POET Technologies Inc.
Annual Report 2023

Plain-text annual report

Submission Data File Form Type* Contact Name Contact Phone Filer Accelerated Status* Filer File Number Filer CIK* Filer CCC* Filer is Shell Company* Filer is Voluntary Filer* Filer is Well Known Seasoned Issuer* Confirming Copy Notify via Website only Return Copy SROS* Period* Emerging Growth Company Elected not to use extended transition period File Count* Document Name 1* Document Type 1* Document Description 1 Document Name 2* Document Type 2* Document Description 2 Document Name 3* Document Type 3* Document Description 3 Document Name 4* Document Type 4* Document Description 4 Document Name 5* Document Type 5* Document Description 5 Document Name 6* Document Type 6* Document Description 6 Document Name 7* Document Type 7* Document Description 7 Document Name 8* Document Type 8* Document Description 8 Document Name 9* Document Type 9* Document Description 9 Document Name 10* Document Type 10* Document Description 10 Document Name 11* Document Type 11* Document Description 11 Document Name 12* Document Type 12* Document Description 12 Document Name 13* Document Type 13* Document Description 13 General Information 20-F M2 Compliance 754-243-5120 Accelerated Filer 0001437424 (POET TECHNOLOGIES INC.) ********** N N N No No Yes NONE 12-31-2023 No No (End General Information) Document Information 194 form20-f.htm 20-F ex4-16.htm EX-4.16 ex4-18.htm EX-4.18 ex4-20.htm EX-4.20 ex4-22.htm EX-4.22 ex4-23.htm EX-4.23 ex4-24.htm EX-4.24 ex8-1.htm EX-8.1 ex12-1.htm EX-12.1 ex12-2.htm EX-12.2 ex13-1.htm EX-13.1 ex13-2.htm EX-13.2 ex23-1.htm EX-23.1 Document Name 14* Document Type 14* Document Description 14 Document Name 15* Document Type 15* Document Description 15 Document Name 16* Document Type 16* Document Description 16 Document Name 17* Document Type 17* Document Description 17 Document Name 18* Document Type 18* Document Description 18 Document Name 19* Document Type 19* Document Description 19 Document Name 20* Document Type 20* Document Description 20 Document 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(End Notifications) form20-f.htm 20-F 1 of 114 03/28/2024 04:02 PM UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number: 001-41319 For the transition period from to POET TECHNOLOGIES INC. (Exact name of Registrant as specified in its charter) Ontario, Canada (Jurisdiction of incorporation or organization) 1107 – 120 Eglinton Avenue East Toronto, Ontario, M4P 1E2, Canada (Address of principal executive offices) Suresh Venkatesan, CEO 1107 – 120 Eglinton Avenue East Toronto, Ontario, M4P 1E2, Canada Telephone No.: 416 368 9411 Email: svv@poet-technologies.com (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Common Shares, no par value Common Shares, no par value Trading Symbol(s) PTK POET Name of each exchange on which registered TSX Venture Exchange Nasdaq Capital Market Securities registered or to be registered pursuant to Section 12(g) of the Act: None. Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None. Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 42,488,045 Common Shares, no par value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒ Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S- T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Emerging growth company ☐ If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ † The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No ☒ POET TECHNOLOGIES INC. FORM 20-F ANNUAL REPORT TABLE OF CONTENTS Introduction Item 1. Item 2. Item 3. Item 4. Item 4A. Item 5. Item 6. Item 7. Item 8. Item 9. Item 10. Item 11. Item 12. Identity of Directors, Senior Management and Advisers Offer Statistics and Expected Timetable Key Information Information on the Company Unresolved Staff Comments Operating and Financial Review and Prospects Directors, Senior Management and Employees Major Shareholders and Related Party Transactions Financial Information The Offer and Listing Additional Information Quantitative and Qualitative Disclosures About Market Risk Description of Securities Other than Equity Securities PART I Part II Defaults, Dividend Arrearages and Delinquencies Material Modifications to the Rights of Security Holders and Use of Proceeds Controls and Procedures Reserved Item 13. Item 14. Item 15. Item 16. Item 16A. Audit committee financial expert Code of Ethics Item 16B. Item 16C. Principal Accounting Fees and Services Exemptions from the Listing Standards for Audit Committees Item 16D. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Item 16E. Change in Registrant’s Certifying Accountant Item 16F. Item 16G. Corporate Governance Item 16H. Mine Safety Disclosure Item 16I. Item 16J. Item 16K. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Insider Trading Policies Cybersecurity Item 17. Item 18. Item 19. Financial Statements Financial Statements Exhibits PART III Page 1 4 4 4 20 29 29 41 60 61 62 63 73 75 75 75 75 77 77 77 78 78 78 78 78 78 79 79 79 80 80 80 INTRODUCTION POET Technologies Inc. is organized under the Business Corporations Act (Ontario). In this Annual Report, the “Company”, “we”, “our”, “POET” and “us” refer to POET Technologies Inc. and its subsidiaries (unless the context otherwise requires). We refer you to the documents attached as exhibits hereto for more complete information than may be contained in this Annual Report. Our principal Canadian corporate offices are located at Suite 1107, 120 Eglinton Avenue East, Toronto, Ontario M4P 1E2, Canada. Our U.S office is located at 1605 N. Cedar Crest Boulevard, Allentown, PA, 18104. Our telephone number in Toronto is (416) 368-9411. We file reports and other information with the Securities and Exchange Commission (“SEC”) located at 100 F Street NE, Washington, D.C. 20549. You may obtain copies of our filings with the SEC by accessing their website located at www.sec.gov. We also file reports under Canadian regulatory requirements on SEDAR; you may access our reports filed on SEDAR by accessing the website www.sedar.com. This Annual Report (including the consolidated audited financial statements for the years ended December 31, 2023, 2022 and 2021 attached thereto, together with the auditors’ report thereon), and the exhibits thereto shall be deemed to be incorporated by reference as exhibits to the Registration Statement of the Company on Form F- 10, as amended (File No. 333-227873), and to be a part thereof from the date on which this report was filed, to the extent not superseded by documents or reports subsequently filed or furnished. Page 1 Business of POET Technologies Inc. POET designs, develops, manufactures and sells integrated opto-electronic solutions for data communications, telecommunications and artificial intelligence markets. POET has developed and is marketing its proprietary POET Optical InterposerTM, a novel platform that allows the seamless integration of electronic and photonic devices onto a single chip using advanced wafer-level semiconductor manufacturing techniques. The semiconductor industry has adopted the term “Wafer- Level Chip-Scale Packaging” (or “WLCSP”) to describe similar approaches within the semiconductor industry. POET’s Optical Interposer eliminates costly components and labor-intensive assembly, alignment, and testing methods employed in conventional photonics. The cost-efficient integration scheme and scalability of the POET Optical Interposer brings value to devices or systems that integrate electronics and photonics, including high-growth areas of communications and computing, such as high-speed networking for cloud service providers and data centers, 5G networks, machine-to-machine communication, sometimes referred to as the “Internet of Things” (IoT), self-contained “edge” computing applications, such as accelerators for Artificial Intelligence – Machine Learning (AI-ML) systems and sensing applications, such as LIDAR systems for autonomous vehicles and point-of-use health care products. On October 21, 2020, the Company signed a Joint Venture Agreement (“JVA”) establishing a joint venture company (the “JV”), Super Photonics Integrated Circuit Xiamen Co., Ltd (“SPX”) with Xiamen Sanan Integrated Circuit Co. Ltd. (“Sanan IC”) whose purpose is to assemble, test, package and sell cost-effective, high- performance optical engines based on POET’s proprietary Optical Interposer platform technology. SPX’S capitalization will consist of a combination of committed cash, capital equipment and intellectual property from Sanan IC and intellectual property and know- how from POET, with a combined estimated value of approximately $50M. Capitalization is on-going and has not yet been completed. POET’s contribution of certain intellectual property and know-how was valued by an independent appraiser at $22.5M. Sanan IC will contribute cash of approximately $25M for capital equipment and operating expenses, with the expectation that the eventual ownership of the JV will be approximately 52% Sanan IC and 48% POET. SPX is an independent company and is operated as a true joint venture, so its financial results are not consolidated into POET’s but are reported as a gain in the value of the contribution to the JV and a gain or loss in the Company’s percentage ownership of the JV. Sanan IC is a world-class wafer foundry service company with an advanced compound semiconductor technology platform, serving the optical, RF microelectronics and power electronics markets. Sanan IC is a wholly owned subsidiary of Sanan Optoelectronics Co., Ltd. (Shanghai Stock Exchange, SSE: 600703), the leading manufacturer of advanced ultra-high brightness LED epitaxial wafers and chips in the world. Significant progress on SPX included the registration of SPX, appointment of the board of directors and key personnel, hiring of 36 employees, completion of 5,000 square feet of temporary facilities, ordering of key capital equipment for installation and qualification and outflow of approximately $7 million from Sanan IC to cover initial operating and capital expenditures to be contributed to the JV. While each joint venturer has appointed one member to the Board of Directors of SPX, the company has its own governance and management structure and is operated under the laws of the Peoples Republic of China. The Company has recognized a gain of $5,366,294 related to its contribution of intellectual property to SPX in accordance with IAS 28. The Company only recognizes a gain on the contribution of the intellectual property equivalent to the Sanan IC’s interest in SPX, the unrecognized gain of $17,127,825 will be applied against the investment and periodically realized as the Company’s ownership interest in SPX is reduced. As at December 31, 2023, Sanan IC’s and the Company’s ownership interests were approximately 23.9% and 76.1% respectively. Net loss for the year ended December 31, 2023 was $20,267,365. The net loss included $10,077,930 incurred for research and development activities directly related to the development and commercialization of the POET Optical Interposer and POET Optical Engine products. Research and development included non-cash costs of $1,539,235 related to stock-based compensation. $10,795,155 was incurred for selling, marketing and administration expenses which included non-cash costs of $2,662,209 related to stock-based compensation and $1,922,140 related to depreciation and amortization. The Company incurred $70,182 of interest expense, of which $53,614 was non-cash. Page 2 The Company recorded a gain on contribution of intellectual property to joint venture of $1,031,807. Additionally, the Company’s share of loss in joint venture was limited to $1,031,807 as required by IFRS standards. The Company’s statement of financial position as of December 31, 2023 reflects assets with a book value of $8,777,417 compared to $15,390,453 as of December 31, 2022. Thirty six percent (36%) of the book value at December 31, 2023 was in current assets consisting primarily of cash and cash equivalents of $3,019,069 compared to sixty two percent (62%) of the book value as of December 31, 2022, which consisted primarily of cash and cash equivalents of $9,229,845. In this Annual Report, unless otherwise specified, all dollar amounts are expressed in United States Dollars (“US$”, “USD” or “$”). Cautionary Statements Regarding Forward-Looking Statements Financial and Other Information This Annual Report on Form 20-F and other publicly available documents, including the documents incorporated herein and therein by reference contain forward- looking statements and information within the meaning of U.S. and Canadian securities laws. Forward-looking statements and information can generally be identified by the use of forward- looking terminology or words, such as, “continues”, “with a view to”, “is designed to”, “pending”, “predict”, “potential”, “plans”, “expects”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, and similar expressions or variations thereon, or statements that events, conditions or results “can”, “might”, “will”, “shall”, “may”, “must”, “would”, “could”, or “should” occur or be achieved and similar expressions in connection with any discussion, expectation, or projection of future operating or financial performance, events or trends. Forward- looking statements and information are based on management’s current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results, performance and achievements may differ materially from those expressed in, or implied by, the forward-looking statements and information in this Annual Report as a result of various risks, uncertainties and other factors, many of which are difficult to predict and generally beyond the control of the Company, including without limitation: ○ we have a limited operating history; ○ our need for additional financing, which may not be available on acceptable terms or at all; ○ the possibility that we will not be able to compete in the highly competitive semiconductor market; ○ the risk that our objectives will not be met within the timelines we expect or at all; ○ research and development risks; ○ the risks associated with successfully protecting patents and trademarks and other intellectual property; ○ the need to control costs and the possibility of unanticipated expenses; ○ manufacturing and development risks; ○ the risk that the price of our common shares will be volatile; Page 3 ○ the risk that geopolitical uncertainties may negatively impact our business venture in China; ○ the risk that shareholders’ interests will be diluted through future stock offerings, option and warrant exercises; and ○ other risks and uncertainties described in Item 3.D. “Risk Factors”. For all of the reasons set forth above, investors should not place undue reliance on forward-looking statements. Other than any obligation to disclose material information under applicable securities laws or otherwise as maybe required by law, we undertake no obligation to revise or update any forward-looking statements after the date hereof. Data relevant to estimated market sizes for our technologies under development are presented in this Annual Report. These data have been obtained from a variety of published resources including published scientific literature, websites and information generally available through publicized means. The Company attempts to source reference data from multiple sources whenever possible for confirmatory purposes. However, the Company has not independently verified the accuracy and completeness of this data. Item 1. Identity of Directors, Senior Management and Advisers A. Not required. Item 2. Offer Statistics and Expected Timetable PART I Not required. Item 3. Key Information A. [Reserved] B. Capitalization and Indebtedness. Not required. C. Reasons for the Offer and Use of Proceeds. Not required. D. Risk Factors. We are subject to various risks, including those described below, which could materially adversely affect our business, financial condition and results of operations and, in turn, the value of our securities. In addition, other risks not presently known to us or that we currently believe to be immaterial may also adversely affect our business, financial condition and results of operations, perhaps materially. The risks discussed below also include forward-looking statements and information within the meaning of U.S. and Canadian securities laws that involve risks and uncertainties. The Company’s actual results may differ materially from the results discussed in the forward-looking statements and information Factors that might cause such differences include those discussed. Before making an investment decision with respect to any of our securities, you should carefully consider the following risks and uncertainties described below and elsewhere in this Annual Report. See also “Cautionary Statement Regarding Forward-Looking Statements.” Page 4 Risks Related to Our Business As a result of our limited financial liquidity, we and our auditors have expressed substantial doubt regarding our ability to continue as a going concern. As a result of our current limited financial liquidity, our auditors’ report for our 2023 financial statements, which is included as part of this report, contains a statement concerning our ability to continue as a going concern. Our limited liquidity could make it more difficult for us to secure additional financing or enter into strategic relationships on terms acceptable to us, if at all, and may materially and adversely affect the terms of any financing that we may obtain and our public stock price generally. Our continuation as a going concern is dependent upon, among other things, achieving positive cash flow from operations and, if necessary, augmenting such cash flow using external resources to satisfy our cash needs. Our plans to achieve positive cash flow primarily include engaging in offerings of securities. Additional potential sources of funds include negotiating milestone payments for non-recurring engineering services or royalties from sales of our products. These cash sources could, potentially, be supplemented by financing or other strategic agreements. However, we may be unable to achieve these goals or obtain required funding on commercially reasonable terms, or at all, and therefore may be unable to continue as a going concern. We have a history of large operating losses. We may not be able to achieve or sustain profitability in the future and as a result we may not be able to maintain sufficient levels of liquidity. We have historically incurred losses and negative cash flows from operations since our inception. As of December 31, 2023, we had an accumulated deficit of $214,291,025. We expect that operating losses will continue into the near term. Our revenues are not considered sufficient to cover operating expenses. We can give no assurance that we will be profitable even if we successfully commercialize or products. Failure to become and remain profitable may adversely affect the market price of our common stock and ability to raise capital and continue operations. As of December 31, 2023, we held $3,019,069 in cash and cash equivalents. We had working capital of $716,881. We divested our major operating asset, adopted a new “fab-light” strategy, and we plan to focus on the Optical Interposer as our main business. Any or all of these decisions if incorrect may have a material adverse effect on the results of our operations, financial position and cash flows, and pose further risks to the successful operation of our business over the short and long-term. There are substantial risks associated with our adoption of a “fab-light” strategy, including the loss of revenue associated with the divested operation, the loss of control over an internal development asset, and the loss of key technical knowledge available from personnel who will no longer be employed by the Company, many of whom we may have to replace. We have some previous experience with managing development without an internal development resource under a similar “fab-light” strategy which was not successful, and there is no guarantee that our new approach to operating a company with our chosen strategy will be successful. Further, our strategy will be solely dependent on the future market acceptance and sale of Optical Interposer-based solutions, which in some cases are neither fully developed nor in qualification stages. Customers are in the initial stages of committing to a production product. We have taken substantial measures to protect POET’s intellectual property in the Optical Interposer, including development and production with a separate third- party company which engaged no engineering personnel from our former subsidiary company DenseLight. We conducted development of component devices with a segregated team at our DenseLight facility and took measures to protect POET’s intellectual property on those developments as well. However, we cannot guarantee that all our measures to protect our intellectual property on either the POET Optical Interposer or its component devices have been totally effective. In addition, we cannot guarantee that DenseLight or any other third-party that we rely on to perform development, manufacturing, packaging or testing services will perform as expected and produce the devices we will need to grow our Optical Interposer business. There can be no assurance that we will be successful in addressing these or any other significant risks we may encounter in the divestment of DenseLight, the adoption of a “fab-light” strategy or the focus of our business solely on the Optical Interposer. We may not be able to obtain additional capital when desired, on favorable terms or at all. We operate in a market that makes our prospects difficult to evaluate and, to remain competitive, we will be required to make continued investments in capital equipment, facilities and technology. We expect that substantial capital will be required to continue technology and product development, to expand our contract manufacturing capacity if we need to do so and to fund working capital for anticipated growth. If we do not generate sufficient cash flow from operations or otherwise have the capital resources to meet our future capital needs, we may need additional financing to implement our business strategy. Page 5 The Company expects that it will need to raise additional capital in the future to fund more rapid expansion, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities, and it may seek to do so through public or private financing, strategic relationships or other arrangements. The ability of the Company to secure any required financing will depend in part upon prevailing capital market conditions and business success. There can be no assurance that the Company will be successful in its efforts to secure any additional financing on terms satisfactory to Management or at all. Even if such funding is available, the Company cannot predict the size of future issues of common shares or securities convertible into common shares or the effect, if any, that future issues and sales of common shares will have on the price of the Company’s common shares. If the Company raises additional capital through the issuance of equity securities, the percentage ownership of the Company’s existing shareholders may be reduced, and such existing shareholders may experience additional dilution in net book value per share. Any such newly-issued equity securities may also have rights, preferences or privileges senior to those of the holders of the common shares. If additional funds are raised through the incurrence of indebtedness, such indebtedness may involve restrictive covenants that impair the ability of the Company to pursue its growth strategy and other aspects of its business plan, expose the Company to greater interest rate risk and volatility, require the Company to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, thereby reducing the availability of its cash flow to fund working capital and capital expenditures, increase the Company’s vulnerability to general adverse economic and industry conditions, place the Company at a competitive disadvantage compared to its competitors that have less debt, limit the Company’s ability to borrow additional funds, and otherwise subject the Company to the risks discussed under “Indebtedness” below and heighten the possible effects of the other risks discussed in these risk factors. In connection with any such future capital raising transaction, whether involving the issuance of equity securities or the incurrence of indebtedness, the Company may be required to accept terms that restrict its ability to raise additional capital for a period of time, which may limit or prevent the Company from raising capital at times when it would otherwise be opportunistic to do so. The process of developing new, technologically advanced products in semiconductor manufacturing and photonics products is highly complex and uncertain, and we cannot guarantee a positive result. The development of new, technologically advanced products is a complex and uncertain process requiring frequent innovation, highly-skilled engineering and development personnel and significant capital, as well as the accurate anticipation of technological and market trends. We cannot assure you that we will be able to identify, develop, manufacture, market or support new or enhanced products successfully or on a timely basis. Further, we cannot assure you that our new products will gain market acceptance or that we will be able to respond effectively to product introductions by competitors, technological changes or emerging industry standards. We also may not be able to develop the underlying core technologies necessary to create new products and enhancements, license these technologies from third parties, or remain competitive in our markets. Page 6 The optical data communications industry in which we have chosen to operate is subject to significant risks, including rapid growth and volatility, dependence on rapidly changing underling technologies, market and political risks and uncertainties and extreme competition. We cannot guarantee that we will be able to anticipate or overcome any or all of these risks and uncertainties, especially as a small company operating in an environment dominated by large, well- capitalized competitors with substantially more resources. The optical data communications industry is subject to significant operational fluctuations. In order to remain competitive, we incur substantial costs associated with research and development, qualification, prototype production capacity and sales and marketing activities in connection with products that may be purchased, if at all, long after we have incurred such costs. In addition, the rapidly changing industry in which we operate, the length of time between developing and introducing a product to market, frequent changing customer specifications for products, customer cancellations of products and general down cycles in the industry, among other things, make our prospects difficult to evaluate. As a result of these factors, it is possible that we may not (i) generate sufficient positive cash flow from operations; (ii) raise funds through the issuance of equity, equity-linked or convertible debt securities; or (iii) otherwise have sufficient capital resources to meet our future capital or liquidity needs. There are no guarantees we will be able to generate additional financial resources beyond our existing balances. Investors may not be able to obtain enforcement of civil liabilities against the Company. The enforcement by investors of civil liabilities under the U.S. federal or state securities laws may be adversely affected by the fact that several of the Company’s officers and directors reside outside of the U.S. and that all, or a substantial portion, of their assets and a portion of our assets, are located outside the U.S. It may not be possible for an investor to effect service of process within the U.S. on, or enforce judgments obtained in the U.S. courts against, us, certain of our subsidiaries or certain of our directors and officers based upon the civil liability provisions of U.S. federal securities laws or the securities laws of any state of the U.S. In light of the above, there is doubt as to whether a judgment of a U.S. court based solely upon the civil liability provisions of U.S. federal or state securities laws would be enforceable against the Company, certain of its subsidiaries or the Company’s directors and officers. We have contributed a portion of our intellectual property and exclusive assembly and sales rights for certain key initial products to a joint venture company that we formed in China. Although we believe that the joint venture offers significant opportunities for growth that we might not otherwise have and solves several major known challenges, we also recognize that there are substantial risks and uncertainties associated with executing a major portion of our strategy through a joint venture, regardless of the intentions and capabilities of the parties involved. On October 21, 2020, the Company signed a Joint Venture Agreement (“JVA”) with Sanan IC to form a joint venture company, Super Photonics Xiamen Co., Ltd. (“SPX”), which will eventually be owned 48% by the Company once SAIC is fully invested. SPX will assemble, test, package and sell certain optical engines on an exclusive basis globally and certain others on an exclusive basis in the territory of Greater China. Optical engines based on the POET Optical Interposer are expected to be a primary component of several types of optical transceivers used in data centers. The joint venture is based on the contribution by the Company of certain assembly and test know-how and other intellectual property and cash to be contributed by Sanan IC in stages, subject to meeting certain milestones, to cover all capital and operating expenses of SPX until it is self-sustaining. We cannot guarantee that SPX will meet each milestone or that Sanan IC will or will not contribute capital on schedule when and if such milestones are met, nor can we guarantee that SPX will be successful in assembling and testing optical engines, nor in the marketing and sales once the optical engines are tested and qualified by potential customers. Because no party to the joint venture, including the Company has a control position, we are not able to consolidate revenue and expenses directly into the Company’s financial statements. The earnings or loss from the joint venture operations are included as a single line item in the financial statements and the gain or loss on the intellectual property contributed to the joint venture is reported on another. Further, even though the joint venture may appreciate in market value if successful, the Company will not be able to reflect any increase in fair value, other than adding or subtracting on a periodic basis the income or loss experienced by the joint venture in relation to the Company’s percentage ownership at the time. Page 7 The Company’s investment into “Super Photonics Xiamen” (“SPX”) is into an independent company operating as a true joint venture under the laws of the Peoples Republic of China (“PRC”). There are significant governance and operational risks associated with joint ventures and with companies operating in the PRC, in general. We cannot guarantee that we will be able to anticipate or overcome the risks and uncertainties of operating a joint venture company in China. Although SPX has its own governance structure to which both parties contribute directors, most major decisions must be unanimous, which means that such decisions will require the support of the management of SPX and both of the JV partners. Although the Company has sought the support of well-known and competent legal and other professional advisors and has had a major role in the recruitment of the senior management team of SPX, the Company has no prior experience with either the operation of a joint venture or with the operation of a JV company under the laws of the PRC, so we cannot guarantee that the joint venture will be successfully managed without substantial investment in time and effort by the Company’s current management team or at all If our customers do not qualify our products for use on a timely basis, our results of operations may suffer. Prior to the sale of new products, our customers typically require us to “qualify” our products for use in their applications. At the successful completion of this qualification process, we refer to the resulting sales opportunity as a “design win.” Additionally, new customers often audit our manufacturing facilities and perform other evaluations during this qualification process. The qualification process involves product sampling and reliability testing and collaboration with our product management and engineering teams in the design and manufacturing stages. If we are unable to accurately predict the amount of time required to qualify our products with customers, or are unable to qualify our products with certain customers at all, then our ability to generate revenue could be delayed or our revenue would be lower than expected and we may not be able to recover the costs associated with the qualification process or with our product development efforts, which would have an adverse effect on our results of operations. We have limited operating history in the data center market, and our business could be harmed if this market does not develop as we expect. The initial target market for our Optical Interposer-based optical engine is the data center market for data communications within the data center and beyond. We have limited experience in selling products in this market. We may not be successful in developing a product for this market and even if we do, it may never gain widespread acceptance by large data center operators. If our expectations for the growth of the data center / datacom market are not realized, our financial condition or results of operations may be adversely affected. Customer demand is difficult to forecast accurately and, as a result, we may be unable to match production with customer demand. We make planning and spending decisions, including determining the levels of business that we will seek and accept, production schedules, component procurement commitments, personnel needs and other resource requirements, based on our estimates of product demand and customer requirements. Our products are typically sold pursuant to individual purchase orders. While our customers may provide us with their demand forecasts, they are typically not contractually committed to buy any quantity of products beyond firm purchase orders. Furthermore, many of our customers may increase, decrease, cancel or delay purchase orders already in place without significant penalty. The short-term nature of commitments by our expected customers and the possibility of unexpected changes in demand for their products reduce our ability to accurately estimate future customer requirements. If any of our customers decrease, stop or delay purchasing our products for any reason, we will likely have excess manufacturing capacity or inventory and our business and results of operations would be harmed. The markets in which we operate are highly competitive, which could result in lost sales and lower revenues. The market for optical components and modules is highly competitive and this competition could result in our existing customers moving their orders to our competitors. We are aware of a number of companies that have developed or are developing integrated optical products, including silicon photonics engines, remote light sources, pluggable components, modules and subsystems, photonic integrated circuits, among others, that compete (or may in the future compete) directly with our current and proposed product offerings. Page 8 Some of our current competitors, as well as some of our potential competitors, have longer operating histories, greater name recognition, broader customer relationships and industry alliances and substantially greater financial, technical and marketing resources than we do. We may not be able to compete successfully with our competitors and aggressive competition in the market may result in lower prices for our products and/or decreased gross margins. Any such development could have a material adverse effect on our business, financial condition and results of operations. We depend on a limited number of suppliers and key contract manufacturers who could disrupt our business and technology development activities if they stopped, decreased, delayed or were unable to meet our demand for shipments of their products or manufacturing of our products. We depend on a limited number of suppliers of epitaxial wafers and contract manufacturers for our Indium Phosphide (“InP”) laser developments and optical interposer production activities. Some of these suppliers are sole source suppliers. We typically have not entered into long-term agreements with our suppliers. As a result, these suppliers generally may stop supplying us materials and other components at any time. Our reliance on a sole supplier or limited number of suppliers could result in delivery problems, reduced control over technology development, product development, pricing and quality, and an inability to identify and qualify another supplier in a timely manner. Some of our suppliers that may be small or under-capitalized may experience financial difficulties that could prevent them from supplying us materials and other components. In addition, our suppliers, including our sole source suppliers, may experience manufacturing delays or shutdowns due to circumstances beyond their control such as pandemics, earthquakes, floods, fires, labor unrest, political unrest or other natural disasters. A change in supplier could require technology transfer that could require multiple iterations of test wafers. This could result in significant delays in resumption of production. Any supply deficiencies relating to the quality or quantities of materials or equipment we use to manufacture our products could materially and adversely affect our ability to fulfill customer orders and our results of operations. Lead times for the purchase of certain materials and equipment from suppliers have increased and, in some cases, have limited our ability to rapidly respond to increased demand, and may continue to do so in the future. To the extent we introduce additional contract manufacturing partners, introduce new products with new partners and/or move existing internal or external production lines to new partners, we could experience supply disruptions during the transition process. In addition, due to our customers’ requirements relating to the qualification of our suppliers and contract manufacturing facilities and operations, we cannot quickly enter into alternative supplier relationships, which prevent us from being able to respond immediately to adverse events affecting our suppliers. Our international business and operations expose us to additional risks. We have significant tangible assets located outside Canada and the United States. Conducting business outside Canada and the United States subjects us to a number of additional risks and challenges, including: ● periodic changes in a specific country’s or region’s economic conditions, such as recession; ● licenses and other trade barriers; ● the provision of services may require export licenses; ● environmental regulations; ● certification requirements; ● fluctuations in foreign currency exchange rates; ● inadequate protection of intellectual property rights in some countries; ● preferences of certain customers for locally produced products; ● potential political, legal and economic instability, foreign conflicts, and the impact of regional and global infectious illnesses in the countries in which we and our customers, suppliers and contract manufacturers are located; ● Canadian and U. S. and foreign anticorruption laws; ● seasonal reductions in business activities