POET to Sell DenseLight Subsidary

TORONTO, ON — POET Technologies Inc, a designer, developer and manufacturer of opto-electronic devices, has signed a non-binding Letter of Intent (LOI) for the sale of the capital stock of its Singapore-based DenseLight subsidiary to an un-named buyer.

Terms include a proposed cash consideration in the range of $26 Million USD-$30 Million USD, including a $4 Million USD earn-out provision, no-shop and confidentiality clauses, and an undertaking to enter into key operating agreements, including a preferred supply agreement and a long-term strategic cooperation agreement among the parties.  The parties expect to complete the signing of the definitive transaction agreements on or before September 15, 2019. The broad terms of the LOI and the consummation of any transaction are subject to further due diligence.

DenseLight was acquired by POET in May 2016 for $10.5 Million USD in POET common stock and has been engaged primarily in the development of new sensing and datacom products, including active devices for POET’s Optical Interposer platform. DenseLight’s sales of LEDs and other light sources, along with contract engineering for third parties, has grown to $3.8 Million USD annually in 2018 from $1.9 Million USD in 2016.

Since the introduction of its Optical Interposer technology in January 2018, POET’s development has expanded to optical waveguide designs fabricated by its manufacturing partner based in Malaysia and on novel packaging techniques related to the Optical Interposer. As the centerpiece of its growth strategy, POET will retain ownership of all the Intellectual Property unique to the Optical Interposer. The company is now preparing to meet high-volume manufacturing requirements for Optical Interposer-based solutions, applying the active device designs successfully achieved at DenseLight, and exploring additional vertical markets beyond datacom.

“We believe this offer, and the anticipated agreements, once completed, represent a compelling opportunity to leverage our assets and inject non-dilutive capital into POET. The deal further allows POET to pursue a ‘fab-light’ strategy with a less capital-intensive business model that is focused on growing the Optical Interposer business through targeted investments in the design, development and sale of vertical market solutions,” said POET’s Chief Executive Officer, Dr. Suresh Venkatesan.

“At the same time, a well-funded partner capable of making investments in both DenseLight and in additional manufacturing capacity will both support the anticipated ramp of POET’s Optical Interposer and transform DenseLight into a world-class manufacturer with global market reach,” continued Venkatesan. “In addition to being one of its potentially largest customers, we expect to remain engaged with DenseLight and its partner over the long term for the benefit of both companies. We are very excited about the potential that this represents for all parties to this proposed transaction.”

About POET Technologies Inc.: POET Technologies is a developer and manufacturer of optical light source products for the sensing and data communications markets. Integration of optics and electronics is fundamental to increasing functional scaling and lowering the cost of current photonic solutions. POET believes that its approach to hybrid integration of devices, utilizing a novel dielectric platform and proven advanced wafer-level packaging techniques, enables substantial improvements in device cost, efficiency and performance. Optical engines based on this integrated approach have applications ranging from data centers to consumer products. POET is headquartered in Toronto, with operations in Silicon Valley, the United Kingdom, and Singapore.