BluGlass Limited (ASX:BLG) 2020 Annual General Meeting with Non-Executive Chairman James Walker, Managing Director and CEO Giles Bourne and Chief Technology and Operations Officer Dr Ian Mann.James Walker: Good morning everyone. It is now 11am, and as a quorum is present, I declare the meeting open. My name is James Walker. I'm the Non-Executive Chair of BluGlass
(ASX:BLG), And I'm pleased to welcome you to the 2020 annual general meeting of the company. I call upon the Company Secretary to advise whether the meeting is probably constituted. Manny?
I'll take that as a yes, thanks Manny. Thank you for joining us for our first virtual AGM. We have chosen to do this to ensure the safety of our stakeholders. Today's meeting is being held in our auditor's office by webcast and teleconference, to enable you, the shareholders to actively participate in the meeting, while adhering to public health advice. Shareholders can listen to the meeting, view the slides and ask questions by submitting their questions via the chat room facility as part of this broadcast. If you have any questions in relation to a specific resolution or the business itself, I ask that shareholders submit their questions now, ahead of the resolutions being considered, so we can answer as many questions as possible. I'll trust you allow some latitude, because even though we are a technology company, these things rarely go smoothly.
Online with me today here in Sydney, we have Stephe Wilks, non-executive director. Giles Bourne, our managing director and CEO, Ian Mann, our chief technology and operating officer. And in California, we had our non-executive director, Vivek Roa, and in Perth, our company secretary, Emmanuel Correia. Welcome everyone. Representatives of our auditors Grant Thornton are also present soon. Seeing we're in their office, that's lucky. I'll just move up and we'll start the presentation.
Great. All right. Today I will summarise the strategic goals and objectives for BluGlass, along with the key milestones achieved in this year. Giles will then update you on the progress made during the last 12 months in the establishment of our laser diode business and other strategic partnerships and market opportunities. He will also outline the business objectives for the year ahead. Following this, Ian will present a laser diode product development and technology update. Finally, after the formal presentations, the board will answer the questions submitted by investors in advance of the meeting, before proceeding with the formal business of the meeting. Just to let you know, there's been one question submitted so far, so thank you for that.
Moving ahead, strategy. Our vision for delivering a bright future through the global commercialisation of lower temperature RPCVD technology was firmly in our sights as we embarked on the 2020 financial year. Our portfolio technology has proven competitive advantages in a diverse range of optical and photonic devices from laser diodes, LEDs and other powertronic and optical devices. While we continue to pursue multiple applications for the commercialisation of our technology, the majority of our effort this year has been on developing our direct to market laser diode business. The GaN laser diode market represents a high value, high margin opportunity for BluGlass, coupled with our RPCVD unique performance advantages, significantly improved lasing performance. This direct to market approach is expected to take the company to profitability in the shortest term. We also set out to establish our manufacturing supply chain, scale our RPCVD platform technology to commercial capabilities and prepare for product launches in the next calendar year. While the business was focused on the laser diode product strategy, we also continue to work with our customers in the foundry business, while also further developing our strategic partnerships in our IP.
Highlights for this year. We are executing on our plans to deliver laser diode products with customer orders and revenue expected in early calendar year 2021. But during the past year, we've set out to establish this business unit, build our global supply chain for end to end manufacturing of these products, commission our laser diode test facility in New Hampshire, develop our laser diode products across a suite of products and market applications, develop customer relationships and collaborations in the laser diode industry, as well as still progressing our cascade LED and micro LED development with collaboration partners for general lighting and other applications. And finally, we also scaled our RPCVD technology and production standards with commissioning of the BLG 500.
Despite the globally challenging business environment presented by the COVID-19 pandemic, international supply chain and customer impacts, the team successfully delivered the major business objectives for this year. Before COVID hit, we travelled to the US to the 2020 SPIE Photonics West show in San Francisco in February, where we met many of our potential laser diode customers. These customers reinforced the significant opportunity that we have in this space due to the unmet needs, supply chain gaps, and lack of flexibility that currently exists in this market. In October this year, we commenced a laser diode customer contract with Yale University to contribute laser diode development for the US Defense Advanced Research Project Agency known as DARPA. This represents a significant opportunity to develop additional laser diode products.
Our financial performance. Our financial performance for the last year was an operating loss of 5.99 million, down from a 14.4 million loss in the previous year. However, if you exclude the one-off impairment in FY19, the operating loss was in line with the previous year of 5.73. We had an increase in our foundry revenue for the year, up 54%, from 424,000 to 655,000. This was despite the significant impacts in the later part of the financial year due to the COVID shut downs, impacting our customers in the US and Europe. We also reported our first laser diode foundry revenue for the development of customer laser diode designs for 150,000 of that number. We do expect revenues to significantly increase in FY 2021. And for the first time in the company's history, we will generate ongoing product revenue. With increased R and D expenditure for the development of the laser diode products, our R and D rebate increased from 2.3 million to 2.7 million.
