POETF: Chaos in the Semiconductor Market Pushes Progress Out a Quarter But Long Term Estimates Still Intact

By Lisa Thompson

OTC:POETF | TSX:PTK.V

READ THE FULL POETF RESEARCH REPORT

The only new news in POET’s (OTC:POETF) earnings report was the effect the global foundry capacity shortage is having on the company. First it was a pandemic to deal with and now, chip factories are finding it impossible to keep up with demand. While POET is not yet producing product in volume, its suppliers have delayed even its samples. A turnaround that had typically taken two weeks now takes six weeks. As a result, we have pushed our revenue projections out one quarter and that has pushed $3 million in revenues out of 2021 into 2022. This results in a 2021 revenue forecast of $2 million compared to our previous $5 million. It does not impact estimates in the out years. We are also now projecting 2022 revenues of $15 million. As a comparison, POET’s biggest competitor, Rockley Photonics (NASDAQ: SPCE), just went public through a SPAC and we suggest investors go take a look. It reported $21 million in sales in 2020 and is already valued at a $1.2 billion enterprise value. By comparison, POET has a lot more valuation upside.

The company is in the process of applying to NASDAQ and has already received comments. It has not made a decision about moving to the Toronto or NEO, or even if that is necessary if it is on NASDAQ. The plan for listing on NASDAQ is that it should happen when the company is closer to volume production and it would coincide with a small capital raise of between $10 and $20 million dollars, as the company really does not need much more cash.

During the fourth quarter, the company signed its joint venture with Sanan IC called Super Photonics Xiamen. Since then, it created a temporary 5,000 sq. ft. clean room and office facility, co-located with Sanan IC in Xiamen with plans for a permanent 15,000 sq. ft. facility in high-tech industrial park outside of Xiamen by year end. The JV has also ordered key capital equipment for delivery, installation, and qualification in April through May. Sanan IC funded this with an approximately US$5 million cash infusion. POET also made technical progress this quarter. It announced it had designed and produced the industry’s first flip-chip Directly Modulated Laser (DML) for use on its optical interposer platform and it introduced its new LightBar™ line of high-performance remote laser light source products for 400G FR4, 800G and co-packaged Optics (CPO) applications in cloud data centers.

Q4 2020 Earnings Report

POET once again reported no revenues in Q4, despite many proposals in the works. In Q4 2020, POET spending increased as the company staffed and equipped its joint venture. Spending increased $1.3 million sequentially to $4.5 million versus Q3 2021 with all of it being in R&D. Spending in Q4 2019 was $2.8 million. In Q4 2020, the company paid $248,000 in interest expense, similar to last quarter.

The net loss was $4.5 million up from a profit of $5.0 million from continuing operations in Q4 2019. The profit was from the sale of DenseLight in last year’s quarter. This resulted in an IFRS loss per share of $0.02 per share and a non-IFRS loss of $0.01 per share, compared to a profit of $0.02 and non-IFRS breakeven quarter last year. Shares outstanding increased 1.9% to 293.9 million. As of March 25, 2021 there were 339.8 million shares outstanding, or 404 million shares fully diluted.

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