State of Phygital

1 AL STATE OF OF PHYGITE PHYGITAL AT ST WWW.LETA.VC/PHYGITAL 2021 2021

2 Foreword Physical world around us today is very different from the one 50 years ago – all due to technology innovation. It is hard to imagine how the world will look like in 10 years, though we can make educated guesses based on the technologies that exist today and the trends where we see the tech is going. Digital has become huge for each of us, but in most cases, population using the Internet in just over 10 years. What it is still separated from the physical world. Digital is will happen then? The digital economy will start tightly intertwined with the physical, you can hardly cannibalizing itself unless it expands offline. imagine any physical object operating without a digital An average global internet user spends almost 6 hours component today. However, digital serves rather as an online each day (3.6 hours on mobile, 2 hours on invisible hand, while we believe it should be vice versa – desktop/laptop and 0.7 hours on other connected anyphysical object from parcel box to largest real estate [3] shall be constructed and utilized in accordance with the devices) . Given that on average a person sleeps for 8 digital use-cases that can be applied to these physical hours a day, we have up to 10 more hours as an upside to objects. becaptured and utilized by Phygital. AL Despite its rapid growth in recent decades, the digital WeseePhygitalasthephilosophyofanewworldorder, economy still accounts for less than 6% of the total where Phygital essentially enables the close integration [1] of the virtual environment (digital) into real human life economy, while offline dominates heavily. However, (physical). with the rise of digital natives we estimate digital will reach at least 50% of the world GDP within the next 15- Phygital is an innovation that creates an industry and 25years—that’sawhopping$100-200trillionupside. subsequent new technologies, making it an especially OF PHYGITE Ontheotherhand,wecanseethatthedigitaleconomyis important category. Some innovations are more transient under a huge threat itself as it will very shortly reach its and come and go very quickly, but the ones that really AT full capacity in terms of user penetration worldwide. As matter are the ones that generate whole new industries. of Apr 2021, 4.8 billion people around the world use the In this report, we will cover all things Phygital, paying ST internet (60%+ of population), with 330 million new users special attention to the modern technology enablers such [2] added over the past 12 months (that’s 990,000 new as Augmented Reality (AR), as well as showcasing the users each day!). In the UK 95% of population already use numerous use-cases of Phygital, some of which are Internet,[3] 93% in South Korea, 90% in Germany and already deployed, while others will soon be possible due 2021 Netherlands, 86% in France, 78% in North America. If this to innovation in hardware, electronics and software trend continues, we will have 100% of the world development. Photo by Masaru Suzuki

3 AL The digital economy OF PHYGITwill start cannibalizing E AT itself unless it expands ST offline. 2021 State of Phygital 2021 l e t a . v c / p h y g i t a l Photo by Raychel Sanner

4 Table of Contents Foreword 6. Factors That Facilitate The Paradigm Shift 7. Technological Revolutions: From Agricultural To Phygital 9. The World Economy Is Sick, Phygital Is The Vaccine 10. World’s Largest Economic Sectors Status Quo 12. Technological Breakthroughs 1970 – 2021 14. Internet In Its Today’s Form Harms And Spoils Masses 15. What Is (actually) Phygital? AL 17. Impact of Phygital on World’s Largest Economic Sectors 19. Phygital Use Cases 36. AR/VR Patents Outlook 37. Augmented Reality Penetration 2021 OF PHYGIT38. Technologies that form the basis of Phygital E 39. Phygital Hardware & Software Challenges AT 40. Phygital Market Predictions 2021-2022 About Authors ST Disclaimer Definitions 2021 References

5 We see Phygital as the AL philosophy of a new world order, where Phygital essentially enables the OF PHYGITE close integration of the AT virtual environment ST (digital) into real human 2021 life (physical). State of Phygital 2021 Photo by Rita Chou leta.vc/phygital