On the other side, our gross operating expenditures for the year remained largely in line with 2019, reducing from 7.7 million down to 7.5 million. As everyone will know, we completed our 5.8 million capital raise in March 2020, which was well-supported by existing and new shareholders, as well as the board, management, and staff, who all agreed to direct a portion of their salary towards shares. This has placed BluGlass in a position to execute our immediate business objectives and take the business forward this year.
In summary, despite the significant global challenge experienced during the year, the business has made strong progress on the four major milestones that we've set ourselves, being product development, manufacturing readiness, technology, and scaling. The board are excited about our short-term prospects as management delivers on commercialising our unique technology as we become a product manufacturing and revenue generating business this financial year.
On behalf of the board, I would like to thank all our loyal shareholders for the continued support and belief in the company, and thank all of the BluGlass team for their enormous efforts and dedication on delivering our shared vision for the future of our RPCVD technology.
I'll now hand over to Giles to present where the business is at. Thanks Giles.
Giles Bourne: Good morning everyone, and thank you, James. My name is Giles Bourne, I'm the Managing Director of BluGlass. I add my welcome to you all today, and hopefully you can hear me. So my plan for today is to give you a bit of an operational progress, where we're going, our strategic focus, remind you about that and our objectives the year ahead.
So as James said, it's been a pretty interesting year. It's had its challenges, but we've overcome a lot of those challenges. And I'm really pleased to say we have an exciting future ahead of us with a product business.
So what I want to do is talk initially about our portfolio product. It's a platform technology that BluGlass operates on. So RPCVD is the underlying technology. We've been working, as you know, for a number of years on LEDs. We continue to do so, but a lot of the work we've done on LEDs has had direct benefit into our other types of applications.
So as you'll see at the top of this list, we have laser diodes out there. Laser diodes have benefited from the work the tech team has done in the LEDs. And it's one way we can actually have a product in business, actually manufacturing devices to a customer, rather than the risk that comes with a license based business, where you have limited control. This one, we can control the supply chain and have a much clearer line of sight to the market. So in the portfolio approach, we have not only laser diodes as the main product. We still continue to do work on high brightness LEDs. We still do work on the tunnel junction, which enables both the LEDs and the laser diodes and micro LEDs is a topic we've talked about for a number of years there. We do have foundry customers in the micro LED space, and we continue to do development work there as well.
And this is all underpinned by our equipment business, the RPCVD equipment business. So we have now in our facility, five reactors, four of which are RPCVD, one is MOCVD. And that is really the engine room that develops all of these products, this suite of products. And there are other applications as well, like power electronics, but as I say, we're a small company, so our focus has really been squarely this year on the laser diode business.
So there's really four paths to market. There's the direct to market. That's the laser diode one, which is taking product. There's the EpiBlu foundry, which is the enabler, so we derive revenues from the EpiBlu foundry business. That really is the custom manufacturing for LEDs, for micro LEDs, and now for laser diodes. And there's a licensing based business as well, which is really more of the LEDs.
And just put that in context. An LED, as we know, is a diffuse source of light, and it's built for the same building blocks that we build on our laser diodes, which is a point source of light. The difference between an LED and a laser diode is that the laser diode market is relatively small, high margin business, where we actually have the manufacturing capability in house. Whereas the LED business is much, much bigger. And for us to actually go and manufacture LEDs would require a huge amount of CapEx. Hence the reason why we'd go down the path of the licensing, or the royalty one.
So, what I'd like to focus on mostly is the laser diode, because that's really dominated this year for BluGlass. So in the laser diode, when we launched this business back in October 2019, we talked about broadly four different market segments for the laser diode, and that remains true today. Those four ones are industrial applications, medical biotechnology, display market, and automotive. That's really driving the growth. And what we're specifically talking about here is blue laser diodes, built from gallium nitride.
So let's just drill down a little bit further into that. So in these blue laser diodes, we have a number of different types of products. Initially, what we're doing is building products which are already out there in the marketplace. So we're not reinventing the wheel here, but we're slowly introducing the RPCVD technology. So the initial product launch for us would be a 405 nanometer or 420 nanometer product, and you can see they have different applications across different market verticals.
So as we go through this product roadmap, we will be launching different products over the course of the coming years, all with different applications, all with different power capabilities and such like, but the 405 nanometers and the 420 nanometer are the first ones that we'll be bringing out.
So I'll just go a little bit more detailed about that. With those particular products, 405 nanometer is probably the most advanced. What we're seeing now from all the work we're doing, and I'm going to talk about our supply chain in a minute, but we're already seeing good lasing behavior from the 405. So it's actually, we know the design, the epitaxy is actually working and we're showing good lasing behaviors, and we're also approaching the commercial specifications, which is key. The customers we're out there talking to have very specific specifications, and that's what we're working towards. The 420 is hot on the heels of that. Again, showing good lasing behavior, it's working through our supply chain. We're closing in on that commercial aspect, and then behind that sits the 450 nanometer product and others will follow in due course.
