Terranet AB

Good morning, ladies and gentlemen, and very much welcome to this second presentation of the second quarter for Terranet. My name is Isa Hood and with me on the line, I also have Magnus Andersson, CEO, and Pjär Ekvall, CTO. We will start off by a video of the highlights from the quarter and then go on to an interview. Lastly, we will have a Q&A section. And if you want to start asking questions, then you will just use the box down below. Very welcome. Hi, and welcome back. We're now starting with the interview section of this presentation. And with me on the line, I have here CEO Magnus Andersson and CTO Pierre Eiffel. Very much welcome you two guys on the line as well.

Thank you.

Thank you. I think we'll start right away with you, Magnus. Congratulations on being selected for the MobilityX Lab. That sounds really interesting. This was announced in June and I understood you were chosen for a program where you can collaborate with leading automotive companies and check out some proof of concept projects. This sounds really interesting. Could you elaborate some more, Magnus?

Yes, thank you very much. First of all, welcome to you all and I hope you have had a great summer. We have had a Very good summer and nice vacation. And we are full of energy to now continue all exciting activities during autumn. And yes, back to Mobile Tax Lab. Yeah, that's fantastic news. It's really good for us. And this accelerator program actually had over 100 companies applying from 14 countries. And we were selected of a few to join this program. This program will now start in August. In this program, there is some automotive companies and T1 suppliers connected as partners, such as AB Volvo Trucks and Buses, but also Ericsson and also Polestar and T1 suppliers like Magna, Senseact and also Seeker Technologies Europe. So we get very good connection interaction with them. So that's fantastic. So we get a kickstart to really integrate our solutions into CAR, do a proof of concept project or other projects. Of course, these companies I mentioned, we already had ongoing dialogues with, but now to get into this program, it gets really formalized and in a structured way, we will kickstart this project.

Some big names there. Big names and collaboration names. It sounds really interesting. What are the main goals for this? thinking, I mean, six, 12 months ahead?

Yeah, as I said, it is to do a proof of concept project. So we do a project where we integrate our solution in the car together with them. So, and also by, we have this sort of fixed program, the resources are allocated, so there should not be any delay. We should really be able to kickstart what we want. But yeah, Pierre, please comment as well. What do you think about this from a product development perspective? Yeah, sure.

We were working on developing this product for quite some time and done a lot of important research and testing. Now to finally adapt our system for full integration in a production vehicle and thereby taking it closer to market launches, of course, really, really exciting. The OEMs and T1 suppliers, of course, have valuable experience in launching and integrating products like Binkvision. So working with their technical teams and utilizing their competency would be a great addition for us to speed up the finalization of the product developments.

So this is kind of taking it one step further to the market. Absolutely. Sounds interesting. Fjär, during this second quarter, You also conducted a system integration in vehicles and performed prototypes testing outdoors. Could you elaborate on that a bit more, please, also?

Yeah, absolutely. Yeah, during the first half of 2024, we have made significant progress. BlinkVision has evolved from an early conceptual prototype to being successfully demonstrated first in a laboratory setting and now integrated in a moving vehicle and tested outdoors. These prototype demonstrations represent a key step forward. We have progressed from using prototype software running on simple laptops to having a fully integrated solution running on an in-vehicle certified automotive core computing platform. We've made important progress in adapting the system to handle motion compensation, ensuring reliable operation even in the most dynamic driving conditions, an area that has historically been challenging for the use of event cameras in automotive applications. Other important achievements include evaluation of optimized sensor placements, placing our sensors in, for example, behind the windscreen to verify system performance when packaged in a more series production-like environment. Additionally, we have adapted the system communication to be compatible with information exchange via the most common vehicle interfaces, as well as being able to trigger a direct emergency brake request in a vehicle.

Okay, a lot of technical stuff there, but if I understood you correctly, it's like you're now able to take this testing outdoors.

Yeah, absolutely. It's important progress to be able to integrate in production like vehicle environments.

Yeah, so that's really the next step there. Oh, interesting. Magnus, this one is for you. You, in May, taking it a little bit backwards, you also announced that you're a part of this new strategic vehicle research innovation project. Several key partners there like Trafikverket and AstraZero. The aim is to improve traffic safety, and it sounds interesting, for automated vehicles. The founder here is Vinnova. Could you open up a bit more about this one?