in certain countries or regions; and ● fluctuations in freight rates and transportation disruptions. Page 9 These factors, individually or in combination, could impair our ability to effectively operate one or more of our foreign facilities or deliver our products, result in unexpected and material expenses, or cause an unexpected decline in the demand for our products in certain countries or regions. Our failure to manage the risks and challenges associated with our international business and operations could have a material adverse effect on our business. If we fail to attract and retain key personnel, our business could suffer. Our future success depends, in part, on our ability to attract and retain key personnel, including executive management. Competition for highly skilled technical personnel is extremely intense and we may face difficulty identifying and hiring qualified engineers in many areas of our business. We may not be able to hire and retain such personnel at compensation levels consistent with our existing compensation and salary structure. Our future success also depends on the continued contributions of our executive management team and other key management and technical personnel, each of whom would be difficult to replace. The loss of services of these or other executive officers or key personnel or the inability to continue to attract qualified personnel could have a material adverse effect on our business. If we fail to protect, or incur significant costs in defending, our intellectual property and other proprietary rights, our business and results of operations could be materially harmed. Our success depends on our ability to protect our intellectual property and other proprietary rights. We rely on a combination of patent, trademark, copyright, trade secret and unfair competition laws, as well as license agreements and other contractual provisions, to establish and protect our intellectual property and other proprietary rights. We have applied for patent registrations in the U.S. and in foreign countries, some of which have been issued. We cannot guarantee that our pending applications will be approved by the applicable governmental authorities. Moreover, our existing and future patents and trademarks may not be sufficiently broad to protect our proprietary rights or may be held invalid or unenforceable in court. A failure to obtain patents or trademark registrations or a successful challenge to our registrations in the U.S. or foreign countries may limit our ability to protect the intellectual property rights that these applications and registrations intended to cover. Policing unauthorized use of our technology is difficult and we cannot be certain that the steps we have taken will prevent the misappropriation, unauthorized use or other infringement of our intellectual property rights. Further, we may not be able to effectively protect our intellectual property rights from misappropriation or other infringement in foreign countries where we have not applied for patent protections, and where effective patent, trademark, trade secret and other intellectual property laws may be unavailable or may not protect our proprietary rights as fully as Canadian or U.S. law. We may seek to secure comparable intellectual property protections in other countries. However, the level of protection afforded by patent and other laws in other countries may not be comparable to that afforded in Canada and the U.S. We also attempt to protect our intellectual property, including our trade secrets and know-how, through the use of trade secret and other intellectual property laws, and contractual provisions. We enter into confidentiality and invention assignment agreements with our employees and independent consultants. We also use non- disclosure agreements with other third parties who may have access to our proprietary technologies and information. Such measures, however, provide only limited protection, and there can be no assurance that our confidentiality and non-disclosure agreements will not be breached, especially after our employees end their employment, and that our trade secrets will not otherwise become known by competitors or that we will have adequate remedies in the event of unauthorized use or disclosure of proprietary information. Unauthorized third parties may try to copy or reverse engineer our products or portions of our products, otherwise obtain and use our intellectual property, or may independently develop similar or equivalent trade secrets or know-how. If we fail to protect our intellectual property and other proprietary rights, or if such intellectual property and proprietary rights are infringed or misappropriated, our business, results of operations or financial condition could be materially harmed. In the future, we may need to take legal actions to prevent third parties from infringing upon or misappropriating our intellectual property or from otherwise gaining access to our technology. Protecting and enforcing our intellectual property rights and determining their validity and scope could result in significant litigation costs and require significant time and attention from our technical and management personnel, which could significantly harm our business. We may not prevail in such proceedings, and an adverse outcome may adversely impact our competitive advantage or otherwise harm our financial condition and our business. Page 10 We may be involved in intellectual property disputes in the future, which could divert management’s attention, cause us to incur significant costs and prevent us from selling or using the challenged technology. Participants in the markets in which we sell our products have experienced frequent litigation regarding patent and other intellectual property rights. There can be no assurance that third parties will not assert infringement claims against us, and we cannot be certain that our products would not be found infringing on the intellectual property rights of others. Regardless of their merit, responding to such claims can be time consuming, divert management’s attention and resources and may cause us to incur significant expenses. Intellectual property claims against us could result in a requirement to license technology from others, discontinue manufacturing or selling the infringing products, or pay substantial monetary damages, each of could result in a substantial reduction in our revenue and could result in losses over an extended period of time. If we fail to obtain the right to use the intellectual property rights of others that are necessary to operate our business, and to protect their intellectual property, our business and results of operations will be adversely affected. From time to time, we may choose to or be required to license technology or intellectual property from third parties in connection with the development of our products. We cannot assure you that third party licenses will be available to us on commercially reasonable terms, if at all. Generally, a license, if granted, would include payments of up-front fees, ongoing royalties or both. These payments or other terms could have a significant adverse impact on our results of operations. Our inability to obtain a necessary third-party license required for our product offerings or to develop new products and product enhancements could require us to substitute technology of lower quality or performance standards, or of greater cost, either of which could adversely affect our business. If we are not able to obtain licenses from third parties, if necessary, then we may also be subject to litigation to defend against infringement claims from these third parties. Our competitors may be able to obtain licenses or cross-license their technology on better terms than we can, which could put us at a competitive disadvantage. Failure to comply with requirements to design, implement and maintain effective internal control over financial reporting could have a materially adverse impact on our financial reporting and our business. We are required to have our internal controls over financial reporting audited under Section 404(b) of the Sarbanes-Oxley Act. Preparing our consolidated financial statements involves a number of complex manual and automated processes, which are dependent upon individual data input or review and require significant management judgment. One or more of these elements may result in errors that may not be detected and could result in a material misstatement of our consolidated financial statements. The Sarbanes-Oxley Act in the U.S. requires, among other things, that as a publicly traded company we disclose whether our internal control over financial reporting and disclosure controls and procedures are effective. Until December 31, 2021 we qualified as an “emerging growth company” under the JOBS Act, and, as a result, were exempted from certain SEC reporting requirements, including those requiring registrants to include an auditor’s report regarding the Company’s internal controls as part of such registrant’s periodic reports. Our “emerging growth company” status expired on December 31, 2021. The report of our auditors regarding the effectiveness of our internal controls over disclosure and financial reporting as of December 31, 2023 is attached as an exhibit to this annual report. Page 11 Our internal control over financial reporting cannot guarantee that no accounting errors exist or that all accounting errors, no matter how immaterial, will be detected because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute assurance that the control system’s objectives will be met. If we are unable to implement and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results could be adversely impacted. This could result in late filings of our annual and quarterly reports under the Securities Act (Ontario) and the Securities Exchange Act of 1934 (the “Exchange Act”), restatements of our consolidated financial statements, a decline in our stock price, suspension or delisting of our common shares by the TSX Venture Exchange (“TSXV”), or other material adverse effects on our business, reputation, results of operations or financial condition. The process of designing and implementing effective internal control over financial reporting is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal control that is adequate to satisfy our reporting obligations as a public company. In addition, we are required, pursuant to Section 404(a) of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment must include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Testing and maintaining our internal control over financial reporting may divert our management’s attention from other matters that are important to our business. In connection with the implementation of the necessary procedures and practices related to our internal control over financial reporting, we and/or our independent registered accounting firm may identify material weaknesses and other deficiencies that may require significant effort and expense to remediate. We may encounter problems or delays in completing the remediation of any such weaknesses or other deficiencies. If there is a change in conditions, or the degree of compliance with policies or procedure deteriorates, internal review of our internal control over financial reporting or the subsequent testing by our independent registered public accounting firm may reveal deficiencies in our internal control over financial reporting that are deemed material weaknesses. If this occurs, our consolidated financial statements or disclosures may contain material misstatements and we could be required to restate our financial results. Additionally, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting or our independent registered public accounting firm may not in future issue an unqualified opinion, each of which could lead to investors losing confidence in our reported financial information, which could have a material adverse effect on the trading price of our common shares, and we may be unable to maintain compliance with applicable stock exchange listing requirements. Our management has identified a material weakness in the Company’s internal control over financial reporting and may identify additional material weaknesses in the future. If we fail to remediate the material weakness or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations. In connection with the audit of our financial statements for the fiscal years ended December 31, 2023, a material weakness in our internal control over financial reporting was identified related to Cybersecurity controls. The identified material weakness, if not corrected, could result in a material misstatement to our consolidated financial statements that may not be prevented or detected. In addition, even if we remediate our material weakness, we may be required to expend significant time and resources to further improve our internal control over financial reporting. If we fail to remediate our material weakness or fail to maintain adequate internal control over financial reporting, any new or recurring material weaknesses could prevent us from concluding that our internal control over financial reporting is effective and impair our ability to prevent material misstatements in our consolidated financial statements, which could cause our business to suffer. Our ability to use our net operating losses and certain other tax attributes may be limited. As of December 31, 2023, we had accumulated net operating losses (“NOLs”), of approximately $150 million. Varying jurisdictional tax codes have restrictions on the use of NOLs, if a corporation undergoes an “ownership change,” the Company’s ability to use its pre-change NOLs, R&D credits and other pre-change tax attributes to offset its post-change income may be limited. An ownership change is generally defined as a greater than 50% change in equity ownership. Based upon an analysis of our equity ownership, we do not believe that we have experienced such ownership changes and therefore our annual utilization of our NOLs is not limited. However, should we experience additional ownership changes, our NOL carry forwards may be limited. Page 12 We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets. Such controls have recently increased for companies in China under the US government’s “control list”, and may further limit or impair our ability to use certain sub- contractors or to sell directly to companies on the list We are subject to export and import control laws, trade regulations and other trade requirements that limit which raw materials and technology we can import or export and which products we sell and where and to whom we sell our products. Specifically, the Bureau of Industry and Security of the U.S. Department of Commerce is responsible for regulating the export of most commercial items that are so called dual-use goods that may have both commercial and military applications. A limited number of our products are exported by license under certain classifications. Export Control Classification requirements are dependent upon an item’s technical characteristics, the destination, the end-use, and the end-user, and other activities of the end-user. Should the regulations applicable to our products change, or the restrictions applicable to countries to which we ship our products change, then the export of our products to such countries could be restricted. As a result, our ability to export or sell our products to certain countries could be restricted, which could adversely affect our business, financial condition and results of operations. Changes in our products or any change in export or import regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could result in delayed or decreased sales of our products to existing or potential customers. In such event, our business and results of operations could be adversely affected. Our manufacturing operations are subject to environmental regulation that could limit our growth or impose substantial costs, adversely affecting our financial condition and results of operations. Our properties, operations and products are subject to the environmental laws and regulations of the jurisdictions in which we operate and sell products. These laws and regulations govern, among other things, air emissions, wastewater discharges, the management and disposal of hazardous materials, the contamination of soil and groundwater, employee health and safety and the content, performance, packaging and disposal of products. Our failure to comply with current and future environmental laws and regulations, or the identification of contamination for which we are liable, could subject us to substantial costs, including fines, cleanup costs, third-party property damages or personal injury claims, and make significant investments to upgrade our facilities or curtail our operations. Identification of presently unidentified environmental conditions, more vigorous enforcement by a governmental authority, enactment of more stringent legal requirements or other unanticipated events could give rise to adverse publicity, restrict our operations, affect the design or marketability of our products or otherwise cause us to incur material environmental costs, adversely affecting our financial condition and results of operations. We are exposed to risks and increased expenses and business risk as a result of Restriction on Hazardous Substances, or RoHS directives, which have been amended but are still in effect. Following the lead of the European Union, or EU, various governmental agencies have either already put into place or are planning to introduce regulations that regulate the permissible levels of hazardous substances in products sold in various regions of the world. For example, the RoHS directive for EU took effect on July 1, 2006. The labeling provisions of similar legislation in China went into effect on March 1, 2007 and is still in effect, as amended. Consequently, many suppliers of products sold into the EU have required their suppliers to be compliant with the new directive. We anticipate that our customers may adopt this approach and will require our full compliance, which will require a significant amount of resources and effort in planning and executing our RoHS program, it is possible that some of our products might be incompatible with such regulations. In such events, we could experience the following consequences: loss of revenue, damages reputation, diversion of resources, monetary penalties, and legal action. Page 13 Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences. We are subject to the U.S. Foreign Corrupt Practices Act, which generally prohibits companies operating in the U.S. from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. In addition, we are required to maintain records that accurately and fairly represent our transactions and have an adequate system of internal accounting controls. Non-U.S. companies, including some that may compete with us, may not be subject to these prohibitions, and therefore may have a competitive advantage over us. If we are not successful in implementing and maintaining adequate preventative measures, we may be responsible for acts of our employees or other agents engaging in such conduct. We could suffer severe penalties and other consequences that may have a material adverse effect on our financial condition and results of operations. Natural disasters or other catastrophic events could harm our operations. Our operations in the U.S., Canada, Singapore and China could be subject to significant risk of natural disasters, including earthquakes, hurricanes, typhoons, flooding and tornadoes, as well as other catastrophic events, such as epidemics, terrorist attacks or wars. For example, our testing facility in Singapore is in an area that is susceptible to hurricanes. Any disruption in our facilities or those of our contractors and suppliers arising from these and other natural disasters or other catastrophic events could cause significant delays in the production or shipment of our products until we are able to arrange for third parties to manufacture our products. We may not be able to obtain alternate capacity on favorable terms or at all. Our property insurance coverage with respect to natural disaster is limited and is subject to deductible and coverage limits. Such coverage may not be adequate or continue to be available at commercially reasonable rates and terms. The occurrence of any of these circumstances may adversely affect our financial condition and results of operation. We may be subject to disruptions or failures in information technology systems and network infrastructures that could have a material adverse effect on our business and financial condition. We rely on the efficient and uninterrupted operation of complex information technology systems and network infrastructures to operate our business. A disruption, infiltration or failure of our information technology systems as a result of software or hardware malfunctions, system implementations or upgrades, computer viruses, third-party security breaches, employee error, theft or misuse, malfeasance, power disruptions, natural disasters or accidents could cause a breach of data security, loss of intellectual property and critical data and the release and misappropriation of sensitive competitive information and partner, customer, and employee personal data. Any of these events could harm our competitive position, result in a loss of customer confidence, cause us to incur significant costs to remedy any damages and ultimately materially adversely affect our business and financial condition. A significant disruption in, or breach in security of, our information technology systems or violations of data protection laws could materially adversely affect our business and reputation. In the ordinary course of business, we collect and store confidential information, including proprietary business information belonging to us, our customers, suppliers, business partners and other third parties and personally identifiable information of our employees. We rely on information technology systems to protect this information and to keep financial records, process orders, manage inventory, coordinate shipments to customers, and operate other critical functions. Our information technology systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures and user errors. If we experience a disruption in our information technology systems, it could result in the loss of sales and customers and significant incremental costs, which could materially adversely affect our business. We may also be subject to security breaches caused by computer viruses, illegal break-ins or hacking, sabotage, or acts of vandalism by disgruntled employees or third parties. The risk of a security breach or disruption, particularly through cyberattack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our information technology network and systems have been and, we believe, continue to be under constant attack. Accordingly, despite our security measures or those of our third-party service providers, a security breach may occur, including breaches that we may not be able to detect. Security breaches of our information technology systems could result in the misappropriation or unauthorized disclosure of confidential information. Such breaches could also result in legal action against us by third parties. Page 14 Outbreaks of diseases and public health crises could delay our development activities and adversely affect our results of operations. The Company faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt its operations and may materially and adversely affect its business and financial conditions. The global outbreak of COVID-19 has resulted in Canada, the United States, Singapore, China and other countries halting or sharply curtailing the movement of people, goods and services. The curtailed activity has negatively affected many businesses, including the Company and other businesses that operate in our sector. The prolonged economic impact of COVID-19 remains uncertain. At this point, we believe the conditions may have a material adverse impact on our business, as our suppliers are experiencing major delays resulting from high backlogs of orders and an inability to operate at full capacity. Such delays have resulted in a four to six months delay or longer in the Company achieving certain development objectives. Given the rapidly changing developments we cannot accurately predict what effects these developments will have on our business going forward, which will depend on, among other factors, the ultimate geographic spread of the virus, governmental limitations, the duration of the outbreak, travel restrictions and business closures. The Company continues to monitor the developments and impacts of any health crises and pandemic diseases as they may arise. The Company cannot estimate whether, or to what extent, any future outbreak of epidemics or pandemics or other health crises may have an impact on the business, operations and financial condition of the Company. The outbreak of epidemics, pandemics or other public health crises, such as COVID-19 pandemic, may result in volatility and disruptions global supply chains and financial markets, as well as declining trade and market sentiment and reduced mobility of people, all of which could affect prices, interest rates, credit ratings, credit risk, share prices and inflation. The risks to the Company of such public health crises also include risks to employee health and safety, a slowdown or temporary suspension of operations in geographic locations impacted by an outbreak, increased labor costs, regulatory changes, political or economic instabilities or civil unrest as well as the Company’s ability to service its obligations as they arise. As such, the impacts of such crises may have a material adverse effect on the Company’s business, results of operations and financial condition and the market price of the Common Shares. There can be no assurance that the Company’s personnel or its contractors’ personnel will not be impacted by these pandemic diseases and ultimately see its workforce productivity reduced or incur increased safety and medical costs / insurance premiums as a result of these health risks. Risks Related to Our Common shares In order to qualify for listing on Nasdaq, we consolidated our common shares on a 10-for-1 basis, thereby reducing the total number of our common shares which are outstanding on a post-consolidation basis. We cannot guarantee that the reduction in the number of our outstanding common shares as a result of the consolidation will not adversely affect the liquidity of our common shares or decrease the overall value of the Company in the future. On February 28, 2022, the Company completed a 10-for-1 consolidation of our outstanding common shares, resulting in a total of 36,496,456 common shares of the Company outstanding on a post-consolidation basis. The reduced number of outstanding shares may reduce market liquidity of our common shares and/or affect investor perception of the value of the Company, and as a result shareholders may not be able to sell their shares on a timely basis, or at all. Our stock price has been and may continue to be volatile. The trading price for our common shares on the TSXV has been and is likely to continue to be highly volatile. Although we have registered our stock with the SEC, the U.S. market for our shares has been slow to develop, and if and as such a market develops, prices on that market are also likely to be highly volatile. The market prices for securities of early-stage technology companies have historically been highly volatile. Page 15 Factors that could adversely affect our stock price include: ● fluctuations in our operating results and our financial condition; ● announcements of new products, partnerships or technological collaborations and announcements of the results or further actions in respect of any products, partnerships or collaborations, including termination of same; ● innovations by us or our competitors; ● governmental regulation; ● developments in patent or other proprietary rights; ● the results of technology and product development testing by us, our partners or our competitors; ● litigation; ● general stock market and economic conditions; ● number of shares available for trading (float); and ● inclusion in or dropping from stock indexes. As of March 15, 2024, our 52-week high and low closing market prices for our common shares on the TSXV were CA$7.15 and CA$1.01. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been brought against that company. We may become involved in this type of litigation in the future. Litigation of this type may be expensive to defend and may divert our management’s attention and resources from the operation of our business The listing of our common shares on multiple exchanges may adversely affect the liquidity and value of our common shares. Currently, our common shares are traded on the TSXV and Nasdaq. We cannot predict the effect of listing our common shares on multiple exchanges on the market price of our common shares, and listing on multiple exchanges may dilute the liquidity of these securities in one or more markets. We have historically obtained, and expect to continue to obtain, additional financing primarily by way of sales of equity, which may result in significant dilution to existing shareholders. We have not earned profits, so the Company’s ability to finance operations is chiefly dependent on equity financings. Funds raised through equity public offerings, financing through private placements or the exercise of stock options and warrants and the conversion of convertible debt into common shares in support of the Company’s business has resulted in significant shareholder dilution. Further equity financings will also result in dilution to existing shareholders, and such dilution could be significant. Future sales of common shares, or the prospect of future sales, may depress our stock price. The exercise of share purchase options and warrants will create dilution which could adversely affect the Company’s shareholders. Sales of a substantial number of common shares, or the perception that sales could occur, could adversely affect the market price of our common shares. Additionally, as of March 15, 2024, there were outstanding options to purchase up to 7,918,358 of our common shares. As of March 15, 2024, there were outstanding warrants to purchase 7,285,907 of our common shares. The holders of these options and warrants have an opportunity to profit from a rise in the market price of our common shares with a resulting dilution in the interests of the other shareholders. The existence of these options and warrants may adversely affect the terms on which we may be able to obtain additional financing. The weighted average exercise price of issued and outstanding options is CAD$4.82, the weighted average exercise price of warrants is CAD$1.79, which compares to the CAD$1.75 market price at closing on March 15, 2024. If all of these securities were exercised, an additional 15,265,764 common shares would become issued and outstanding. This represents an increase of 31.68% in the number of shares issued and outstanding and would result in significant dilution to current shareholders Page 16 The rights of our shareholders may differ from the rights typically afforded to shareholders of a U.S. corporation. We are incorporated under the Business Corporations Act (Ontario) (the “OBCA”). The rights of holders of our common shares are governed by the laws of the Province of Ontario, including the OBCA, by the applicable laws of Canada, and by our Articles of Continuance and all amendments thereto (collectively, the “Articles”), and our by-laws (the “By-laws”). These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. The principal differences include without limitation the following: Under the OBCA, we have a lien on any common share registered in the name of a shareholder or the shareholder’s legal representative for any debt owed by the shareholder to us. Under U.S. state law, corporations generally are not entitled to any such statutory liens in respect of debts owed by shareholders. With regard to certain matters, we must obtain approval of our shareholders by way of at least 66 2/3% of the votes cast at a meeting of shareholders duly called for such purpose being cast in favor of the proposed matter. Such matters include without limitation: (a) the sale, lease or exchange of all or substantially all of our assets out of the ordinary course of our business; and (b) any amendments to our Articles including, but not limited to, amendments affecting our capital structure such as the creation of new classes of shares, changing any rights, privileges, restrictions or conditions in respect of our shares, or changing the number of issued or authorized shares, as well as amendments changing the minimum or maximum number of directors set forth in the Articles. Under U.S. state law, the sale, lease, exchange or other disposition of all or substantially all of the assets of a corporation generally requires approval by a majority of the outstanding shares, although in some cases approval by a higher percentage of the outstanding shares may be required. In addition, under U.S. state law the vote of a majority of the shares is generally sufficient to amend a company’s certificate of incorporation, including amendments affecting capital structure or the number of directors. Pursuant to our By-laws, two persons present in person or represented by proxy and each entitled to vote thereat shall constitute a quorum for the transaction of business at any meeting of shareholders. Under U.S. state law, a quorum generally requires the presence in person or by proxy of a specified percentage of the shares entitled to vote at a meeting, and such percentage is generally not less than one-third of the number of shares entitled to vote. Under rules of the Ontario Securities Commission, a meeting of shareholders must be called for consideration and approval of certain transactions between a corporation and any “related party” (as defined in such rules). A “related party” is defined to include, among other parties, directors and senior officers of a corporation, holders of more than 10% of the voting securities of a corporation, persons owning a block of securities that is otherwise sufficient to affect materially the control of the corporation, and other persons that manage or direct, to a substantial degree, the affairs or operations of the corporation. At such shareholders’ meeting, votes cast by any related party who holds common shares and has an interest in the transaction may not be counted for the purposes of determining whether the minimum number of required votes have been cast in favor of the transaction. Under U.S. state law, a transaction between a corporation and one or more of its officers or directors can generally be approved either by the shareholders or a by majority of the directors who do not have an interest in the transaction. Neither Canadian law nor our Articles or By-laws limit the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (the “Investment Act”), as amended by the World Trade Organization Agreement Implementation Act (the “WTOA Act”). The Investment Act generally prohibits implementation of a direct reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture that is not a “Canadian,” as defined in the Investment Act (a “non-Canadian”), unless, after review, the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. An investment in the common shares of the Company by a non-Canadian (other than a “WTO Investor,” as defined below) would be reviewable under the Investment Act if it were an investment to acquire direct control of the Company, and the value of the assets of the Company were CA$5.0 million or more (provided that immediately prior to the implementation of the investment the Company was not controlled by WTO Investors). An investment in common shares of the Company by a WTO Investor (or by a non- Canadian other than a WTO Investor if, immediately prior to the implementation of the investment the Company was controlled by WTO Investors) would be reviewable under the Investment Act if it were an investment to acquire direct control of the Company and the value of the assets of the Company equaled or exceeded certain threshold amounts determined on an annual basis. The threshold for a pre-closing net benefit review depends on whether the purchaser is: (a) controlled by a person or entity from a member of the WTO; (b) a state-owned enterprise (SOE); or (c) from a country considered a “Trade Agreement Investor” under the Investment Act. A different threshold also applies if the Canadian business carries on a cultural business. The 2024 threshold for WTO investors that are SOEs will be CA$528 million based on the book value of the Canadian business’ assets, up from CA$512 million in 2023. The 2023 thresholds for review for direct acquisitions of control of Canadian businesses by private sector investor WTO investors is $1.326 billion and private sector trade- agreement investors is $1.989 billion and are both based on the “enterprise value” of the Canadian business being acquired. Page 17 A non-Canadian, whether a WTO Investor or otherwise, would be deemed to acquire control of the Company for purposes of the Investment Act if he or she acquired a majority of the common shares of the Company. The acquisition of less than a majority, but at least one-third of the shares, would be presumed to be an acquisition of control of the Company, unless it could be established that the Company is not controlled in fact by the acquirer through the ownership of the shares. In general, an individual is a WTO Investor if he or she is a “national” of a country (other than Canada) that is a member of the WTO (“WTO Member”) or has a right of permanent residence in a WTO Member. A corporation or other entity will be a “WTO Investor” if it is a “WTO Investor-controlled entity,” pursuant to detailed rules set out in the Investment Act. The U.S. is a WTO Member. Certain transactions involving our common shares would be exempt from the Investment Act, including: ● an acquisition of our common shares if the acquisition were made in connection with the person’s business as a trader or dealer in securities; ● an acquisition of control of the Company in connection with the realization of a security interest granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act; and ● an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization, following which the ultimate direct or indirect control of the Company, through the ownership of voting interests, remains unchanged. Under U.S. law, except in limited circumstances, restrictions generally are not imposed on the ability of non- residents to hold a controlling interest in a U.S. corporation. As a “foreign private issuer”, the Company is exempt from certain sections of the Exchange Act, which results in shareholders having less complete and timely information concerning the Company than if the Company were a domestic U.S. issuer. As a “foreign private issuer,” as defined under the U.S. securities laws, we are exempt from certain sections of the Exchange Act. In particular, we are exempt from the proxy statement rules that are applicable to domestic U.S. issuers. The Company submits its proxy materials and annual meeting of shareholder information (which are prepared in accordance with Canadian standards) by filing a Form 6-K with the SEC, although those documents typically have more limited information than the corresponding documents required to be filed by U.S. domestic issuers, which results in our shareholders having less complete and timely data, including, among others, with respect to disclosure of: (i) personal and corporate relationships and age of directors and officers; (ii) material