What I want to do is talk a little bit about the supply chain. So we spent a lot of this year, since we launched the business in October, actually developing an end to end supply chain. It's quite a complex supply chain, but different to some of the other businesses we've worked on, we're controlling both the beginning and the end of this supply chain. So in BluGlass, in Silverwater, we're doing the epitaxy, which is actually taking the raw way for doing the growths on our MOCVD or RPCVD equipment. We then ship those products into our various different components supply chain that do front-end, back-end processing, feeding, coating. There's lots of different process steps. That supply chain has been built out largely in the US, and the final component of that supply chain is it goes to our facility in New Hampshire for testing, and then ultimately to the customer.
So you would know in June this year, we actually formally launched our site in the US, we commissioned that site and Brad Siskavich, who's our executive vice president of our laser diode business. He's online. And he's been instrumental in driving that growth of our facility in the US, hiring people to work with him, both technical and commercial people, and will continue to build out that facility in the US. Our supply chain involves multiple different parties in that. And one of the challenges we had is trying to find people who had commercial capability. So it's not just research style. It's people who can scale up the technology for mass manufacturing. And along the way, of course, like any supply chain you build up, you encounter challenges. We've tried to put in contingency plans. In fact, we have put in contingency plans, where we put multiple suppliers in to deal with certain issues. It has been challenging, but we are now working towards that, and we now see multiple different wafer in different parts of supply chain working its way through to the ultimate testing. Ian is going to talk a little bit more about the supply chain, the technicalities of it and what each process represents.
More importantly, and most importantly, for us as a company that's reaching commercialisation is, who are our customers, and what are they doing? We broadly look at our customers in three different buckets. There's the R&D institutions who are doing custom laser diode design. So they come to us for one-off applications. The most notable of that recently is the Yale-DARPA contract we announced last month in October. That's a revenue-generating product for us, but it has also got commercial applications at the end of it. We'll see more of those as we go, which is really interesting because it helps prove up some of the designs we're working on, very, very important, high-profile R&D style customers.
Then we have the OEM systems integrators. They're the ones that are doing mass product, and they're doing it for things like industrial, cutting and welding and such like. There are very specific designs they're looking for. When James mentioned that we went to SPIE Photonics West, the show in February, we certainly met with most of our customers and qualified what they're looking for then. But we're in constant contact with our customers, and we know exactly what specifications they're looking for. We know at what point they are ready to engage with us. So really for us, the challenge is pushing products through our supply chain to meet their needs. There is a shortage of suppliers of laser diode products that we fill a hole there, and they're looking for increased higher-power products. I think we're in a very unique position there.
Then there's the distributors who are doing smaller applications as well. There's really these three broad buckets. We're talking to all of them, and we're working towards obviously delivering products to them in 2021. So it's an exciting time for us.
And that leads me on to the actual roadmap itself. This is the roadmap we put up in October last year. And I wanted to show you how we're progressing along it. So the R&D device at the top, we've done that. We've already produced products which are going out there. Some of the other products that we are pushing out there, we're now specifically giving them some wavelengths. Mostly on target. There's one or two that's been slipped because we're dealing with a complex supply chain. But we're looking at fixing those problems. So we're seeing products coming out in early 2021, and we are on target for revenue in 2021. Then the manufacturing supply chain is close to being completely qualified. So we're making very, very good progress given the challenges, the environment we're working in at the moment.
I briefly want to just talk about the economic scenario. So, again, this is a slide that we've talked to last year about how we saw the economic scenarios for the laser diode product. And this remains true to date. We say, and as James highlighted in his talk, that 2021 is the year that we'll see product revenue. And we still stand by that, firmly stand by that, product coming out in 2021 and customer revenue in 2021. It's an exciting time for us. And we've looked at the different applications. So as we evolve into customer revenue, so we'll adapt this slide and give you more information around it, but it is an important year, this calendar year, of actually delivering product and revenues.
And I just want to just touch briefly on our partnerships. So I know I've talked mostly about laser diodes, but we do continue to do other activities as well. We haven't ignored them. We just wanted to focus the business on this one product, double down on that for this year and have control of our destiny in terms of revenue. So, obviously, the Yale-DARPA partnership is really key for us. But you will recall that we actually worked with Bridge Labs and Luminus on the cascade LED. And those are ongoing discussions, and we haven't ignored that. We will continue to work on it. We have done some work on it, but we'd like to obviously bring that up to speed in the course of the coming years as well.
And you'll recall that the red LED or micro LEDs have been a very important opportunity for BluGlass, and we're working with a company called X Display. And this particular image on X Display uses BluGlass' technology in its prototypes, which is really exciting. So we've been working with them to actually produce prototype micro LEDs. And, again, they remain an important foundry customer for us, and there are others as well. Then Aixtron, who's our equipment partner, Aixtron have been instrumental in helping basically commission the BLG-500, which is our commercial scale tool, on actual platforms. So we're working very closely with our engineers and our tech team to bring that online. And obviously, their interest is in our output that we produce, so how they can utilise that with our customers. So that's an important ongoing dialogue. We have Aixtron as a key partner. There are others as well, but those are the ones that we can publicly talk about.
All this is underpinned by a suite of patents and IP. We have eight patent families, 75 granted patents across all key jurisdictions. And we continue to build on that. We spend a lot of time looking at the IP and how we can file it in the patent, which is obviously expensive, but there's know-how as well. There's a whole suite of different things we can do to protect our core IP, and that is instrumental to what we do.
