Dr. Suresh Venkatesan reports

POET TECHNOLOGIES REPORTS THIRD QUARTER 2023 FINANCIAL RESULTS

Poet Technologies Inc. has released its unaudited consolidated financial results for the third quarter ended Sept. 30, 2023. The company's financial results, as well as management's discussion and analysis, have been filed on SEDAR+ and are available on the Securities and Exchange Commission's EDGAR website. All financial figures in this press release are in U.S. dollars unless otherwise indicated.

Business highlights since second quarter results reported on Aug. 11, 2023:

• On Aug. 9, 2023, the company filed a registration statement on Form F-3 with the U.S. Securities and Exchange Commission. The Form F-3 replaces the company's expired Form F-10. Declared effective by the SEC on Aug. 18, 2023, the Form F-3 may be used to sell securities registered under U.S. securities laws.
• On Aug. 15, 2023, the company announced the development of an Optical Interposer platform specifically designed for pluggable 1.6T transceivers, expandable to 3.2T, utilizing current industry form factors and employing 200G per-lane technology for data centres running artificial intelligence networks.
• On Sept. 1, 2023, the company announced a resumed at-the-market program in the United States with Craig-Hallum Capital Group LLC as its sales agent, replacing its previous ATM program in the United States and Canada (please refer to the press release of the same date that references the registration statement and shelf prospectus pertaining to the ATM program).
• Between Sept. 6 and Sept. 8, 2023, the company and its joint venture, Super Photonics Xiamen, showed live demonstrations of end-to-end optical solutions for 800G, 400G and 200G transceivers using Poet's highly integrated optical engines at the China International Optoelectronics Expo in Shenzhen, China. The demonstrations also featured an 800G transceiver module incorporating a Poet 800G receive engine that Luxshare-ICT intends to market globally. Poet also showcased its own prototype 400G module at the event.
• On Sept. 12, 2023, Poet reported on the success of its joint appearance at the CIOE with SPX and its engagement with multiple prospective customers for Poet optical engines, ranging in speeds from 100G to 800G. Poet's optical engines enable module makers to lower both labour and capital costs, and provide a seamless path to higher speeds and more efficient network architectures, while reducing customers' own in-house research and development efforts.
• On Oct. 5, 2023, Poet reported that SPX had committed to expand production capacity needed to fulfill existing and expected customer orders. SPX is preparing to ramp production of Poet's optical engines.
• On Oct. 10, 2023, Poet announced a collaboration with Yuanjie Semiconductor Technology Inc. to supply SPX with YST's high performance directly modulated lasers for use in the 100G and 200G optical engines being sold to module makers in China and the United States, including to Adva, BFYY and Fibertop, and others to be announced.
• On Nov. 1, 2023, Poet announced an underwritten public offering in the United States and a concurrent offering in Canada under the life exemption (see press release of the same date for additional information).
• On Nov. 6, 2023, the company provided a financial update that included preliminary, unaudited financial data in advance of this press release.

Management comments

"The third quarter of 2023 has been particularly intensive with prospect meetings following CIOE, continued support of customers with module design and qualification, and our financing efforts," said Dr. Suresh Venkatesan, chairman and chief executive officer. "Supporting module design and assembly for optical engine customers in China has been the principal focus of much of our engineering resources, but soon, those efforts will be behind us and we can look forward to SPX fulfilling production orders with expanded capacity. In the U.S., we are sharply focused on the market for artificial intelligence hardware, which encompasses both leading-edge, high-speed 800G and 1.6T transceivers, and light sources for disaggregated network architectures in AI. These two market segments are expected to yield direct revenue to Poet in the form of NRE for custom designs, sampling and initial module production, particularly in light sources for AI. We are confident in Poet's value proposition and competitive advantage in these market segments, especially in pluggables at 1.6T and 3.2T, high performance light sources for light-enabled data transmission in AI servers and for co-packaged optics. Two thousand twenty-four should set the stage for what we expect will be accelerated growth in 2025 and 2026, driven by a large projected demand in high-speed transceivers for AI, combined with our innovative product introduction road map."

Financial summary

The company reported a net loss of $5.1-million, or 13 cents per share, in the third quarter of 2023 compared with a net loss of $4.0-million, or 11 cents per share, for the same period in 2022 and a net loss of $4.4-million, or 11 cents per share, in the second quarter of 2023. The net loss in the third quarter of 2023 included research and development costs of $2.0-million compared with $1.9-million for the same period in 2022 and $2.0-million in the second quarter of 2023. Fluctuations in R&D for a company of this size and this stage of growth are expected on a period-over-period basis as the company transitions from technology development to product development.

Non-cash expenses in the third quarter of 2023 included stock-based compensation of $1.3-million and depreciation and amortization of $500,000. Non-cash stock-based compensation and depreciation and amortization in the same period of 2022 were $900,000 and $300,000, respectively. Second quarter 2023 stock-based compensation and depreciation and amortization were $700,000 and $500,000, respectively. The company had non-cash finance costs of $18,000 in the third quarter of 2023 compared with non-cash finance costs of $12,000 in the third quarter of 2022 and non-cash costs of $11,000 in the second quarter of 2023.

The company recognized other income, including interest, of $45,000 in the third quarter of 2023, compared with $57,000 in the same period in 2022 and $57,000 in the second quarter of 2023.

Non-cash impact of the company's joint venture, Super Photonics Xiamen, in the third quarter of 2023, was nil, compared with a net gain of $100,000 in the same period of 2022 and nil in the second quarter of 2023. The company's share of loss is approximately 78.4 per cent of the loss of SPX in the third quarter of 2023, 86.3 per cent in the third quarter of 2022 and 80.7 per cent in the second quarter of 2023. The company's current share of the operating loss is a result of the high value of the company's initial contribution. Although the company's equity ownership of SPX was approximately 78.4 per cent at Sept. 30, 2023, the company did not recognize a share of loss in SPX in the third quarter of 2023 because the value of its investment is carried at nil on the consolidated statements of financial position precluding further loss recognition under the relevant accounting standards.

Cash flow from operating activities in the third quarter of 2023 was ($4.1-million), compared with ($2.5-million) in the third quarter of 2022 and ($4.0-million) in the second quarter of 2023.

From Jan. 1, 2023, to date, the company received net proceeds of $9.0-million from the sale of shares, including through the exercise of warrants and stock options.

Summary of financial performance

Attached is a summary of the company's operations over the five quarters ended Sept. 30, 2023. This information should be read in conjunction with the company's financial statements filed on SEDAR+ on Nov. 14, 2023.

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 bring value to any device or system that integrates electronics and photonics, including some of the highest-growth areas of computing, such as artificial intelligence, the Internet of things, 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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