legal proceedings involving the Company, affiliates of the Company, and directors, officers promoters and control persons; (iii) the identity of principal shareholders and certain significant employees; (iv) related party transactions; (v) audit fees and change of auditors; (vi) voting policies and procedures; (vii) executive compensation; and (viii) composition of the Compensation Committee. In addition, in light of the Company’s status as a foreign private issuer, the officers, directors and principal shareholders of the Company are exempt from the short-swing insider disclosure and profit recovery provisions of Section 16 of the Exchange Act. The foregoing exemption results in our shareholders having less data in that regard than is made available by U.S. domestic issuers. Page 18 As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq Capital Market (“Nasdaq”) corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq’s corporate governance listing standards. As a foreign private issuer listed on Nasdaq, we are subject to Nasdaq’s corporate governance listing standards. However, pursuant to Nasdaq rules, foreign private issuers are permitted to follow the corporate governance practices of their home country in certain instances, provided that disclosure regarding which requirements have not been complied with and confirmation regarding applicable Canadian corporate governance practices which are being followed has been provided. The Company has availed itself of the ability to follow applicable corporate governance standards of its home country in certain instances, and provided such disclosures and confirmations in applicable periodic reports filed with the SEC. Certain corporate governance practices in Canada, which is our home country, may differ significantly from Nasdaq corporate governance listing standards. Therefore, our shareholders may be afforded less protection than they otherwise would have in certain instances as a result of following such Canadian corporate governance practices. The Company may lose its foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses. We are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2023. In order to maintain our current status as a foreign private issuer, either (a) a majority of our common shares must be owned of record by persons who are not residents or citizens of the United States or (b)(i) a majority of our executive officers and a majority of our directors cannot be citizens or residents of the United States, (ii) more than 50 percent of our assets must be located outside the United States and (iii) our business must be administered principally outside the United States. If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, including the requirement to prepare our financial statements in accordance with U.S. generally accepted accounting principles, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. If we lose foreign private issuer status and are unable to comply with the reporting requirements applicable to a U.S. domestic issuer by the applicable deadlines, we would not be in compliance with applicable SEC rules or the rules of Nasdaq, which could cause investors could lose confidence in our public reports and could have a material adverse effect on the trading price of our common shares. Additionally, we are currently eligible to use the multijurisdictional disclosure system (“MJDS”), which, among other things, allows eligible Canadian issuers to make registered public offerings in the United States using a prospectus prepared and reviewed in Canada that is mainly, although not exclusively, in accordance with Canadian disclosure requirements. If the Company no longer qualifies as a foreign private issuer, it would not be eligible to use the MJDS, or other foreign issuer forms for certain securities offerings. The regulatory and compliance costs under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as a Canadian foreign private issuer eligible for MJDS. If the Company is characterized as a passive foreign investment company, our U.S. shareholders may suffer adverse tax consequences. As more fully described below in Item 10.E. “Taxation” — United States Federal Income Tax Considerations — Passive Foreign Investment Company Status”, if for any taxable year our passive income, or the value of our assets that produce (or are held for the production of) passive income, exceed specified levels, we may be characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax consequences to our U.S. shareholders, including gain on the disposition of our common shares being treated as ordinary income and any resulting U.S. federal income tax being increased by an interest charge. Rules similar to those applicable to dispositions generally will apply to certain “excess distributions” in respect of our common shares. Page 19 The actual allocation of proceeds from any financing undertaken may differ from the Company’s initial or current intentions. The Company has discretion in the use of the net proceeds from any offering of equity securities. The Company may elect to allocate proceeds differently from its initial or current intentions. The failure by the Company’s management to apply these funds effectively could have a material adverse effect on its business. Warrants included with financings Warrants offered with financings are not listed on any exchange. Investors may be unable to sell the warrants at the prices desired or at all. There is no existing trading market for the warrants and there can be no assurance that a liquid market will develop or be maintained for the warrants, or that an investor will be able to sell any of the warrants at a particular time (if at all). The liquidity of the trading market in the warrants, and the market price quoted for the warrants, may be adversely affected by, among other things: ● ● ● ● ● ● ● changes in the overall market for the warrants; changes in the Corporation’s financial performance or prospects; changes or perceived changes in the Corporation’s creditworthiness; the prospects for companies in the industry generally; the number of holders of the warrants; the interest of securities dealers in making a market for the warrants; and prevailing interest rates. Item 4. Information on the Company A. History and Development of the Company. The legal and commercial name of the Company is POET Technologies Inc. The Company was originally incorporated under the British Columbia Company Act on February 9, 1972 as Tandem Resources Ltd. On November 14, 1985, Tandem Resources Ltd. amalgamated with Stanmar Resources Ltd. and Keezic Resources Ltd., to continue as one company under the name Tandem Resources Ltd. under the British Columbia Company Act. By Articles of Continuance dated January 3, 1997, Tandem Resources Ltd. was continued under the OBCA. By Articles of Amendment dated September 26, 2006, Tandem Resources Ltd. changed its name to OPEL International Inc. By Certificate of Continuance dated January 30, 2007, OPEL International Inc. was continued under the New Brunswick Business Corporations Act. By Articles of Continuance dated November 30, 2010, OPEL International Inc. was continued under the OBCA and changed its name to OPEL Solar International Inc. By Articles of Amendment dated August 25, 2011, OPEL Solar International Inc. changed its name to OPEL Technologies Inc. By Articles of Amendment dated July 23, 2013, OPEL Technologies Inc. changed its name to POET Technologies Inc. On May 11, 2016, in an all-stock transaction, the Company acquired all the issued and outstanding shares of DenseLight Semiconductor Pte. Ltd., a privately held Singapore company that provides optical solutions. DenseLight designs, manufactures and sells optical light source products. DenseLight was acquired for $10,500,000 of the Company’s stock. The Company issued 1,361,115 common shares to the former shareholders of DenseLight. Page 20 On November 8, 2019, the Company sold 100% of the issued and outstanding shares of DenseLight for $26,000,000. The Company recognized a gain on the sale of $8,707,280. On June 22, 2016, in an all-stock transaction, the Company acquired all the issued and outstanding shares of BB Photonics Inc., a privately held US Company with a wholly owned subsidiary, BB Photonics UK Ltd. Both companies design integrated photonics solutions for the data communications market. BB Photonics and its subsidiary were acquired for consideration of $1,550,000. The acquisition was settled with the issuance of 199,609 common shares of the Company to the former shareholders of BB Photonics. The Company dissolved BB Photonics UK Ltd. on October 6, 2020. On May 17, 2019, the Company established POET Technologies Pte. Ltd. (“PTS”), a wholly owned subsidiary in Singapore. On August 4, 2020, PTS established POET Optoelectronics Shenzhen Co., Ltd (“POET SZ”), a wholly owned subsidiary in Shenzhen, China. On October 22, 2020, the Company signed a Joint Venture Agreement establishing a joint venture company, Super Photonics Xiamen Co., Ltd with Xiamen Sanan Integrated Circuit Co. Ltd. Super Photonics Xiamen Co., Ltd was formed on March 12, 2021. The following is a graphic description of the Company and its subsidiaries: OPEL Solar Inc. and ODIS Inc. OPEL Solar, Inc. (OPEL) OPEL is a wholly-owned subsidiary of POET Technologies and is the assignee for all patents and patent applications filed by the Company prior to 2019. ODIS Inc. (“ODIS”) ODIS is a wholly owned subsidiary of OPEL Solar, Inc. and is the designer of the POET Optical Interposer platform, and developer of optical engines based on the POET Optical Interposer platform. BB Photonics Inc. BB Photonics developed photonic integrated components for the datacom and telecom markets utilizing embedded dielectric technology that enabled the partial integration of active and passive devices into photonic integrated circuits. BB Photonics’ operation is currently dormant. Page 21 POET Technologies Pte Ltd. (“PTS”) PTS is a wholly owned subsidiary of POET Technologies Inc. Situated in Singapore, PTS designs and tests variations of the POET Optical Interposer for specific applications. PTS also develops the assembly and test methodologies for the production of optical engines designed by ODIS. POET Optoelectronics Shenzhen Co., Ltd (“POET SZ”) POET SZ is a wholly owned subsidiary of PTS. Situated in Shenzhen, China, PTSZ validates optical engine designs produced by ODIS and works with customers to incorporate optical engine designs into modules. Super Photonics Xiamen Co., Ltd, (“SPX”) SPX is a joint venture, situated in Shenzhen, China. SPX was established with Sanan IC with a sole purpose to assemble, test, package and sell cost-effective, high- performance optical engines based on POET’s proprietary Optical Interposer platform technology. The Company operates geographically in the United States, Canada, Singapore and China. Capital Expenditures Our capital expenditures for the last three years, which principally consist of purchases of research and development equipment and instrumentation and patents are as follows: Period Fiscal 2023 Fiscal 2022 Fiscal 2021 Capital Expenditure Purpose $ $ $ 1,247,064 3,074,037 930,882 Instruments, equipment and patents Instruments, equipment and patents Instruments, equipment and patents The Company’s registered office is located at Suite 1107, 120 Eglinton Avenue East, Toronto, Ontario, Canada M4P 1E2 and its phone number is (416) 368-9411. The Company has operations at Suite 308, 1605 N. Cedar Crest Boulevard, Allentown, PA, 18104, 21 Changi North Way, #04-06, Singapore, 498774 and Unit 02, 10th Floor, A4 Building, Kexing Science Park, No.15 Keyuan Road, Science Park Middle District, Nanshan District, Shenzhen, 518057 B. Business Overview. Overview The Company is incorporated under the laws of the Province of Ontario. The Company’s shares trade under the symbol “POET” on Nasdaq in the U.S and under the symbol “PTK” on the TSXV in Canada. POET Technologies is a design and development company offering photonic integrated packaging solutions based on the POET Optical Interposer™, a novel platform that allows the seamless integration of electronic and photonic devices onto a single chip using advanced wafer-level semiconductor manufacturing techniques. The semiconductor industry has adopted the term “Wafer-Level Chip-Scale Packaging” (or “WLCSP”) to describe similar approaches within the semiconductor industry. POET’s Optical Interposer eliminates costly components and labor-intensive assembly, alignment, and testing methods employed in conventional photonics. We believe the cost-efficient integration scheme and scalability of the POET Optical Interposer brings value to devices or systems that integrate electronics and photonics, including high-growth areas of communications and computing. The emergence of Artificial Intelligence (AI) systems over the past year has placed extraordinary demands on cloud-based AI service providers and hyperscale data centers for increases in network speeds and bandwidth. We believe that chip-scale integration is essential to developing hardware that can meet such demands and that POET is on the forefront of providing scalable solutions for current and future AI systems. Page 22 POET targeted as the first application of the Optical Interposer the development of optical engines for optical transceivers used in internet-based data centers. Optical Engines include all the passive and active components related to the production, manipulation, and detection of light within an Optical Transceiver. Optical Transceivers plug into switches and servers within the data center and allow these network devices to send and receive data over fiber-optic cables. We chose this market because it is large in size, has established standards for device performance, and the unit volumes of devices shipped annually are exceptionally high. It is a market in which our advantages of cost, power consumption and ability to scale rapidly allow us to be competitive with other suppliers. The rapid growth of AI software systems represents a profound opportunity for POET. We believe that the rapid growth of software services can only be sustained with hardware that meets the challenges of increasing speed and bandwidth, lower power consumption, lower cost, and the ability to scale to the volumes that will be required by data centers globally. POET meets these challenges in two ways: first, by providing to the market integrated, chip-scale Optical Engines that perform at the levels that are now being deployed in the most advanced AI clusters at speeds of 800Gbs (gigabits per second); and second, by offering what we believe is currently the only viable path to increasing the speeds and bandwidth of Optical Transceivers to 1.6Tbs (terabits per second) and 3.2Tbs in industry-standard pluggable form factors. In addition, we have used our Optical Interposer technology to develop Light Source products that address newly emerging architectures in data centers that are based on chip-to-chip data transfer using light, rather than electrons, which resolves speed, bandwidth, heat-generation and cost issues at a fundamental level. The combination of POET’s focus on leading-edge Optical Transceivers and Light Source products for next generation data center architectures essentially places POET among a small number of suppliers globally that are truly “pure play” AI hardware companies. Research & Development Beginning in 2017, POET began designing lasers for data communications applications and directed DenseLight Semiconductors, Pte. Ltd., a former subsidiary of the Company, to build such lasers to be compatible with the Optical Interposer platform. In 2019, the Company decided to adopt a “fab light” strategy, common among semiconductor companies, and divested its fabrication operations through the sale of DenseLight in November of that year. From 2018 - 2020, virtually all the R&D spending in the Company was dedicated to design & development of the Optical Interposer as a versatile platform technology, replete with features that enhance its utility across a variety of application spaces. During the second half of 2021, the Company transitioned to product development by investing more than $2 million in the design & development of 100G and 200G optical engines in several configurations, including customized designs for specific customers and applications. Samples of optical engines at various stages of development were made available and delivered to customers in 2022 for initial evaluation and in 2023 for design-in and customer qualification. SPX is forecasted to produce Optical Engines in high volumes for several customers in 2024. POET’s effort in lower speed Optical Engine design and production was intended primarily as a way for POET to demonstrate the viability and market acceptance of its unique approach to integration and fabrication and to establish an initial presence in the market. However, the Company’s primary strategy is to offer Optical Engines at the highest speeds at which customers are deploying Optical Transceivers. In 2024, we expect that we will be primarily in 800G, and heavily focused on those hyperscale data centers actively implementing AI services. Consistent with this strategy, the Company has invested approximately $20 million in design, development and engineering programs related to its 400G transmit chiplets (combined in multiples of 400G to achieve 800G, 1.6T and 3.2T speeds), in 800G receive optical engines, and in light source products, and fabrication techniques. The Company has designed, tested and sampled the current version of its 400G transmit (Tx) engine, and its 800G receive (Rx) engine with various customers. The Company intends to revise its 400G Tx product and to introduce a new version later this year. The 800G Rx has been well received, fully qualified and is expected to be incorporated in the optical transceiver modules of several customers this year. So long as the Company provides Optical Engines to optical transceiver module customers, there will always be customer centric adjustments to these products to fit their specific needs. The cost to make these adjustments will vary depending on the customer requirements. Page 23 The Company is expected to invest an additional $11 million in 2024 in ongoing development of the 400G Tx chiplet for inclusion in 800G and 1.6T optical tranceivers. POET is also committed to the development of its own optical transceiver modules, a critical next phase in the Company’s growth plan, with investments in that program beginning this year. At the present time, the Company expects to have a functional module by 2025 with sales of modules ramping in late 2025. Target Markets Data Center AI Market To support the substantial increase in bandwidth consumption, internet data center operators are increasing the scale of their internet data centers and deploying infrastructure capable of higher data transmission rates. At the present time, much of the industry is moving from 100G to 400G and higher. With the growth of AI clusters, interest in acquiring 800G capable optical transceivers has literally skyrocketed. LightCounting estimates1 that AI services will add $17 billion in revenue over the next five years to the existing nearly $5 billion in annual shipments of ethernet transceivers in 2022. As transceiver speeds have increased the cost and complexity of assembling optical modules has also increased, few module makers have the ability to achieve economies of scale with conventional, non- semiconductor-based approaches. We believe that products incorporating the Company’s unique technology will enable POET to capture a significant share of this large market, especially at the cutting edge of higher speeds, particularly as AI-driven data centers increasingly deploy 800G optical transceivers and are actively looking for 1.6T capabilities. Light Source Markets There are numerous established companies and start-ups addressing the need to lower power consumption and increase the efficiency of the GPUs and memory devices typically used in AI systems. To date, these bandwidth and efficiency issues have been addressed by increasing the capabilities and protocols at which electronic data network systems operate. To achieve lower power, several device makers are beginning design systems to utilize light, instead of electrons to either perform certain computations, or to manage data traveling in and out of the processor and memory chips. Using light offers significant advantages of speed and lower heat generation than comparable electronic-only devices. There are currently no reliable sources that the Company has been able to find that estimate the current or future size of this market. However, we expect that when the hardware is fully developed and the market emerges, it is bound to be very large, and could eclipse the market for optical transceivers. 1LightCounting. “July 2023 Mega Data Center Optics Market Report”, July 2023 and “LightCounting Quarterly Market Update September 2023.” Page 24 Other Potential Photonics Markets Other markets for POET’s integrated photonics solutions include 5G interconnect markets, such as PON and GPON, edge computing for machine-to-machine communications, and selected sensing markets, including LIDAR, Optical Coherence Tomography for medical devices, and certain consumer products, such as virtual reality systems. Manufacturing To address the challenge of producing devices in the large quantities that are needed by customers in the high-volume data communications industry, POET entered into an agreement in late 2020 with Xiamen Sanan Integrated Circuit Co. Ltd. (“Sanan IC”), a subsidiary of Sanan Optoelectronics Xiamen Co. Ltd. to form a joint venture to assemble, test and sell POET-designed optical engines in high volumes. Sanan is the world’s largest manufacturer of compound semiconductor devices, producing over 25 million eight-inch wafers per year across a variety of substrate types and applications. The objective of the joint venture company, which is named “Super Photonics Xiamen” (“SPX”) is to assemble, test and sell optical engines based on the POET Optical Interposer, along with devices procured from various suppliers, including Sanan IC, into finished products. Except for specific customers as agreed between the parties, optical engines for 100G and 200G applications will be sold exclusively world-wide by SPX. 400G optical engines will be sold by SPX in the China territory while the Company will sell 400G and 800G optical engines to customers in the United States, Europe and elsewhere outside the China territory. Volume production of optical engines designed for specific customers with high volumes is expected to ramp in mid-2024. Our Strategy Our vision for the Company is to become a global leader in chip-scale photonic solutions by deploying products based on our Optical Interposer technology and optical engine designs over a broad range of vertical market applications. Our Mission for the Company is to establish an industry leadership position based on the full “semiconductorization” of the photonics industry, producing validated, disruptive, IP protected products globally. We recently refined our strategy to reflect our current thinking about how best to achieve our vision and mission for the Company: ● Support Super Photonics Xiamen (SPX), a joint venture between POET and Sanan IC, as an independent company to drive growth in optical transceivers and deliver maximum cash flow to partners. POET’s designs for Optical Engines are assembled by SPX into samples that customers can test and are designed-in to modules supplied to end-users, such as network equipment companies and data center operators. POET’s shortest path to commercial success is the deployment of its Optical Engines that are designed into the optical modules of its customers. This activity provides validation for the technical feasibility, market acceptance and scalability of POET’s Optical Engines. SPX has matured to the point where it can provide design support and deliver samples and production devices to in China, where virtually all optical transceiver module manufacturers are located. As SPX builds a revenue base it becomes an asset for generating cash in the form of dividends or becomes a potential source of non-equity capital for POET to support its own growth. POET has no capital commitment requirements for the advancement of SPX to a revenue-generating entity. Prior to a future planned exit on the Shanghai Exchange, opportunities to sell a portion of POET’s equity interest in SPX are also being actively pursued. 2 PitchBook Data Inc., “Emerging Tech Research” and “Q1 and Q3 2022 Artificial Intelligence & Machine Learning Reports”, Brendan Burke, Senior Analyst. 3 “Celestial AI Raises $56 Million Series A to Disrupt the Artificial Intelligence Chipset Industry with Novel Photonic-Electronic Technology Platform”, February 4, 2022, Businesswire. Page 25 ● Engage with industry leaders and incumbents. We will continue to promote the potential of the Optical Interposer and POET-designed Optical Engines to solve critical challenges with current approaches to data transfer in data center and telecom applications, especially to those hyperscale data centers implementing large-scale AI applications. We believe that the size, performance and design flexibility of POET’s chiplet approach to integration and to the rapid introduction of successive product generations is an enabling technology that will allow POET to enter markets where relatively few competitors will have the requisite technology to succeed. ● Transition to making Optical Transceiver Modules for direct sales to end-users In addition to adding features to the Optical Interposer, we have added essential electronic components, such as Trans Impedance Amplifiers (TIAs) and laser drivers to the interposer platform, which improves performance and lowers the cost of module assembly. We intend to add the necessary capabilities for design and development optical transceiver modules to our existent capabilities in Optical Interposer and Optical Engine design. Being most familiar with the unique capabilities of our technology, we believe that we are in a position to rapidly extend our expertise to complete optical modules. Doing so has the advantage of avoiding a lengthy sales and qualification cycle (i.e., selling to module makers who then sell to end users) and being able to sell directly to end users, showcasing our own branded products to network equipment suppliers and data center operators.. ● Establish additional fabrication and sales operations for advanced, high-speed transceiver modules and packaged light source products. Internally, we refer to this our “China plus One” strategy, which is only partially dictated by the current international political climate. We are planning to develop our advanced products as modules and packaged products that we will sell directly to end-users, which will require additional fabrication, assembly, marketing and sales operations. In addition, we expect that as we approach other vertical market applications outside of optical transceivers and packaged light sources, our strategy may include the formation additional partnerships in those market segments in order to develop appropriate strategies for the fabrication of devices whose functions will be materially different from those of transceivers and with correspondingly different distribution and sales. The form of such partnerships may also be different than what was established for transceivers. ● Pursue complementary strategic alliance or acquisition opportunities for inorganic growth. We intend to evaluate and selectively pursue strategic alliances or acquisition opportunities for growth and vertical integration that we believe will accelerate our penetration of specific applications or vertical markets with our technology or products. ● Explore technology licensing opportunities for growth in non-target sectors. It is not possible for the Company to pursue all potential applications for the POET Optical Interposer. We will carefully consider opportunities to license our technology to others when and if appropriate. Our Products POET Optical Engine Products currently include the following: ● 100G LR4 Tx and Rx ● 200G FR4 Tx and Rx ● 400G/800G FR4 Rx with integrated TIA ● 400G/800G FR4 Tx with integrated Driver ● 1.6T 4xFR4 Rx with integrated TIA ● 200G/Lane Tx & Rx for 1.6T and 3.2T Page 26 ● LightBar: C-Band External Light Source ● LightBar: O-Band External Light Source Competition The photonics market is intensely competitive and we expect experience intense competition from a number of manufacturers with alternative technologies. Many of our competitors will be larger than we are and have significantly greater financial, marketing and other resources. In addition, several of our competitors, especially in the datacom markets, have large market capitalizations or cash reserves and are much better positioned to acquire other companies to gain new technologies or products that may displace our products. Data center equipment providers, who we expect to become our customers, and data center service providers, who are supplied by our customers, may decide to manufacture the optical subsystems that we plan to provide. We may also encounter potential customers that, because of existing relationships, are committed to the products offered by these competitors. We believe the principal competitive factors in our target markets include the following: ● use of internally manufactured components; ● product breadth and functionality; ● timing and pace of new product development; ● breadth of customer base; ● technological expertise; ● reliability of products; ● product pricing; and ● manufacturing efficiency. We believe that we can compete favorably with respect to the above factors based on processes, the projected performance, anticipated inherent reliability of our products, our technical expertise in photonic engine design and manufacture and cost. Intellectual Property We have 69 issued patents and 19 patent applications pending, including three provisional patent applications. Of the 69 issued patents, 30 are directly related to the Optical Interposer and include fundamental design and process patents. All 19 applications pending are Optical Interposer-related. Multiple additional applications are in various stages of preparation. The patents cover device structures, underlying technology related to the Optical Interposer, applications of the technology, and fabrication processes. We intend to continue to apply for additional patents in the future. We believe these patents provide a significant barrier to entry against competition along with company trade secrets and know-how. Currently, we are working on the design of integrated devices, manufacturing processes, assembly and packaging processes, and products for data communication applications in the data center market. Page 27 Geographic Distribution of Revenue Revenue and geographic markets in 2023, 2022 and 2021 were approximately as follows: Region Europe North & South America C. Organizational Structure. 2023 2022 2021 $ $ 191,225 274,552 $ $ 58,998 493,750 $ $ - 209,100 The following graphically displays the organizational structure of the Company: (1) There are 28,374,000 Class A Common Shares of OPEL Solar, Inc. issued and outstanding, all of which are held by the Company. There are no other outstanding securities of OPEL Solar, Inc. other than the Class A Common Shares. (2) There are 5 Common Shares of ODIS Inc. issued and outstanding, held by OPEL Solar, Inc. (3) There is 1 Ordinary share of POET Technologies Pte Ltd. issued and outstanding, held by POET Technologies Inc. (4) There are 1,000,000 Preferred Shares and 1,050,100 Common shares of BB Photonics Inc. issued and outstanding, all of which are held by the Company. There are no other outstanding securities of BB Photonics Inc. (5) POET Optoelectronics Co, Ltd. is a wholly owned subsidiary of POET Technologies Pte. Ltd with a registered capital of RMB1,168,833. (6) Super Photonics Xiamen Co., Ltd is joint venture located in Xiamen, China. The Company currently has an 76.1% interest in the joint venture with Sanan Integrated Circuit Co., Ltd, the other joint venturer, holding the remaining 23.9% interest in the joint venture. D. Property, Plants and Equipment. The Company’s head Canadian office is located in a 400 sq. ft. leased office space in Toronto, Ontario, Canada. The US based operations are in a leased 3,883 sq. ft. space in Allentown, Pennsylvania. Our testing operations are located in a 4,669 sq. ft leased facility in Singapore. Our product development operation is located in a 2,830 sq. ft leased facility in Shenzhen, China. Page 28 Item 4A. Unresolved Staff Comments Not applicable. Item 5. Operating and Financial Review and Prospects The following discussion should be read in conjunction with the audited consolidated financial statements of the Company and the related notes for the years ended December 31, 2023, 2022 and 2021 and the accompanying notes thereto included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. See “Cautionary Statements Regarding Forward-Looking Statements” discussed above. Actual results could differ materially from those anticipated by forward-looking information due to factors discussed under “Item 3.D. Risk Factors” and “Item 4.B. Business Overview.” A. Operating Results. The information in this section should be read in conjunction with our audited consolidated financial statements for the years ended December 31, 2023, 2022 and 2021 and related notes and the information contained elsewhere in this report. Cash and cash equivalents Cash and cash equivalents consist of cash in current accounts of $1,249,116 (2022 - $1,981,765, 2021 - $4,216,911) and funds invested in US and Canadian Term Deposits of $1,769,953 (2022 - $7,248,080, 2021 - $10,724,864) earning interest at rates ranging from 0.20% - 0.25% and maturing in less than 90 days. The decrease was primarily due to a lack of revenue and limited equity raises during the year. Short-term investments The short-term investments of nil (2022 – nil, 2021 - $6,366,828); in 2021, the Company’s short term investments consisted of guaranteed investment certificates (GICs) held with one Canadian chartered bank and earn interest at rates ranging from 0.75 to 1.44%. Selected Annual Data The selected financial data of the Company for the years ended December 31, 2023, 2022 and 2021 was derived from the audited annual consolidated financial statements of the Company, which have been audited by Marcum LLP, independent registered public accounting firm, as described in their report which is included in this Annual Report. The information contained in the selected financial data for the 2023, 2022 and 2021 years is qualified in its entirety by reference to the Company’s consolidated financial statements and related notes included under the heading ITEM 17. “Financial Statements” and should be read in conjunction with such financial statements and with the information appearing under the heading ITEM 5 “Operating and Financial Review and Prospects”. Except where otherwise indicated, all amounts are presented in accordance with IFRS as issued by IASB. Page 29 The selected annual information for continuing operations for 2023, 2022 and 2021 can be further analyzed as follows: Research and development can be analyzed as follows: Wages and benefits Subcontract fees Stock-based compensation Supplies $ $ Selling, marketing and administration costs can be analyzed as follows: Stock-based compensation Wages and benefits Professional fees General expenses Depreciation and amortization Rent and facility costs $ $ 2023 2022 2021 4,298,207 1,864,122 1,539,235 2,376,366 10,077,930 2,662,209 2,649,770 1,744,771 1,681,899 1,922,140 134,366 10,795,155 $ $ $ $ 4,267,937 2,946,729 2,054,187 1,477,890 10,746,743 2,382,417 2,648,862 1,173,743 1,860,762 1,293,158 157,329 9,516,271 $ $ $ $ 3,270,528 1,516,343 1,769,951 1,608,306 8,165,128 2,764,419 2,643,451 1,155,316 1,304,690 1,100,522 87,130 9,055,528 Factors Affecting Our Results of Operations Analysis of Continuing Operations Year Ended December 31, 2023 compared to Year Ended December 31, 2022 Net loss was $20,267,365 for the year ended December 31, 2023 compared to a net loss of $21,036,690 for the same period for 2022, a decrease of $769,325 (4%). The following discusses the significant variances between the period and 2022: Total R&D decreased by $668,813 (6%) to $10,077,930 for the year ended December 31, 2023 from $10,746,743 for the same period in 2022. For the purposes of the following analysis, non-cash stock-based compensation of $1,539,235 has been excluded and is included with the analysis of non-cash stock-based compensation below. Depreciation and amortization increased by $628,982 (49%) to $1,922,140 for the year ended December 31, 2023 from $1,293,158 for the same period in 2022. Subsequent to the sale of DenseLight, the Company embarked on a “fab-light” strategy with a required test facility situated in Singapore and product development facility in China. The increase in depreciation and amortization was a result of assets acquired for these new facilities. Professional fees increased by $571,028 (49%) to $1,744,771 for the year ended December 31, 2023 from $1,173,743 for the same period in 2022. During the period, the Company incurred legal fees related to certain unsuccessful financing arrangements that it was engaged in. Additionally, the Company incurred fees related to the preparation of regulatory documents to support multiple at-the-market financing programs. Page 30 Impact of joint venture was nil for the year ended December 31, 2023 compared to a net loss of $1,465,006 for the same period in 2022. The impact of joint venture relates to the Company’s activity related to its investment in SPX. During 2023, the Company recorded a non cash gain on its contribution of IP to SPX of $1,031,807 compared to $1,746,987 in 2022. The Company recognized its share of SPX’s losses using the equity method. On a weighted average bases, the Company incurred approximately 78.9% or $(3,026,408) of the net operating loss of SPX for 2023 compared to $(3,614,211) or 83.7% in 2022. Although the Company’s equity ownership of SPX approximated 76.1% at December 31, 2023, the Company only recognized $(1,031,807) of its share of loss in SPX in 2023, compared to $(3,211,993) in 2022 because the value of its investment is carried at nil on the consolidated statements of financial position precluding further loss recognition under the standards. General expenses and rent decreased by $201,826 (10%) to $1,816,265 for the year ended December 31, 2023 from $2,018,091 for the same period in 2022. In 2022, the Company engaged with a firm to assist with a new shareholder outreach program at a cost of $73,280. Additionally, the Company paid $30,000 to the transfer agent in annual fees to manage to various trust agreements related to debenture warrants outstanding in 2022, there were no debentures outstanding in 2023. The Company also reduced the services of certain investor relations advisers in 2023. Non-cash stock-based compensation decreased by $235,160 (5%) to $4,201,444 for the year ended December 31, 2023 from $4,436,604 for the same period in 2022. The valuation of stock options is driven by a number of factors including the number of options granted, the strike price and the volatility of the Company’s stock. The stock option expense is dependent on the timing of the stock option grant and the amortization of the options as they vest. The stock options vest in accordance with the policies determined by the Board of Directors at the time of the grant consistent with the provisions of the Plan. The Company issued warrants in USD during 2023. The issuance of those warrants created a derivative liability which is periodically remeasured and adjusted to reflect the fair value of the warrants. The Company had a non-cash adjustment of $24,865 for the year ended December 31, 2023 related to the fair value adjustment of the derivative liability. Other (income), including interest increased by $46,670 (25%) to $234,990 for the year ended December 31, 2023 from $188,320 for the same period in 2022. The increase in other (income), including interest was a result of interest income earned from short-term investments and cash equivalents during 2023. Year Ended December 31, 2022 compared to Year Ended December 31, 2021 Net loss for the year ended December 31, 2022 was $21,036,690 compared to a net loss of $15,669,093 for the same period in 2021, an increase of $5,367,597 (34%). The following discusses the significant variances between the period and 2021. During the year, NRE revenue increased by $343,648 (164%) to $552,748 for the year ended December 31, 2022 from $209,100 for the same period in 2021. The Company provided services under an NRE contract to one customer in 2021. In 2022, the Company is now providing similar services to multiple customers, one of which continued to contract services from last year. The revenue relates to unique projects that are being addressed utilizing the capabilities of the POET Optical Interposer. Total R&D increased by $2,581,615 (32%) to $10,746,743 for the year ended December 31, 2022 from $8,165,128 for the same period in 2021. For the purposes of the following analysis, non-cash stock-based compensation of $2,054,187 during the year ended December 31, 2022 has been excluded and is included with the analysis of non-cash stock-based compensation below. R&D, excluding non-cash stock-based compensation, increased by $2,297,379 (36%) to $8,692,556 for the year ended December 31, 2022 from $6,395,177 for the same period in 2021. The increase in R&D is a result of the new stage of the Company’s development where it is transitioning from technology development to product development. As the transition occurs, qualified engineers are needed to fill roles related to new production introduction and quality control. R&D wages increased by $997,409 (30%) to $4,267,937 for the year ended December 31, 2022 from $3,270,528 for the same period in 2021. The Company has also engaged with new suppliers, through non-recurring engineering and qualification programs, to ensure that the supply of required products and services will meet the Company’s standards and will be available as needed. These programs resulted in an increase in R&D supplies and subcontract fees of $1,299,970 (42%) to $4,424,619 for the year ended December 31, 2022 from $3,124,649 for the same period in 2021. Page 31 Interest expense was $49,738 for the year ended December 31, 2022 from $364,619 for the same period in 2021, a decrease of $314,881 (86%). The Company raised $3,729,921 in convertible debentures between April 2019 and September 2019 with two-year maturities. The Company was required to pay monthly interest on the convertible debentures. As the convertible debentures reached maturity during 2021, interest cost was reduced. All convertible debenture were either converted or matured in 2021. Interest in the year is non-cash. Depreciation and amortization increased by $192,636 (18%) to $1,293,158 for the year ended December 31, 2022 from $1,100,522 for the same period in 2021. With the sale of DenseLight, the Company embarked on a “fab-light” strategy with a required test facility situated in Singapore and product development facility in China. The increase in depreciation and amortization was a result of assets acquired for these new facilities. Impact of joint venture decreased by $2,910,257 (201%) to a net loss of $1,465,006 for the year ended December 31, 2022 from a net gain of $1,445,251 for the same period in 2021. The impact of joint venture relates to the Company’s activity related to its investment in SPX. During the year, the Company recognized its share of SPX’s losses using the equity method. On a weighted average basis, the Company’s share of the net operating loss was 83.7% or $3,614,211 for the year ended December 31, 2022, however the Company only recognized $3,211,993 of the net operating loss of SPX for the year ended December 31, 2022, because the investment is carried at nil (2021 - $1,445,251) on the consolidated statements of financial position. On a weighted average bases the net operating loss was 95.3% or $1,142,249 for the same period in 2021. The loss for the year ended December 31, 2022 was offset by a recognized gain of $1,746,987 related to the Company’s contribution of intellectual property to SPX in accordance with IAS 28. The Company recognized a gain of $2,587,500 during the same period in 2021. General expenses and rent increased by $626,271 (45%) to $2,018,091 for the year ended December 31, 2022 from $1,391,820 for the same period in 2021. The increase was primarily a result of the increase in D&O insurance subsequent to the Company’s listing on Nasdaq. D&O insurance is substantially higher for US listed Companies than for Canadian listed Companies. The Company was only listed on the TSXV in 2021. Additionally, the Company’s lease for its Singapore facility was renewed in Q2 2022. The lease term is currently one year, accordingly the accounting rules relating to leases permits the Company to record rent expense. Some lease related costs in 2021 were charged to interest expense and amortization because the lease term exceeded one year. Other drivers for the increase over 2021 were the fees associated with listing on Nasdaq, costs associated with the new shareholder outreach program and costs related to the Company’s presentation at the Optical Fiber Conference. The Company did not have similar costs in 2021. Other (income), including interest decreased by $73,511 (28%) to $188,320 for the year ended December 31, 2022 from $261,831 for the same period in 2021. During 2021, the Company received notice from the Small Business Administration of Washington, DC that its Covid-related PPP loan of $186,747 was forgiven in full. The Company did not have a similar forgiveness in the prior year. Other (income) including interest was all interest income in the year. Interest income for the year ended December 31, 2021 was $75,084. Exchange Rate Risk The functional currency of each of the entities included in the accompanying consolidated financial statements is the local currency where the entity is domiciled. Functional currencies include the Chinese Yuan, US, Singapore and Canadian dollar. Most transactions within the entities are conducted in functional currencies. As such, none of the entities included in the consolidated financial statements engage in hedging activities. The Company is exposed to a foreign currency risk when its subsidiaries hold current assets or current liabilities in currencies other than its functional currency. A 10% change in foreign currencies held would increase or decrease other comprehensive loss by $198,000. Page 32 Liquidity Risk The Company currently does not maintain credit facilities. The Company’s existing cash and cash resources are considered sufficient to fund operating and investing activities beyond one year from the issuance of these consolidated financial statements. The Company may, however, need to seek additional financing in the future. B. Liquidity and Capital Resources. The Company had working capital of $716,881 on December 31, 2023 compared to $5,751,101 on December 31, 2022. The Company’s statement of financial position as of December 31, 2023 reflects assets with a book value of $8,777,417 compared to $15,390,453 as of December 31, 2022. 36% of the book value at December 31, 2023 was in current assets consisting primarily of cash and cash equivalents of $3,019,069 compared to 62% of the book value as of December 31, 2022, which consisted primarily of cash and cash equivalents of $9,229,845. During the year ended December 31, 2023, the Company had negative cash flows from operations of $(15,407,462). The Company has prepared a cash flow forecast for one year from December 31, 2023 which indicates that it does not have sufficient cash to meet its minimum expenditure commitments and therefore needs to raise additional funds to continue as a going concern. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. To address the future funding requirements, management has undertaken the following initiatives: 1. 2. 3. 4. Raised CA$6,219,667 (US$4,607,161) in gross funding from a private placement on January 24, 2024.The financing included the issuance of warrants at an exercise price of CA$1.52. These warrants are currently in- the- money and will be exercisable after May 25, 2024. Raised $1,607,400 in gross funding from a public offering on December 4, 2023. The financing included the issuance of warrants at an exercise price of $1.12. These warrants are currently in- the- money and holders of these warrants are encouraged to exercise them. Raised $983,194 in gross proceeds from its at-the-market programs which were raised between June 30, 2023 and December 31, 2023. Established a strict budgetary process with a focus on maintaining an appropriate level of corporate overheads in line with the Company’s available cash resources. The Company’s financial statements do not include any adjustments to the assets’ carrying amount, to the expenses presented and to the reclassification of the balance sheets items that could be necessary should the Company be unable to continue its operations. Page 33 The following is a summary of Company’s cash flows and working capital: Net cash used in operating activities Net cash from investing activities Net cash from financing activities Effect of exchange rate changes on cash Change in cash Opening cash Ending cash Operating Activities 2023 $ (15,407,462) (1,247,064) 10,195,500 248,250 (6,210,776) 9,229,845 3,019,069 2022 $ (12,325,910) 3,292,791) 3,435,204 (114,015) (5,711,930) 14,941,775 9,229,845 2021 $ (11,233,293) (7,297,710) 26,553,677 46,207 8,068,881 6,872,894 14,941,775 During 2023, the Company recorded consolidated losses of $20,267,365 (2022 - $21,036,690, 2021 - $15,669,093). The operating activities of the included the following non-cash items: non-cash stock-based compensation of $4,201,444 (2022 - $4,436,604, 2021 - $4,534,370), depreciation and amortization of $1,922,161 (2022 - $1,293,158, 2021 - $1,100,522), accretion of debt discount on convertible debentures and non-cash interest of $53,614 (2022 - $49,738, 2021 - $213,843). Gain on contribution of intellectual property to joint venture was $1,031,807 (2022 - $1,746,987, 2021 - $2,587,500) while the Company had a share of loss in joint venture of $1,031,807 (2022 - $3,211,993, 2021 - $1,142,249). The Company had a non-cash adjustment of $24,865 (2022 – nil, 2021 – nil) related to the fair value adjustment of the derivative liability. Other non-cash operating costs (income) was nil (2022 - $40,029, 2021 - $(172,933)). The Company will regularly have high non-cash stock-based compensation as it uses stock options as method of attracting, retaining and motivating directors, employees and consultants of the Company and any of its subsidiaries and to closely align the personal interests of such directors, employees and consultants with those of the shareholders by providing them with the opportunity, through options, to acquire common shares in the capital of the Company while managing compensation through cash. Subsequent to the sale of DenseLight, the Company embarked on a “fab-light” strategy with a required test facility situated in Singapore and product development facility in China. The increase in depreciation and amortization was a result of assets acquired for these new facilities. In 2019, the Company raised $7,729,921 in convertible debentures issued at a discount. The discount on the convertible debentures was accreted over the life of the convertible debentures. The convertible debentures either matured or were converted in 2021, therefore in 2023 and 2022, non-cash cost of accretion of debt discount on convertible debentures was nil (2021 - $213,843). Non-cash interest in 2023 and 2022 related to the interest costs attributed the Company’s property leases. The Company recognized a gain of $1,031,807 for the year ended December 31, 2023 (2022 - $1,746,987, 2021 - $2,587,500) related to its contribution of intellectual property to SPX in accordance with IAS 28. The Company only recognizes a gain on the contribution of the intellectual property equivalent to SAIC’s interest in SPX. Additionally, the Company recognizes its share of SPX’s losses using the equity method. On a weighted average basis, the Company’s share of the net operating loss was 78.9% or $3,026,408, however, the Company only recognized $1,031,807 of the net operating loss of SPX for the year ended 2023, which was equivalent to the gain in the year. No further loss is recorded because the carrying value is nil. In 2022, the Company incurred a loss of 83.7% or $3,614,211, however the Company only recognized $3,211,993 of the net operating loss of SPX for the year ended December 31, 2022 because the investment is was carried at nil (2021 - $1,445,251) on the consolidated statements of financial position. Page 34 Consolidated negative cash flow from operations was $15,407,462 for the year ended December 31, 2023 (2022 - $12,325,910, 2021 - $11,233,293). Investing Activities The Company had consolidated cash flows from investing activities of $(1,247,064) for the year ended December 31, 2023 (2022 - $3,292,791, (2021 - $(7,297,710)). The Company purchased $6,366,828 of short-term investments in 2021 due to the excess cash it had on hand. These investments matured in 2022. The funds were invested in interest bearing facilities in accordance with the Company’s investment policy. No such investments were either purchased or matured in 2023. In 2023, $1,247,064 (2022 - $3,074,037, 2021 - $930,882) was used to purchase new equipment and patents. Financing Activities During the year ended December 31, 2023, the Company raised gross proceeds of $983,194 from the issuance of 227,673 common shares at an average price of $4.32 through an Equity Distribution Agreement, (“EDA”) with multiple agents. Pursuant to the EDA, the Company established an at-the-market (“ATM”) equity offering program whereby the Company may, at its discretion, during the term of the ATM agreement issue and sell, through the agents such number of common shares of the Company as would result in aggregate gross proceeds to the Company of up to $30 million. The agents were paid a commission of 3% or $29,486 of the gross proceeds raised through the ATM. The Company incurred additional financing costs including legal and filing fees of $291,226. On December 4, 2023, the Company raised gross proceeds of $1,607,400 from the issuance of 1,786,000 units through an underwritten public offering in the United States (the “Offering”). The Offering consisted of 1,600,000 common shares of the Company and warrants to purchase up to 1,600,000 common shares of the Company at a combined public offering price of $0.90 per common share and accompanying warrant. Each warrant has an exercise price of $1.12 per common share and is exercisable for five years from the date of issuance. In addition, the Company granted the underwriter a 45-day option to purchase up to an additional 240,000 common shares and/or warrants to purchase up to an additional 240,000 common shares at the public offering price in any combination, less underwriting discounts and commissions, which the underwriter has partially exercised to purchase 186,000 additional common shares and additional warrants to purchase up to 186,000 common shares. The agents were paid a commission of 7% or $112,518 of the gross proceeds raised. The Company incurred additional financing costs including legal and filing fees of $145,089. The fair value of the share purchase warrants was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: dividend yield of 0%, risk-free interest rate of 3.54%, volatility of 75.66%, and estimated life of 5 years. The estimated fair value assigned to the warrants was $954,537. On December 2, 2022, the Company completed a non-brokered private placement offering of 1,126,635 units at a price of $2.78 (CAD$3.81) per unit for gross proceeds of $3,184,332 (CAD$4,292,479). Each unit consists of one common share and one-half common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at a price of $3.61 (CAD$4.95) per share until December 2, 2025. The Company paid finders’ fees aggregating to $42,090 (CAD$57,897) to four firms. The Company paid other share issue costs of $205,802 related to this private placement offering. One director subscribed for 10,000 units of this private placement offering for gross proceeds of $27,800 (CAD$38,100). On February 11, 2021, the Company completed a brokered private placement offering of 1,764,720 units at a price of $6.70 (CAD$8.50) per unit for gross proceeds of $11,815,595 (CAD$15,000,120). Each unit consists of one common share and one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at a price of $9.00 (CAD$11.50) per share until February 11, 2023. At any time after June 12, 2021, the Company reserves the right to accelerate the expiry of the warrants if the Company’s average stock price exceeds $18.10 (CAD$23.00) for a period of 10 consecutive trading days. The broker was paid a cash commission of $708,667 (CAD$900,007) equating to 6% of the gross proceeds and received 1,058,832 broker warrants. Each broker warrant is exercisable into one common share of the Company at a price of $6.70 (CAD$8.50) per broker warrant until February 11, 2023. The Company incurred additional share issuance costs of $434,367 directly related to the private placement and fees to induce certain warrant holders to exercise their warrants. Page 35 In addition to funds received from the brokered private placement, the Company received $16,118,750 from the exercise of stock options and warrants. The Company also improved its liquidity by $3,571,342 through the conversion of convertible debentures into units of the Company. Capital Expenditures The Company has an approved capital budget of $610,000 for the 2024 fiscal year related to research and development equipment, manufacturing equipment and patent registration. In 2023, $1,247,064 (2022 - $3,074,037, 2021 - $930,882) was either spent in cash or accrued for acquiring development and manufacturing equipment and new patents. C. Research and Development. Beginning in 2017, POET began designing lasers for data communications applications and directed DenseLight Semiconductors, Pte. Ltd., a former subsidiary of the Company, to build such lasers to be compatible with the Optical Interposer platform. In 2019, the Company decided to adopt a “fab light” strategy, common among semiconductor companies, and divested its fabrication operations through the sale of DenseLight in November of that year. From 2018 – 2020, virtually all the R&D spending in the Company was dedicated to design & development of the Optical Interposer as a versatile platform technology, replete with features that enhance its utility across a variety of application spaces. During the second half of 2021, the Company transitioned to product development by investing more than $2 million in the design & development of 100G and 200G optical engines in several configurations, including customized designs for specific customers and applications. Samples of optical engines at various stages of development were made available and delivered to customers in 2022 for initial evaluation and in 2023 for design-in and customer qualification. SPX is forecasted to produce Optical Engines in high volumes for several customers in 2024. POET’s effort in lower speed Optical Engine design and production was intended primarily as a way for POET to demonstrate the viability and market acceptance of its unique approach to integration and fabrication and to establish an initial presence in the market. However, the Company’s primary strategy is to offer Optical Engines at the highest speeds at which customers are deploying Optical Transceivers. In 2024, we expect that we will be primarily in 800G, and heavily focused on those hyperscale data centers actively implementing AI services. Consistent with this strategy, the Company has invested approximately $20 million in design, development and engineering programs related to its 400G transmit chiplets (combined in multiples of 400G to achieve 800G, 1.6T and 3.2T speeds), in 800G receive optical engines, and in light source products, and fabrication techniques. The Company has designed, tested and sampled the current version of its 400G transmit (Tx) engine, and its 800G receive (Rx) engine with various customers. The Company intends to revise its 400G Tx product and to introduce a new version later this year. The 800G Rx has been well received, fully qualified and is expected to be incorporated in the optical transceiver modules of several customers this year. So long as the Company provides Optical Engines to optical transceiver module customers, there will always be customer centric adjustments to these products to fit their specific needs. The cost to make these adjustments will vary depending on the customer requirements. The Company is expected to invest an additional $11 million in 2024 in ongoing development of the 400G Tx chiplet for inclusion in 800G and 1.6T optical transceivers. POET is also committed to the development of its own optical transceiver modules, a critical next phase in the Company’s growth plan, with investments in that program beginning this year. At the present time, the Company expects to have a functional module by 2025 with sales of modules ramping in late 2025. Page 36 Internally generated research costs, including the costs of developing intellectual property and maintaining patents are expensed as incurred. Internal development costs are expensed as incurred unless such costs meet the criteria for capitalization and amortization under IFRS, which to date has not occurred. We incurred a cumulative $10,077,930, $10,746,743 and $8,165,128 of research and development expenses during the years ended December 31, 2023, 2022 and 2021 which includes non-cash stock-based compensation of $1,539,235, $2,054,187 and $1,769,951 respectively. Other expenses related to research and development expenditures in the semiconductor business include costs associated with salaries, material costs, license fees, consulting services and third-party contract manufacturing. The expenses in all years presented can be analyzed for continuing and discontinuing operations as follows: R&D for Continuing Operations Wages and benefits Subcontract fees Stock-based compensation Supplies D. Trend Information. For the Years Ended December 31, 2023 2022 2021 $ $ 4,298,207 1,864,122 1,539,235 2,376,366 10,077,930 $ $ 4,267,937 2,946,729 2,054,187 1,477,890 10,746,743 $ $ 3,270,528 1,516,343 1,769,951 1,608,306 8,165,128 Other than as may be disclosed elsewhere in this annual report and specifically in Item 4.B. “Business Overview,” we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. E. Critical Accounting Estimates. The Company prepares its audited consolidated financial statements in accordance with IFRS as issued by the IASB, which differs from U.S. GAAP. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting assumptions and estimates. These assumptions are limited by the availability of reliable comparable data and the uncertainty of predictions concerning future events. It also requires management to exercise judgment in applying the Company’s accounting policies. The Company believes that the estimates and assumptions upon which it relies are reasonable based upon information available at the time that these estimates and assumptions are made. Actual results could differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below. Basis of presentation These consolidated financial statements include the accounts of POET Technologies Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated on consolidation. Page 37 The Company’s financial instruments consist of cash and cash equivalents, short-term investments, covid-19 government support loans, contract liabilities and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest risk arising from these financial instruments. The Company estimates that carrying value of these instruments approximates fair value due to their short-term nature. The following table outlines the classification of financial instruments under IFRS 9: Financial Assets Cash and cash equivalents Short-term investments Accounts receivable Financial Liabilities Accounts payable and accrued liabilities Derivative warrant liability Covid-19 government support loans Contract liabilities Debt and Debt Instruments Amortized cost Amortized cost Amortized cost Amortized cost Fair value through profit and loss Amortized cost Amortized cost Convertible debentures are accounted for as a compound financial instrument with a debt component and a separate equity component. The debt component of these compound financial instruments is measured at fair value on initial recognition by discounting the stream of future interest and principal payments at the rate of interest prevailing at the date of issue for instruments of similar term and risk. The debt component is subsequently deducted from the total carrying value of the compound instrument to derive the equity component. The debt component is subsequently measured at amortized cost using the effective interest rate method. Interest expense based on the coupon rate of the debenture and the accretion of the liability component to the amount that will be payable on redemption are recognized through profit or loss as a finance cost. Joint venture A joint arrangement is an arrangement among two or more parties where the parties are bound by a contractual arrangement and the contractual arrangement gives the parties joint control of the arrangement. A joint venture is a form of joint arrangement where an entity is independently formed and the parties jointly have rights to the net assets of the arrangement and therefore account for their interests under the equity method. Share consolidation On February 24, 2022, the Company filed Articles of Amendment to consolidate its common shares on a ten-for-one basis. For further clarity, for every ten (10) pre- consolidated common shares, shareholders received one (1) post-consolidated common share. On February 28, 2022 the Company’s common shares began trading on the TSXV on a post consolidation basis. The Company’s name and trading symbol remained unchanged. All references to share and per share amounts in these consolidated financial statements and accompanying notes to the consolidated financial statements have been retroactively restated to reflect the ten-for-one share consolidation. Property and equipment Property and equipment are recorded at cost. Depreciation is calculated based on the estimated useful life of the asset using the following method and useful lives: Machinery and equipment Leasehold improvements Office equipment Straight Line, 5 years Straight Line, 5 years or life of the lease, whichever is less Straight Line, 3 – 5 years Page 38 Patents and licenses Patents and licenses are recorded at cost and amortized on a straight-line basis over 12 years. Ongoing maintenance costs are expensed as incurred. Stock-based Compensation Stock options and warrants awarded to non-employees are accounted for using the fair value of the instrument awarded or service provided, whichever is considered more reliable. Stock options and warrants awarded to employees are accounted for using the fair value method. The fair value of such stock options and warrants granted is recognized as an expense on a proportionate basis consistent with the vesting features of each tranche of the grant. The fair value is calculated using the Black-Scholes option-pricing model with assumptions applicable at the date of grant. Other stock-based payments The Company accounts for other stock-based payments based on the fair value of the equity instruments issued or service provided, whichever is more reliable. Cumulative Translation Adjustment IFRS requires certain gains and losses such as certain exchange gains and losses arising from the translation of the financial statements of a self-sustaining foreign operation to be included in comprehensive income. Impairment of long-lived assets The Company’s tangible and intangible assets are reviewed for indications of impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. An assessment is made at each reporting date whether there is any indication that an asset may be impaired. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss for the year. The recoverable amount is the greater of the asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (“CGU”) to which the asset belongs. An impairment loss is reversed if there is an indication that there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. No impairment loss has been reported for the years ended December 31, 2023, 2022 and 2021. Income taxes The Company follows the liability method of accounting for income taxes. Under this method, deferred income taxes are provided on differences between the financial reporting and income tax bases of assets and liabilities and on income tax losses available to be carried forward to future years for tax purposes. Deferred income taxes are measured using the substantively enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Deferred tax assets are only recognized if the amount is expected to be realized in the future. Page 39 Revenue recognition Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue when it transfers control over a product or service to a customer. Sale of goods Revenue from the sale of goods is recognized, net of discounts and customer rebates, at the point in time the transfer of control of the related products has taken place as specified in the sales contract and collectability is reasonably assured. Service revenue The Company provides contract services, primarily in the form of non-recurring revenue (“NRE”) where control is passed to the customer over time. The contracts generally provide agreed upon milestones for customer payment which include but are not limited to the delivery of sample products, design reports and test reports. The customer makes payment when it has approved the delivery of the milestone. The Company must determine if the contract is made up of a series of independent performance obligations or a single performance obligation. Where NRE contracts contain multiple performance obligations for which a standalone transaction price can be assessed, revenue is recognized as each performance obligation is satisfied. Where NRE contracts contain a single performance obligation to be settled over time, revenue is recognized progressively based on the output method. Other income Interest income Interest income on cash is recognized as earned using the effective interest method. Government Grants Loans received exclusively from governmental agencies to support the Company throughout the COVID-19 pandemic qualify to be forgiven if certain conditions are met. Forgiveness of COVID-19 related loans will be recognized as other income on the consolidated statements of operations and deficit. Wage subsidies Wages subsidies received from the Singaporean government are netted against R&D related wages and benefits on the consolidated statements of operations and deficit. Intangible assets Research and development costs Research costs are expensed in the year incurred. Development costs are also expensed in the year incurred unless the Company believes a development project meets IFRS criteria as set out in IAS 38, Intangible Assets, for deferral and amortization. IAS 38 requires all research costs be charged to expense while development costs are capitalized only after technical and commercial feasibility of the asset for sale or use have been established. This means that the entity must intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefits. Development costs are tested for impairment whenever events or changes indicate that its carrying amount may not be recoverable. Page 40 In-process research and development Under IFRS, in-process research and development (“IPR&D”) acquired in a business combination that meets the definition of an intangible asset is capitalized with amortization commencing when the asset is ready for use (i.e., when development is complete). The Company does not capitalize its IPR&D. Loss per share Basic loss per share, net of taxes is calculated by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period after giving effect to potentially dilutive financial instruments. The dilutive effect of stock options and warrants is determined using the treasury stock method. Selected Annual Data The selected financial data of the Company for the years ended December 31, 2023, 2022 and 2021 was derived from the audited annual consolidated financial statements of the Company, which have been audited by Marcum LLP, independent registered public accounting firm, as described in their report which is included in this Annual Report. The information contained in the selected financial data for the 2023, 2022 and 2021 years is qualified in its entirety by reference to the Company’s consolidated financial statements and related notes included under the heading Item 17. “Financial Statements” and should be read in conjunction with such financial statements and with the information appearing under the heading Item 5 “Operating and Financial Review and Prospects”. Except where otherwise indicated, all amounts are presented in accordance with IFRS as issued by IASB. Item 6. Directors, Senior Management and Employees A. Directors and Senior Management. The following table sets forth information regarding our Directors and Senior Management for the most recent fiscal year. Name Jean-Louis Malinge (1)(4) Peter Charbonneau (1)(3)(5) Dr. Suresh Venkatesan (4) Kevin Barnes Thomas R. Mika Vivek Rajgarhia Chris Tsiofas (1)(2) Glen Riley (2)(3)(4) Michal Lipson (3)(4) Theresa Ende (2)(4) Raju Kankipati Dr. Mo Jinyu Dr. Robert Ditizio Dan Meerovich Yong Meng (James) Lee Positions Director Lead Independent Director Corporate Governance and Nominating Committee Chair Chief Executive Officer and Chairman Chair of Ad Hoc Strategy Committee VP Finance & Administration, Corporate Controller and Treasurer EVP & Chief Financial Officer President & General Manager Director Audit Committee Chair Director Compensation Committee Chair Director Director SVP – Product Line Management & GM USA SVP, GM of Asia VP – Intellectual Property VP – Product Engineering VP & GM POET Technologies Pte. Ltd. (1) Member of Audit Committee (2) Member of Compensation Committee (3) Member of Corporate Governance and Nominating Committee (4) Member of Ad Hoc Strategy Committee (5) Resigned from the Board on March 14, 2024 Date First Elected or Appointed a Director or Officer September 5, 2017 March 28, 2018 June 11, 2015 December 1, 2012 November 2, 2016 November 4, 2019 August 21, 2012 December 7, 2020 October 14, 2022 October 14, 2022 May 1, 2022 January 1, 2022 December 1, 2021 March 2, 2020 September 2, 2019 Age 70 70 57 52 72 56 56 61 53 67 45 49 61 64 52 Page 41 Dr. Suresh Venkatesan as CEO. Prior to joining POET in 2015 as CEO, Dr. Venkatesan was the Senior Vice President, Technology Development at GlobalFoundries and was responsible for the Company’s Technology Research and Development. He joined GlobalFoundries in 2009, where he led the development and ramp of the 28nm node and was instrumental in the technology transfer and qualification of 14nm. In addition, he was responsible for the qualification and ramp up of multiple mainstream value-added technology nodes. Dr. Venkatesan is an industry veteran with over 22 years of experience in semiconductor technology development. Prior to joining GlobalFoundries, he held various leadership positions with Freescale Semiconductor in Austin, Texas. He holds over 25 US patents, and has co-authored over 50 technical papers. He earned a Bachelor of Technology degree in Electrical Engineering from the Indian Institute of Technology and a Master of Science and PhD degrees in Electrical Engineering from Purdue University. Vivek Rajgarhia serves as President and General Manager. Before joining POET, Mr. Rajgarhia served as Senior Vice President & General Manager of the Lightwave Business Unit of MACOM (NASDAQ: MTSI). Mr. Rajgarhia joined MACOM through the acquisition of Optomai Inc., where he was the Co-Founder and CEO, to start MACOM’s first optical business. He was then instrumental in identifying and leading several strategic acquisitions to build an extensive portfolio of optical and photonic businesses, which formed MACOM’s Lightwave Business Unit. Mr. Rajgarhia has held several senior management positions during his 30 years in the optical communications industry. He was Director of Sales & Marketing (Asia) for Lucent Technologies’ (now Nokia) optical components, where he started Lucent’s Asia business; Vice President of Product Marketing and Business Development for OpNext (formerly Hitachi’s Fiber Optics Division), now Lumentum, where he was part of the team to spin-off the optical business from Hitachi; Director of Product Management & Marketing for JDS Uniphase (now Lumentum), and VP of Global Sales for GigOptix. Mr. Rajgarhia has been a successful entrepreneur, founding two optical companies, and has held international assignments in Hong Kong, Germany and India. He holds a Bachelor of Engineering (Electrical) degree from Stevens Institute of Technology in New Jersey. Mr. Thomas Mika serves as EVP & CFO. Prior to joining POET, Mika served for one year as the Executive Chairman of Rennova Health, Inc., the successor company to CollabRx and its predecessor, Tegal Corporation, a semiconductor capital equipment company (NASDAQ: TGAL). On the Board of Directors of Tegal since its spin-out from Motorola in 1989, Mika assumed the roles of Chief Financial Officer in 2002, CEO in 2005 and Chairman & CEO in 2006, positions which he held until 2015. In 2015, Tegal merged with Rennova Health with Mika retaining the position of Chairman until joining POET in November 2016. In 1980, Mika co- founded IMTEC, a boutique M&A, investment and consulting firm, serving clients in the U.S., Europe and Japan over a period of 20 years, taking on the role of CEO in several ventures. Earlier in his career, Mika was a managing consultant with Cresap, McCormick & Paget and a policy analyst for the National Science Foundation. He holds a Bachelor of Science in Microbiology from the University of Illinois at Urbana-Champaign and a Master of Business Administration from the Harvard Graduate School of Business. Mr. Kevin Barnes has been serving as Corporate Controller and Treasurer since 2008 and briefly as Chief Financial Officer (2012 – 2016). Mr. Barnes holds a Master of Business Administration and is a member of the Institute of the Certified Management Accountants of Australia and an Accredited Chartered Secretary. Mr. Barnes served as a Corporate Controller and Business Performance Manager for EC English, one of the world’s largest language training institutes between 2006 and 2014. Mr. Barnes also serves as Chief Financial Officer of VVC Exploration Corporation, a minerals exploration company since 2006. From 2000 to 2006, he was a reporting manager with Duguay and Ringler Corporate Services, which specializes in financial reporting for publicly traded companies. Page 42 Dr. Mo Jinyu is a highly experienced technical and business veteran of the photonics and optoelectronics industries. Her expertise covers optical transmission system, advanced optical modulation format, tunable semiconductor lasers, DFB and FP lasers and PD/APD, optical transceiver modules and high-speed integrated packaging. Dr. Mo has more than 22 years of experience spanning several companies, including MACOM Technology Solutions, Bookham/Oclaro, Huawei, I2R