So finally, before I hand over to Ian, who will take you through the technical progress of where we have gone through the year, we're very comfortable with where we're going with the laser business. It's an exciting opportunity. We do have the other paths to market as well with micro LEDs, the LEDs as well. We've got some very aggressive timelines, but we're feeling increasingly confident meeting those timelines, strong IP portfolios. But most importantly, there is a very good market opportunity in these devices. We are constantly in contact with them. We know that the customers are looking for these products. And it's very exciting for us. So thank you for your time today. I'll hand over to Ian Mann, who will take you through the technology progress.
Ian Mann: Well, thanks, Giles. And good morning, everyone. My name is Ian Mann. I'm the Chief Operations and Technology Officer for BluGlass. And today, I'll be walking through the manufacturing steps for laser diodes. I'll highlight how they're different from LEDs. I'll also go into some of our RPCVD tunnel junction efforts on laser diodes. Then I will conclude with a brief update on our micro LED update, our micro LED and tunnel junction LED efforts. And I'll, I'll finalise with our RPCVD scaling efforts, particularly on the BLG-500.
So with the manufacturing steps, Giles has gone through that commercial level side of the supply chain, but I really want to touch on some of the technical. And really, there's probably two key things to note in particular for laser diodes on a difference. Now one of the key technical aspects is that with LEDs, we use low-cost sapphire synthetic substrates, whereas with laser diodes, we use these very expensive free-standing gallium nitride substrates. And they're much smaller. They're only two inch in size. But one of the key issues with that is that the gallium nitride substrates, they have much lower defects, and lasers tend to be much more sensitive to defects. So these particular wafers they're really not used in a lot of other applications. Laser diodes are certainly one of the main ones. But actually, the handling, the physical handling of these wafers, does involve new processes.
Now, a second aspect of the difference between LED and laser diode manufacturing, in fact, is the supply chain itself. As Giles touched on, LED clearly is a very high-volume manufacturing industry, whereas with gallium nitride laser diodes, in fact, it's very small in terms of the number of ways wafers produced. And what that means is that BluGlass, while we've been growing wafers for years on LEDs, we can't actually take a wafer and just give it to another company to turn it into a final laser diode device or product. So we've had to work with a number of vendors to build up that technology and work closely with them. Now, the groups that we are working with all have expertise in one or more of the areas that I'm going to go through, but it has been an evolved process to try and bring them into laser diode manufacturing.
So let's just take some time now to go through these specific steps. So one of the key ingredients to any good device, and in particular with the laser diode, is actually the device design itself. Now, we spend a lot of effort actually doing simulation. This is computer modeling and simulation to actually design the structures that go into the ultimate laser product. Then after we've done the design, then we actually have to grow the materials. And this is what's done in BluGlass' facility, using both MOCVD and ultimately with RPCVD for some of the advanced performances that we are seeking. And once those wafers are grown, we're able to do some in-house testing at the BluGlass facility. And this involves looking at the material's properties but also some initial device performance. Now, this, again, is where the departure between LED and laser diode happens, is that even though we have a sophisticated test set up at BluGlass, we really can't get the full laser properties until we've gone through subsequent steps of fabrication, which that differs because when we make our LEDs, you've probably seen over the years we give these nice images of our quick test. We can still do that with the laser, but it just gives us a bit of a filter to know that what we've done in the lab is ready to be processed for the next step.
All right. So let's talk about some of those next steps. There's really two wafer fabrication steps. Now, the first one, this is probably what we conventionally think of if you think of an Intel style when they produce the silicon chips. We call this the front end of micro-fabrication. And this is where the laser wafer gets processed into a pattern structure of a specific geometry, the geometry that's needed for the laser diode. And we also do some steps that involve putting the metal down. The metal is required for making the electrical contact to the end device. Now, these particular steps here really involve the really heavy lifting in terms of CapEx of any kind of semiconductor process. Very expensive, clean rooms, very tight control on resolution and cleanliness to produce the high-end devices.
So with both of these steps in wafer fabrication one and what we call wafer fabrication step two, we do have multiple partners working on these solutions. All right. So the next step for wafer fabrication, we call this the backend. And again, this is very unique for laser diodes. This is not something we would need to do for LED fabrication. And what it involves is actually the thinning down of the overall structure. It also involves its own metalisation step. But it also involves the careful cutting of the wafer into different chip sizes. And what is critically important is to get that process right so that when you go to the next step, you can do what's called a cleave step very accurately and to the performance you need.
Now, I'm going to go through in a slide or two some of the very specifics of the laser diode structure. But I think what is important to remember is that LEDs that we've been making in the past, they actually admit they're light vertically from the wafer, whereas these devices that we're making for lasers, they actually come out of the side. We call them edge emitting. So what's critical for that is that when you cut the wafer, you want the end of the laser device to be a very smooth, very clean surface. And that's this step called cleaving. Now, these last two steps of the backend and the cleaving, a lot of the vendors in particular, have different approaches to doing that. So there is some proprietary know-how in doing that step. And it was really critical for having a high-end performing device. So when we've mentioned in our recent announcements and per Giles's comments earlier where we've exhibited lasing, this is actually at the point where we can test the laser, after the cleave.
