Mr. Thomas Mika reports

POET TECHNOLOGIES REPORTS FOURTH QUARTER 2023 FINANCIAL RESULTS

Poet Technologies Inc. has filed its audited consolidated financial results for the fourth quarter ended Dec. 31, 2023. The company's financial results as well as the Management Discussion and Analysis have been filed on SEDAR+. All financial figures are in United States dollars unless otherwise indicated.

Fourth quarter and recent business highlights

The company achieved the following during the three months ended Dec. 31, 2023, and more recently:

• Closed a public offering of 1,786,000 common shares of the company and warrants to purchase 1,786,000 common shares of the company at a public offering price of 90 U.S. cents ($1.22 (Canadian)) per common share and accompanying warrant. Each warrant is exercisable at an exercise price of $1.12 (U.S.) ($1.52 (Canadian)) per common share for a period of five years from issuance. The company raised gross proceeds of $1,607,400 from this offering.
• Announced that Shaoxing ZKTel Equipment Co. (ZKTel), which supplies optical computer equipment such as modules and transceivers to Tier 1 companies in China's datacom and mobile networking industries, is one of the lead customers for Poet's 100G optical engines.
• Closed a non-brokered private placement of 5,098,088 units of the company at a price of $1.22 (Canadian) (90 U.S. cents) per unit for aggregate gross proceeds of approximately $6.2-million (Canadian) ($4.6-million (U.S.)). Each unit consists of one common share and one common share purchase warrant, with each warrant entitling the holder thereof to purchase one additional common share of the company at a price of $1.52 (Canadian) ($1.12 (U.S.)) per warrant for a period of five years following the date of issuance of such warrant. Certain officers, employees and directors of the company subscribed for an aggregate of 459,522 units of the private placement for gross proceeds of approximately $560,617 (Canadian) ($415,272 (U.S.)).

Management comments

"The company's efforts during the fourth quarter were to ensure the financial sustainability of the company during a difficult period in the equity markets for micro and small cap stocks, while still delivering on its 800G module development plans and development of 200G/lane solutions for 1.6T and 3.2T pluggable applications," stated Poet chairman and chief executive officer Dr. Suresh Venkatesan. "Between December, 2023, and January, 2024, we raised $6.2-million (U.S.) in cash through equity offerings to serve as a bridge to other funding opportunities. We have shown leadership in our technology development with our AI-focused products, in particular with our Poet Starlight light source product and recently with our 800G module project. Both are targeted at the rapidly growing demand for higher speed communications in AI networks. With OFC just weeks away, we are excited about the products that will be showcased and the near-term prospects for the company. We believe that the second half of 2024 and the beginning of 2025 will position the company as a key supplier in high-speed AI data communications.

Non-IFRS financial summary

The company reported non-recurring engineering revenue (NRE) of $108,000 in the fourth quarter of 2023 compared with $200,000 for the same period in 2022 and nil in the third quarter of 2023. In 2023, the company provided under NRE contract services to multiple customers, one of which continued to contract services from prior years. The revenue relates to unique projects that are being addressed utilizing the capabilities of the Poet Optical Interposer.

The company reported a net loss of $5.5-million, or (13 cents) per share, in the fourth quarter of 2023 compared with a net loss $6.3-million, or (17 cents) per share, for the same period in 2022 and a net loss of $5.1-million, or (13 cents) per share, in the third quarter of 2023. The net loss in the fourth quarter of 2023 included research and development costs of $2.1-million compared with $2.7-million for the same period in 2022 and $2.0-million in the third quarter of 2023. Fluctuations in R&D (research and development) for a company of this size and this stage of growth is expected on a period-over-period basis as the company transitions from technology development to product development.

Non-cash expenses in the fourth quarter of 2023 included stock-based compensation of $1.0-million and depreciation and amortization of $500,000. Non-cash stock-based compensation and depreciation and amortization in the same period of 2022 were $1.5-million and $300,000, respectively. Third quarter 2023 stock-based compensation and depreciation and amortization were $1.3-million and $500,000, respectively. The company had non-cash finance costs of $14,000 in the fourth quarter of 2023 compared with non-cash finance costs of $12,000 in the fourth quarter of 2022 and non-cash costs of $18,000 in the third quarter of 2023.

The company recognized other income, including interest of $54,000 in the fourth quarter of 2023, compared with $69,000 in the same period in 2022 and $45,000 in the third quarter of 2023.

Non-cash impact of joint venture in the fourth quarter of 2023 was a nil, compared with a net loss of $400,000 in the same period of 2022 and nil in the third quarter of 2023. The company's share of loss is approximately 76.1 per cent of the loss of Super Photonics in the fourth quarter of 2023, 80.7 per cent in the fourth quarter of 2022 and 78.4 per cent in the third 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. The non-cash impact of joint venture in the fourth quarter of 2023 consisted of a gain on the company's investment in the joint venture of $500,000 netted against a loss on the joint venture operations of ($500,000). The gain in the same period of 2022 was $1.3-million and was netted against a loss from operations of ($1.7)-million. No gain or loss was recognized in the third quarter of 2023.

Cash flow from operating activities in the fourth quarter of 2023 was ($2.9)-million compared with ($2.7)-million in the fourth quarter of 2022 and ($4.1)-million in the third quarter of 2023.

Summary of financial performance

The attached table is a summary of the company's operations over the five quarters ending Dec. 31, 2023. This information should be read in conjunction with the company's financial statements filed on SEDAR+ on March 15, 2024.

Director resignation

The company is announcing that effective March 14, 2024, Peter Charbonneau, the company's lead independent director and chairman of the corporate governance and nominating committee, is stepping down from the board of directors for personal reasons. "Peter has served on the board since March 18, 2018," stated Poet chairman and chief executive officer Dr. Suresh Venkatesan "and in that time, Peter took a leadership role in establishing effective governance policies that has allowed the company to be acknowledged by outside professionals as one of the most effectively governed companies. We are sorry to see Peter go as his leadership and professionalism will be missed. We wish Peter well in his new endeavours."

Jean-Louis Malinge has been appointed as lead director and chairman of the corporate governance and nominating committee effective March 15, 2024, and Michal Lipson has been appointed to the vacancy in the audit committee left by Mr. Charbonneau.

Option repricing

In recognition of a critical need to retain employees, the board of directors has approved the repricing of 7,153,358 stock options from prices ranging between $2.60 (Canadian) and $11.90 (Canadian) to $1.75 (Canadian), being the closing price of the company's stock on March 14, 2024. The repriced stock options were granted to employees, consultants and insiders of the company in prior years. The repricing is applicable to stock options that are out of the money and were granted earlier than Sept. 30, 2023. As a means to emphasize the retention value of options, 50 per cent of any fully vested and repriced stock options, whether held by insiders or rank and file employees are subject to a deferral in the exercise date of one year following approval of the repricing by the TSX Venture Exchange. All other terms of the repriced stock options remain unchanged.

All repriced stock options are subject to exchange approval. The repriced stock options to insiders are subject to both exchange and shareholder approval. The company will seek shareholder approval at the next annual general and special meeting of shareholders.

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.

We seek Safe Harbor.