in Singapore and Nexvave Photonics Technology Co., which she founded and served as Chief Technology Officer. Dr. Mo was most recently with MACOM as the Senior Director and Chief Scientist of the Lightwave business unit in Asia and site leader in Shenzhen. Dr. Mo received her PhD degree in Optical Communications from Nanyang Technological University (NTU) Singapore. She is a senior member of IEEE and has been a member of IEEE’s Technical Committees for several international conferences. She has over 11 patents and more than 40 papers published in tier one journals and conferences. Mr. Raju Kankipati brings over 20 years of experience in Optical transceivers, Optical components, Cloud data center and networks to POET. He was a Senior Director of Product Management at MACOM, focused on optical components and photonic solutions. Prior to that, Raju worked at Arista Networks as a Senior Product Manager and Engineering Manager. During this time he collaborated closely with data center customers to bring unique switching products as well as Optical transceivers to market, that helped customers deploy 40G and 100Gbps products for highly scalable and efficient networks. Raju worked as a Product Manager at Cisco prior to joining Arista. Raju started his career as an Optics Engineer at Opnext and later held various roles in sales and marketing at the company. Raju received his MBA degree from UC Berkeley (Haas School of Business) and completed his Bachelor of Engineering in Electronics from BITS, Pilani in India. Mr. Chris Tsiofas, CA, CPA, earned a Bachelor’s of Commerce Degree from the University of Toronto and is a member of the Chartered Professional Accountants of Canada and the Canadian Tax Foundation. He has been on the Board of Directors since August of 2012 and has served as the Chair of the Audit Committee during his entire tenure In February 2024 he was appointed to the Board of Directors of Andrew Peller Limited (TSE:ADW) and serves as the Chair of the Audit and Pension Committees. Andrew Peller Ltd. is a leading producer and marketer of quality wines and craft beverage alcohol products in Canada. With wineries in British Columbia, Ontario, and Nova Scotia, the Company markets wines produced from grapes grown in Ontario’s Niagara Peninsula, British Columbia’s Okanagan and Similkameen Valleys, and from vineyards around the world. He is the president of MTN Chartered Professional Accountant Professional Corporation, a public accountancy firm. He sits on various private company boards. He has also served in a principal capacity in various entrepreneurial ventures resulting in successful divestitures Mr. Jean-Louis Malinge recently retired as partner with ARCH Venture Partners, an early-stage venture capital firm with nearly $2 billion under management. Additionally, he is a board member of EGIDE SA, CAILabs and Aeponyx. EGIDE SA is a public French company which designs, manufactures and sells hermetic packages for the protection and interconnection of several types of electronic and photonic chips. CAIlabs is a venture-backed French innovative start-up founded in 2013 which has developed a unique spatial multiplexing platform. Aeponyx is a venture-backed Canadian innovative start-up which develops a platform combining Silicon Nitride waveguides with planar MEMS for photonics components. From 2004 to 2013 Jean-Louis was President and CEO of Kotura, a Silicon Photonics pioneer which was acquired in 2013 by Mellanox Technologies. Prior to Kotura, Mr. Malinge was an executive with Corning Inc for 15 years. Jean-Louis hold an Executive M.B.A. from MIT Sloan School in Boston, Massachusetts. He also holds an engineering degree from the Institut National des Sciences Appliquées in Rennes, France. Mr. Peter Charbonneau was a general partner at Skypoint Capital Corporation for almost 15 years, where he was jointly responsible for the placement of $100 million of capital in early-stage telecommunications and data communication companies Mr. Charbonneau currently serves on the board of Surgical Safety Technologies Inc. an early stage start up that uses clinically trained deep learning systems to perform advanced analytics on hospital data. He recently served on the Board of Mitel Networks Corporation, a leading global provider of cloud and on-site business communications until November 2018 when it was sold to a private equity firm. He previously served as Chairman of the Board of Trustees for the CBC Pension Board and a director on the board of the Canadian Broadcasting Corporation as well as many technology and networking companies, including March Networks Corporation, TELUS Corporation, Breconridge Corporation and Dragonwave Incorporated. Page 43 Mr. Yong Meng (James Lee) is General Manager of the Company’s Singapore subsidiary. Prior to his appointment in 2019, Mr. Lee was Vice President of Logic Technology at IMEC where he was responsible for defining the logic roadmap and developing the technology elements necessary to extend scaling with ultra-scaled FinFET, GAA devices, advanced metallization as well novel materials for emerging devices and quantum computing. Mr. Lee joined IMEC in 2015 where he was instrumental in driving collaborations with the foundries in China and was responsible for bringing in >100M euros of research partnership. Prior to IMEC, Mr. Lee had a 19-year career with GLOBALFOUNDRIES where he held various technical and management positions spanning the US and Singapore focused on developing, qualifying and ramping leading edge CMOS technology in the foundry. He has over 60 patents and holds a Bachelor of Engineering degree from the University of Illinois at Champaign-Urbana. Mr. Glen Riley has more than 30 years’ experience in leadership roles spanning both the semiconductor and optoelectronics industries. He most recently served as General Manager of the Filter Solutions Business Unit at Qorvo, where he was responsible for developing highly integrated RF modules used in flagship smartphones. Prior to the merger of RFMD and TriQuint that formed Qorvo, he held multiple leadership roles at TriQuint, including Managing Director of international headquarters in Singapore, General Manager of the GaAs foundry business, and General Manager of Optoelectronics. Riley was previously the Chief Executive Officer of Opticalis, an early stage optoelectronics company focused on the development of high-density wavelength division multiplexing products. He also held prior roles as Vice President and General Manager of the Optoelectronic business at Agere Systems, and President of Asia-Pacific Sales and Marketing at Lucent Technologies Microelectronics Group. He graduated as valedictorian with a B.S. degree in Electrical Engineering from the School of Engineering at the University of Maine and completed the General Manager Program at Harvard Business School. Ms. Theresa Ende serves as Chief Procurement Director of Arista Networks. Prior to her appointment as Chief Procurement Director in 2019, Ms. Ende served for 10 years as its Senior Director of Global Supply Chain Management. Prior to Arista, she held senior positions at JDSU Optical Division and Force10 Networks. At Cisco Systems and ROLM Telecommunications, Ms. Ende held various program management and planning management positions over a 20-year period. In 2019, she was honored as one of the “Top 100 Women of Influence” by Silicon Valley Business Journal. Professor Michal Lipson currently serves as a Eugene Higgins Professor of Electrical Engineering and Professor of Applied Physics at Columbia University. Her research focus is on Nanophotonics and includes the investigation of novel phenomena, as well as the development of novel devices and applications. Professor Lipson pioneered critical building blocks in the field of Silicon Photonics, which today is recognized as one of the most promising directions for solving the major bottlenecks in microelectronics. She is the inventor of over 45 issued patents and has co-authored more than 250 scientific publications. In recognition of her work in silicon photonics, she was elected as a member of the National Academy of Sciences and the American Academy of Arts and Sciences. She was also awarded the NAS Comstock Prize in Physics, the MacArthur Fellowship, the Blavatnik Award, the Optical Society’s R. W. Wood Prize, the IEEE Photonics Award, and has received an honorary degree from Trinity College, University of Dublin. In 2020, she was elected the 2021 Vice President of The Optical Society and will serve as OSA President in 2023. Since 2014, every year, she has been named by Thomson Reuters as a top 1% highly cited researcher in the field of Physics. Dr. Robert Ditizio joined POET Technologies Inc. as a consultant in 2017, assisting with the development of the Company’s Intellectual Property portfolio for the Optical Interposer platform. Dr. Ditizio was appointed Vice President in December 2021. He brings to POET over 20 years of IP portfolio management expertise and an expansive knowledge of materials and semiconductor processing technology. Prior to his work with POET Technologies, Dr. Ditizio played an instrumental role in the development of manufacturing and processing equipment for companies in the semiconductor industry, including plasma reactors and cluster tool platforms for advanced etching and deposition processes in a range of engineering positions, culminating as Chief Technologist of Tegal Corporation. In addition to equipment development, he also led the development of numerous semiconductor patterning applications including non-volatile memory etch applications, through silicon via applications, and compound semiconductor etch applications, among many others, and the development of deposition applications including CVD of polymeric films and pulsed CVD and ALD of barrier layers and complex stoichiometric films. Dr. Ditizio holds 10 patents in these areas and has published numerous technical papers. He holds BS, MS, and PhD degrees in Engineering Science from Pennsylvania State University and an MBA from the Sonoma State University. Page 44 Mr. Dan Meerovich brings to POET more than 30 years of experience in developing and manufacturing innovative photonics products at MACOM, Apogee (now Broadcom), Oclaro, Multiplex (now Hisense) and JDS Uniphase. As the Director of Product Engineering for MACOM’s Lightwave Business Unit, he led the test, product and process engineering for lasers, photodetectors, AWG waveguides, optical engines and silicon photonic PICs. Dan developed the low-cost and scalable process of laser integration onto silicon photonic integrated circuits. Dan has set up wafer fabrication facilities, run manufacturing operations at Multiplex and Xtellus (acquired by Oclaro) and built and managed a China-based manufacturing subsidiary acquired by Hisense. In addition, Dan set up and managed contract manufacturers to scale production of both high performance and low- cost optical modules. Earlier in his career, Dan led the development of photonic engines incorporating high speed lasers and EMLs, including the first uncooled EML module in a low cost TO platform. The company, Apogee, was later acquired by Cyoptics which was then acquired by Broadcom. Dan holds BSEE and MBA degrees from Rutgers University. The Directors, unless otherwise noted above, have served in their respective capacities since their election and/or appointment, and will serve until the next Company’s annual general meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles of Continuance. The Board has adopted a written Code of Business Conduct and Ethics to promote a culture of ethical business conduct and relies upon the selection of persons as directors, senior management and employees who they consider to meet the highest ethical standards. The Company’s Code of Business Ethics can be found on the Company’s web site at: www.poet-technologies.com. There are no family relationships between any of our Directors or senior management. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or member of senior management. B. Compensation. Fixed Stock Option Plan On September 21, 2007, the Directors approved a fixed 20% vesting Stock Option Plan (the “Plan”) to replace the Rolling Stock Option Plan that had been in effect since May 4, 2005. The Plan was approved by the disinterested shareholders of the Company at the Shareholders’ Meeting of June 19, 2008 and accepted for filing by the TSXV. Under the Plan, the maximum number of shares (the “Maximum Number”) which may be issued pursuant to options granted under the Plan or otherwise granted cannot exceed 20% of the issued and outstanding shares. The shareholders fixed the Maximum Number at 1,193,000. Thereafter, the Plan has been amended by the Directors, and such amendments have been approved by the shareholders in 2009, 2011, 2013, 2014, 2015, 2016, 2018, 2020 and 2021. Omnibus Plan On June 30, 2023, shareholders of the Company approved a fixed 20% omnibus equity incentive plan (the “Omnibus Plan”). The Omnibus Plan replaces the 2021 stock option plan. The Omnibus Plan provides flexibility to the Company to grant different forms of equity-based incentive awards to directors, officers, employees and consultants. The Omnibus plan provides the Company with the choice of granting stock options, share units and deferred share units. The purpose of the Omnibus Plan is to assist the Company in attracting, retaining and motivating directors, employees and consultants of the Company and any of its subsidiaries and to closely align the personal interests of such directors, employees and consultants with those of the shareholders by providing them with the opportunity, through options, to acquire common shares in the capital of the Company. Page 45 The Omnibus Plan provides that the maximum number of common shares issuable pursuant to awards granted under the Omnibus Plan and pursuant to other previously granted awards is limited to 8,056,055. Any subsequent increase in the Number Reserved must be approved by shareholders of the Company and cannot, at the time of the increase, exceed 20% of the number of issued and outstanding shares. Awards vest in accordance with the policies determined by the Board of Directors from time to time consistent with the provisions of the Omnibus Plan which grants discretion to the Board of Directors. There is no other limit to the number of options granted to any individual, except for: (i) 2% on a yearly basis to any one consultant and (ii) 2% on a yearly basis to any employee providing “Investor Relations Activities.” The following paragraphs summarize some of the terms of the Omnibus Plan: Options An Option is an option granted by the Corporation to a Participant entitling such Participant to acquire a designated number of Shares from treasury at an exercise price set at the time of grant (the “Option Price”). Options are exercisable, subject to vesting criteria established by the Board at the time of grant as set out in the Participant’s option agreement (“Option Agreement”). Each Option shall be exercisable at such time or times and/or pursuant to the achievement of such Performance Criteria and/or other vesting conditions as the Board at the time of granting the particular Option, may determine in its sole discretion. The Board shall determine, at the time of granting the particular Option, the period during which the Option is exercisable, which shall not be more than ten (10) years from the date the Option is granted. Notwithstanding the expiration provisions hereof, if the date on which an Option Term expires falls within a Blackout Period or within nine Business Days after a Blackout Period Expiry Date, the expiration date of the Option will be the date that is ten Business Days after the Blackout Period Expiry Date. The Blackout Period must expire following the general disclosure of the undisclosed material information; provided that if an additional Blackout Period is subsequently imposed by the Corporation during the ten Business Days after the initial Blackout Period, then Blackout Period Expiry Date shall be such the tenth trading day following the end of the last imposed Blackout Period. The Omnibus Plan also permits the Board to grant an option holder, at any time, the right to deal with such Option on a cashless exercise basis, in whole or in part by notice in writing to the Corporation, where the Corporation has an arrangement with a brokerage firm that certain procedures must take place. The Omnibus Plan also permits the Board to grant an Option holder, at any time the right to deal with such Option on a net exercise mechanism, in whole or in part by notice in writing to the Corporation. The grant of an Option by the Board shall be evidenced by an Option Agreement. Share Units A Share Unit is an Award in the nature of a bonus for services rendered, or for future services to be rendered, and that, upon settlement, entitles the recipient Participant to acquire to receive a cash payment equal to the Market Value of a Share or at the discretion of the Corporation (or applicable Subsidiary) one Share or any combination of cash and Shares as the Corporation (or applicable Subsidiary) in its sole discretion may determine, pursuant and subject to such restrictions and conditions on vesting as the Board may determine at the time of grant, unless such Share Unit expires prior to being settled. Restrictions and conditions on vesting conditions may, without limitation, be based on the passage of time during continued employment (or other service relationship), in which case the Award is what is commonly referred to as a “Restricted Share Unit” or “RSU”, or the achievement of specified Performance Criteria, in which case the Award is what is commonly referred to as a “Performance Share Unit” or “PSU”, or both. The grant of a Share Unit by the Board shall be evidenced by a Share Unit Agreement. 22 The Board shall have sole discretion to determine if any Performance Criteria and/or other vesting conditions with respect to a Share Unit, and as contained in the Share Unit Agreement governing such Share Unit, have been met and shall communicate to a Participant as soon as reasonably practicable when any such applicable vesting conditions or Performance Criteria have been satisfied and the Share Units have vested. Notwithstanding the foregoing, if the date on which any Share Units have vested falls within a Blackout Period (as defined in the Omnibus Plan) or within nine Business Days (as defined in the Omnibus Plan) after a Blackout Period Expiry Date (as defined in the Omnibus Plan), the vesting of such Share Units will be deemed to occur on the date that is ten Business Days after the Blackout Period Expiry Date. The Blackout Period must expire following the general disclosure of the undisclosed material information; provided that if an additional Blackout Period is subsequently imposed by the Corporation during the ten Business Days after the initial Blackout Period, then Blackout Period Expiry Date shall be such the tenth trading day following the end of the last imposed Blackout Period. Subject to the vesting and other conditions and provisions in the Plan and in the Share Unit Agreement, each Share Unit awarded to a Participant shall entitle the Participant to receive on settlement, a cash payment equal to the Market Value of a Share or at the discretion of the Corporation (or applicable Subsidiary) one Share or any combination of cash and Shares as the Corporation (or applicable Subsidiary) in its sole discretion may determine, in each case less any applicable withholding taxes. Dividend Equivalents may, as determined by the Board in its sole discretion, be awarded in respect of unvested Share Units in a Participant’s Account on the same basis as cash dividends declared and paid on Shares as if the Participant was a Shareholder of record of Shares on the relevant record date. In the event that the Participant’s applicable Share Units do not vest, all Dividend Equivalents, if any, associated with such Share Units will be forfeited by the Participant and returned to the Corporation’s account. Page 46 Deferred Share Units A deferred share unit (“DSU”) is an Award in the nature of a deferral of payment for services rendered, or for future services to be rendered, and that, upon settlement, entitles the recipient Participant to receive cash or acquire Shares, as determined by the Corporation in its sole discretion, unless such DSU expires prior to being settled. Subject to adjustments and amendments in the Plan, DSUs shall only vest, and a Participant is only entitled to redemption of a DSU, when the Participant ceases to be a director, officer or employee of the Corporation for any reason, including termination, retirement or death. The grant of a DSU by the Board shall be evidenced by a DSU Agreement. DSUs will be fully vested on the Termination Date of the applicable Participant. Notwithstanding the foregoing, if the date on which any DSUs have vested falls within a Blackout Period or within nine Business Days after a Blackout Period Expiry Date, the vesting of such DSUs will be deemed to occur on the date that is ten Business Days after the Blackout Period Expiry Date. The Blackout Period must expire following the general disclosure of the undisclosed material information; provided that if an additional Blackout Period is subsequently imposed by the Corporation during the ten Business Days after the initial Blackout Period, then Blackout Period Expiry Date shall be such the tenth trading day following the end of the last imposed Blackout Period. Subject to the vesting and other conditions and provisions in the Plan and in any DSU Agreement, each DSU awarded to a Participant the Participant to receive on settlement a cash payment equal to the Market Value of a Share, or at the discretion of the Corporation, one Share or any combination of cash and Shares as the Corporation in its sole discretion may determine. DSUs shall be redeemed and settled by the Corporation as soon as reasonably practicable following the Participant ceasing to be a director, officer or employee of the Corporation but in any event not later than December 15 of the year following the calendar year in which the Participant ceases to be any of a director, officer or employee. On redemption and settlement, the Corporation shall deliver the applicable number of Shares, or, in the sole discretion of the Corporation, cash equal to the redemption amount of such DSU specified in the applicable DSU Agreement, subject to the satisfaction of any applicable withholding tax. Eligibility. Awards may be granted under the Omnibus Plan to directors, employees, consultants and consultant companies of the Company and any of its subsidiaries. Stock Options may also be granted to individuals referred to as “Management Company Employees” which are employed by a company providing management services to the Company, except for services involving “Investor Relations Activities.” Omnibus Plan Administration. The Plan shall be administered and interpreted by the board of directors of the Corporation (the “Board”) or, if the Board by resolution so decides, by a committee or plan administrator appointed by the Board. Subject to the terms of the Plan, applicable law and the rules of the Exchanges, the Board (or its delegate) will have the power and authority to: (i) designate the Eligible Participants who will receive Awards (an Eligible Participant who receives an Award, a “Participant”), (ii) fix the number of Awards, if any, to be granted to each Eligible Participant and the date or dates on which such Awards shall be granted, (iii) determine the terms and conditions of any Award, including any vesting conditions or conditions based on performance of the Corporation or of an individual (“Performance Criteria”); and (iv) and make such amendments to the Plan and Awards made under the Plan as are permitted by the Plan and the rules of the Exchanges Page 47 Exercise Price. The exercise price subject to an award shall be determined by the Board and set forth in the option agreement, but shall be either (i) not less than the last closing price of the Company’s common shares as traded on the TSXV, unless discounted by the Board or (ii) such other price agreed by the Board and accepted by the TSXV. Amendment The Board may suspend or terminate the Omnibus Plan at any time, or from time to time amend or revise the terms of the Plan or any granted Award without the consent of the Participants provided that such suspension, termination, amendment or revision shall: (a) not adversely alter or impair the rights of any Participant, without the consent of such Participant except as permitted by the provisions of the Omnibus Plan; and (b) be in compliance with applicable law and with the prior approval, if required, of the shareholders of the Corporation, the Exchanges, or any other regulatory body having authority over the Corporation. Subject to the terms of the Omnibus Plan, the Board may, from time to time, in its absolute discretion and without approval of the shareholders of the Corporation make the following amendments to the Omnibus Plan, unless where required by law or the requirements of the Exchanges: (a) any amendment to the vesting provision, if applicable, of Options or Share Units, or assignability provisions of the Awards; (b) any amendment to the expiration date of an Award that does not extend the terms of the Award past the original date of expiration of such Award; (c) any amendment regarding the effect of termination of a Participant’s employment or engagement; (d) any amendment which accelerates the date on which any Option may be exercised under the Plan; (e) any amendment necessary to comply with applicable law or the requirements of the Exchanges or any other regulatory body; (f) any amendment to clarify the meaning of an existing provision of the Omnibus Plan, correct or supplement any provision of the Omnibus Plan that is inconsistent with any other provision of the Plan, correct any grammatical or typographical errors or amend the definitions in the Plan; (g) any amendment regarding the administration of the Omnibus Plan; (h) any amendment to add provisions permitting the grant of Awards settled otherwise than with Shares issued from treasury, or adopt a clawback provision applicable to equity compensation; and (i) any other amendment that does not require the approval of the shareholders of the Corporation as outlined in the paragraph below. Page 48 The Board shall be required to obtain disinterested shareholder approval, if required under the rules of the Exchanges, to make the following amendments: (a) an increase in the maximum number of Shares issuable under the Plan, except in the event of an adjustment pursuant to the Omnibus Plan; (b) except in accordance with the terms of the Omnibus Plan, any amendment which reduces the exercise price of an Option or any cancellation of an Option and replacement of such Option with an Option with a lower exercise price; (c) any amendment reduction in the price of an Option or extension of the term of an Option if the Participant is an Insider of the Corporation at the time of the proposed amendment; (d) any amendment which extends the expiry date of any Award, or the Restriction Period of any Share Unit beyond the original expiry date or Restriction Period; (e) any amendment which increases the maximum number of Shares that may be issuable under the Plan and any other proposed or established Share Compensation Arrangement; and; (f) any amendment to the definition of Eligible Participant under the Plan, provided that Shares held directly or indirectly by Insiders benefiting from the amendments shall be excluded when obtaining such shareholder approval. Term of the Awards. At the meeting of the Board of Directors held on February 25, 2016, based on the report of Compensia, it was determined that stock options should generally have a term of 10 years. Vesting Schedule. In general, options granted under the Omnibus Plan vest 25% immediately and 25% every six months from the date of issue, until fully vested. The directors may, at their discretion, specify a different vesting period, provided that options granted to consultants performing “Investor Relations Activities” must vest in stages over 12 months with no more than 25% of the options vesting in any three-month period. At the meeting of the Board of Directors held on February 25, 2016, based on the report of Compensia, it was determined that stock options should vest 25% at the end of one year from the date of issue with the remaining 75% vesting equally on a quarterly basis over the remaining 3 years for a total vesting period of 4 years. At a meeting of the Board of Directors held on March 30, 2017, the board approved a revised one-year vesting schedule for options granted for service on the board to conform to the term for which a director is elected. Such options will vest 25% at the end of each quarter served in office. Assignment Each Award granted under the Omnibus Plan is personal to the Participant and shall not be assignable or transferable by the Participant, whether voluntarily or by operation of law, except by will or by the laws of succession of the domicile of the deceased Participant. No Award granted hereunder shall be pledged, hypothecated, charged, transferred, assigned or otherwise encumbered or disposed of on pain of nullity. Change of Control In the event of a potential Change of Control (as described in the Omnibus Plan) the Board will have the power, in its sole discretion, to modify the terms of the Plan and/or the Awards to assist the Participants to tender into a take-over bid or participating in any other transaction leading to a Change of Control. For greater certainty, in the event of a take-over bid or any other transaction leading to a Change of Control, the Board shall have the power, in its sole discretion, subject to any required approval of the Exchanges to (i) provide that any or all Awards shall thereupon terminate, provided that any such outstanding Awards that have vested shall remain exercisable until consummation of such Change of Control, and (ii) permit Participants to conditionally exercise their vested Options, such conditional exercise to be conditional upon the take-up by such offeror of the Shares or other securities tendered to such take-over bid in accordance with the terms of such take- over bid (or the effectiveness of such other transaction leading to a Change of Control). If the Corporation completes a transaction constituting a Change of Control and within twelve (12) months following the Change of Control a Participant who was also an Officer or Employee of, or Consultant to, the Corporation prior to the Change of Control has their position, employment or consulting agreement terminated, or the Participant is constructively dismissed, then all unvested Awards of the Participant shall immediately vest and become exercisable, and remain open for exercise until the earlier of their expiry date as set out in the Award Agreement and the date that is twelve (12) months after such termination or dismissal. Page 49 Termination of Options. In the event that the award recipient ceases employment with us or ceases to provide services to us, the options will terminate after a period of time following the termination of employment. Our Board of Directors has the authority to amend or terminate the plan subject to shareholder approval with respect to certain amendments. However, no such action may adversely affect in any material way any awards previously granted unless agreed upon by the recipient. Officer Compensation Total cash compensation accrued and/or paid (directly and/or indirectly) to all of our Officers during fiscal year 2023 was $2,083,669 (refer to Item 7. “Major Shareholders and Related Party Transactions” for information regarding indirect payments) In order to assist the Board of Directors in fulfilling its oversight responsibilities with respect to human resources matters, the Board established a Compensation Committee. The Compensation Committee reviews and makes determinations with respect to senior officer compensation on a regular basis with any discretionary compensation used only for extraordinary projects or significant milestone results that advance the Company’s growth potential. When determining Executive Officers’ compensation, the Compensation Committee receives input and guidance from the Executive Chairman of the Board and the Chief Executive Officer of the Company. In the past, the Compensation Committee has engaged an outside consultant to conduct a peer group review to provide guidance to the Compensation Committee with respect to appropriate comparative terms for executive compensation and stock option grants. The Company also utilizes peer group comparisons from subsidiary locations to assist in its salary review of various positions in those locations. The Compensation Committee utilizes such comparative reviews to assist it in making appropriate recommendations to the Board. In addition to his or her fixed base salary, each officer may be eligible to receive variable pay compensation or bonus meant to motivate him or her to achieve short- term goals. Currently, the Company does not have in place established procedures for determining variable pay compensation. Stock options are an important element of the variable pay compensation and do not require cash disbursement from the Company. Stock options are also generally awarded to officers, qualifying employees and consultants at the time of hire and are used as a recruitment tool to attract highly qualified and experienced executives, employees and consultants to the Company. Stock options are also granted at other times during the year. As the Company is continuing to develop its Optical Interposer technology, it must conserve its limited financial resources and control costs to ensure that funds are available when needed to complete its scheduled developments. As a result, the Compensation Committee generally considers not only the financial situation of the Company at the time of the determination of the compensation, but also the estimated financial situation in the mid- and long-term. The use of stock options encourages and rewards performance by aligning an increase in each officer’s compensation with increases in the Company’s performance and in shareholder value. The following table sets forth all annual and long-term compensation for services in all capacities to the Company for fiscal year 2023 of the Company. Options Based Awards (1)(2) Non-Equity Incentive Plan Compensation Name and Principal Position Dr. Suresh Venkatesan Thomas Mika Vivek Rajgarhia Mo Jinyu Raju Kankipati James Lee Dan Meerovich Kevin Barnes Robert Ditizio Fiscal Year 2023 2023 2023 2023 2023 2023 2023 2023 2023 Salary (2) $ 462,000 $ 330,000 $ 325,762 $ 261,667 $ 240,000 $ 225,750 $ 211,909 $ 199,740 $ 225,761 Share- Based Awards (1) (2) - - - - - - - - - No. of Options 100,000 75,000 50,000 50,000 50,000 50,000 40,000 40,000 15,000 Value of Options (1) (2) $ 341,441 $ 256,081 $ 170,720 $ 170,720 $ 170,720 $ 170,720 $ 136,576 $ 136,576 $ 51,216 Annual Incentive Plans Long- term Incentive Plans Pension Value All other Comp. - - - - - - - - - - - - - - - - - - - - - - - - - - - Total Comp. $ 803,441 $ 586,081 $ 496,482 $ 432,387 $ 410,720 $ 396,470 $ 348,485 $ 336,316 $ 276,977 - - - - - - - - - (1) The Company used the Black-Scholes model as the methodology to calculate the grant date fair value. The fair value will be recorded as an operating expense as the options vest based on the stock options vesting schedule from the date of grant. (2) The exchange rate used in these calculations to convert CAD to USD is based on the average exchange rate for the year ended December 31, 2023 being 0.7408. Page 50 The following table sets forth information concerning all awards outstanding under a stock option plan to each of the current officers, as of December 31, 2023: Option-based Awards Share-based Awards Number of Securities Underlying Unexercised Options First Name Last Name Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Mo Mo Mo Raju Raju Raju Yong Meng Yong Meng Yong Meng Yong Meng Yong Meng Thomas Thomas Thomas Thomas Thomas Thomas Thomas Thomas Thomas Vivek Vivek Vivek Vivek Vivek Suresh Suresh Suresh Suresh Suresh Suresh Suresh Suresh Dan Dan Dan Dan Robert Robert Barnes Barnes Barnes Barnes Barnes Barnes Barnes Barnes Barnes Jinyu Jinyu Jinyu Kankipati Kankipati Kankipati Lee Lee Lee Lee Lee Mika Mika Mika Mika Mika Mika Mika Mika Mika Rajgarhia Rajgarhia Rajgarhia Rajgarhia Rajgarhia Venkatesan Venkatesan Venkatesan Venkatesan Venkatesan Venkatesan Venkatesan Venkatesan Meerovich Meerovich Meerovich Meerovich Ditizio Ditizio 24,500 23,400 50,000 50,000 50,000 2,000 30,000 40,000 25,000 100,000 50,000 100,000 100,000 50,000 100,000 100,000 55,000 20,000 50,000 25,000 80,000 100,000 50,000 100,000 95,000 60,000 75,000 100,000 45,000 102,400 100,000 115,000 50,000 45,000 280,000 450,000 200,000 390,000 250,000 100,000 30,000 65,000 100,000 50,000 40,000 25,000 100,000 15,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Value of Unexercised in-the-money Options (1) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Number of Shares or Units of Shares that have not Vested N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Option Expiration Date 13-Dec-2028 13-Jul-2027 15-Jan-2030 29-May-2029 11-Nov-2032 28-Mar-2028 11-Jun-2030 08-Aug-2033 06-Apr-2031 11-Nov-2032 08-Aug-2033 08-Jan-2031 11-Nov-2032 08-Aug-2033 06-Apr-2032 04-Nov-2029 11-Nov-2032 11-Jun-2030 08-Aug-2033 06-Apr-2031 13-Jul-2027 29-May-2029 16-Jan-2027 11-Nov-2032 28-Mar-2028 11-Jun-2030 08-Aug-2033 02-Nov-2026 06-Apr-2031 04-Nov-2029 11-Nov-2032 11-Jun-2030 08-Aug-2033 06-Apr-2031 13-Jul-2027 29-May-2029 11-Nov-2032 28-Mar-2028 11-Jun-2030 08-Aug-2033 07-Jul-2026 06-Apr-2031 17-Mar-2030 11-Nov-2032 08-Aug-2033 06-Apr-2031 01-Dec-2031 08-Aug-2033 Market or Payout Value of Shares or Units of Shares that have not Vested Market or Payout Value of Vested Shares or Units of Shares that have not Paid Out or Distributed N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Option Exercise Price 2.65 CAD 2.80 CAD 3.70 CAD 3.80 CAD 4.00 CAD 5.20 CAD 5.30 CAD 5.50 CAD 11.90 CAD 3.54 CAD 5.50 CAD 8.10 CAD 3.54 CAD 5.50 CAD 8.73 CAD 3.30 CAD 3.54 CAD 5.30 CAD 5.50 CAD 11.90 CAD 2.80 CAD 3.80 CAD 3.85 CAD 4.00 CAD 5.20 CAD 5.30 CAD 5.50 CAD 6.20 CAD 11.90 CAD 3.30 CAD 4.00 CAD 5.30 CAD 5.50 CAD 11.90 CAD 2.80 CAD 3.80 CAD 4.00 CAD 5.20 CAD 5.30 CAD 5.50 CAD 8.60 CAD 11.90 CAD 2.95 CAD 3.54 CAD 5.50 CAD 11.90 CAD 8.20 CAD 5.50 CAD (1) This amount is calculated based on the difference between the market value of the shares underlying the options as of December 31, 2023, being CAD$1.25 (US$0.94), and the exercise or base price of the option. The exchange rate used in these calculations to convert CAD to USD was 0.755, being the closing exchange rate at December 31, 2023. Page 51 The value vested or earned during fiscal year 2023 of incentive plan awards granted to NEOs are as follows: First Name Last Name Kevin Mo Raju Yong Meng Thomas Vivek Suresh Dan Barnes Jinyu Kankipati Lee Mika Rajgarhia Venkatesan Meerovich Option-based Awards Share-based Awards Number of Securities Underlying Options Vested Value Vested During the Year 45,002 50,000 62,500 50,002 63,752 148,749 185,002 43,752 37,636.48 $ 32,826.62 $ 32,826.62 $ 54,835.87 $ 47,512.94 $ $ 149,915.71 $ 146,400.22 53,267.83 $ USD USD USD USD USD USD USD USD Number of Shares or Units of Shares Vested N/A N/A N/A N/A N/A N/A N/A N/A Value Vested During the Year N/A N/A N/A N/A N/A N/A N/A N/A Non-equity Incentive Plan Compensation – Value Earned During The Year N/A N/A N/A N/A N/A N/A N/A N/A (1) This amount is the dollar value that would have been realized and is computed by obtaining the difference between the market price of the underlying securities on the vesting date and the exercise or base price of the options under the option-based award. For the named executive officers to realize this