So that's not a final product because it still needs to go through a few additional steps, but this gives us the lion's share of the data that's required for the actual performance to see how the design and the iteration is going. I should also point out that with the data that you get after testing after cleaving, that can feed directly back into the next iteration for the design and the modeling. So because our devices have these two edges on them, what you need to do is you need to coat both of these faces. And this is basically a specialty coating that allows one of the surfaces of the end to be like a mirror, and the other end is a surface that allows a light to pass through it. If you think of a laser, it's a long device that light will actually pass through, but it will bounce off of one end as you maximise the output from the other end. These coatings also help protect the critical surface from the environmental effects.
So once the coating is done, then you actually package the device. And when we say packaging, that means mechanically mounting this laser chip that you have. It also means handling the thermal aspects. So a lot of the applications here are certainly for high-power lasers. They generate a lot of heat. So you have to deal with that. And that's typically done with package design. Also, what you should think of the package is what allows the device to interact with what you might drive it with. So it has electrical contacts and also has the output for the light to come out. Now, once it's packaged, then you go again for another step, which is called reliability testing. And this is effectively making sure that the device performs over a period of hours. Now, there's many different ways of doing this and different styled tests, you can, for example, test at higher temperature, but really this is kind of our requirement of customers to know that the device that you've fabricated will last, and really depends a lot on the application, because many applications require lots of hours. A good example would be a laser for a display projector, which is used on a very high output rate.
So once you have all those steps done, then you ultimately have your final laser dialed product. And while I've highlighted here, there's a lot of complexity in this, but this complexity also does add a barrier to entry to our would-be competitors, and certainly with the years of experience that Blue Glass has on the focus of the design, in particular on the epitaxial growth. I do want to stress that literally the lion's share of the ultimate performance really comes from the design and the quality of that growth, and that's where we feel like we have strong competitive advantage, and certainly over the last year of investing and working closely with this supply chain, we feel like we're well positioned for 2021 to roll out the product roadmap.
I'll probably quickly go through this, but I want to stress that there are different stages that we can engage with customers and OUR executive vice president in the US is really working very closely, in particular with customers, to understand the technical requirements. So this first step here is, we're doing technical demonstrations, but most of those demonstrations are really sort of customer-sponsored in terms of the specifications that they're looking for. We are trying to design to those specifications, and certainly that's a trigger point for us for sharing data, usually under NDA, for example, when we've shown some of these 404 or 450 nanometer lasing performance.
The next step, really though, involves going one step further than where we've been, because I mentioned that that cleaning step we get the performance data, but really we want to then go to that coding step and do the initial part of the reliability, which is this, we call it a quick burn in test to know that the devices are valid. That's actually where we think customers will trial samples, some may pay for those samples, and really depending on the application, that's a key trigger for us, which comes shortly before product launch.
The third step really, of course, is then the product launch, and this is really based on now data sheets will be out, we will have reliability data of our lasers, and we will roll the product out accordingly. Now, I want to stress that this is really a pipeline of products, because each of the wavelengths really defines its own product, and I should also stress there's also classes within those wavelengths of different designs. But where it kind of gets exciting, at least I think from a growth perspective, is really the next step, and the next step is really about enhancing the overall performance.
So today we've been talking about using the MOC CBD to grow these laser diodes, but really we want to enhance that performance, and that's where the RPCVD tunnel junction program comes into play. But in addition to that, we also have other advances and innovations in overall design, which do involve that supply chain that I've spent the time to go through, and these are other areas, in things like in heat management, that are all part of the innovation and ways that we can advance that. We do know that there's very specific customers that have unique needs, and a good example of that would be, for example, the Yale and DARPA, but there's also commercial industry that want unique aspects of laser diodes, and because Blue Glass is very willing to be flexible with that approach, that plays to our strength as well.
Okay. So just to give a quick update on where we're up to on the technical side of things. There's these three main product designs that we were working on, and I'm just listing them as individual wavelengths, but they do range because you can have products that are slightly higher or lower than 405, but in terms of our actual effort, I went to explain the laser diode design, so that would categorise an example of 405 versus a 420. All three of these we've shown them to lase. Certainly the 405 is probably our highest performing candidate to date, and just recently, we've made really good progress on the 450.
Now, in addition to the laser diode, we've been working on our internal development of the tunnel junction laser diodes. This is something where, again, we've made really strong, recent progress. This has only been measured internally at BluGlass, but it's about to go through some of those steps. Initially, we've been working with a university over in the US called university of New Mexico. It's the one that we co-authored the paper with at Photonix West, and we're working very close to them and look forward to reporting on those results as they come out.
Okay. I do want to just take a few minutes, or maybe less than that, to just recapture the value proposition of the tunnel junction. So, with the laser diode structure, we're simply proposing to combine MOCVD for growing the bulk of the structure, but then we want to use our tunnel junction and our RPCVD to grow the top half of the structure. I just want to stress that the key advantage there is that the tunnel junction really enables us to grow a thick layer of a different style of material, we call it an NL GaN, to replace a PL GaN. And what that means is the overall resistance and optical loss is actually improved with the use of the RPCVD technology.
