		264 773	205 886	178 242

Operating activities Profit / loss (-) for the period -20 315 -17 259 -36 347 -38 152 -67 644 Adjustments for: Depreciation of property, plant and equipment and right-of-use assets 496 437 911 856 1 877 Amortisation of intangible assets 8 1 819 2 318 3 637 4 885 8 522 Net finance income -49 585 -248 39 -1 496 Equity-settled share-based payments 920 1 167 1 974 2 533 4 821 Other non-cash items 6 -656 224 -829 -430 Changes in unrealised net foreign exchange rate differences/fluctuations 52 -79 172 -41 143 Changes in working capital: Decrease (+) in trade and other receivables and prepayments 7 395 -324 25 10 618 11 925 Increase (-) in inventories -9 513 -9 800 -20 704 -13 660 -28 741 Decrease (-) in trade and other payables 10 -6 091 1 354 -4 804 2 963 2 574 Changes in provisions and government grants -678 -562 -1 509 1 202 3 166 Interest received 7 109 152 275 959 2 255 Interest paid 7 -66 -84 -138 -173 -330 Income tax paid -28 -3 -28 -4 -242 Net cash flows used in operating activities -25 945 -22 756 -56 557 -28 805 -63 600 Investing activities Purchase of property, plant and equipment -45 -3 098 -82 -4 463 -9 202 Net cash flows used in investing activities -45 -3 098 -82 -4 463 -9 202 Financing activities Proceeds from issuance of ordinary shares 148 500 0 148 500 0 0 Proceeds from exercise of share options 0 222 0 254 254 Transaction costs on issue of shares -22 679 0 -22 679 0 0 Payment of lease liabilities -257 -233 -509 -462 -964 Net cash flows from/(used in) financing activities 125 564 -12 125 312 -208 -710 Net increase in cash and cash equivalents 99 573 -25 866 68 673 -33 476 -73 513 Effect of exchange rate changes on cash and cash equivalents 30 154 250 104 -49 Cash and cash equivalents at the start of the period 53 568 150 151 84 249 157 810 157 810 Cash and cash equivalents at the close of the period 153 172 124 439 153 172 124 439 84 249	Cash flow	NOK 000 Note	Q2 2023	Q2 2022	YTD 2023	YTD 2022	FY 2022

40 Second quarter 2023 - Earnings presentation