Dr. Suresh Venkatesan reports

POET TECHNOLOGIES REPORTS FOURTH QUARTER 2021 FINANCIAL RESULTS

Poet Technologies Inc. has released its audited condensed consolidated financial results for the fourth quarter and full year ended Dec. 31, 2021. The company's financial results, as well as management's discussion and analysis, have been filed on SEDAR and EDGAR. All financial figures are in U.S. dollars unless otherwise indicated.

Fourth quarter financial (non-international financial reporting standards) and recent business highlights

The company continued to execute on its strategic initiatives and achieved the following significant milestones during the fourth quarter and the subsequent three months:

• Secured a commitment from a leading network system company for a unique multiengine design for 100G CWDM4 and 100G LR4 optical engines based on the Poet Optical Interposer; the combined value of the NRE and the purchase order for initial units exceeds $1.2-million (U.S.);
• Established the first phase of a supply agreement with a leading global supplier of lasers and other components used in high-speed optical networking equipment; the companies will collaborate on the design and production of flip-chippable continuous wave (CW) high-power lasers for use in the company's 400G optical engines;
• Completed previously announced consolidation of its common shares and commenced trading on the Nasdaq Capital Market on March 14, 2022;
• Entered development agreement and received initial purchase order from Celestial AI to provide multilaser integrated external light source modules for artificial intelligence accelerator chips;
• Began collaboration on multiphase, co-development project with Liobate Technologies to incorporate advanced thin-film lithium niobate (TFLN) modulators into the company's optical engines, with a focus on commercializing Poet's 400/800Gps transmit and receive optical engines for data centre and telecom applications;
• Appointed seasoned optical industry executive Raju Kankipati to newly established position of vice-president of product line management;
• Formally launched and began sampling 400G FR4 and 800G (2x400G FR4) receive (RX) optical engines based on the Poet Optical Interposer, representing the industry's only chip-scale integrated version of a FR4 RX optical engine;
• Exhibited and demonstrated Poet's unique chip-scale integrated FR4 optical engines, 200G FR4 transmit and 400G FR4 receive, at the Optical Fiber Conference (OFC), in addition to hosting meetings with numerous existing and prospective customers;
• Joined new centre for photonic integration, the Singapore Hybrid-Integrated Next Generation Micro-Electronics (SHINE), as a founding member;
• Ended the fourth quarter with robust balance sheet consisting primarily of cash, cash equivalents and short-term investments of $21.3-million and no debt.

Management comments

"During the fourth quarter and year to date, we have successfully delivered an increasing number of fully functional samples of Poet's optical engines to customers, which is a key milestone in the commercialization of our technology after more than four years of technology and product development," stated Dr. Suresh Venkatesan, chairman and chief executive officer. "I'm also pleased to report that we are on track to deliver beta samples to multiple lead customers within the coming weeks. These latest beta samples meet or exceed the highest industry specifications, and they will be undergoing standard reliability testing and qualifications by customers over the next three to six months.

"As a further highlight to our product sampling milestones, the recent launch and live demonstration of our 200G FR4 transmit and 400G FR4 receive optical engines at OFC was also a watershed achievement. Enabled by our proprietary Poet Optical Interposer platform, we were the only company to exhibit a chip-scale integrated FR4 optical engine, offering substantial size, energy efficiency and cost benefits compared to alternative solutions based on the DR4 standard. As a result of our demonstrations and participation at OFC, we have gained increasing awareness, as well as notable traction, on new engagements for our standard products, as well as potential custom designs across a growing number of prospective customers. We expect to build on this momentum over the course of 2022 as we continue to execute on our product road map and expand sampling of our industry-leading solutions based on the Poet Optical Interposer platform toward production releases later this year."