This really isn't an option for MOCVD because of the way that p-GaN behaves, and I won't go through all that detail here. Certainly I've gone through that in previous years and on our website and happy to entertain questions, if there are those technical questions. I'm really proud of this photo here is showing our internal latest result on tunnel junction. Very bright performance. Again, that has to go through a few extra manufacturing steps, but once we work with University of New Mexico, we can quickly roll that out into that manufacturing supply chain. So that's going to follow the initial roadmap for the products.
I think, in a way, this recent award of the Yale university and DARPA program is kind of a culmination of working with the supply chain, getting those demonstrations out there. And this is a very exciting area for us because it's really combining the strengths, in particular, of the DARPA Yale University, who've been working on an area called photonic integrated circuits. And just to try and give you a high level view of what that is, if you think of your normal Intel-style chips, which is using copper wires for passing or using electrical contacts for signals, this is all done optically. Some of the real advantages of optically is that if you can make a chip doing the same kind of things that you can do processing with electrical, you can dramatically shrink the size of components. So things that take an entire disk full of indiscrete components, can all be done at the chip-level.
So we're trying to play to the strengths and it's obviously that Yale University is decided that our technology is sufficient to get this project going, but more importantly, I view this project as really, as us getting in the very early days of a new technology, working with world leaders, but also, quickly off the back of that world, hopefully working with companies and customers to bring those to products and light as well.
All right. So changing gears a little bit, while the major focus, both as James and Giles have pointed out, really has been the laser diode effort. We still do continue to make efforts on the microLED and also on our tunnel junctions for LEDs. I also want to stress that when we put a tunnel junction, we do use the materials that are used in, for example, red LEDs, and when we make tunnel junctions for cascades, they are the same as the same tunnel junction that goes into the laser diode. So all of the efforts really are concentrated, but in terms of the focus and where the effort has gone, the application has always been the laser diode.
Now, we do intend to revisit, for example, cascade LEDs, once we get through our short-term roadmap to get product launch, because certainly we still think the advances that we're making on the laser diode are equally applicable to the LED. I also just want to show that we have actually been delivering some of these style of chips that I'm showing here, both for the longer wavelength and into the red for customers, and while customers have slowed down a little bit with COVID, some of those customers are now coming back as their labs are reopening.
And then the final topic, really, is just the RPCVD scaling effort. An immense amount of effort has gone into retro-fitting the Extron System, and just to refresh your memory, this is capable of doing six-by-six inch. Shown in the image here is 42 wafers, but you can probably envision that where there are seven of those two-inch wafers, you could put one large wafer. This is, again, taking advantage of the pre-existing technology that Extron has developed. This particular setup, the way it works, is there's two rotation axis, and what that allows us was for greater control over uniformity. And certainly we've demonstrated a significant improvement in uniformity over our existing BLG 300 series over the six-inch deposition area. There's still some further optimisation to do, but we've already shown that we can grow on par tunnel junctions with this tool, so we really look forward to keeping that continuing going forward.
We did also announce during the year that we were awarded a Plasma grant and this grant is also related to scaling, but it's actually for another next generation RPCVD tool. One of the things that customers have been asking us on the equipment side for is, can you combine the best of MOCVD and RPCVD into one single system? Because for right now, the way it operates is we'll grow half the structure with MOCVD, and then we transfer IT over to the RPCVD. But with this new design, certainly if successful, the idea is to combine both the technologies.
So thank you for your attention this morning. I would also like to thank all shareholders, stakeholders, and our customers. I would also have a special thanks to the technology team, the support staff at BluGlass, and in particular, the safety team that done a lot of hard effort in the challenging times with COVID. So, thank you for your attention.
James Walker: All right.
Giles Bourne: We're back on this.
James Walker: Now we're back here, I think. Well, just while you're doing that step, so thanks, Giles and Ian. It's now time for questions. All the questions are coming in through the chat box. I've got one question here. So I'll read that one out while we're waiting for the others to be summarised.
Question one, given the progress of the business in the past couple of months, can you explain why there was little focus on obtaining coverage of the stock? I'm happy to answer that. We get asked this question a lot. I think there definitely is attention on trying to get the stock covered. We are talking to brokers and analysts all the time. It is difficult to get unpaid coverage of a company of our size. As you know, we've been listed for a long time and had little coverage, but we are still working on that and we are still talking to different institutions all the time about that.
The other question that leads out of that, of course, is paid coverage. And we've talked about a lot of that at the board-level. I think it's a consensus view that paid coverage does not get a lot of traction in Australia, and while we're at this stage and we are yet to launch a product, with a product coming early next year, we don't think there will be any benefit in getting paid coverage at this stage, but believe you me, when we have a product launch early next year, you will be hearing about us from all the sources you can imagine. We then have an event that is worth talking about, and we will be talking to analysts and getting coverage on the launch of the laser diode products. Okay, let me just see what other questions we've got.
Stefanie Winwood: So we've got about six or seven questions.
