2 April 2021
POET’s losses rise in Q4 due to increased R&D spending
POET Technologies Inc of Toronto, Ontario, Canada — a designer and developer of the POET Optical Interposer and photonic integrated circuits (PICs) for the data-center and telecom markets — has reported a net loss of $5m ($0.02 per share) for fourth-quarter 2020, up from $3.5m ($0.01 per share) in third-quarter 2020 and compared with net income (before tax recovery) of $3.2m ($0.01 per share) in fourth-quarter 2019. However, the latter included a recovery of deferred income taxes of $0.3m) plus a $8m gain on selling Singapore-based subsidiary DenseLight Semiconductors Pte Ltd.
The Q4/2020 loss included R&D costs of $2.2m (up from $1.2m in Q3/2020 and $0.8m a year ago), reflecting a redistribution of R&D activities and costs that were previously accounted for by DenseLight and reported as discontinued operations while the organization operated as a single entity (from 1 January 2019 until the closing date of the sale transaction on 8 November 2019). These costs are now accounted for solely by POET.
During Q4/2020, POET had debt-related finance costs of $249,000, compared with $244,000 in Q3/2020 and $302,000 a year ago. Of the finance costs recognized in Q4/2020, $128,000 was non-cash compared with $141,000 in Q3 and $109,000 a year ago.
On a non-IFRS basis, cash outflow from operating activities was -$2.9m, level with Q3 but cut from -$3.7m a year ago.
“The fourth quarter was a pivotal period for our company, as we successfully achieved significant milestones on the path toward commercialization of new products based on the POET Optical Interposer platform,” notes CEO Dr Suresh Venkatesan. “First, we released our first multi-product wafer (MPW) mask set for production, which was comprised of custom designs for specific applications and customers. Additionally, we completed and tested the designs of our newly launched product line LightBar, a family of high-performance laser light source products for 400G FR4, 800G and co-packaged optics (CPO) applications in cloud data centers. We are very excited about the near-term opportunity for these products to serve as a spring-board for supplying products to large cloud-based data-center customers that are aggressively seeking solutions with both higher speed and reduced cost,” he adds. “As evidence of further progress, in December we achieved an industry first with the successful test of our high-speed DML laser design flip-chipped onto POET’s Optical Interposer platform, enabling the world’s lowest-cost and smallest 100G CWDM4 optical engine. This accomplishment is critical to the assembly of a single-chip, fully integrated optical engine that can be produced at wafer-scale in high volume.”
POET also expanded its operations team and facilities in early 2021 with the appointment of Dr Jinyu Mo as a senior VP of Asia, coupled with opening a new product design and development center in Shenzhen, China.
In addition, POET signed a definitive agreement with Xiamen Sanan Integrated Circuit Co Ltd (Sanan IC) in October and has recently completed official registration of the joint-venture company Super Photonics Xiamen (SPX) in order to offer a new generation of cost-effective, high-performance optical engines based on the POET Optical Interposer platform.
POET ended 2020 with cash and cash equivalents of $6.9m (up from $1.4m at the end of 2019). Subsequently, POET completed a private placement financing, resulting in gross proceeds of $11.8m. It also received $8.4m from the exercise of stock options and warrants and further reduced its debt by $1.7m through the conversion of convertible debentures into units of the company. POET hence has about $23.7m in cash available to fund operations.
“Looking at the current landscape in early 2021, there have been broadly reported supply chain constraints throughout the semiconductor industry,” notes Venkatesan. “This environment has introduced challenges related to the reliable and timely sourcing of lasers, which has resulted in delayed production schedules across the industry and also for POET’s alpha and beta samples. That said, we are continuing to work closely with our strategic manufacturing partners, while also exploring potential alternative sources in order to mitigate the impacts of these external supply constraints,” he adds. “I want to emphasize that we have continued to meet the product development milestones that are based on variables within our control, and we’ve encountered no new hurdles in terms of technological barriers or device performance. Importantly, we have a solid cash position and strengthened balance sheet following the successful financing activities completed in recent months, and we remain very optimistic about our advancement of POET’s product roadmap throughout 2021.”