Yes, for sure. It's an interesting project. As you said, it's driven by Asta Zero, which we work very close to. They're certified test track. And for us, again, to be able to show our BlinkVision product, what value it can add is very important. In this project, there are also leading automotive manufacturers, tier one suppliers, and also insurance companies, actually. And what they will do is look at the current solutions on the cars today, and how good are they? How good do they actually save lives and avoid collisions? Also, another part is your NCAP. Your NCAP is rating methods, right? Or rating standards. And they are also very interested to see what can actually the car achieve today and what can be achieved with new solutions like Prevision. How many more lives can possibly be saved? So, and they are working on new revisions for their rating standard protocol. And there will be one new one coming out 2026 and another one 2029. So it's a perfect timing on working on showing what can existing system do, what can new solutions like BlickVision do.

So this is a real good timeframe for you to come in and kind of show what you are able to do.

And also to do it on a certified trust track, but also to do it together with automotive manufacturers and T1 suppliers and authorities like Tapfi Kverket, right? But yeah, Pierre, I mean, from development, what do you think about this?

Yeah, much as you said there, Magnus, I mean, for us to prove and ensure our solution on certified test, right, like AstaZero, and deliver towards the most advanced urine cap safety scenarios is really important, as this enables us to clearly identify the limits of existing solutions on the market today, and thereby also see the unique value of BlinkVision and what BlinkVision can add in the next-gen ADA system. So, very important.

Yeah. For you both, or Magnus perhaps, you have onboarded new people as well, or the management team has been expanded with Jonas Renander as a strategic business developer. What are your expectations for this role and the person itself? Could you shed some more light on it?

Thank you for that question. I mean, I think, first of all, it's the perfect timing of Jonas joining us and strengthening the business development part of the company. Over the last few years, we've been interacting a lot with automotive manufacturers and tier one suppliers, and they all want to come and see our product, okay? And now in the Q2, where we actually demonstrate the solution on a moving vehicle, then they want to come and visit, okay? Yeah. So having an additional resource in taking care of all this interest and ensuring that we can follow up and deliver on those is very important. So and also, not to be least, Jonas, of course, comes with great experience from the automotive industry. Also been able to expanding our network even further globally. So very good timing and very excited about that recruitment.

That's good. Financial stuff. You recently issued a new share, the new shares in relation to the T07 burn series, which resulted in, was it 12.6? Yeah, correct. Could you open up on this a bit? What does it mean for you as a company and what does it make possible?

Yeah, absolutely. Of course, financing is a very important topic in a company, product development company like ourselves, right? And yes, we had the 207 Warren program in the second quarter. And actually, that was part of a rights issue that we did in 2023. And on this 207 Warren program, we got a 95% subscription. So that's very good. It shows that our shareholders really believe in what we're doing. and are committed. And in terms of who subscribe, also the management and board subscribe. So that's also a good sign.

So skin in the game there.

Sorry?

Skin in the game there.

Yeah, absolutely. It's important, right? Yes. And then with this TU7 Warren program and addition of this funding, we now have finances up to the next Warren program, TU08, who comes in end of this year, okay? And so that's also very good. And then moving on, financing the company forward, the board, of course, and the management is continuously working on financing. So I feel very confident that we have this topic under control and I feel comfortable about the financing moving forward.

Yes. So let's move on to some more technical stuff. It sounds kind of... It sounds really interesting, but hard to understand. But what is, I think, Pierre, this is more for you. What does the product development plan look for the upcoming, I mean, what can we expect during this fall and the upcoming quarter?

Yeah, the third quarter will be very significant for us. Our collaboration with MobilityX Lab is about to begin, and we'll offer our company a unique chance to carry out the proof of concept with automotive manufacturers and 2-1 suppliers. conducting tests in real-life world settings. There are also planned visits to authorize test tracks to better understand the system strengths and weaknesses in different traffic scenarios, giving us a more realistic picture of exact performance. During the third and fourth quarter, key development efforts will focus on verifying the system in more complex environments, as well as working on miniaturization, enhancing the optomechanics of the system, and advancing our AI-based object perception technology. In this phase, we also aim to not only issue a break request to a vehicle, but also make sure that the target vehicle can receive and thereby break on the signal that we have generated, and thereby be able to do a full end-to-end vehicle system testing from our side in complex environment scenarios.