James Walker: Okay.
Stefanie Winwood: Starting from here.
James Walker: Question number one, how critical is your dependency on Chinese suppliers? You mentioned Bridgelux and Luminex as key partners. They are headquartered in the US, but both rely on factories based in China.
Giles Bourne: Maybe I can just touch on that. So, in the laser diodes, we did not work with any Chinese suppliers. Most of our supply chain is out of the US, with some substrate suppliers out of Japan, et cetera, but we're working predominantly with Europe and US, and obviously ourselves. With the LEDs, yes, there is a need. Luminex and Bridgelux, both have their operations in China, and that's the nature of the way the LED industry is going. The balance has moved away from, say, Europe and the US, to Asia, so we have to be mindful of that. But for the laser diodes, which is the critical business that we've been talking about, our supply chain is US and Europe.
James Walker: All right. Thanks. Question number two, are we still engaging with Extron with regards to future equipment manufacturing factoring?
Giles Bourne: Again, I'll touch on that and the impact. So, as I mentioned in my talk, yes. There's two parts to the Extron engagement. One is they've been working in an engineering team to actually commission the BLG 500. So, obviously that's done. It's a very complex process we went through, but they've been instrumental in building that. The second part of the engagement is a commercial one. They're obviously interested in the output from the BLG 500 and how that looks with their customers. They're interested in converting their equipment to RPCVD. So, it's the data that comes out of that which is equipment to RPCVD. So it's the data that comes out of that which is key. So there's the BLG 500 has only recently come online and contributing to our research. It's only now that we're beginning to generate data and that data we will share with Aixtron and that's why they're interested. So I can't comment on that yet, but clearly we will be sharing stuff. And perhaps, Ian, you've got something to add to that.
Ian Mann: I think you have covered it. I would say though that with Aixtron, obviously as an equipment company, they are interested in a whole range of applications, but it really has to have a volume behind it because ultimately they're selling the equipment. So that's certainly the micro LED aspect would be probably the first and foremost in any semiconductor equipment roadmaps right now. So that's an area that as the red LED progresses, certainly we know Aixtron and others are very interested in that capability.
James Walker: Right. Thanks, guys. Next question, Brad, maybe you might want to answer this one, so unmute yourself. Is the initial laser diode product envisaged to have any performance or cost benefit to our customers? If so, can you provide any insight into the improvements over the current market products?
Brad Siskavich: The early stage products that we'll be bringing to market will still be very similar to the traditional or current laser diode out products that are on the market, as Ian mentioned earlier. So both design and epitaxy are a key part of our performance advantage. And the custom approach does allow us to integrate that into some of the early products, but as we're able to weave in more of our RPCVD growth capabilities and advantages, that's when we'll see the true, both performance advantages and in some case, as we work through these new product changes into our supply chain, we'll also see some of those cost advantages show up.
James Walker: Great. Thanks, Brad. All right, next question. The customer segments and supply chain are complex with many moving parts. I like the technology, but I cannot grasp the product strategy, the opportunity map as you see it. How do you coordinate your efforts? Do you have a particular plan focus on a particular use of the technology and customer segment? And if so, which one? And do you follow up the leads and respond to customer demand as it comes, deciding on the direction you go.
Giles Bourne: Maybe I can start that and then I'll hand over to my colleagues on that. But just to go back to when we originally put this business together, it was informed by the customer. So we had lots of interactions with the future customers, understanding what their needs were.
There was a shortfall of suppliers in the market and there was this needs for very specific wavelengths of laser diodes, and we realised we had a capability of doing it. So that's really what drove this. And as we go forward, we sort of put the customers into various different buckets, which I highlighted in my talk. And the main one for us would be the industrial OEM style manufacturer. And each one of those has very specific needs, so we are constantly in dialogue with them understanding what they want and their point of engagement.
Both Brad, leading that customer engagement, with myself as well, we will work very much as a team on this one and to come to the point of the supply chain complexities as well, but that's really drawing on the expertise that Brad has had. He's been three decades in the laser diode industry, so he's developed some very strong relationships with supply chain partners out there. So that's helped set up that base of it.
We've met with them as best as we can remotely, and, to a certain extent, in-person, developed up who are the best ones that we can actually get, not only doing the development work for us, but to go and scale manufacturing.
Where we see issues, and I think I highlighted this in my talk, was we built in contingency. So in some instances within the supply chain, we have two or three partners working with us, but we're in constant dialogue with that and really Brad and his team technically are driving that. And obviously myself and Ian, obviously very, very closely working with those supply chain.
Do you want to add to that, Ian, on that question?
Ian Mann: I think that covers it.
James Walker: Okay. Good one. A couple more questions have just come in, so thank you everyone. Can you provide information on the timeline for the new plasma source and integration into the BLG 180 and 300?
Ian Mann: Yeah. So that's for the plasma grant. So the program, it's a 15 month project. We're several months in. We're past the design at the prototyping stage. So within the next 9-12 months, we actually expect to have what we call an iterative approach of having growth done. So it's still a bit longer term for that style project, but it really doesn't disrupt any of the short-term laser diode development in part, because we've invested in the multiple RPCVD tools.