6 Factors That Facilitate The Paradigm Shift We are living in extremely exciting times. Due to a combination of various critical factors that emerged in a single Today’s technological and macroeconomic factors that lead to the paradigm shift moment in time, we experience an unprecedented level of technological progress as never seen before. At the same time, due to the influx of wide-spread accelerated information, most people confuse popularity and Internet network globalization and rapidly decreasing R&D resources and basic improvements and pseudo- access to high- penetration bandwidth streamline of costs to manufacture budgets consolidated innovation with fundamental quality engineering worldwide supply electronic components within largest paradigm shifts, missing the broader education worldwide chain and logistics corporations and picture of where we as humanity countries AL stand in terms of stages of technological development and what will be next. While it is widely accepted that we are currently in a period of the “Third Industrial Revolution”, or sometimes innovation in computer & software Intensified increasing demand increased need for raising purchasing OF PHYGITcalled “Information Revolution”, which electronics hardware development competition and for tools & means of remote power of population E started in 1975 with the shift from (microprocessors, advances fight for market technologies that communication and tolerance to analogue to digital electronics, we semiconductors, quantum share and boost productivity, and collaboration adoption of new AT believe that we have already computing, optics, storage, consumer dollars satisfaction and well- technologies surpassed this stage and are standing mobile & wearable devices, etc) being ST on the verge of the next one, which is Phygital. 2021

7 Technological Revolutions: Phygital From Agricultural Information To Phygital Science Automobile Heavy engineering Steam engine AL Industrial Agricultural OF PHYGITE AT ST 1650 1780 2021 Photo by Cosmin Serban on Unsplash 1810 1875 1900 1940 1975 2021 2021 Photo by Mihály Köles Photo by Museums Victoria Photo by Sherry Chen Photo by Ant Rozetsky Source of photo Photo by National Cancer Institute Photo by Markus Spiske Eon Reality

8 Phygital is an innovation that creates an industry and subsequent new technologies, AL making it an OF PHYGIT especially E AT important ST category. 2021 State of Phygital 2021 leta.vc/phygital Photo by Steve Halama

9 The World Economy Is Sick, Phygital Is The Vaccine 5.57% Average Annual World GDP Growth Given the amount of technological breakthroughs in the recent decades 4.03% from IT and biology to 3.03% manufacturing and science, which 2.63% 2.86% 2.81% are considerably improving the way weworkandlive, how come we see the world GDP (one of the major indicators of the world’s wellbeing) has been plateauing in the past 4 AL decades?[4] (as seen on the graph on 1960s 1970s 1980s 1990s 2000s 2010s the left). SamegoesforGDPPerCapita—the growth has slowed down in the past [5] 11.87% Average Annual GDP Per Capita Growth decades, which is quite surprising OF PHYGIT seeing great developments in almost E all aspects of our daily lives. AT 5.80% 5.55% 5.83% In order to find answers to the questions above, let’s briefly analyze ST 3.46% 2.11% 2 things: what are the largest economic sectors that contribute the most to the growth (or decline) of the world GDP and what is their 2021 1960s 1970s 1980s 1990s 2000s 2010s current respective state?