What excites you the most? It sounds like a full program coming up here during the next quarter. What's the most exciting part about this?

The most exciting part I would say is getting our system to run in full production vehicle. That's what excites me the most. That's the final proof of concept.

Sounds nice. One final question from me. Magnus, this is for you. According to your roadmap, your plan is to establish a partnership with the OEM and Tier 1 suppliers in Q4. Which will be the following steps in Q3 to ensure that this goal is achieved?

Yes. Now, this is another important milestone for us, for sure. And as you heard now with MobilityX Lab, the readiness of a product in terms of demonstrated outdoor vehicles gives a good timing for actually formalize our partnerships with automotive manufacturers and T1 suppliers. And I mean, Mobility XLab is one, but there can also be other types of partnerships outside that, right? And now in Q3, since this OEMs and T1 suppliers can come and see the demonstration, see the solution, it's easier than also to, of course, formalize that partnership. So very much look forward to that.

Thank you so much. Is there something more you would like to add before we move over to the Q&A section?

Just to finalize, I think we are in a very exciting phase. Not only with the product, Big Vision, but with the company as a whole. We've done a lot of hard work and we have now followed our plan. We've approved a prototype in the lab, now out on vehicle, engaging with customers. So we are in a very, very exciting phase.

Sounds really interesting. And you have a lot of stuff coming up. Thank you so much for all these comments from you. I think if you're all ready, we'll move over to the questions from the audience. I'll start with the first one. Is This is a hard one. Is TUV certificate something you're working towards?

Yeah, I can start and maybe Pierre you can add on this. And I think, of course, when you're working automotive and you work with safety solutions, certificates is very important, right? So, yes, we are looking at what certificates are needed and we are preparing for that. but it's also something we will look at more in detail now when we're getting closer to integration in vehicles. But yeah, Ples, please help here.

No, I fully agree. And as many of you might be aware of already, we are working a lot on prototype hardware level at the current stage, which means it's not exactly the best timing to do it now, but the planning for it, as Magnus mentioned, is very important. And of course, that's one of the certificates that we're looking at gaining at a later stage, yes.

Yep. Next question starts like this. First of all, I want to congratulate you for your recent success. Do we have a new update regarding the price per vehicle for BlinkVision and what that could be?

Okay. Yeah, let me start by that, right? Of course, when you are in a prototype phase, the end volume price is very hard to estimate, right? But of course, it's something that we work on continuously, looking at our BOM, the bill of material, okay? And in terms of what we need to look at is, of course, the added value, and that's what will be the price, but also what is competitive other solutions out there, I mean, who do similar things. What is the price of that? And in terms of that, we are aligned, so we feel that we have a competitive product. So, of course, it's something that we look into all the time, but yes, a few words, a few words.

Yeah, sure. Of course, we always do comparisons to other systems, and we know that we need to have good, let's say, cost relation in terms of the cost compared to the features we are delivering, of course. But I would say also a lot of the tuning will be done now together with the partners that we are working with to finalize the exact technical needs of the system. And while we're doing that, that will also, let's say, affect cost. And overall, the phase we're going into now with miniaturization, et cetera, is aiming to both enable better packaging in the vehicle to make it easier to integrate the system, but also reducing costs. So we are in a, we're starting the kind of cost reduction phase going from a full feature focus to now getting closer to production. But of course, there is a target price, but that's a bit too early to discuss that more in depth at this moment, I think.

A bit too early at this moment. Another question. I'm not sure if I'm pronouncing this as, could NCAP make LinkVision mandatory in CARS?

Yeah, I mean, I think they will not say that you have to use a product, but what they will say is that you need to achieve certain safety standards. And, yeah, maybe then you need a product like Pink Vision to achieve these standards. That's how it would work, yeah. So, for example, you know, in different scenarios with vulnerable road users, which is a focus area for them, you know, when a child jumping out between two parked vehicles, you know, In what distance speed should the vehicle be able to stop? There are many technical terms, right? But they will dictate what scenarios a car should stop and not have a collision. And we believe that in the future, when they put in the scenarios, you need a solution like BlinkVision to achieve that.