James Walker: Right. The next one is for the board, so I'll answer this one. Can the board explain why share-based payments on the 8th of April to staff and board were valued at two cents rather than on 6th of July when the payment was made?
I'm not sure if everyone can remember, but when we did the rights issue to the entire shareholder base in April, it was a very uncertain time, no one actually knew what sort of take up we were going to get from that rights issue to our shareholders. And it was really important that our shareholders heard from us, the board, the management, and the entire team at BluGlass, that we believe in the future of this company.
At that time in April, we all agreed that we would take a portion of our fees and salary and remuneration as shares at the same price that we offered it to the shareholders, which was two cents. The timing of the issue in July is just a timing issue. By the time that we deferred our quarter of our fees until the 30th of June, it meant we issued the shares in July. We didn't know how many shares we were actually going to issue in April. Hence, that's why they were issued in July.
For the shareholders, I'm sorry, for the board, you actually get to vote on that later on today, the shares have not been issued to the directors at this stage, but we thought it was important that all our shareholders knew that everyone inside of the company was committed to this company and wanted to allocate some of our fees to that rights issue to also tell the shareholders that we thought that was a good price for everyone to be involved, including us. That's all I'm going to say on that. I hope that answers everyone's question on that one.
Two more questions, and then I think we're done. So on 6th of April, the company announced taking up the radium product, we took a million dollars of a prepayment of our R&D grant. Question is, what was the cash balance at that time, and what was the justification of taking that facility on with the interest rate that we had to pay, even though we took it on for a very short period of time?
Giles Bourne: I can start. Look, there's a number of products like that out there where you can advance your R&D tax and the radium one to us was the most commercially competitive product. We were only doing it as a shortstop, and we literally had that product and facility in place for a matter of weeks. We then, as James said, it was an uncertain time. We then competed our capital raise so we were able to terminate our facilities.
The actual real cost to BluGlass was very, very small indeed, but it gave us some degree of comfort and confidence in making sure that we had enough cash in the runway. So it's very useful to have there, but the overall cost, and the real cost, to the company was negligible. And it's always available to us. For us, the R&D tax rebate is a fairly substantial number. We pulled in 2.7 million this year for the R&D tax. And we're pulling around the same sort of number next year as well. That's a substantial amount of cash funding and to have some flexibility over that is really useful to us.
James Walker: Right. Thank you. Two more questions. Can you provide a bit more detail on the revenue projections for FYI 21? The graph scale makes it hard to read the numbers.
Giles Bourne: Let's just make this clear, these are not revenue projections, they're economic scenarios. So what we've said is that this is what we look at the market as and how we enter the market. We'll only start doing revenue projections when we start selling products on mass scale to industrial and OEM partners, and then we're able to provide more substance around the forecast. Right now we're looking at scenarios only.
We look at what the market looks like, what sort of market share we think we can take, range of scenarios, but the key message there is in calendar year 2021, we will deliver products and we will deliver revenue and we'll deliver revenue in all those three buckets we talked about. Custom, which we're already doing. The commercial, which is coming through the industrial OEM. And then the distributors as well. So we will do that. And soon as we do that, we were able to provide more substance around it. And, as James has said, we will be shouting very loudly about that through every source.
James Walker: Great. Last question, everyone. You are confident of sales in early 2021, even though you are still developing a product. How are you so confident of this when you haven't reached a commercial product as yet, still approaching?
Giles Bourne: I can kick that off. I mean, look, I work very closely with our supply chain, I work closely with our customers. I won't deny the fact that it's got challenges, but a lot of the work we've done in terms of the epitaxy design and the actual product is working, we know that's working. So that's a tick from Ian and the technology team. What we're delivering to our supply chain is actually doing what it should be doing.
The supply chain, sure there's degrees of complexity in that, hence the reason why I've built up contingencies. But where we have had some challenges we're onto it very quickly. And our supply chain, we know this through our conversations with them, commercially think this is a really interesting opportunity they're working on with BluGlass.
They're bending over backwards to try and deliver the outcome that we want, so challenges that we have identified, they're quickly on top of it and looking at solutions. So I'm really comfortable that we are managing it now very well. We've got a number of different products working its way through the supply chain from a number of different vendors, so lots of options to get success there. I mean, Ian, you might want to add a bit more to that.
Ian Mann: I think just on the technical side, obviously those first iterations working with the supply chain in particular, they have been going through their own development cycle working with us, but as we're coming towards the end of that for a number of those steps, then the turnaround times get faster. We have a whole wave of iterations coming through, certainly over the next period of time, for the different product lines. So that helps gives us more confidence on the overall roadmap.
There are still certain things that have to be resolved on some of the more high performance. For example, is the 450 nanometre which is this industrial application. That's definitely a high performing requirement, which is why that timeline is further out in 2021.
James Walker: Great. Thanks guys.
Giles Bourne: Thank you.
James Walker: I think that's all for the questions, so thank you everyone who asked questions. As always, feel free to always come back and ask those questions afterwards after the meeting. Now we move on to the more formal part of today's process.
Ends