10 World’s Largest Economic Sectors Status Quo Financial Services. Between 2.5 and 3 Commercial Real Estate. If construction Life and Health Insurance. The World Oil and Gas. With the current speed of billion adults transact exclusively in cash, of productivity were to catch up with the total Health Organization estimates a projected global natural gas & oil consumption the gas which 1.7 billion remain completely economy, the industry’s value added could shortfall of 18 million health workers by reserves will last for the next 50 to 55 years unbanked without an account at a financial rise by $1.6 trillion a year. That would meet 2030[12], mainly in low-income countries, and oil reserves will last for 40 to 45 more institution or through a mobile money about half of the world’s annual where the majority of population resides in years according to the Energy Information [6] [17] provider ; between 500 million and 1 infrastructure needs or boost global GDP by densely populated areas, which might Administration (EIA). The market is likely [9] billion people rely exclusively on retail agent 2%accordingtoMcKinsey .Incomparison, become hotbeds for new deadly diseases to continue decreasing due to the growing network instead of established financial productivity in manufacturing, retail and and epidemics. All due to inadequate popularity of electric cars and solar energy. institutions; prohibitive regulation; agriculture has grown by as much as healthcare spend in the past 5 decades, Automobile Manufacturing. 14 million proliferation of financial crime and fraud 1,500% since the 1950s, but productivity in which averaged 5% of total GDP spend in people are employed in Europe in the (according to PwC 50%+ of all companies construction has barely increased at all. The developed countries (same as for military automotive industry, 8 million in the US, as globally experience fraud annually, $42Bn is industry is extensively regulated, very spend, for example)[13] well as 5 million in China.[18] At the same the total fraud losses reported in 2020 dependent on public-sector demand, and Information Technology. Information time, an industry’s current average cash alone)[7]; existing financial architecture isn’t highly cyclical. Informality and corruption Technology (IT) has grown 2.5 times faster runway of the largest OEMs is less than 2 AL coping with fast transforming economy and distort the market. than global GDP over the past 15 years.[14] months (meaning they have cash on hand business models. E-commerce. Do you think eCommerce is IT outpaced the value-add contributions of for less than 2 months of operating Construction. In OECD countries (leading huge? It has become very important indeed, goods-producing industries to gross expenses), which is quite horrifying. Such a 38 developed countries) an average labor though it still accounts for only 20% from domestic output for the first time in 2018 working capital/liquidity deficit might result [10] productivity in construction has been total retail sales . What are some of the and is now on track to overtake services- in a huge social & economic crisis given the OF PHYGITdecliningsince 1987 for 1% annually top eCommerce challenges on top of severe producing industries which are still complexity and its interconnections to E (meaning less output for the same amount competition, low margins and dominant.[15] upstream (e.g. steel, chemicals, textiles) and [8] of work) . In specific construction sectors monopolization of the industry? Logistics, FoodIndustry. To give you the taste of how downstream industries (e.g. repair, mobility AT the decline looks as follows: -1.2% in single- distribution and other offline-related bad things have become in the food services). family residential construction (RC), operations, as well as lack of visibility in the industry, let us present you just one number Telecommunication. According to EY, ST -1.3% in multiple-family RC, +0.7% in whole supply chain, which result in $1 industrial building construction. As a result, trillion loss annually for the whole as a means of characterizing the current telecom industry’s revenue between 2010 [11] state of food sector: 690 million — which is and 2020 was growing at a compound rate global need for infrastructure and housing industry . No matter how much you invest the number of people around the world of just 0.4%, mainly due to OTT players will be hard to meet. At the same time, the in digital experience and improve your who don’t have enough to eat—and the (WhatsApp, Facebook, WeChat) luring 2021 sector employs over 7% of the world’s mobile or Web app, when offline simply number continues to rise, according to traffic away from telcos.[19] workingpopulation. can’t keep up with the increased volumes. UnitedNations.[16]

11 2.5xfaster Information AL Technology has been growing as OF PHYGITE compared to the AT ST global GDP in the past 15 years. 2021 State of Phygital 2021 l e t a . v c / p h y g i t a l Photo by Eleonora Albasi Photo by Craig Cooper

12 Technological Breakthroughs 1970-2021 Togive you a taste of how far ahead IT has gone in a mere 30 years of its existence as compared to hundreds and even thousands of years of existence of other industries, let’s look at the table below which showcases some of the technological breakthroughs in IT and technology over the past 30-50 years. Also please bear in mind that NONE of the things below were existent a mere 60-70 years or so ago other than in fiction books. 1970s* 2021* Improvement over Computing efficiency 1970-2021** Number of watts needed per million instructions per second (Watts per MIPS) 5W per MIPS 0.00001W per MIPS x 500,000 Processing power (Moore’s Law) 2,300 transistors on a 39.5 billion transistors x 17.2M Speed and capability of computers increases every 2 years microprocessor on a microprocessor Computational capacity for supercomputers 124 billion (1993) 442,000 trillion x 3.6M Number of floating-point operations (FLOPS) carried out per second RAM capacity Random-access memory (RAM) - Computer memory typically used to store working data 1-bit 128 Gb x 1.024*10^12 and machine code AL Flash memory 256 Kb 8 Tb x 8×10^9 Non-volatile storage chip can keep stored data and information even when the power is off Generation of semiconductor manufacturing process 20,000 nm 5 nm x 4M Minimum size and spacing for features on each layer of the chip Cost of computers $95,000 for HP 3000 $1,000 x 610 OF PHYGIT Brand-new personal computer costs ($610,000 today) E Hard drive capacity 0.01 GB 20 TB x 2M AT Where all files and folders are physically located Digital camera resolution 10,000 pixels 80,000 megapixels x 8M Camera that captures photographs in digital memory ST Display resolution 160 × 200 pixels 30,720x17,280 pixels x 16.6k Number of horizontal and vertical pixels on a display screen (32K) Internet speed 50 Kbps (1984) 178 terabits per second x 3.2Bn 2021 Rate at which information is transferred from one place on the internet to another 56 Kbps (WWW 1993) (Tbps) (178,000 Gbps) * Our World in Data, 2021 (https://ourworldindata.org/technological-progress) ** LETA Capital estimate