Financial summary

The company reported a net loss of $3.7-million, or 10 cents per share, in the fourth quarter of 2021 compared with a net loss of $5.0-million, or 17 cents per share, for the same period in 2020 and a net loss of $3.5-million, or 10 cents per share, in the third quarter of 2021. The net loss in the fourth quarter of 2021 included research and development costs of $2.0-million compared with $2.2-million for the same period in 2020 and $1.2-million in the third quarter of 2021. R&D for the company varies from period to period as based on the immediate product development needs of the company. The company's decreased spend in the fourth quarter of 2021 compared with the fourth quarter of 2020 was driven by the current contraction in the global semiconductor chip supply chain that has resulted in slower deliveries of orders made by the company. The increased spend in the fourth quarter of 2021 compared with the third quarter of 2021 was a result of certain NRE commitments with large Tier 1 industry suppliers established to manage the company's supply chain and associated risks.

Non-cash expenses in the fourth quarter of 2021 included stock-based compensation of $1.2-million and depreciation and amortization of $300,000. Non-cash stock-based compensation and depreciation and amortization in the same period of 2020 were $900,000 and $200,000, respectively. Third quarter 2021 stock-based compensation and depreciation and amortization were $1.3-million and $300,000, respectively. The company had debt-related finance costs of $16,000 in the fourth quarter of 2021 compared with $249,000 in the fourth quarter of 2020 and $20,000 in the third quarter of 2021. All of the finance costs recognized in the fourth quarter of 2021 were non-cash compared with $128,000 during the same period in 2020 and $18,000 in the third quarter of 2021. The company recognized other income, including interest of $27,000, in the fourth quarter of 2021 compared with $7,000 in the same period in 2020 and $208,000 in the third quarter of 2021. Other income, including interest in the third quarter of 2021, included $187,000 of a COVID-19-related paycheque protection program loan that was forgiven.

Impact of joint venture in the fourth quarter of 2021 was $1.0-million compared with nil in the same period of 2020 and $400,000 in the third quarter of 2021. Impact of joint venture is a net gain on the company's activity related to its investment in SPX. During 2021, the company recognized a gain of $2.6-million related to its contribution of intellectual property to SPX in accordance with IAS 28. The company only recognized a gain on the contribution of the intellectual property equivalent to SAIC's interest in SPX. Additionally, the company recognized its share of SPX's losses using the equity method. The company recognized 94.2 per cent or $1.1-million of the net operating loss of SPX from March 12, 2021, to Dec. 31, 2021. The company's current share of the operating loss is a result of the high value of the company's initial contribution.

On a non-international financial reporting standard basis, cash flow from operating activities in the fourth quarter of 2021 was ($3.2-million) compared with ($2.9-million) in the fourth quarter of 2020 and ($2.8-million) in the third quarter of 2021.

Business update conference call

The company will host a business update conference call on April 27, 2022, at 8 a.m. Pacific Time (11 a.m. Eastern Time). A link to the live webcast and archived replay of the business update conference call, as well as associated presentation materials, can be found in the investor relations section of Poet's website. Additionally, the live conference call will be available by dialling 1-866-688-4315 and using conference ID 6948124. A telephone replay of the call will also be made available approximately two hours after the call and remain available through May 4, 2022. The telephone replay will be available by dialling 1-855-859-2056 and using the conference ID 6948124.

About Poet Technologies Inc.

Poet is a design and development company, offering integration solutions based on the Poet Optical Interposer, a novel platform that allows the seamless integration of electronic and photonic devices into a single multichip module using advanced wafer-level semiconductor manufacturing techniques and packaging methods. Poet's Optical Interposer eliminates costly components and labour-intensive assembly, alignment, burn-in and testing methods employed in conventional photonics. The cost-efficient integration scheme and scalability of the Poet Optical Interposer brings value to any device or system that integrates electronics and photonics, including some of the highest-growth areas of computing, such as artificial intelligence (AI), the Internet of things (IoT), autonomous vehicles, and high-speed networking for cloud service providers and data centres. Poet is headquartered in Toronto, with operations in Allentown, Pa., Shenzhen, China, and Singapore.

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