Another question. We are... Running out of time shortly, but I think we have time for two more questions. This is from Alexander. Will you investigate other user areas than automotive?

Now, that's a very good question, so thank you for that. Our main focus is automotive, for sure. And when I talk automotive, I mean both personal driven cars, but also autonomous vehicles, right? And then, of course, you can expand it to trucks and buses as well. But of course, so that's our main focus. But then there are other sectors like where you have vehicles like mining, like farming, like defense, maybe even forklifts and things indoor. So all these use cases is of interest for us. And we are looking at that, but we also need to maintain our focus on automotive. And at the end of the day, if we create the world's fastest sensor solution, There are endless of opportunities, right? In endless of sectors, I would say.

Here's a financial question. Apart from the T08, what plans do we have to start getting more funded or getting income?

Yes, thank you. Relevant question, of course. As I said before, the board and the management is continuously working on different finance alternatives, right? So there are many different options on how you finance Telenet and the company. But we will come back to you with more details, of course, when we decided what kind of financing options we are using moving forward. But the only thing I can say is we continuously work on it, and I feel confident that we will be able to finance a company moving forward.

Yeah. Then there was a question about... Could you elaborate on the Mobility X-Lab collaboration? How come that you were chosen amongst hundreds of applicants?

Yeah, that's good. Good. And I like to talk about Mobility X-Lab. So thank you. And maybe Pierre as well can add. But to start with why we were chosen, I think there are different parts, right? One, it proves the area that we work with, saving more lives, you know, avoiding collisions. is important and it is of interest for car manufacturers and T1 suppliers. So that's one part. The other part is also saying that the existing solutions out there are not delivering 100% towards this. Accidents still happen. People still die. Too many people die in traffic. And also with traffic getting more and more complex. So, yeah, they see that we need different solutions. And also with BlinkVision and our product, and Pierre, you can add on that, right, is that it's very different. Because it's one thing of just trying to improve LiDAR, radar, cameras. That's one option, right? Improving existing solutions. But really looking at something new, delivering much faster solutions. You know, that's what we are doing, right?

Yeah, I think as Magnus said, I mean, many of our customers have been struggling and really, really working hard on getting their ADAS systems to work and without too many bugs and also implementing, looking at level two, level three solutions for, let's say, getting closer to autonomous driving. Now they're starting to reach some of their, let's say, the right technical levels with the current systems. But yeah, it's still obvious for our customers that now when they reach that stepping stone, they... to be able to go further, need to look at alternative sensor technology, new technology, because you're starting to reach the limits, let's say, of the current systems. And that's why I think one of the reasons why BlinkVision is so important and so interesting for members of MobilityX lab, because it can enable that next step in reaching higher autonomous levels and improved ADAS performance.

Yeah, interesting. We are running out of time. I think we'll take one final question. And this is, in the recent update on 8th of August, Nutanet stated that vehicle integration completed. Was the vehicle manufacturer collaborating on the software and hardware integration?

Yeah, we've had continuous dialogue, of course, with a lot of OEMs and 2.1s. And so, yes, their input have impacted the work we've done in the vehicles, of course. And we also need to adapt everything. Like I mentioned before, for example, the communication interface needs to be exactly adapted to the requirements of the OEMs, the T1s, for the system to actually work. So a lot of input have been taken from T1s and OEMs, even during Q1 and Q2.

I would say, let's wrap this up. Thank you so much for all these great answers. Thank you for sending in questions. Thank you also from my behalf. Is there anything more you would like to add?

No, I think just to wrap it up, thank you for all you who are listening to this webcast and thank you for keeping in touch with us. We appreciate that. And stay up to date with us. You can, of course, subscribe to press releases and look at news updates on our website. We also publish a lot on social media, especially LinkedIn. So please follow us there. And of course, if you have any questions, email us to investorrelations at taranet.se. But please continue and keep in touch. And we look forward to update you soon on our exciting journey.