13 Similar To What Penicillin And Insulin th Did For Humanity Since 20 Century, Phygital Will Treat Most Economic st Diseases of the 21 Century. What have we learned from the aforementioned stats on the previous slides? One thing is for sure: the world economy is sick. Most of the legacy economic sectors are completely stuck in the old wayofdoingthings. But the world has radically transformed in the past 30 years with the arrival of the Internet and AL computing. Legacy sectors in the way they were created and managed for ages are not suited for the sweeping progress of the IT sector, which is now the driving force of the world economy. If not for Information technology and innovation, we wouldn’t be able to OF PHYGITE discover new opportunities as we do today. At the same time, IT in its current form, can’t solve AT most of the fundamental issues of the largest economic sectors, having an inert placebo effect, ST rather than a full therapeutic effect. Similar to how Penicillin or Insulin drugs discovery in the 20th century saved and improved lives of the whole generations worldwide, Phygital is set to bring a 2021 whole lot of new experience and innovation in the st 21 centuryandyearstocome. Photo by Harry Cunningham

14 Internet In Its Today’s Form Harms And Spoils Masses The current model of Internet proves to be more harmful for users in the long run, rather than beneficial. There is now whole generations of people (Gen Z and beyond) who’ve been hooked on the online-only activities since the very early age, being cultivated by the major online platforms to spend as much time being online as possible, which is not natural for any human being, thus resulting in physical and mental problems early on. People all over the world experience various health-related issues such as depression, anxiety and sleep quality and blame the Internet platforms for 3X 30% aggravating the situation with the adverse factors such as bullying, fear of AL missing out, body image and more. Children who were cyberbullied are of 18-44 year-olds feel anxious if As a result, sadly enough, Internet in its 3x more likely to contemplate suicide they haven’t checked Facebook in compared to their peers.[23] the last 2 hours.[24] existing form gradually transforms from the most powerful facilitator to a killing machine. OF PHYGITPhygital, on the other hand, thanks to E its combination of physical and digital, 55% 6X AT has a much more organic and natural effect on humans, providing seamless of cases where children blocked Fake news spreads six times faster ST experience and being as powerful and aggressors, the perpetrators quickly than true news.[26] convenient as a purely digital interface. found them again.[25] 2021

15 What Is (actually) Phygital Phygital? $200tn** The term “Phygital” has been around for quite some time, though it is perceived completely wrong and in a very unfairly narrow sense. In most cases “Phygital” is monopolized today by either omnichannel marketing, retail strategy or online-to-offline customer experience meanings. In fact, it is much more powerful and relates to every human being on Earth, as well as every corporation and the government. Physical So, what’s the big deal with Phygital? And why should anyone Digital AL care about it? $84tn* The answer is plain and simple and is pictured on the right: you $9tn* can think of Phygital as an evolution of everything that has been AR/VR developedincomputing,AR,VRandissettodramaticallychange $34Bn* the way we live, work, communicate, travel, study, entertain and muchmore. OF PHYGITAs a result, all physical objects in the future will be Phygital, i.e. E powered by a set of breakthroughs (AR, IoT, M2M, etc.), while AT online environments (Social media, eCommerce, etc.) that exist today in the digital form only, will finally merge with physical objects not just as an add-on, but rather as an integral part of it. ST This will lead to a dramatic redistribution of wealth and assets, primarily disrupting the offline world and acting as a gateway to the offline economy for today’s digital enterprises. 2021 * Global Market Size in 2020, $US trillion ** Upside potential in the next 5-10 years, LETA Capital estimate, $US trillion

16 AL Phygital is an evolution of everything that has been OF PHYGITdeveloped in computing, AR, VR E AT and enables the close integration ST of the virtual environment (digital) into real human life (physical). 2021 State of Phygital 2021 l e t a . v c / p h y g i t a l Photo by mkobr61

17 Potential Impact of Phygital on World’s Largest Economic Sectors Similar to the effect of the digitalization on legacy sectors and systems, Phygital is poised to bring enormous boost in efficiency and productivity across all the major economic sectors. Given that the essence of Phygital is the combination of multiple technologies, the upside is estimated to be disproportionately greater as compared to the effect from the digitalization. ** * Global Market Size 2021, US$ trillion $30tr $25tr (Yahoo Finance, 2021 [21]) $20tr ** Upside potential for each market segment upon $21tr implementation of Phygital, US$ trillion (LETA Capital estimate based on OECD’s report $18tr “Digitalisation and productivity: a story of complementarities”, 2019 [22]) $10tr AL $23tr* $15tr $8tr $13tr $10tr $7tr $6tr Construction $9tr $2tr Financial Commercial Real $8tr $5tr $5tr OF PHYGITservices Estate $5tr Telecom E E-Commerce Information Oil & Gas $3tr AT Insurance Technology Automotive ST Food 2021

18 AL Phygital revolution will lead to a dramatic redistribution of wealth OF PHYGITE and assets, primarily disrupting AT the offline world and acting as a ST gateway to the offline economy 2021 for today’s digital enterprises. S t a t e o f P h y g i t a l 2021 l e t a . v c / p h y g i t a l Photo by Raychel Sanner on Unsplash Photo by Frederik Schönfeldt

19 Phygital Use Cases But what makes us so confident that the Phygital revolution is around the corner? It is the numerous existing use-cases of AR and XR that we see taking place globally and the amount of interest that AR & XRattractamongbothindividualusersandbusinesses. It is hardly possible to predict today how huge AR specifically and Phygital in general will become after dedicated mass market AR headsetswill gain popularity. Below you can find examples of companies that already implemented Phygital technologies into their products or processes (Phygital Implementation slides), as well as examples of the corresponding use cases across different sectors and some of the vendors that provide Phygital services. Please note, that the information below is for information purposes only and doesn’t constitute an AL offer or investment advice. Amongthecompanies which already implemented Phygital (AR, VR, XR and other complementing technologies) are some of the largest and most well-known organizations globally. In addition, you will find below a few live examples of AR that you can try out yourself (Phygital OF PHYGITUse Case slides). All you need to do is to scan QR code with the camera of your smartphone, go E to your mobile browser and then either point the camera at the picture on the slide (Marker) or AT point the camera at any flat surface (SLAM). And Voila! You can see and experience the magic of AR right from your mobile browser thanks to the technology of WebAR. For a better experience we advice you to print out the Marker’s slides so that you could see AR in action from the ST horizontal flat area. 2021

20 PhygitalImplementation: Construction Clients Phygital Vendors AL Use Cases • Safety training • RemoteMaintenance OF PHYGIT • L&D, training • Dataoverlay on sites E • Workplace manuals • Humanerrors reduction AT • Real-Time Information • OnJobSiteInspection • TeamCollaboration • ARforBIM • Progress capture • Equipment Monitoring ST • Digital twin • Clash & errors detection • Project presentation • Utility infrastructure locates • Project Planning • Modifying Projects 2021

21 PhygitalUse Case: Construction Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGITE 2. Point camera to the picture AT ST 3. Or click and watch here 2021 Poweredby

22 Phygital Implementation: Retail Clients Phygital Vendors AL Use Cases • Virtual fitting room • Collect information on consumers • Visualize product catalogs • Object visualization at home OF PHYGIT • Viewproductinformation • Personalized product offering E • Warehouse spaceoptimization • Omnichannel experience AT • Combine B&MandeComm • Post-purchase consumption • Enhance brand recognition • Try before you buy ST • Gamification • Bring customers into the store • Search for deals around you • ARadvertising • Educate customers about products • Product Configurator • Encourage interaction with the brand • In-Store Navigation 2021

23 PhygitalUse Case: Retail Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGITE 2. Point camera to the picture AT ST 3. Or click and watch here 2021 Poweredby

24 PhygitalImplementation: Healthcare Clients Phygital Vendors AL Use Cases • Dentistry • Remoteguidance OF PHYGIT • Training nurses • Physical therapy E • Medical imaging • Surgery virtualization AT • Medical education • Patient rehabilitation • MRIevaluation • Enhanced telemedicine • Vein detection • Medical device maintenance ST • Remotesurgical expertise • Visualize medical data • Pharma marketing • Navigation in hospitals • Clinical researchers • Advanced diagnosis 2021 • Virtual patient care • Collaboration between physicians

25 PhygitalUse Case:Healthcare SLAM scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the floor or E your table AT ST 3. Or click and watch here 2021 Poweredby

26 PhygitalUse Case: Education Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the picture E AT ST 3. Or click and watch here 2021 Poweredby

27 PhygitalUse Case: Fashion Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the picture E AT ST 3. Or click and watch here 2021 Poweredby

28 PhygitalUse Case: Travel Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the picture E AT ST 3. Or click and watch here 2021 PPoweowerreedd byby

29 PhygitalUse Case: Gaming/Toys-to-life Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the picture E AT ST 3. Or click and watch here 2021 Poweredby

30 PhygitalUse Case: Space Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGITE 2. Point camera to the picture AT ST 3. Or click and watch here 2021 Poweredby

31 PhygitalUse Case: Space Marker’s scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGITE 2. Point camera to the picture AT ST 3. Or click and watch here 2021 Poweredby

32 PhygitalUse Case:E-Commerce SLAM scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the floor or E your table AT ST 3. Or click and watch here 2021 Poweredby

33 PhygitalUse Case:Food SLAM scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the floor or E your table AT ST 3. Or click and watch here 2021 Poweredby

34 PhygitalUse Case: Pipe Repairs SLAM scenes 1. Scan with your mobile camera to see live AR effects AL OF PHYGIT 2. Point camera to the floor or E your table AT ST 3. Or click and watch here 2021 Poweredby

35 Augmented realitypromises to be as influential to our society as the smart phone ALAL — Tim Cook, CEO of Apple OF PHYGITE E OF PHYGIT ATSTSTAT 20212021 Photo: https://www.christianheadlines.com Quote: http://www.independent.co.uk

36 AR/VR Patents Outlook AR and VR patent applications per year worldwide* Leading global AR/VR patent owners and amount of patents owned** 37000 35000 32100 26600 10,100 5,050 5,950 AL 18700 4,600 3,100 1,900 13600 14300 10200 OF PHYGIT 8600 2,300 3,300 2,000 E 5400 6500 AT ST 1,400 1,100 2,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 * Aggregate from USPTO, CNIPA, KIPO, JPO, EPO, WIPO; 2021 ** Statista (https://www.statista.com/statistics/963685/worldwide-augmented-virtual-reality-patent-top-owners/)

37 Augmented Reality Penetration 2021 3.5 billion 1.3 billion 0.9 billion total number of smartphones total number of ARkit devices total number of ARCore globally* (iOS) devices (Android) AL OF PHYGITE AT 3.1 billion 0.8 billion 0.5 billion ST total number of devices total number of active AR total number of Snap lenses globally that support WebAR mobile consumers worldwide 2021 * https://artillry.co/intelligence/

38 Technologies That Form The Basis Of Phygital AR, XR accessories Augmented & Mixed Reality to deepen the (headsets, lenses) experience Brain Computer Interface, Whole brain Machine Learning, emulation Artificial intelligence, Big Data AL Wearables, Beacons Cyber Physical Systems, Smart IoT, Smart OF PHYGIT Infrastructure Sensors, E Robotics AT ST Human-machine interfaces, Digital 5G, 6GHz Wi-Fi 2021 Twins

39 Phygital Hardware & Software Challenges Transition from smartphone-first to AR glasses-first mobile computing. Release of a mass-market end user device (near-eye display device, likely in the form of AR glasses) with the appropriate characteristics: wide viewing angle cones (field of view), long-lasting battery life, proper panel resolution, comfortable form factor, advanced imaging performance, brightness and resolution density among others. The latter two tackle the issue of displaying AR objects in bright light or outdoor daylight, when the picture in glasses does not provide a sufficient level of quality. AL Vergence-accommodation conflict (VAC): instead of a stereo sensation when viewing 3D objects in real life, AR glasses use fixed display plane where different rendered contents for each eye is adopted, which leads to visual fatigue and discomfort, sabotages stereo acuity, and distorts perceived depth. Improving the quality of spatial tracking (SLAM) to ensure that 3D objects perfectly fit into any space in a very fast OF PHYGITE and invisible for the end user manner. AT Independence of tracking quality from lighting conditions, movements and external shaking: overall subjects ST stability is not lost, there is no shaking of objects and their displacements. Enhancement of device performance, which can be solved by transferring all processing to the cloud via 5G (now processing mainly takes place on the edge device (smartphone), which causes restrictions in use. 2021

40 Phygital Market Predictions 2021-2022 Facebook will have Apple releases a Apple releases a Release of a consumer 50,000 employees in visual search feature, feature of creating 3D AR device from major its division working AR walking and other models from a single technology players on AR & VR (from AR enhancements. photo among other AR (Facebook, Apple, 10,000 today) enhancements. Samsung) AL Many other companies Proliferation of 5G, WebARbecomes truly More and more businesses release mass-market AR which reaches 1 billion mass-market, similar apply AR and Phygital to glasses (DAQRI, ROCID, users by the end of to what Wixdid to their core offering, fast OF PHYGIT Meta, EPSON, LENOVO, 2022 website development. democratization of the E VUZIX, GLASS, technology. AT RealWear, Unreal, etc.) ST 2021

41 About Authors LETA Capital Devar LETACapital is a venture capital firm investing in Devar is a Phygital company founded by Anna AL Russian-speaking IT founders globally at late Belova and Andrey Komissarov. It has been Seed, Series A and early growth stages. creating augmented reality products and services for their creation for more than 5 years. The LETA’s investments cover a wide range of company's main mission is to bring the Internet software startups focused on international into the real world. OF PHYGIT markets. Our portfolio spans 40 companies As a tech company DEVAR uses its own Artificial E including InDriver, Novakid, 365Scores, Buddy.ai Vision technology stack. Today the company's IP AT amongothers. portfolio includes more than 15 patents in the US, SouthKorea,Europe,China,IndiaandRussia. ST LETA Capital is founded by a serial IT entrepreneur Alexander Chachava. To learn Phygital products by DEVAR are translated into 25 about LETA Capital investment approach feel languages and are sold in more than 40 countries. free to read our Manifesto. Its services and technologies are already used in 2021 150countries. For more visit https://en.leta.vc/. For more visit https://devar.org/. Photo by Alex Glebov

42 Disclaimer This report provides general information for reference purposes only. Readers should not use this report as a replacement for legal, tax, accounting, or consulting advice that is specific to the facts and circumstances of their business. We encourage readers to consult with appropriate advisors before acting on any of the information contained in this report. The contents of this report may not be reused, reprinted, or redistributed without the expressed written consent of Leta Capital and Devar. The information on this document is provided for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movement in rates or prices or any representation that any such future movements will not exceed those shown in any illustration. Users of this document should seek advice regarding AL the appropriateness of investing in any securities, financial instruments or investment strategies referred to in this document and should understand that statements regarding future prospects may not be realized. Opinion, Projections and estimates are subject to change without notice. Neither Leta Capital nor Devar is an investment adviser, and is purporting to provide you with investment, legal or tax OF PHYGITadvice. Neither Leta Capital nor Devar accepts any liability and can be liable for any loss or damage arising directly or E indirectly (including special, incidental or consequential loss or damage) from your use of this document, howsoever arising, AT and including any loss, damage or expense arising from, but not limited to, any defect, error, imperfection, fault, mistake or inaccuracy with this document, its contents or associated services, or due to any unavailability of the document or any thereof or due to any contents or associated services. ST 2021

43 Definitions Augmented Reality (AR) - interactive experience of a real-world environment that overlays digital content and information onto the physical world by using the camera on a smartphone or Snapchat lenses. A system that incorporates three basic features: a combination of real and virtual worlds, real-time interaction, and accurate 3D registration of virtual and real objects. Extended Reality (XR) - umbrella term that covers all of the various technologies that enhance our senses, whether they’re providing additional information about the actual world or creating totally unreal, simulated worlds for us to experience. It includes Virtual Reality (VR), Augmented Reality (AR) and Mixed Reality (MR). GDP(Gross domestic product) - a monetary measure of the market value of all the final goods and services produced in a AL specific time period. GDPPerCapita-measurestheaverageincomeearnedperpersoninagivenareainaspecifiedyear. Mixed Reality (MR) - combines elements of both AR and VR, where real-world and digital objects interact. Example: Microsoft’s HoloLens. OF PHYGITE OECD(TheOrganisation for Economic Co-operation and Development) - an intergovernmental economic organisation with AT 38membercountries,foundedin1961tostimulateeconomicprogressandworldtrade. Phygital – set of technologies which enables the close integration of the virtual environment (digital) into real human life ST (physical). Virtual reality (VR) - implies a complete immersion experience that shuts out the physical world. WorldHealthOrganization(WHO)-aspecializedagencyoftheUnitedNationsresponsibleforinternationalpublichealth. 2021

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