value, they would have had to exercise their options and sell the shares on the day of vesting. The exchange rate used in these calculations to convert CAD to USD is based on the average exchange rate for the year ended December 31, 2023 being 0.7408. Director Compensation The following table details compensation paid/accrued for fiscal year 2023 for each director who is not also an officer. Name and Principal Position Peter Charbonneau Chris Tsiofas Glen Riley Jean-Louis Malinge Theresa Ende Michal Lipson Fiscal Year 2023 2023 2023 2023 2023 2023 Salary (2) 55,000 40,000 40,000 30,000 30,000 30,000 Share- Based Awards (1) (2) Options Based Awards (1)(2) No. of Options 31,879 27,722 27,722 24,949 24,949 24,949 - - - - - - Value of Options (1) (2) $ 112,678 $ 97,985 $ 97,985 $ 88,183 $ 88,183 $ 88,183 Non-Equity Incentive Plan Compensation Annual Incentive Plans Long- term Incentive Plans Pension Value All other Comp. - - - - - - - - - - - - - - - - - - Total Comp. 167,678 137,985 137,985 118,183 118,183 118,183 - - - - - - (1) The Company used the Black-Scholes model as the methodology to calculate the grant date fair value. The fair value will be recorded as an operating expense as the stock options vest from the date of grant. (2) The exchange rate used in these calculations to convert CAD to USD is based on the average exchange rate for the year ended December 31, 2023 being 0.7408 Page 52 The following table sets forth information concerning all awards outstanding under the stock option plans to each of the current Directors who are not also named executive officers as of December 31, 2023: Option-based Awards Share-based Awards First Name Peter Peter Peter Peter Peter Peter Peter Peter Theresa Theresa Theresa Michal Michal Michal Jean-Louis Jean-Louis Jean-Louis Jean-Louis Jean-Louis Jean-Louis Jean-Louis Glen Glen Glen Glen Chris Chris Chris Chris Chris Chris Chris Chris Last Name Charbonneau Charbonneau Charbonneau Charbonneau Charbonneau Charbonneau Charbonneau Charbonneau Ende Ende Ende Lipson Lipson Lipson Malinge Malinge Malinge Malinge Malinge Malinge Malinge Riley Riley Riley Riley Tsiofas Tsiofas Tsiofas Tsiofas Tsiofas Tsiofas Tsiofas Tsiofas Number of Securities Underlying Unexercised Options 39,900 40,059 52,860 3,549 15,473 33,711 31,879 14,375 41,368 24,949 4,745 41,368 24,949 5,194 52,500 39,900 36,053 41,368 26,382 24,949 11,250 45,965 22,460 27,722 11,250 68,750 48,767 44,065 45,965 29,314 27,722 15,000 12,500 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Option Exercise Price 3.30 CAD 3.80 CAD 4.00 CAD 4.20 CAD 5.20 CAD 5.30 CAD 5.70 CAD 11.90 CAD 4.00 CAD 5.70 CAD 7.16 CAD 4.00 CAD 5.70 CAD 6.59 CAD 3.00 CAD 3.30 CAD 3.80 CAD 4.00 CAD 5.30 CAD 5.70 CAD 11.90 CAD 4.00 CAD 5.00 CAD 5.70 CAD 11.90 CAD 2.80 CAD 3.30 CAD 3.80 CAD 4.00 CAD 5.30 CAD 5.70 CAD 8.60 CAD 11.90 CAD Option Expiration Date 21-Jun-2028 29-May-2029 11-Nov-2032 06-Feb-2030 28-Mar-2028 11-Jun-2030 14-Jul-2033 06-Apr-2031 11-Nov-2032 14-Jul-2033 01-Jun-2032 11-Nov-2032 14-Jul-2033 21-Jun-2032 05-Sep-2027 21-Jun-2028 29-May-2029 11-Nov-2032 11-Jun-2030 14-Jul-2033 06-Apr-2031 11-Nov-2032 04-Dec-2030 14-Jul-2033 06-Apr-2031 13-Jul-2027 21-Jun-2028 29-May-2029 11-Nov-2032 11-Jun-2030 14-Jul-2033 07-Jul-2026 06-Apr-2031 Value of Unexercised in-the-money Options (1) 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD 0.00 USD $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Number of Shares or Units of Shares that have not Vested Market or Payout Value of Shares or Units of Shares that have not Vested N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Market or Payout Value of Vested Shares or Units of Shares that have not Paid Out or Distributed N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A (1) This amount is calculated based on the difference between the market value of the shares underlying the options as of December 31, 2023, being CAD$1.25 (US$0.94), and the exercise or base price of the option. The exchange rate used in these calculations to convert CAD to USD was 0.755, being the closing exchange rate at December 31, 2023. The value vested or earned during fiscal year 2023 of incentive plan awards granted to Directors who are not also named executive officers are as follows: First Name Last Name Peter Theresa Michal Jean-Louis Glen Chris Charbonneau Ende Lipson Malinge Riley Tsiofas Option-based Awards Share-based Awards Number of Securities Underlying Options Vested Value Vested During the Year 55,585 43,501 43,501 43,501 48,335 48,335 $ $ $ $ $ $ 56,016.97 43,838.62 43,838.62 43,838.62 48,710.67 48,710.67 USD USD USD USD USD USD Number of Shares or Units of Shares Vested Value Vested During the Year N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Non-equity Incentive Plan Compensation – Value Earned During The Year N/A N/A N/A N/A N/A N/A (1) This amount is the dollar value that would have been realized and is computed by obtaining the difference between the market price of the underlying securities on the vesting date and the exercise or base price of the options under the option- based award. Termination and Change of Control Benefits Other than as described in their individual management agreements, the Company has no plans or arrangements in respect of remuneration received or that may be received by the Officers the Company to compensate such Officers, in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control. Page 53 Pension Plan Benefits The Company does not provide a defined benefit plan to the Officers or any of its employees. The Company offers a defined contribution plan that is a 401k Plan but does not contribute toward such plan. The Company does not have any deferred compensation plans other than that described above. The following individuals were senior management of the Company in 2023: Name Suresh Venkatesan Vivek Rajgarhia Thomas Mika Mo Jinyu Raju Kankipati C. Board Practices. Title CEO President & General Manager Executive Vice President and CFO SVP, GM of Asia SVP, Product Line Management & GM USA Our Board of Directors currently consists of seven (7) directors, all of whom are independent, except for Suresh Venkatesan, our CEO who also currently serves on the Board of Directors. Each director holds office until the next annual general meeting of the Company or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the Articles of Amalgamation and all amendments thereto (the “Articles”), or with the provisions of the OBCA. The Company’s Officers are appointed to serve at the discretion of the Board, subject to the terms of the employment agreements described above. Lead independent director Our independent directors have selected Peter Charbonneau to serve as the lead independent director. The lead independent director’s primary role is to facilitate the functioning of the board, and to maintain and enhance the quality of our corporate governance practices. The lead independent director presides over the private sessions of our independent directors that take place following each meeting of the board and conveys the results of these meetings to the chair of the board. The Board and committees of the Board schedule regular meetings over the course of the year. During fiscal 2023, the Board held 17 regularly scheduled meetings, including committee meetings. If for various reasons, Board members may not be able to attend a Board meeting, all Board members are provided information related to each of the agenda items before each meeting, and, therefore, can provide counsel outside the confines of regularly scheduled meetings. The Board has adopted standards for determining whether a director is independent from management. The Board reviews, consistent with the Company’s corporate governance guidelines, whether a director has any material relationship with the Company that would impair the director’s independent judgment. The Board has affirmatively determined, that as of the filing of this Form 20-F, based on its standards, that the following directors are independent: Chris Tsiofas, Jean-Louis Malinge, Peter Charbonneau, Glen Riley, Theresa Lan Ende and Michal Lipson. Directors’ Service Contracts As CEO, Mr. Venkatesan has an employment contract with the Company which allows him to receive a severance of twelve months on termination of employment by the Company, other than for cause. Unvested stock options will be cancelled. He will have one year to exercise vested stock options. Page 54 No other director has a service contract with the Company. Audit and Compensation Committees of the Board of Directors We currently have four board committees; (1) an Audit Committee; (2) a Compensation Committee, (3) a Corporate Governance & Nominating Committee, and (4) an Ad Hoc Strategy Committee. Committee charters for the Audit, Compensation and Corporate Governance & Nominating Committees can be found on the Company’s website (poet-technologies.com). The Strategy Committee is an ad-hoc committee and therefore does not have a charter. The names of the members and a summary of the terms of the charter for each the Audit Committee and the Compensation Committee is provided below. Audit Committee The Audit Committee is currently comprised of three members: Chris Tsiofas (Chair), Peter Charbonneau and Jean-Louis Malinge. All three members are independent directors of the Company. Mr. Tsiofas was appointed chair of the Audit Committee on August 21, 2012. The Board has determined that Mr. Tsiofas satisfies the criteria of “audit committee financial expert” within the meaning of Item 401(h) of Regulation S-K and is independent in accordance with Rule 4200 of the Nasdaq Marketplace Rules. All members of the audit committee are financially literate, meaning they have the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. The Audit Committee is responsible for reviewing the Company’s financial reporting procedures, internal controls and the performance of the Company’s external auditors. The Audit Committee is also responsible for reviewing the annual and quarterly financial statements and accompanying Management’s Discussion and Analysis prior to their approval by the full Board. The Audit Committee also reviews the Company’s financial controls with the auditors of the Company on an annual basis. The Company’s independent auditor is accountable to the Board and to the Audit Committee. The Board, through the Audit Committee, has the ultimate responsibility to evaluate the performance of the independent auditor, and through the shareholders, to appoint, replace and compensate the independent auditor. Any non-audit services must be pre- approved by the Audit Committee. Compensation Committee The Compensation Committee is currently comprised of three members: Glen Riley (Chair), Chris Tsiofas and Theresa Ende. Mr. Riley was appointed chair of the Compensation Committee on October 14, 2022. All three members are independent directors. The Board has determined that all members of the Compensation Committee are qualified as members based on the following: Mr. Riley has more than 30 years’ experience in leadership roles spanning both the semiconductor and optoelectronics industries. He most recently served as General Manager of the Filter Solutions Business Unit at Qorvo, where he was responsible for developing highly integrated RF modules used in flagship smartphones. Prior to the merger of RFMD and TriQuint that formed Qorvo, he held multiple leadership roles at TriQuint, including Managing Director of international headquarters in Singapore, General Manager of the GaAs foundry business, and General Manager of Optoelectronics. Riley was previously the Chief Executive Officer of Opticalis, an early stage optoelectronics company focused on the development of high-density wavelength division multiplexing products. He also held prior roles as Vice President and General Manager of the Optoelectronic business at Agere Systems, and President of Asia-Pacific Sales and Marketing at Lucent Technologies Microelectronics Group. He graduated as valedictorian with a B.S. degree in Electrical Engineering from the School of Engineering at the University of Maine and completed the General Manager Program at Harvard Business School. Page 55 Mr. Chris Tsiofas, CA, CPA, earned a Bachelor’s of Commerce Degree from the University of Toronto and is a member of the Institute of Chartered Accountants of Canada and the Canadian Tax Foundation. He has been on the Board of Directors of the Company since August of 2012 2012 and has served as the Chair of the Audit Committee during his entire tenure. In February 2024 he was appointed to the Board of Directors of Andrew Peller Limited (TSE:ADW) and serves as the Chair of the Audit and Pension Committees. Andrew Peller Ltd. is a leading producer and marketer of quality wines and craft beverage alcohol products in Canada. With wineries in British Columbia, Ontario, and Nova Scotia, the Company markets wines produced from grapes grown in Ontario’s Niagara Peninsula, British Columbia’s Okanagan and Similkameen Valleys, and from vineyards around the world. Mr. Tsiofas is the president of MTN Chartered Professional Accountant Professional Corporation, a public accountancy firm. He sits on various private company boards. He has also served in a principal capacity in various entrepreneurial ventures resulting in successful divestitures. Tsiofas formerly served as Chairman of the Company’s Compensation Committee and has directed past engagements with the Company’s outside executive compensation consultants. Mr. Tsiofas is also the Chairman of the Audit Committee of the Board of Directors. He brings to the Compensation Committee specialized knowledge regarding the tax impact of certain compensation policies and practices on individuals and on the Company. Ms. Lan Ende serves as Chief Procurement Director of Arista Networks. Prior to her appointment as Chief Procurement Director in 2019, Ms. Ende served for 10 years as its Senior Director of Global Supply Chain Management. Prior to Arista, she held senior positions at JDSU Optical Division and Force10 Networks. At Cisco Systems and ROLM Telecommunications, Ms. Ende held various program management and planning management positions over a 20-year period. In 2019, she was honored as one of the “Top 100 Women of Influence” by Silicon Valley Business Journal. The Compensation Committee has extensive direct relevant experience in determining executive compensation policies and practices on behalf of the Company. In addition to being supported by outside compensation consultants on a periodic basis for peer group review, the members of the Committee are professional executives familiar with best practices associated with executive compensation, are knowledgeable about the tax implications to the Company and its executive officers of changes in the tax laws pertaining to executive compensation and have direct relevant experience with the incentives used throughout the Company’s industry to align the interests of executive management with company and shareholder interests. This gives these individuals strong insight as to the incentive structures and programs appropriate for companies of a comparable size. The seniority, experience and level of achievement of the three current members of the Compensation Committee speak to the independent judgement exercised in making decisions about the suitability of the Company’s compensation policies and practices. The Compensation Committee discusses and makes recommendations to the Board for approval of compensation issues that pertain to the senior executives of the Company, and on issues involving employment company-wide compensation policies and practices. In general, the compensation programs of the Company are designed to reward performance and to be competitive with the compensation agreements of other comparable semiconductor companies. The Compensation Committee is responsible for evaluating the compensation of the senior management of the Company and assuring that they are compensated effectively in a manner consistent with the Company’s business, stage of development, financial condition and prospects, and the competitive environment. Specifically, the Compensation Committee is responsible for: (i) reviewing the compensation practices and policies of the Company to ensure that they are competitive and that they provide appropriate motivation for corporate performance and increased shareholder value; (ii) overseeing the administration of the Company’s compensation programs, and reviewing and approving the employees who receive compensation and the nature of the compensation provided under such programs, and ensuring that all management compensation programs are linked to meaningful and measurable performance targets; (iii) making recommendations to the Board regarding the adoption, amendment or termination of compensation programs and the approval of the adoption, amendment and termination of compensation programs of the Company, including for greater certainty, ensuring that if any equity- based compensation plan is subject to shareholder approval, and that such approval is sought; (iv) periodically surveying the executive compensation practices of other comparable companies; (v) establishing and ensuring the satisfaction of performance goals for performance-based compensation; (vi) annually reviewing and approving the annual base salary and bonus targets for the senior executives of the Company, other than the Chief Executive Officer (the “CEO”); (vii) reviewing and approving annual corporate goals and objectives for the CEO and evaluating the CEO’s performance against such goals and objectives; (viii) annually reviewing and approving, based on the Compensation Committee’s evaluation of the CEO, the CEO’s annual base salary, the CEO’s bonus, and any stock option grants and other awards to the CEO under the Company’s compensation programs (in determining the CEO’s compensation, the Compensation Committee will consider the Company’s performance and relative shareholder return, the compensation of CEOs at other companies, and the CEO’s compensation in past years); and (ix) reviewing the annual report on executive compensation required to be prepared under applicable corporate and securities legislation and regulation including the disclosure concerning members of the Compensation Committee and settling the reports required to be made by the Compensation Committee in any document required to be filed with a regulatory authority and/or distributed to shareholders. Page 56 Code of Ethics The Board has adopted a written code of business conduct and ethics. All transgressions of the code of business conduct and ethics are required to be promptly reported to the Chair of the Board or of any committee, who in turn, reports them to the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee is charged with investigating alleged violations of the code of business conduct and ethics. Any findings of the Corporate Governance and Nominating Committee are then reported to the full Board, which will take such action as it deems appropriate. The Company’s Code of Ethics may be inspected on the Company’s website (poet-technologies.com) and is filed as an Exhibit to this Annual Report. Corporate Governance As a foreign private issuer, we are exempt from certain requirements of the Nasdaq listing rules that are applicable to U.S. listed companies. Please see “Item 16G. Corporate Governance” for additional information. Nasdaq’s Board Diversity Rule Nasdaq’s Board Diversity Rule, which was approved by the SEC on August 6, 2021, is a disclosure standard designed to encourage minimum board diversity for companies and provide stakeholders with consistent, comparable disclosures concerning a company’s current board composition. The director diversity matrix required by Nasdaq Marketplace Rule 5606 is available on the Company’s website, https://poet-technologies.com, in the “Board Diversity Matrix” section under the “Investor Relations” tab. D. Employees. As of December 31, 2023, the Company had fifty-six (56) full-time employees and four (4) consultants. Sixteen (16) employees and three (3) consultants work at our lab facility either as support staff or are engaged in research and development initiatives; four (4) employees are employed at the Canadian office; twenty (28) employees are employed at our fabrication facility in Singapore; eight (8) employees are employed at our product development facility in China; one (1) consultant is located in Italy. None of the Company’s employees are covered by collective bargaining agreements. E. Share Ownership. The following table sets forth certain information regarding the beneficial ownership of our outstanding common shares for: (i) each of our Directors and Officers individually; (ii) all of our Directors and Officers as a group; and (iii) each other person known to us to own beneficially more than 5% of our common shares as of March 15, 2024. Beneficial ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. The table also includes the number of shares underlying options that are exercisable within sixty (60) days of March 15, 2024. Common shares subject to these options are deemed to be outstanding for the purpose of computing the ownership percentage of the person holding these options, but are not deemed to be outstanding for the purpose of computing the ownership percentage of any other person. Page 57 The shareholders listed below do not have any different voting rights from our other shareholders. Directors and Officers: Chris Tsiofas Thomas Mika Kevin Barnes Suresh Venkatesan Raju Kankipati Peter Charbonneau Jean-Louis Malinge Vivek Rajgarhia Glen Riley Michal Lipson Directors and Officers Subtotal Major Shareholders: None that we are aware of. * Less than one percent (1%). Number of Shares Beneficially Owned (1) Percent of Class 64,467 138,611 54,746 158,611 11,111 63,729 33,892 1,500 40,129 8,196 574,992 * * * * * * * * * * * (1) The number of shares set forth for each Director, Officer and Major Shareholder, if any, was determined in accordance with Rule 13d-3 of the General Rules and Regulations under the Exchange Act. See “Item 6.B. Compensation” for the exercise prices of options. The following table presents the options exercisable for Directors and Officers within the next 60 days: First Name Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Peter Peter Peter Last Name Barnes Barnes Barnes Barnes Barnes Barnes Barnes Barnes Barnes Barnes Barnes Charbonneau Charbonneau Charbonneau Expiry 11-Jul-2027 25-Mar-2028 11-Jul-2027 11-Jul-2027 08-Nov-2032 04-Apr-2031 12-Jan-2030 10-Dec-2028 12-Jan-2030 09-Jun-2030 26-May-2029 03-Feb-2030 04-Apr-2031 25-Mar-2028 $ $ $ $ $ $ $ $ $ $ $ $ $ $ Grant Price Exercisable 2.80 5.20 2.80 2.80 4.00 11.90 3.70 2.65 3.70 5.30 3.80 4.20 11.90 5.20 CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD 1,400 2,000 10,000 12,000 15,625 17,189 20,314 24,500 25,000 26,250 50,000 3,549 14,375 15,473 Page 58 Peter Peter Peter Peter Peter Theresa Theresa Theresa Mo Mo Raju Raju Yong Meng Yong Meng Yong Meng Yong Meng Michal Michal Michal Jean-Louis Jean-Louis Jean-Louis Jean-Louis Jean-Louis Jean-Louis Jean-Louis Thomas Thomas Thomas Thomas Thomas Thomas Thomas Thomas Vivek Vivek Vivek Vivek Glen Glen Glen Glen Chris Chris Chris Chris Chris Charbonneau Charbonneau Charbonneau Charbonneau Charbonneau Ende Ende Ende Jinyu Jinyu Kankipati Kankipati Lee Lee Lee Lee Lipson Lipson Lipson Malinge Malinge Malinge Malinge Malinge Malinge Malinge Mika Mika Mika Mika Mika Mika Mika Mika Rajgarhia Rajgarhia Rajgarhia Rajgarhia Riley Riley Riley Riley Tsiofas Tsiofas Tsiofas Tsiofas Tsiofas 11-Jul-2033 09-Jun-2030 18-Jun-2028 26-May-2029 08-Nov-2032 29-May-2032 11-Jul-2033 08-Nov-2032 08-Nov-2032 06-Jan-2031 08-Nov-2032 03-Apr-2032 08-Nov-2032 04-Apr-2031 09-Jun-2030 01-Nov-2029 18-Jun-2032 11-Jul-2033 08-Nov-2032 04-Apr-2031 11-Jul-2033 09-Jun-2030 26-May-2029 18-Jun-2028 08-Nov-2032 03-Sep-2027 04-Apr-2031 08-Nov-2032 14-Jan-2027 09-Jun-2030 11-Jul-2027 25-Mar-2028 31-Oct-2026 26-May-2029 04-Apr-2031 08-Nov-2032 09-Jun-2030 01-Nov-2029 04-Apr-2031 11-Jul-2033 02-Dec-2030 08-Nov-2032 04-Apr-2031 05-Jul-2026 11-Jul-2033 09-Jun-2030 26-May-2029 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5.70 5.30 3.30 3.80 4.00 7.16 5.70 4.00 3.54 8.10 3.54 8.73 3.54 11.90 5.30 3.30 6.59 5.70 4.00 11.90 5.70 5.30 3.80 3.30 4.00 3.00 11.90 4.00 3.85 5.30 2.80 5.20 6.20 3.80 11.90 4.00 5.30 3.30 11.90 5.70 5.00 4.00 11.90 8.60 5.70 5.30 3.80 CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD 23,909 33,711 39,900 40,059 52,860 4,745 18,712 41,368 31,250 75,000 31,250 43,750 17,188 17,189 17,500 100,000 5,194 18,712 41,368 11,250 18,712 26,382 36,053 39,900 41,368 52,500 30,939 31,250 50,000 52,500 80,000 95,000 100,000 100,000 30,939 31,250 99,376 102,400 11,250 20,792 22,460 45,965 12,500 15,000 20,792 29,314 44,065 Page 59 Chris Chris Chris Suresh Suresh Suresh Suresh Suresh Suresh Suresh Tsiofas Tsiofas Tsiofas Venkatesan Venkatesan Venkatesan Venkatesan Venkatesan Venkatesan Venkatesan 08-Nov-2032 18-Jun-2028 11-Jul-2027 05-Jul-2026 04-Apr-2031 08-Nov-2032 09-Jun-2030 11-Jul-2027 25-Mar-2028 26-May-2029 $ $ $ $ $ $ $ $ $ $ 4.00 3.30 2.80 8.60 11.90 4.00 5.30 2.80 5.20 3.80 CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD 45,965 48,767 68,750 30,000 44,689 62,500 218,750 280,000 390,000 450,000 3,782,718 Glen Riley 5,000 5.00 Number of Warrants exercisable within 60 days Exercise price CA$ F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation. In 2023, the Company adopted a compensation recovery policy (the “Compensation Recovery Policy”) in compliance with Nasdaq listing standards and Rule 10D-1 of the Exchange Act, a copy of which is filed as Exhibit 97.1 to this Annual Report on Form 20-F. We were not required to prepare an accounting restatement during the year ended December 31, 2023. As of December 31, 2023, there was no outstanding balance of erroneously awarded compensation to be recovered pursuant to the Compensation Recovery Policy. Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders. Holdings by Major Shareholders Please refer to Item 6.E. “Share Ownership” for details regarding securities held by Directors, Officers and Major Shareholders. The Company’s major shareholders do not have any different or special voting rights. U.S. Share Ownership As of March 15, 2024, there were a total of 405 holders of record of our common shares with addresses in the U.S. We believe that the number of U.S beneficial owners is substantially greater than the number of U.S record holders, because a large portion of our common shares are held in broker “street names.” As of March 15, 2024, U.S. holders of record held approximately 17% of our outstanding common shares. Control of Company The Company is a publicly owned Ontario corporation, the common shares of which are owned by Canadian residents, U.S. residents and other foreign residents. The Company is not controlled by any foreign government or other person(s) except as described in “Item 4.A. History and Progress of the Company” and “Item 6.E. Share Ownership.” Change of Control of Company Arrangements None Page 60 B. Related Party Transactions. No shareholder beneficially owns 5% or more of the Company’s common shares. Compensation to key management personnel (CEO, CFO, President, GM POET Technologies Pte Ltd, VP Finance and Treasurer, VP Product Line Management, SVP, GM Asia) was as follows: Salaries Share-based payments (1) Total 2023 2022 2021 $ $ 2,044,920 1,771,078 3,815,998 $ $ 2,010,479 1,711,716 3,722,195 $ $ 1,782,297 2,077,333 3,859,630 (D) Share-based payments are the fair value of options granted to key management personnel and expensed during the various years as calculated using the Black-Scholes model. C. Interests of Experts and Counsel. Not applicable. Item 8. Financial Information A. Consolidated Statements and Other Financial Information. The Company’s financial statements are stated in U.S. dollars and are prepared in accordance with IFRS as issued by the IASB. The financial statements as required under “Item 17. Financial Statements” are attached hereto and found immediately following the text of this Annual Report. The audit report of Marcum LLP, independent registered public accounting firm, is included herein immediately preceding the consolidated financial statements. Legal Proceedings The directors and the senior management of the Company do not know of any material, either active or pending, legal proceedings against them, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. The directors and the senior management of the Company know of no active or pending proceedings against anyone that might materially adversely affect an interest in the Company. Dividend Policy The Company has not paid, and has no current plans to pay, dividends on its common shares. We currently intend to retain future earnings, if any, to finance the development of our business. Any future dividend policy will be determined by the Board, and will depend upon, among other factors, our earnings, if any, financial condition, capital requirements, any contractual restrictions with respect to the payment of dividends, the impact of the distribution of dividends on our financial condition, tax liabilities, and such economic and other conditions as the Board may deem relevant. Page 61 B. Significant Changes. On February 24, 2022, the Company filed Articles of Amendment to consolidate its common shares on a ten-for-one basis. For further clarity, for every ten (10) pre- consolidated common shares, shareholders received one (1) post-consolidated common share. On February 28, 2022 the Company’s common shares began trading on the TSXV on a post consolidation basis. The Company’s name and trading symbol remained unchanged. All references to share and per share amounts in these consolidated financial statements and accompanying notes to the consolidated financial statements have been retroactively restated to reflect the ten-for-one share consolidation. On March 14, 2022 the Company’s common shares began trading on Nasdaq under the trading symbol “POET”. Item 9. The Offer and Listing A. Offer and Listing Details. The Company’s common shares began trading on the TSXV in Toronto, Ontario, Canada, on June 25, 2007. The current Stock symbol is “PTK”. The CUSIP/ISN numbers are 73044W104 / 73044W1041. The Company received new CUSIP/ISN numbers on the consolidation of the common shares on February 24, 2022. The new CUSIP/ISN numbers are 73044W302/73044W3021. The following table lists the high and low sales price on the TSXV for the Company’s common shares for: the last six months; the last ten fiscal quarters; and the last five fiscal years. Period Ended MONTHLY 28-Feb-24 31-Jan-24 31-Dec-23 30-Nov-23 31-Oct-23 30-Sep-23 QUARTERLY 28-Feb-24 30-Nov-23 31-Aug-23 31-May-23 28-Feb-23 30-Nov-22 31-Aug-22 31-May-22 28-Feb-22 30-Nov-21 YEARLY 31-Dec-23 31-Dec-22 31-Dec-21 31-Dec-20 31-Dec-19 High (CA$) Low (CA$) 2.04 1.79 1.54 3.83 4.49 5.50 2.04 5.50 7.75 6.90 8.31 5.41 7.39 13.65 11.25 12.90 8.31 13.65 15.80 7.10 4.60 1.75 1.18 1.02 1.01 3.72 4.17 1.06 1.01 4.84 4.80 3.60 3.26 4.13 7.04 7.60 7.70 1.01 3.26 7.10 2.20 2.70 Page 62 B. Plan of Distribution. Not required. C. Markets. The Company’s common shares trade on (i) the TSXV in Canada under the symbol “PTK” and (ii) Nasdaq in the United Stated under the symbol “POET” (since March 14, 2022). D. Selling Shareholders. Not required. E. Dilution Not required. F. Expenses of the Issue Not required. Item 10. Additional Information A. Share Capital Not required. B. Memorandum and Articles of Association. The Company was originally formed under the British Columbia Company Act on February 9, 1972 as Tandem Resources Ltd. (“Tandem”). The Company took its current form after Tandem amalgamated with Stanmar Resources Ltd. and Keezic Resources Ltd. pursuant to Articles of Amalgamation on November 14, 1985. Tandem moved to Ontario by Articles of Continuance on January 3, 1997. Tandem changed its name to OPEL International Inc. by Articles of Amendment on September 26, 2006. OPEL International Inc. was continued under the New Brunswick Business Corporations Act on January 30, 2007, then back to Ontario by Articles of Continuance on November 30, 2010, changing its name to OPEL Solar International Inc. By Articles of Amendment on August 25, 2011, OPEL Solar International Inc. changed its name to OPEL Technologies, Inc. By Articles of Amendment on July 23, 2013, OPEL Technologies Inc. changed its name to POET Technologies Inc. Today, the Company is an Ontario corporation governed by the OBCA. The following are summaries of material provisions of our Articles of Continuance, as amended from time to time (the “Articles”), in effect as of the date of this Annual Report insofar as they relate to the material terms of our common shares. Register, Entry Number and Purposes Our Articles of Continuance became effective on November 30, 2010. Our corporation number in Ontario is 641402. The Articles of Continuance do not contain a statement of the Company’s objects and purposes. However, the Articles of Continuance provide that there are no restrictions on business that the Company may carry on or the powers the Company may exercise as permitted under the OBCA. Page 63 Board of Directors Pursuant to our By-laws and the OBCA, a director or officer who is a party to, or who is a director or officer of, or has a material interest in, any person who is a party to, a material contract or proposed material contract with the Company, shall disclose the nature and extent of his interest at the time and in the manner provided by the OBCA. Any such contract or proposed contract shall be referred to the Board or shareholders for approval even if such contract is one that in the ordinary course of the Company’s business would not require approval by the Board or shareholders, and a director interested in a contract so referred to the Board shall not vote on any resolution to approve the same unless the contract or transaction: (i) relates primarily to his or her remuneration as a director of the Company or an affiliate; (ii) is for indemnity or insurance of or for the director or officer as permitted by the OBCA; or (iii) is with an affiliate. Directors shall be paid such remuneration for their services as the Board may determine by resolution from time to time, and will be entitled to reimbursement for traveling and other expenses properly incurred by them in attending meetings of the Board or any committee thereof. Neither the Company’s Articles nor By-laws require an independent quorum for voting on director compensation. Directors are not precluded from serving the Company in any other capacity and receiving remuneration therefor. A director is not required to hold shares of the Company. There is no age limit requirement respecting the retirement or non-retirement of directors. The directors may sign the name and on behalf of the Company, or appoint any officer or officers or any other person or persons on behalf of the Corporation either to sign on behalf of the Company, all instruments in writing and any instruments in writing so signed shall be binding upon the Company without further authorization or formality. The term “instruments in writing” includes contracts, documents, powers of attorney, deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments of property (real or personal, immovable or movable), agreements, tenders, releases, receipts and discharges for the payment of money or other obligations, conveyances, transfers and assignments of shares, stocks, bonds, debentures or other securities, instruments of proxy and all paper writing. Nothing in the Company’s By-laws limits or restricts the borrowing of money by the Company on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Company. Rights, Preferences and Restrictions Attaching to Common Shares The holders of common shares are entitled to vote at all meetings of the shareholders, except meetings at which only holders of a specified class of shares are entitled to vote. Each common share carries with it the right to one vote. Subject to the rights, privileges, restrictions and conditions attaching to any other class or series of shares of the Company, the holders of the common shares are entitled to receive any dividends declared and payable by the Company on the common shares. Dividends may be paid in money or property or by issuing fully paid shares of the Company. Subject to the rights, privileges, restrictions and conditions attaching to any other class or series of shares of the Company, the holders of the common shares are entitled to receive the remaining property of the Company upon dissolution. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds. The common shares must be issued as fully-paid and non-assessable, and are not subject to further capital calls by the Company. The common shares are without par value. All of the common shares rank equally as to voting rights, participation in a distribution of the assets of the Company on a liquidation, dissolution or winding-up of the Company and the entitlement to dividends. The Company does not currently have any preferred shares outstanding. Page 64 Ordinary and Special Shareholders’ Meetings The OBCA provides that the directors of a corporation shall call an annual meeting of shareholders not later than 15 months after holding the last preceding annual meeting. The OBCA also provides that, in the case of an offering corporation, the directors shall place before each annual meeting of shareholders, the financial statements required to be filed under the Ontario Securities Act and the regulation thereunder relating to the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting and the immediately preceding financial year, if any. The Board has the power to call a special meeting of shareholders at any time. Notice of the date, time and location of each meeting of shareholders must be given not less than 21 days or more than 50 days before the date of each meeting to each director, to the auditor of the Company and to each shareholder who at the close of business on the record date for notice is entered in the securities register as the holder of one or more shares carrying the right to vote at the meeting. Notice of a meeting of shareholders called for any other purpose other than consideration of the minutes of an earlier meeting, financial statements, reports of the directors or auditor, setting or changing the number of directors, the election of directors and reappointment of the incumbent auditor, must state the general nature of the special business in sufficient detail to permit the shareholder to form a reasoned judgment on such business, must state the text of any special resolution to be submitted to the meeting, and must, if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it, a copy of the document or state that a copy of the document will be available for inspection by shareholders at the Company’s records office or another accessible location. The only persons entitled to be present at a meeting of shareholders are those entitled to vote, the directors of the Company and the auditor of the Company. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting. In circumstances where a court orders a meeting of shareholders, the court may direct how the meeting may be held, including who may attend the meeting. Limitations on Rights to Own Securities No share may be issued until it is fully paid. Neither Canadian law nor our Articles or By-laws limit the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (the “Investment Act”), as amended by the World Trade Organization Agreement Implementation Act (the “WTOA Act”). The Investment Act generally prohibits implementation of a direct reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture that is not a “Canadian,” as defined in the Investment Act (a “non-Canadian”), unless, after review, the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. An investment in the common shares of the Company by a non-Canadian (other than a “WTO Investor,” as defined below) would be reviewable under the Investment Act if it were an investment to acquire direct control of the Company, and the value of the assets of the Company were CA$5.0 million or more (provided that immediately prior to the implementation of the investment the Company was not controlled by WTO Investors). An investment in common shares of the Company by a WTO Investor (or by a non- Canadian other than a WTO Investor if, immediately prior to the implementation of the investment the Company was controlled by WTO Investors) would be reviewable under the Investment Act if it were an investment to acquire direct control of the Company and the value of the assets of the Company equaled or exceeded certain threshold amounts determined on an annual basis. The threshold for a pre-closing net benefit review depends on whether the purchaser is: (a) controlled by a person or entity from a member of the WTO; (b) a state- owned enterprise (SOE); or (c) from a country considered a “Trade Agreement Investor” under the Investment Act. A different threshold also applies if the Canadian business carries on a cultural business. The 2024 threshold for WTO investors that are SOEs will be $528 million based on the book value of the Canadian business’ assets, up from $512 million in 2023. The 2024 thresholds for review for direct acquisitions of control of Canadian businesses by private sector investor WTO investors is $1.326 billion and private sector trade- agreement investors is $1.989 billion and are both based on the “enterprise value” of the Canadian business being acquired. Page 65 A non-Canadian, whether a WTO Investor or otherwise, would be deemed to acquire control of the Company for purposes of the Investment Act if he or she acquired a majority of the common shares of the Company. The acquisition of less than a majority, but at least one-third of the shares, would be presumed to be an acquisition of control of the Company, unless it could be established that the Company is not controlled in fact by the acquirer through the ownership of the shares. In general, an individual is a WTO Investor if he or she is a “national” of a country (other than Canada) that is a member of the WTO (“WTO Member”) or has a right of permanent residence in a WTO Member. A corporation or other entity will be a “WTO Investor” if it is a “WTO Investor-controlled entity,” pursuant to detailed rules set out in the Investment Act. The U.S. is a WTO Member. Certain transactions involving our common shares would be exempt from the Investment Act, including: ● an acquisition of the shares if the acquisition were made in the ordinary course of that person’s business as a trader or dealer in securities; ● an acquisition of control of the Company in connection with the realization of a security interest granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act; and ● an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization, following which the ultimate direct or indirect control in fact of the Company, through the ownership of voting interests, remains unchanged. Procedures to Change the Rights of Shareholders In order to change the rights of our shareholders with respect to certain fundamental changes as described in Section 168 of the OBCA, the Company would need to amend our Articles to effect the change. Such an amendment would require the approval of holders of two-thirds of the votes of the Company’s common shares, and any other shares carrying the right to vote at any general meeting of the shareholders of the Company, cast at a duly called special meeting. The OBCA also provides that a sale, lease or exchange of all or substantially all of the property of a corporation other than in the ordinary course of business of the corporation likewise requires the approval of the shareholders at a duly called special meeting. For such fundamental changes and sale, lease and exchange, a shareholder is entitled under the OBCA to dissent in respect of such a resolution amending the Articles and, if the resolution is adopted and the Company implements such changes, demand payment of the fair value of the shareholder’s common shares. Impediments to Change of Control In 2016, the Canadian Securities Administrators (the “CSA”) enacted amendments (the “Bid Amendments”) to the Take-Over Bid Regime. The Bid Amendments, which are very significant, are contained in National Instrument (NI) 62-104. The Bid Amendments were intended to enhance the quality and integrity of the take-over bid regime and rebalance the current dynamics among offerors, offeree issuer boards of directors (“Offeree Boards”), and offeree issuer security holders by (i) facilitating the ability of offeree issuer security holders to make voluntary, informed and coordinated tender decisions, and (ii) providing the Offeree Board with additional time and discretion when responding to a take-over bid. Specifically, the Bid Amendments require that all non-exempt take-over bids (D) receive tenders of more than 50% of the outstanding securities of the class that are subject to the bid, excluding securities beneficially owned, or over which control or direction is exercised, by the offeror or by any person acting jointly or in concert with the offeror (the Minimum Tender Requirement); Page 66 (2) be extended by the offeror for an additional 10 days after the Minimum Tender Requirement has been achieved and all other terms and conditions of the bid have been complied with or waived (the 10 Day Extension Requirement); and (3) remain open for a minimum deposit period of 105 days (the Minimum 105 Day Bid Period) unless (D) the offeree board states in a news release a shorter deposit period for the bid of not less than 35 days, in which case all contemporaneous take-over bids must remain open for at least the stated shorter deposit period, or (b) the issuer issues a news release that it intends to effect, pursuant to an agreement or otherwise, a specified alternative transaction, in which case all contemporaneous take-over bids must remain open for a deposit period of at least 35 days. The Bid Amendments involved fundamental changes to the bid regime to establish a majority acceptance standard for all non-exempt take-over bids, a mandatory extension period to alleviate offeree security holder coercion concerns, and a 105 day minimum deposit period to address concerns that offeree boards did not have enough time to respond to an unsolicited take-over bid. The CSA determined not to amend National Policy 62-202 Defensive Tactics (NP 62-202) in connection with these amendments. They reminded participants in the capital markets of the continued applicability of NP 62-202, which means that securities regulators will be prepared to examine the actions of offeree boards in specific cases, and in light of the amended bid regime, to determine whether they are abusive of security holder rights. After canvassing several commentaries concerning the new regime, we have concluded that: ● It will be much more difficult for hostile bidders as a result of target issuers having a much longer period of time to respond, concurrent with the added risk and cost to such bidders. ● There is good reason to expect that, except in unusual circumstances, regulators will not permit SRPs to remain in effect after a 105 day bidding period. ● A significant number of reporting issuers have not sought re-approval of their SRPs since the amendments were introduced and those that have sought to renew their SRPs have been required to amend the plans to comply with the new rules. ● A large part of the traditional rationale for adopting SRPs has now been eliminated. We believe that the amended take-over bid rules provide adequate protection against hostile bids. Having said that, it has been suggested that the new rules do not protect against creeping take-over bids for control which are exempt from the rules (such as the accumulation of 20% or more of the issuer’s shares through market transactions or the acquisition of a control block through private agreements with a few large shareholders). These activities would however be identifiable through the early warning filing requirements. If, prior to making a determination that the Company ought to adopt a “strategic” SRP at an annual or special meeting of shareholders, the Company were faced with a hostile bid that we believed was not in the best interests of the Company and its shareholders, the directors could adopt a “tactical” plan which we could take to the shareholders for approval. Nevertheless, at this point in time, we are of the opinion that such action is not necessary and the shareholders should be the best arbiters of when “the pill must go”. Stockholder Ownership Disclosure Threshold in Bylaws Neither our Articles nor By-laws contain a provision governing the ownership threshold above which shareholder ownership must be disclosed. Pursuant to securities legislation, an Early Warning Report and an Insider Report must be filed if a shareholder obtains ownership on a partially diluted basis of 10% or greater of the Company. Page 67 Special Conditions for Changes in Capital The conditions imposed by the Company’s Articles are not more stringent than required under the OBCA. C. Material Contracts. In addition to any contracts described in “Item 7.B. Related Party Transactions” or “Item 4. Business Overview”, below is a summary of material contracts, other than those entered into by the Company in the ordinary course of business, to which we are or have been a party during the two years immediately preceding the date of this document. Other than contracts entered into in the ordinary course of business, we have not been a party to any other material contract within such two-year period. None D. Exchange Controls. Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non- resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non- resident holders of the Company’s securities, except as discussed in “Item 10.E. Taxation” below. E. Taxation. The following summary discusses certain material U.S. and Canadian tax considerations related to the holding and disposition of common shares as of the hereof. Prospective purchasers of our common shares are advised to consult their own tax advisers concerning the consequences under the tax laws of the country of which they are resident or in which they are otherwise subject to tax of making an investment in our common shares. Canadian Federal Income Tax Considerations The Company believes the following is a brief summary of the material principal Canadian federal income tax consequences to a U.S. Holder (as defined below) of common shares of the Company who deals at arm’s length with the Company, holds the shares as capital property and who, for the purposes of the Income Tax Act (Canada) (the “Tax Act”) and the Canada — U.S. Income Tax Convention (1980) (the “Treaty”), is at all relevant times resident in the U.S., is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a business in Canada. Special rules, which are not discussed below, may apply to a U.S. Holder that is an insurer that carries on business in Canada and elsewhere. U.S. Holders are urged to consult their own tax advisors with respect to their particular circumstances. This summary is based upon the current provisions of the Tax Act, the regulations thereunder in force at the date hereof, all specific proposals to amend such regulations and the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof and the current provisions of the Convention and the current administrative practices of the Canada Revenue Agency published in writing prior to the date hereof. This summary does not otherwise take into account or anticipate any changes in law or administrative practices whether by legislative, governmental or judicial decision or action, nor does it take into account tax laws of any province or territory of Canada or of the U.S. or of any other jurisdiction outside Canada. For the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of the common shares must be converted into Canadian dollars based on the relevant exchange rate applicable thereto. This summary does not address all aspects of Canadian federal income taxation that may be relevant to any particular U.S. Holder in light of such holder’s individual circumstances. Accordingly, U.S. Holders should consult with their own tax advisors for advice with respect to their own particular circumstances. Page 68 Under the Tax Act and the Treaty, a U.S. Holder of common shares will generally be subject to a 15% withholding tax on dividends paid or credited or deemed by the Tax Act to have been paid or credited on such shares. The withholding tax rate is 5% where the U.S. Holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends may be exempt from such withholding in the case of some U.S. Holders such as qualifying pension funds and charities. A U.S. Holder will generally not be subject to tax under the Tax Act on any capital gain realized on a disposition of common shares, provided that the shares do not constitute “taxable Canadian property” to the U.S. Holder at the time of disposition. Generally, common shares will not constitute taxable Canadian property to a U.S. Holder provided that such shares are listed on a designated stock exchange (which currently includes the TSXV) at the time of the disposition and, during the 60- month period immediately preceding the disposition, the U.S. Holder, persons with whom the U.S. Holder does not deal at arm’s length, or the U.S. Holder together with all such persons has not owned 25% or more of the issued shares of any series or class of the Company’s capital stock. If the common shares constitute taxable Canadian property to a particular U.S. Holder, any capital gain arising on their disposition may be exempt from Canadian tax under the Convention if at the time of disposition the common shares do not derive their value principally from real property situated in Canada. U.S. Federal Income Tax Considerations Subject to the limitations described herein, the following discussion summarizes certain U.S. federal income tax consequences to a U.S. Holder of our common shares. A “U.S. Holder” means a holder of our common shares who is: ● an individual who is a citizen or resident of the U.S. for U.S. federal income tax purposes; ● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the U.S. or under the laws of the U.S. or any political subdivision thereof, or the District of Columbia; ● an estate, the income of which is subject to U.S. federal income tax regardless of its source; or ● a trust (i) if, in general, a court within the U.S. is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person. Unless otherwise specifically indicated, this discussion does not consider the U.S. tax consequences to a person that is not a U.S. Holder (a “Non-U.S. Holder”). This discussion considers only U.S. Holders that will own our common shares as capital assets (generally, for investment) and does not purport to be a comprehensive description of all of the tax considerations that may be relevant to each U.S. Holder’s decision to purchase our common shares. This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), current and proposed Treasury Regulations promulgated thereunder, and administrative and judicial decisions as of the date hereof, all of which are subject to change, possibly on a retroactive basis. This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular U.S. Holder in light of such holder’s individual circumstances. In particular, this discussion does not address the potential application of the alternative minimum tax or the U.S. federal income tax consequences to U.S. Holders that are subject to special treatment, including U.S. Holders that: ● are broker-dealers or insurance companies; ● have elected market-to-market accounting; ● are tax-exempt organizations or retirement plans; ● are financial institutions or “financial services entities”; ● hold our common shares as part of a straddle, “hedge” or “conversion transaction” with other investments; ● acquired our common shares upon the exercise of employee stock options or otherwise as compensation; ● own directly, indirectly or by attribution at least 10% of our voting power; Page 69 ● have a functional currency that is not the U.S. Dollar; ● are grantor trusts; ● are certain former citizens or long-term residents of the U.S.; or ● are real estate trusts or regulated investment companies. If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds our common shares, the tax treatment of the partnership and a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership should consult its own tax advisor as to its tax consequences. In addition, this discussion does not address any aspect of state, local or non-U.S. laws or the possible application of U.S. federal gift or estate taxes. Each potential U.S Holder of our common shares is advised to consult its own tax advisor with respect to the specific tax consequences to it of purchasing, holding or disposing of our common shares, including the applicability and effect of federal, state, local and foreign income tax and other laws to its particular circumstances. Distributions Subject to the discussion below under “Passive Foreign Investment Company Status,” a U.S. Holder will be required to include in gross income as ordinary dividend income the amount of any distribution paid on our common shares, including any non-U.S. taxes withheld from the amount paid, to the extent the distribution is paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Distributions in excess of such earnings and profits will be applied against and will reduce the U.S. Holder’s basis in our common shares and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of our common shares. The dividend portion of such distributions generally will not qualify for the dividends received deduction available to corporations. U.S. Holders which are individuals, estates and trusts and whose income exceeds certain thresholds will be required to pay a 3.8% surtax on “net investment income” including, among other things, dividends (if any) and net gain realized from our common shares. U.S. Holders should consult with their own tax advisors regarding the application of this tax. Subject to the discussion below under “Passive Foreign Investment Company Status,” dividends that are received by U.S. Holders that are individuals, estates or trusts may qualify for taxation at the rate applicable to long-term capital gains (a maximum marginal federal income tax rate of 20%), provided that such U.S. Holders satisfy certain holding period requirements and such dividends meet the requirements of “qualified dividend income.” For this purpose, dividends paid by a non-U.S. corporation may qualify if the non-U.S. corporation is eligible for benefits of a comprehensive income tax treaty with the U.S., which benefits include an information exchange program and is determined to be satisfactory by the U.S. Secretary of the Treasury. The IRS has determined that the U.S.- Canada Tax Treaty is satisfactory for this purpose. Dividends that fail to meet such requirements, and dividends received by corporate U.S. Holders, are taxed at ordinary income rates. Distributions of current or accumulated earnings and profits paid in foreign currency to a U.S. Holder (including any non-U.S. taxes withheld therefrom) will be includible in the income of a U.S. Holder in a U.S. Dollar amount calculated by reference to the exchange rate on the day the distribution is received. A U.S. Holder that receives a foreign currency distribution and converts the foreign currency into U.S. dollars subsequent to receipt may have foreign exchange gain or loss based on any appreciation or depreciation in the value of the foreign currency against the U.S. dollar, €h will generally be U.S. source ordinary income or loss. A loss might not be deductible due to certain limitations. Page 70 U.S. Holders will have the option of claiming the amount of any non-U.S. income taxes withheld at source either as a deduction from gross income or as a dollar-for- dollar credit against their U.S. federal income tax liability. Individuals who do not claim itemized deductions, but instead utilize the standard deduction, may not claim a deduction for the amount of the non-U.S. income taxes withheld, but such amount may be claimed as a credit against the individual’s U.S. federal income tax liability. The amount of non-U.S. income taxes which may be claimed as a credit in any taxable year is subject to complex limitations and restrictions, which must be determined on an individual basis by each shareholder. These limitations include, among others, rules that limit foreign tax credits allowable with respect to specific classes of income to the U.S. federal income taxes otherwise payable with respect to each such class of income. A U.S. Holder will be denied a foreign tax credit with respect to non-U.S. income tax withheld from a dividend received on the common shares if such U.S. Holder does not satisfy certain holding period requirements. Distributions of current or accumulated earnings and profits generally will be foreign source income for U.S. foreign tax credit purposes. Disposition of Common Shares Subject to the discussion below under “Passive Foreign Investment Company Status,” upon the sale, exchange or other taxable disposition of our common shares, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between such U.S. Holder’s basis in such common shares, which is usually the cost of such shares, and the amount realized on the disposition. Capital gain from the sale, exchange or other disposition of common shares held more than one year is long-term capital gain, and is eligible for a reduced rate of taxation for individuals (currently a maximum marginal federal income tax rate of 20%, plus the 3.8% net investment income tax discussed above, if applicable). Gains recognized by a U.S. Holder on a sale, exchange or other disposition of common shares generally will be treated as U.S. source income for U.S. foreign tax credit purposes. A loss recognized by a U.S. Holder on the sale, exchange or other taxable disposition of common shares generally is allocated to U.S. source income. The deductibility of capital losses recognized on the sale, exchange or other taxable disposition of common shares is subject to limitations. A U.S. Holder that receives foreign currency upon disposition of common shares and converts the foreign currency into U.S. dollars subsequent to the settlement date or trade date (whichever date the taxpayer was required to use to calculate the value of the proceeds of sale) may have foreign exchange gain or loss based on any appreciation or depreciation in the value of the foreign currency against the U.S. Dollar, which will generally be U.S. source ordinary income or loss. Such loss may not be deductible due to certain limitations. Passive Foreign Investment Company Status We would be a passive foreign investment company (a “PFIC”) if (taking into account certain “look-through” rules with respect to the income and assets of our corporate subsidiaries in which we own 25 percent (by value) of the stock) either (i) 75 percent or more of our gross income for the taxable year was passive income or (ii) the average percentage (by value) of our total assets that are passive assets during the taxable year was at least 50 percent. If we were a PFIC, each U.S. Holder would (unless it made one of the elections discussed below on a timely basis) be taxable on gains recognized from the disposition of our common shares (including gain deemed recognized if the common shares are used as security for a loan) and upon receipt of certain “excess distributions” (generally, distributions that exceed 125% of the average amount of distributions in respect to such common shares received during the preceding three taxable years or, if shorter, during the U.S. Holder’s holding period prior to the distribution year) with respect to our common shares as if such income had been recognized ratably over the U.S. Holder’s holding period for the common shares. The U.S. Holder’s income for the current taxable year would include (as ordinary income) amounts allocated to the current taxable year and to any taxable year period prior to the first day of the first taxable year for which we were a PFIC. Tax would also be computed at the highest ordinary income tax rate in effect for each other taxable year period to which income is allocated, and an interest charge on the tax as so computed would also apply. Additionally, if we were a PFIC, U.S. Holders who acquire our common shares from decedents (other than non resident aliens) would be denied the normally available step-up in basis for such shares to fair market value at the date of death and, instead, would have a tax basis in such shares equal to the decedent’s basis, if lower. Page 71 As an alternative to the tax treatment described above, a U.S. Holder could elect to treat us as a “qualified electing fund” (a “QEF”), in which case the U.S. Holder would be taxed currently, for each taxable year that we are a PFIC, on its pro rata share of our ordinary earnings and net capital gain (subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge). Special rules apply if a U.S. Holder makes a QEF election after the first taxable year in its holding period in which we are a PFIC. In the event that we conclude that we will be classified as a PFIC, we will make a determination at such time as to whether we will be able to provide U.S. Holders with the information that is necessary to make a QEF election. Amounts includable in income as a result of a QEF election will be determined without regard to our prior year losses or the amount of cash distributions, if any, received from us. A U.S. Holder’s basis in its common shares will increase by any amount included in income and decrease by any amounts not included in income when distributed because such amounts were previously taxed under the QEF rules. So long as a U.S. Holder’s QEF election is in effect with respect to the entire holding period for its common shares, any gain or loss realized by such holder on the disposition of its common shares held as a capital asset ordinarily will be capital gain or loss. As an alternative to making the QEF election, a U.S. Holder of PFIC stock which is regularly traded on a qualified exchange may avoid the negative effects of the PFIC rules by electing to mark the stock to market and recognizing as ordinary income or loss, each taxable year that we are a PFIC, an amount equal to the difference as of the close of the taxable year between the fair market value of the PFIC stock and the U.S. Holder’s adjusted tax basis in the PFIC stock. Losses would be allowed only to the extent of net mark-to-market gain previously included by the U.S. Holder under the election for prior taxable years. This election is available for so long as the Company’s common shares constitute “marketable stock,” which includes stock of a PFIC that is “regularly traded” on a “qualified exchange or other market.” Generally, a “qualified exchange or other market” includes a national market system established pursuant to Section 11A of the Exchange Act, or a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located and that has certain characteristics. A class of stock that is traded on one or more qualified exchanges or other markets is “regularly traded” on an exchange or market for any calendar year during which that class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter, subject to special rules relating to an initial public offering. It is not entirely clear whether either Nasdaq or TSXV are qualified exchanges or other markets, or whether there will be sufficient trading volume with respect to the Company’s common shares, and accordingly, whether the common shares will be “marketable stock” for these purposes. Furthermore, there can be no assurances that the Company’s common shares will continue to trade on any of the exchanges listed above. We believe we were not a PFIC for the year ending December 31, 2022 and do not expect to be classified as a PFIC for the year ending December 31, 2023. However, PFIC status is determined as of the end of each taxable year and is dependent on a number of factors, including the value of our passive assets, the amount and type of our gross income, and our market capitalization. Therefore, there can be no assurance that we will not be classified as a PFIC for the current taxable year or in a future taxable year. We will notify U.S. Holders in the event we conclude that we will be treated as a PFIC for any taxable year. Information Reporting and Backup Withholding U.S. Holders (other than exempt recipients, such as corporations) generally are subject to information reporting requirements with respect to dividends paid on, or proceeds from the disposition of, our common shares. U.S. Holders are also generally subject to backup withholding (currently at a rate of 24%) on dividends paid on, or proceeds from the disposition of, our common shares unless the U.S. Holder provides IRS Form W-9 or otherwise establishes an exemption. The amount of any backup withholding will be allowed as a credit against a U.S. or Non-U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is furnished to the IRS. F. Dividends and Paying Agents. Not required. Page 72 G. Statements by Experts. The consolidated financial statements of POET Technologies Inc. as of December 31, 2023, 2022 and 2021 included herein, have been audited by Marcum LLP, our independent registered accounting firm for that period, 555 Long Wharf Drive, 8th Floor, New Haven, CT 06511, USA, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. H. Documents on Display. The Company’s documents can be viewed at its Canadian office, located at: Suite 1107, 120 Eglinton Avenue East, Toronto, Ontario M4P 1E2, Canada. Further, we file reports under Canadian regulatory requirements on SEDAR; you may access our reports filed on SEDAR by accessing their website at www.sedar.com. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), and files reports, Annual Reports and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Company’s reports, Annual Reports and other information can be inspected on the SEC’s website. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, and other reports and financial statements with the SEC as frequently or as promptly as United States domestic companies whose securities are registered under the Exchange Act. We maintain a corporate website at www.poet-technologies.com. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report on Form 20-F. We have included our website address in this Annual Report on Form 20-F solely as an inactive textual reference. I. Subsidiary Information. Not applicable. J. Annual Report to Security Holders. If we are required to furnish an annual report to security holders on Form 6-K, we will submit such annual report in electronic format in accordance with the EDGAR Filer Manual. Item 11. Quantitative and Qualitative Disclosures About Market Risk Market Risk Market risk arises from the possibility that changes in market prices will affect the value of the financial instruments of the Company. The Company is exposed to fair value fluctuations on its cash equivalents. The Company’s other financial instruments (cash and accounts payable and accrued liabilities) are not subject to market risk, due to the short- term nature of these instruments. The Company manages market risk through its investment policy where surplus funds are only invested in a manner that will provide the optimal blend of investment returns and principal protection while meeting its daily cash flow and liquidity demands. Interest Rate Risk Short-term investments bear interest at fixed rates, and as such, are subject to interest rate risk resulting from changes in fair value from market fluctuations in interest rates. The Company does not depend on interest from its investments to fund its operations. Page 73 Exchange Rate Risk The functional currency of each of the entities included in the accompanying consolidated financial statements is the local currency where the entity is domiciled. Functional currencies include the Chinese Yuan, US, Singapore and Canadian dollar. Most transactions within the entities are conducted in functional currencies. As such, none of the entities included in the consolidated financial statements engage in hedging activities. The Company is exposed to a foreign currency risk when its subsidiaries hold current assets or current liabilities in currencies other than its functional currency. A 10% change in foreign currencies held would increase or decrease other comprehensive loss by $198,000. The following table shows exchange rates, from CAD to USD, for the past six months: Period February 2024 January 2024 December 2023 November 2023 October 2023 September 2023 September 2023 — February 2024 (1) Bank of Canada monthly average rates (2) Bank of Canada daily closing average rates The following table shows exchange rates, from SGD to USD, for the past six months: Period February 2024 January 2024 December 2023 November 2023 October 2023 September 2023 September 2023 — February 2024 (1) Bank of Singapore monthly average rates (2) Bank of Singapore daily closing average rates The following table shows exchange rates, from CNY to USD, for the past six months: Period February 2024 January 2024 December 2023 November 2023 October 2023 September 2023 September 2023 — February 2024 (1) Bank of China monthly average rates (2) Bank of China daily closing average rates High (1) Low (1) Average (2) 0.7471 0.7506 0.7575 0.7373 0.7362 0.7437 0.7575 0.7363 0.7394 0.7354 0.7218 0.7207 0.7308 0.7207 0.7411 0.7451 0.7460 0.7296 0.7289 0.7375 0.7381 High (1) Low (1) Average (2) 0.7479 0.7537 0.7576 0.7509 0.7338 0.7386 0.7576 0.7399 0.7434 0.7437 0.7306 0.7279 0.7285 0.7279 0.7434 0.7482 0.7510 0.7414 0.7302 0.7333 0.7413 High (1) Low (1) Average (2) 0.1395 0.1400 0.1408 0.1402 0.1371 0.1377 0.1408 0.1389 0.1390 0.1393 0.1367 0.1366 0.1361 0.1361 0.1390 0.1394 0.1400 0.1383 0.1368 0.1370 0.1384 Page 74 Item 12. Description Of Securities Other Than Equity Securities A. Debt Securities. Not required. B. Warrants and Rights Not required. C. Other Securities Not required. D. American Depositary Shares. Not applicable. Item 13. Defaults, Dividend Arrearages and Delinquencies Not applicable. Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds PART II Not applicable. Item 15. Controls and Procedures Disclosure Controls and Procedures. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) under the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective due to a material weakness in our internal control over financial reporting. A material weakness, as defined in the Sarbanes Oxley Act of 2002 (“SOX”), is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual consolidated financial statements will not be prevented or detected on a timely basis. The material weakness resulted from a cybersecurity event in which the Company, late in the year, received a fraudulent request to pay an amount owing to a single vendor. The Company’s controls over the validity of such requests were not effective and as a result an immaterial amount was paid to an unauthorized party. Management identified the fraud and recovered the amount through its pre-existing insurance coverage. Management immediately put in place additional cyber controls to ensure that the Company’s assets are appropriately safe guarded. However, because there was not sufficient time to test those additional controls prior to year-end, the Chief Executive Officer and the Chief Financial Officer determined that a material weakness existed at December 31, 2023 (the “Cybersecurity Material Weakness”). Page 75 Management’s Annual Report on Internal Control Over Financial Reporting. Our management, under the oversight of our Board of Directors (in particular its audit committee), is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act and as set forth in Section 404 of SOX). The Company’s internal control over financial reporting is designed to provide reasonable assurance to management and the Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of its published consolidated financial statements. Under the SOX framework, our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with IFRS, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements. All internal controls over financial reporting, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, it used the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that assessment and those criteria, management concluded that we did not maintain effective internal controls over financial reporting as of December 31, 2023 as a result of the Cybersecurity Material Weakness. The Cybersecurity Material Weakness did not result in a material misstatement of our consolidated financial statements for the fiscal year ended December 31, 2023 or any prior annual or interim periods nor has it resulted in any material failure to safeguard our assets, including our cash and fixed assets. However, if the Cybersecurity Material Weakness is not remediated, a material misstatement of account balances or disclosures may not be prevented, and may go undetected, which could result in a material misstatement of future annual or interim consolidated financial statements. Following the identification of the Cybersecurity Material Weakness, management has taken steps to remediate that material weakness. Specifically, management has: ● Added a procedure that requires vendors to provide on letterhead both the original bank information and the changed bank information. Page 76 ● Put in place a call back procedure to contact the vendor to get verbal confirmation of the change, including confirming pertinent transactions related to prior business activity. ● Upgraded email security and monitoring to more effectively identify phishing and spoofing events; and . ● Initiated training programs to help staff more quickly identify spoofing and phishing events. Although management has taken immediate remedial steps, the Cybersecurity Material Weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Further, our independent registered accounting firm has not performed an audit of our internal control over financial reporting subsequent to December 31, 2023 and we cannot give assurances that the measures we have thus far taken to remediate the aforementioned material weakness were sufficient or that they will prevent future material weaknesses. As management continues to evaluate and work to improve our internal control over financial reporting, we may determine it necessary to take additional measures or modify the remediation measures we have taken to date. Attestation Report of the Registered Public Accounting Firm. Marcum LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 20-F, and has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. Changes in Internal Controls Over Financial Reporting. We have undertaken the remediation efforts described. Except for those efforts, there were no other changes in our internal control over financial reporting during year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 16. [Reserved] Item 16A. Audit Committee Financial Expert Our Board of Directors has determined that Chris Tsiofas is an audit committee financial expert. The Board has determined that Mr. Tsiofas satisfies the criteria of “audit committee financial expert” set forth in Item 16A of Form 20-F and is independent in accordance with Rule 4200 of the Nasdaq Marketplace Rules. Item 16B. Code of Ethics As amended in February 2023, our Board of Directors adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all our employees, including without limitation our chief executive officer, chief financial officer and principal accounting officer. Our Code may be viewed on our website at www.poet- technologies.com and is filed as an Exhibit to this Annual Report. A copy of our Code may be obtained, without charge, upon a written request addressed to our office at, 120 Eglinton Avenue East, Suite 1107, Toronto, Ontario M4P 1E2, Canada. Page 77 Item 16C. Principal Accountant Fees and Services The following table sets forth, for each of the years indicated, the fees billed by our independent registered public accounting firm, Marcum LLP. Services Rendered Audit Fees (1) Audit-Related Fees (2) Tax Fees (3) All Other Fees (4) Total Year Ended December 31, 2023 2022 $ $ $ 470,455 - 16,715 - 487,170 340,000 - 14,440 - 354,440 (1) Audit Fees included fees for the audit of the Company’s annual consolidated financial statements, SOX 404(b) audit and professional services rendered in connection with filing of registration statements. (2) Audit-Related Fees include fees for assurance and related services that are reasonably related to the performance of the audit and are not reported under audit fees. These fees primarily include accounting consultations regarding the accounting treatment of matters that occur in the regular course of business, implications of new accounting pronouncements, acquisitions and other accounting issues that occur from time to time. (3) Tax Fees include fees for professional services rendered by our independent registered public accounting firm for tax compliance and tax advice on actual or contemplated transactions. (4) All Other Fees include fees for services rendered by our independent registered public accounting firm with respect to government incentives and other matters. Our Audit Committee, in accordance with its charter, reviews and pre-approves all audit services and permitted non-audit services (including the fees and other terms) to be provided by our independent auditors. All of the services provided by Marcum LLP over the past two years were pre-approved by the Audit Committee. Item 16D. Exemptions from the Listing Standards for Audit Committees Not applicable. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Not applicable. Item 16F. Change in Registrant’s Certifying Accountant. Not applicable. Item 16G. Corporate Governance A foreign private issuer that follows home country practices in lieu of certain provisions of the Nasdaq rules must disclose the ways in which its corporate governance practices differ from those followed by U.S. domestic companies. As required by Nasdaq Rule 5615(a)(3), the Company discloses on its website, www.poet-technologies.com, each requirement of the Nasdaq rules that it does not follow and describes the home country practice it follows in lieu of such requirements. Item 16H. Mine Safety Disclosure Not applicable. Page 78 Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. Item 16J. Insider Trading Policies The Company has adopted an Insider Trading Policy governing the purchase, sale and other dispositions of the Company’s securities by directors, senior management and employees that is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and all applicable listing standards. A copy of the policy is filed as Exhibit 11.2 hereto. Item 16K. Cybersecurity We believe cybersecurity is key to the Company achieving its strategic goals and objectives. Based on the nature of our business and the industry in which we operate, we are faced with a variety of cybersecurity threats including phishing emails, ransomware attacks, malicious attachments, social engineering attacks and denial of service attacks, among others. Our customers, suppliers, subcontractors and partners face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance and results of operations. Our information security organization has implemented a governance structure and processes to assess, identify, manage and report cybersecurity risks. We engage third-party service providers to conduct evaluations of our security controls, including testing both the design and operational effectiveness of security controls. In the event of an incident, we intend to follow our incident management procedures, which outline the steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (e.g., legal, compliance and internal audit), as well as senior leadership and the Board, as appropriate. On a regular basis, the Company analyzes its internet-based services to identify vulnerabilities and assesses the protection and the detection capabilities. The cybersecurity compliance status of assets is centrally evaluated across the Company’s global sites and business and operational functions. Results are shared within the Company’s relevant business units and across global functions. The Company implements corrective measures and improvement actions in response to these processes, as appropriate. Data classification and protection tools are in place, such as the implementation of a specific process and technology aimed at detecting and responding to abnormal data flows. Cybersecurity risks and threats, including as a result of any previous cybersecurity incidents, have not materially impacted and are not reasonably expected to materially impact us or our operations to date. However, we recognize the ever-evolving cyber risk landscape and cannot provide any assurances that we will not be subject to a material cybersecurity incident in the future. Governance The Board of Directors and our Audit Committee oversee management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives. Senior leadership have developed a process to regularly brief the Audit Committee and Board of Directors on our cybersecurity and information security policies and procedures, and the Board of Directors will be apprised of cybersecurity incidents deemed to have a potential material impact on the Company. We use an outsourced IT firm, to manage our overall information security strategy, policy, cyber threat detection and response, cyber architecture and processes for the security of our network and intellectual property. Various technologies and techniques are used to monitor and manage cybersecurity risks. Policies and processes are regularly updated. Page 79 Item 17. Financial Statements PART III The Company’s consolidated financial statements are stated in U.S. dollars and are prepared in accordance with IFRS as issued by the International Accounting Standards Board. The consolidated financial statements required under Item 17 are attached hereto and found immediately following the text of this Annual Report and are incorporated by reference herein. The audit report of Marcum LLP, independent registered public accounting firm, is included herein immediately preceding the audited consolidated financial statements. a. Audited Financial Statements — for the years ended December 31, 2023, 2022 and 2021 and as of December 31, 2023, 2022 and 2021 Item 18. Financial Statements The Company has elected to provide financial statements pursuant to Item 17. Item 19. Exhibits 1.1 1.2 1.3 2.0 4.1 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.15 4.16 4.18 4.20 4.22 4.23 4.24 4.27 4.28 4.29 4.30 4.31 4.32 8.1 11.1 12.1 12.2 13.1 13.2 23.1 97.1 101. INS(*) 101.SCH(*) 101. AL(*) 101.DEF(*) 101.LAB(*) 101.PRE(*) 104(*) Certificate and Articles of Continuance (1) Amended and Restated Bylaws (2) Articles of Amendment, dated February 24, 2022 (8) Description of Securities (6) License Agreement with the University of Connecticut, dated April 28, 2003, as amended April 15, 2014 (1) Shareholder Rights Plan Agreement between the Company and TMX Equity Transfer Services, Inc.(2) Employment Agreement with Suresh Venkatesan, dated June 10, 2015 (3) Employment Agreement with Vivek Rajgarhia, dated November 4, 2019 (6) Employment Agreement with Thomas Mika, dated November 2, 2016 (4) Definitive agreement with San’an Integrated Circuit Co., Ltd dated October 21, 2020 (7) Sale and Purchase Agreement for DenseLight Semiconductors PTE, LTD, dated April 27, 2016 (4) Sale and Purchase Agreement for BB Photonics Inc. dated May 16, 2016 (4) 2021 Stock Option Plan (8) Form of Option Agreement(1) Form of Warrant for Purchase of Common Shares (1) Stock Specimen Certificate (1) Share Sale Agreement for DenseLight Semiconductors PTE, Ltd dated August 20, 2019 (6) Omnibus Incentive Plan (10) Underwriting Agreement with Maxim Group LLC (10) Form of Warrant Certificate, December 4, 2023 (10) Securities Trading Policy (10) Equity Distribution Agreement Dated June 29, 2023 (10) Equity Distribution Agreement Dated September 1, 2023 (10) Warrant indenture with TSX Trust Company, dated February 11, 2021 (7) Engagement letter with Cormark Securities Inc, dated January 25, 2021 (7) Upsize letter with Cormark Securities Inc, dated January 26, 2021 (7) Form of Subscription for Units of Private Placement, dated February 11, 2021 (7) Form of Subscription for Units of Private Placement, dated December 2, 2022 (9) Form of Warrant Certificate, dated December 2, 2022 (9) List of Subsidiaries (10) Code of Business Conduct and Ethics (7) Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (10) Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (10) Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (10) Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (10) Consent of Marcum LLP, independent registered accounting firm (10) POET Technologies Inc. Clawback Policy (10) Inline XBRL Instance Document (10) Inline XBRL Taxonomy Extension Schema Linkbase Document (10) Inline XBRL Taxonomy Extension Calculation Linkbase Document (10) Inline XBRL Taxonomy Extension Definition Linkbase Document (10) Inline XBRL Taxonomy Extension Label Linkbase Document (10) Inline XBRL Taxonomy Extension Presentation Linkbase Document (10) Cover Page Interactive Data File (embedded within Inline XBRL document) (10) (1) Filed as an exhibit to the Company’s registration statement under the Securities and Exchange Act on Form 20-F on May 15, 2014 and incorporated herein by reference. (2) Filed as an exhibit to the Company’s annual Form 20-F on April 13, 2015 and incorporated herein by reference. (3) Filed as an exhibit to the Company’s annual Form 20-F on March 18, 2016 and incorporated herein by reference. (4) Filed as an exhibit to the Company’s annual Form 20-F on April 18, 2017 and incorporated herein by reference. (5) Filed as an exhibit to the Company’s annual Form 20-F on April 30, 2019 and incorporated herein by reference (6) Filed as an exhibit to the Company’s annual Form 20-F on April 29, 2020 and incorporated herein by reference. (7) Filed as an exhibit to the Company’s annual Form 20-F on April 9, 2021 and incorporated herein by reference (8) Filed as an exhibit to the Company’s annual Form 20-F on April 26, 2022 and incorporated herein by reference (9) Filed as an exhibit to the Company’s annual Form 20-F on March 31, 2023 and incorporated herein by reference (10) Filed as an exhibit to this Form 20-F. (*) In accordance with Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Page 80 The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf. SIGNATURES POET TECHNOLOGIES INC. /s/ Suresh Venkatesan Suresh Venkatesan Chief Executive Officer Date: March 28, 2024 Page 81 We file reports and other information with the Securities and Exchange Commission; you may obtain copies of our filings with the SEC by accessing their website located at www.sec.gov. Further, we file reports under Canadian regulatory requirements on SEDAR; you may access our reports filed on SEDAR by accessing their website at www.sedar.com. MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION The accompanying consolidated financial statements of the Company and other financial information contained in this Annual Report are the responsibility of management. The consolidated financial statements have been prepared in conformity with IFRS, using management’s best estimates and judgments, where appropriate. In the opinion of management, these consolidated financial statements reflect fairly the financial position and the results of operations and cash flows of the Company within reasonable limits of materiality. The financial information contained elsewhere in this Annual Report has been reviewed to ensure consistency with that in the consolidated financial statements. To assist management in discharging these responsibilities, the Company maintains a system of procedures and internal control which is designed to provide reasonable assurance that its assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management’s authorization and that the financial records form a reliable base for the preparation of accurate and reliable financial information. The Board of Directors endeavors to ensure that management fulfills its responsibilities for the financial reporting and internal control. The Board of Directors exercises this responsibility through its independent Audit Committee comprising a majority of unrelated and outside directors. The Audit Committee meets periodically with management and annually with the external auditors to review audit recommendations and any matters that the auditors believe should be brought to the attention of the Board of Directors. The Audit Committee also reviews the consolidated financial statements and recommends to the Board of Directors that the statements be approved for issuance to the shareholders. The consolidated financial statements for the years ended December 31, 2023, 2022 and 2021 have been audited by Marcum LLP, independent registered public accounting firm, which has full and unrestricted access to the Audit Committee. Marcum’s report on the consolidated financial statements is presented herein. Page 82 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of POET Technologies Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of POET Technologies Inc. (the “Company”) as of December 31, 2023, 2022 and 2021, the related consolidated statements of operations and deficit, comprehensive loss, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2023, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 15, 2024, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of a material weakness. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a incurred significant losses over the past few years and needs to raise additional funds to meet its future obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission, Ontario Securities Commission and the PCAOB. Page 1 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /(cid:3468)/ M(cid:3450)(cid:3467)(cid:3452)(cid:3470)(cid:3462) LLP Marcum (cid:3461)(cid:3461)(cid:3465) We have served as the Company’s auditor since 2009, such date takes into account the acquisition of a portion of UHY LLP by Marcum LLP in April 2010. Hartford, CT March 15, 2024 PCAOB ID 668 Page 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Shareholders and Board of Directors of POET Technologies Inc. Adverse Opinion on Internal Control Over Financial Reporting We have audited POET Technologies Inc.’s (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in “Management’s Annual Report on Internal Control Over Financial Reporting”. The Company’s controls responsible for verification of changes to payment instructions from the Company’s vendors was not effective. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal December 31, 2023 consolidated financial statements, and this report does not affect our report dated March 15, 2024 on those financial statements. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated statements of financial position as of December 31, 2023, 2022 and 2021 and the related consolidated statements of operations and deficit, comprehensive loss, changes in shareholders’ equity, and cash flows and the related notes for each of the three years in the period ended December 31, 2023 of the Company and our report dated March 15, 2024 expressed an unqualified opinion, which includes an explanatory paragraph regarding the Company’s ability to continue as a going concern, on those financial statements. Page 3 Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission, the Ontario Securities Commission, and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate. /s/ Marcum LLP Marcum (cid:3461)(cid:3461)(cid:3465) Hartford, CT March 15, 2024 Page 4 POET TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in US Dollars) December 31, 2023 2022 2021 Current Cash and cash equivalents (Note 2) Short-term investments (Note 2) Accounts receivable (Notes 3) Prepaids and other current assets (Note 4) Investment in joint venture (Note 5) Property and equipment (Note 6) Patents and licenses (Note 7) Right of use asset (Note 8) Current Accounts payable and accrued liabilities (Note 9) Covid-19 government support loans (Note 23) Lease liability (Note 8) Contract liabilities (Note 3) Non-current lease liability (Note 8) Derivative warrant liability (Note 10 and 11(b)) Share capital (Note 11(b)) Warrants and compensation options (Note 12) Contributed surplus (Note 13) Accumulated other comprehensive loss Deficit Commitments and contingencies (Note 15) On behalf of the Board of Directors Assets Liabilities $ $ $ $ 3,019,069 - - 150,676 3,169,745 - 4,623,228 502,055 482,389 $ 9,229,845 - 62,842 275,507 9,568,194 - 5,070,507 510,705 241,047 14,941,775 6,366,828 - 480,523 21,789,126 1,445,251 3,064,234 528,476 326,890 8,777,417 $ 15,390,453 $ 27,153,977 2,301,457 30,200 204,939 - 2,536,596 307,141 1,002,264 $ $ 3,362,430 29,520 150,951 274,192 1,791,222 31,660 101,074 - 3,817,093 1,923,956 128,312 - 258,274 - 3,846,001 3,945,405 2,182,230 Shareholders’ Equity 165,705,423 670,115 55,447,961 (2,601,058) (214,291,025) 151,206,539 5,905,642 51,016,808 (2,660,281) (194,023,660) 147,729,846 5,328,455 46,954,333 (2,053,917) (172,986,970) 4,931,416 11,445,048 24,971,747 $ 8,777,417 $ 15,390,453 $ 27,153,977 Director Director The accompanying notes are an integral part of these consolidated financial statements. Page 5 POET TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (Expressed in US Dollars) For the Years Ended December 31, 2023 2022 2021 Revenue (Note 21) Operating expenses Selling, marketing and administration (Note 20) Research and development (Note 20) Operating expenses Operating loss before the following Interest expense (Notes 8) Other income, including interest Forgiveness of Covid-19 government support loans (Note 23) Gain on contribution of intellectual property to joint venture (Note 5) Share of loss in joint venture (Note 5) Fair value adjustment to derivative warrant liability (Note 10 and 11(b)) Net loss Deficit, beginning of year Net loss Deficit, end of year Basic and diluted net loss per share (Note 14) CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Expressed in US Dollars) $ 465,777 $ 552,748 $ 209,100 10,795,155 10,077,930 9,516,271 10,746,743 9,055,528 8,165,128 20,873,085 20,263,014 17,220,656 (20,407,308) (70,182) 234,990 - 1,031,807 (1,031,807) (24,865) (19,710,266) (49,738) 188,320 - 1,746,987 (3,211,993) - (17,011,556) (364,619) 75,084 186,747 2,587,500 (1,142,249) - (20,267,365) (21,036,690) (15,669,093) (194,023,660) (172,986,970) (157,317,877) (20,267,365) (21,036,690) (15,669,093) $ $ (214,291,025) (0.51) $ $ (194,023,660) (0.57) $ $ (172,986,970) (0.45) For the Years Ended December 31, 2023 2022 2021 Net loss $ (20,267,365) $ (21,036,690) $ (15,669,093) Other comprehensive (loss) - net of income taxes Items that may in the future be reclassified to profit (loss): Exchange differences on translating foreign operations 59,223 (606,364) (70,705) Comprehensive loss $ (20,208,142) $ (21,643,054) $ (15,739,798) The accompanying notes are an integral part of these consolidated financial statements. Page 6 POET TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Expressed in US Dollars) For the Years Ended December 31, Share Capital Beginning balance Funds from the exercise of stock options Fair value of stock options exercised Funds from the exercise of warrants and compensation warrants Fair value of warrants and compensation warrants exercised Conversion of convertible debentures Fair value of warrants issued on conversion of convertible debentures Funds from common shares issued through ATM Financing Funds from common shares issued on public or private offerings Share issue costs Common shares issued to settle accounts payable Fair value of warrants issued on public or private offering Fair value of broker warrant issued as share issue costs $ 2023 2022 2021 $ 151,206,539 668,259 587,035 7,767,067 4,418,783 - - 983,194 1,607,400 (578,317) - (954,537) - $ 147,729,846 418,845 374,129 284,437 79,547 - - - 3,184,332 (247,892) 40,029 (656,734) - 114,586,260 3,124,392 2,699,042 12,994,358 5,351,586 3,571,342 (1,229,305) - 11,815,595 (1,143,034) 13,814 (3,766,007) (288,197) December 31, 165,705,423 151,206,539 147,729,846 Equity Component of convertible debentures Beginning balance Fair value of equity component of convertible debentures December 31, Warrants and Compensation Options Beginning balance Fair value of warrants and compensation warrants exercised Fair value of expired warrants and compensation options Fair value of warrants issued on the exercise of convertible debentures Fair value of warrants issued on private placement Fair value of broker warrants issued as share issue costs - - - 5,905,642 (4,418,783) (816,744) - - - - - - 5,328,455 (79,547) - - 656,734 - 565,121 (565,121) - 5,557,002 (5,351,586) (160,470) 1,229,305 3,766,007 288,197 December 31, 670,115 5,905,642 5,328,455 Contributed Surplus Beginning balance Stock-based compensation Fair value of stock options exercised Fair value of expired warrants and compensation options Fair value effect of conversion of convertible debentures 51,016,808 4,201,444 (587,035) 816,744 - 46,954,333 4,436,604 (374,129) - - 44,407,679 4,534,370 (2,699,042) 160,470 550,856 December 31, 55,447,961 51,016,808 46,954,333 Accumulated Other Comprehensive Loss Beginning balance Other comprehensive (loss) attributable to common shareholders - translation adjustment December 31, Deficit Beginning balance Net loss December 31, (2,660,281) 59,223 (2,053,917) (606,364) (1,983,212) (70,705) (2,601,058) (2,660,281) (2,053,917) (194,023,660) (20,267,365) (172,986,970) (21,036,690) (157,317,877) (15,669,093) (214,291,025) (194,023,660) (172,986,970) Total Shareholders’ Equity $ 4,931,416 $ 11,445,048$ 24,971,747 The accompanying notes are an integral part of these consolidated financial statements. Page 7 POET TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in US Dollars) For the Years Ended December 31, 2023 2022 2021 CASH AND CASH EQUIVALENTS (USED IN) PROVIDED BY: OPERATING ACTIVITIES Net loss Adjustments for: Depreciation of property and equipment (Note 6) Amortization of patents and licenses (Note 7) Amortization of right of use asset (Note 8) Fair value adjustment to derivative warrant liability (Note 10) Accretion of debt discount on convertible debentures and non-cash interest (Notes 8) Stock-based compensation (Note 13) Non-cash settled operating costs (Notes 6 and 11) Gain on contribution of intellectual property to joint venture (Note 5) Share of loss in joint venture (Note 5) Forgiveness of covid-19 government support loans (Note 23) Net change in non-cash working capital accounts: Accounts receivable Prepaid and other current assets Accounts payable and accrued liabilities Contract liabilities $ (20,267,365) $ (21,036,690) $ (15,669,093) 1,653,798 87,761 180,602 24,865 53,614 4,201,444 - (1,031,807) 1,031,807 - 1,054,264 80,246 158,648 - 49,738 4,436,604 40,029 (1,746,987) 3,211,993 - 840,366 69,560 190,596 - 213,843 4,534,370 13,814 (2,587,500) 1,142,249 (186,747) (14,065,281) (13,752,155) (11,438,542) 62,000 126,936 (1,256,925) (274,192) (61,099) (356,199) 1,596,690 246,853 - 134,926 70,323 - Cash flows from operating activities (15,407,462) (12,325,910) (11,233,293) INVESTING ACTIVITIES Maturity (purchase) of short-term investments (Note 2) Purchase of property and equipment (Note 6) Purchase of patents and licenses (Note 7) - (1,167,953) (79,111) 6,366,828 (3,011,562) (62,475) (6,366,828) (771,523) (159,359) Cash flows from investing activities (1,247,064) 3,292,791 (7,297,710) FINANCING ACTIVITIES Issue of common shares for cash, net of issue costs (Note 11) Payment of lease liability (Note 8) Cash flows from financing activities Effect of exchange rate on cash Net change in cash and cash equivalents Cash and cash equivalents, beginning of year 10,447,603 (252,103) 3,639,722 (204,518) 26,791,311 (237,634) 10,195,500 3,435,204 26,553,677 248,250 (114,015) 46,207 (6,210,776) 9,229,845 (5,711,930) 14,941,775 8,068,881 6,872,894 Cash and cash equivalents, end of year $ 3,019,069 $ 9,229,845 $ 14,941,775 Page 8 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 1. DESCRIPTION OF BUSINESS POET Technologies Inc. is incorporated in the Province of Ontario. POET Technologies Inc. and its subsidiaries (the “Company”) design and develop the POET Optical Interposer and Photonic Integrated Circuits for the data center and tele-communications markets. The Company’s head office is located at 120 Eglinton Avenue East, Suite 1107, Toronto, Ontario, Canada M4P 1E2. These audited consolidated financial statements of the Company were approved by the Board of Directors of the Company on March 15, 2024. These financial statements have been prepared on the going concern basis which assumes that the Company will have sufficient cash to pay its debts, as and when they become payable, for a period of at least 12 months from the date the financial report was authorised for issue. As of December 31, 2023, the Company has accumulated losses of $(214,291,025) and working capital of $633,149. During the year ended December 31, 2023, the Company had negative cash flows from operations of $(15,407,462). The Company has prepared a cash flow forecast for one year from December 31, 2023 which indicates that it does not have sufficient cash to meet its minimum expenditure commitments and therefore needs to raise additional funds to continue as a going concern. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. To address the future funding requirements, management has undertaken the following initiatives: 1. Raised CA$6,219,667 (US$4,607,161) in gross funding from a private placement on January 24, 2024.The financing included the issuance of warrants at an exercise price of CA$1.52. These warrants are currently in- the- money and will be exercisable after May 25, 2024. 2. Raised $1,607,400 in gross funding from a public offering on December 4, 2023. The financing included the issuance of warrants at an exercise price of $1.12. These warrants are currently in- the- money and holders of these warrants are encouraged to exercise them. 3. Established a strict budgetary process with a focus on maintaining an appropriate level of corporate overheads in line with the Company’s available cash resources. The Company’s financial statements do not include any adjustments to the assets’ carrying amount, to the expenses presented and to the reclassification of the balance sheets items that could be necessary should the Company be unable to continue its operations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements of the Company and its subsidiaries were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below: Basis of presentation These consolidated financial statements include the accounts of POET Technologies Inc. and its subsidiaries; ODIS Inc. (“ODIS”), Opel Solar Inc. (“OPEL”), BB Photonics Inc. (“BB Photonics”), POET Technologies Pte Ltd. (“PTS”) and POET Optoelectronics Shenzhen Co., Ltd (“POET Shenzhen”). All intercompany balances and transactions have been eliminated on consolidation. Page 9 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations Acquisitions of businesses are accounted for using the acquisition method. The acquisition cost is measured at the acquisition date at the fair value of the consideration transferred, including all contingent consideration. Subsequent changes in contingent consideration are accounted for through the consolidated statements of operations and deficit and consolidated statements of comprehensive loss in accordance with the applicable standards. Goodwill arising on acquisition is initially measured at cost, being the difference between the fair value of the consideration transferred including the recognized amount of any non-controlling interest in the acquiree and the net recognized amount (generally fair value) of the identifiable assets and liabilities assumed at the acquisition date. If the net of the amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in the consolidated statements of operations and deficit as a bargain purchase gain. Acquisition-related costs, other than those that are associated with the issue of debt or equity securities that the Company incurs in connection with a business combination, are expensed as incurred. Foreign currency translation These consolidated financial statements are presented in U.S. dollars (“USD”), which is the Company’s presentation currency. Items included in the financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities not denominated in the functional currency of an entity are recognized in the statement of operations and deficit. Assets and liabilities of entities with functional currencies other than U.S. dollars are translated into the presentation currency at the year end rates of exchange, and the results of their operations are translated at average rates of exchange for the year. The resulting translation adjustments are included in accumulated other comprehensive loss in shareholders’ equity. Additionally, foreign exchange gains and losses related to certain intercompany loans that are permanent in nature are included in accumulated other comprehensive loss. Elements of equity are translated at historical rates. Financial instruments Financial assets held with an objective to hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest are measured at amortised cost using the effective interest method. Debt investments held with an objective to hold both assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of fair value are measured at FVTOCI. All other financial assets are classified and measured at fair value through profit or loss (“FVTPL”). Financial liabilities are classified as either FVTPL or other financial liabilities, and the portion of the change in fair value that relates to the Company’s credit risk is presented in other comprehensive income (loss). Instruments classified as FVTPL are measured at fair value with unrealized gains and losses recognized in net income (loss). Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Page 10 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities, other than financial assets and financial liabilities classified as FVTPL, are added to or deducted from the fair value on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities classified as FVTPL are recognized immediately in consolidated net income (loss). Derecognition Financial assets The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. Financial liabilities A financial liability is derecognized from the balance sheet when it is extinguished, that is, when the obligation specified in the contract is either discharged, cancelled or expires. Where there has been an exchange between an existing borrower and lender of debt instruments with substantially different terms, or there has been a substantial modification of the terms of an existing financial liability, this transaction is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. A gain or loss from extinguishment of the original financial liability is recognized in profit or loss. The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities. The following table outlines the classification of financial instruments under IFRS 9: Financial Assets Cash and cash equivalents Short-term investments Accounts receivable Financial Liabilities Accounts payable and accrued liabilities Contract liabilities Covid-19 government support loans Derivative warrant liability Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost Fair value through profit and loss (FVTPL) Convertible debentures are accounted for as a compound financial instrument with a debt component and a separate equity component. The debt component of these compound financial instruments is measured at fair value on initial recognition by discounting the stream of future interest and principal payments at the rate of interest prevailing at the date of issue for instruments of similar term and risk. The debt component is subsequently deducted from the total carrying value of the compound instrument to derive the equity component. The debt component is subsequently measured at amortized cost using the effective interest rate method. Interest expense based on the coupon rate of the debenture and the accretion of the liability component to the amount that will be payable on redemption are recognized through profit or loss as a finance cost. Page 11 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and cash equivalents Cash and cash equivalents consist of cash in current accounts of $1,249,116 (2022 - $1,981,765, 2021 - $4,216,911) and funds invested in US and Canadian Term Deposits of $1,769,953 (2022 - $7,248,080, 2021 - $10,724,864) earning interest at rates ranging from 0.20% - 0.25% and maturing in less than 90 days. Short-term investments The short-term investments of nil (2022 - nil, 2021 - $6,366,828) consist of guaranteed investment certificates (GICs) held with one Canadian chartered bank and earn interest at rates ranging from 0.75 to 1.44%. Property and equipment Property and equipment are recorded at cost. Depreciation is calculated based on the estimated useful life of the asset using the following method and useful lives: Machinery and equipment Leasehold improvements Office equipment Patents and licenses Straight Line, 5 years Straight Line, 5 years or life of the lease, whichever is less Straight Line, 3 - 5 years Patents and licenses are recorded at cost and amortized on a straight line basis over 12 years. Ongoing maintenance costs are expensed as incurred. Impairment of long-lived assets The Company’s tangible and intangible assets are reviewed for indications of impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. An assessment is made at each reporting date whether there is any indication that an asset may be impaired. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss for the year. The recoverable amount is the greater of the asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (“CGU”) to which the asset belongs. An impairment loss is reversed if there is an indication that there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. No impairment loss has been reported for the years ended December 31, 2023, 2022 and 2021. Page 12 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income taxes The Company follows the liability method of accounting for income taxes. Under this method, deferred income taxes are provided on differences between the financial reporting and income tax bases of assets and liabilities and on income tax losses available to be carried forward to future years for tax purposes. Deferred income taxes are measured using the substantively enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Deferred tax assets are only recognized if the amount is expected to be realized in the future. Revenue recognition Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue when it transfers control over a product or service to a customer. Sale of goods Revenue from the sale of goods is recognized, net of discounts and customer rebates, at the point in time the transfer of control of the related products has taken place as specified in the sales contract and collectability is reasonably assured. Service revenue The Company provides contract services, primarily in the form of non-recurring revenue (“NRE”) where control is passed to the customer over time. The contracts generally provide agreed upon milestones for customer payment which include but are not limited to the delivery of sample products, design reports and test reports. The customer makes payment when it has approved the delivery of the milestone. The Company must determine if the contract is made up of a series of independent performance obligations or a single performance obligation. Where NRE contracts contain multiple performance obligations for which a standalone transaction price can be assessed, revenue is recognized as each performance obligation is satisfied. Where NRE contracts contain a single performance obligation to be settled over time, revenue is recognized progressively based on the output method. Other income Interest income Interest income on cash is recognized as earned using the effective interest method. Wage subsidies Wages subsidies received from the Singaporean government are netted against R&D related wages and benefits on the consolidated statements of operations and deficit. Government Grants Loans received exclusively from governmental agencies to support the Company throughout the COVID-19 pandemic qualify to be forgiven if certain conditions are met. Forgiveness of COVID-19 related loans will be recognized as other income on the consolidated statements of operations and deficit. Page 13 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Intangible assets Research and development costs Research costs are expensed in the year incurred. Development costs are also expensed in the year incurred unless the Company believes a development project meets IFRS criteria as set out in IAS 38, Intangible Assets, for deferral and amortization. IAS 38 requires all research costs be charged to expense while development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. This means that the entity must intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefits. Development costs are tested for impairment whenever events or changes indicate that its carrying amount may not be recoverable. In-Process Research and Development Under IFRS, in-process research and development (“IPR&D”) acquired in a business combination that meets the definition of an intangible asset is capitalized with amortization commencing when the asset is ready for use (i.e., when development is complete). The Company does not capitalize its IPR&D. Stock-based compensation Stock options and warrants awarded to non employees are measured using the fair value of the goods or services received unless that fair value cannot be estimated reliably, in which case measurement is based on the fair value of the stock options. Stock options and warrants awarded to employees are accounted for using the fair value method. The fair value of such stock options and warrants granted is recognized as an expense on a proportionate basis consistent with the vesting features of each tranche of the grant. The fair value is calculated using the Black-Scholes option pricing model with assumptions applicable at the date of grant. Loss per share Basic loss per share, net of taxes is calculated by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period after giving effect to potentially dilutive financial instruments. The dilutive effect of stock options and warrants is determined using the treasury stock method. Joint Venture A joint arrangement is an arrangement among two or more parties where the parties are bound by a contractual arrangement and the contractual arrangement gives the parties joint control of the arrangement. A joint venture is a form of joint arrangement where an entity is independently formed and the parties jointly have rights to the net assets of the arrangement and therefore account for their interests under the equity method. The Company has a joint venture in China and uses the equity method to account for its share of the joint venture’s operations. Share Consolidation On February 24, 2022, the Company filed Articles of Amendment to consolidate its common shares on a ten-for-one basis. For further clarity, for every ten (10) pre-consolidated common shares, shareholders received one (1) post-consolidated common share. On February 28, 2022 the Company’s common shares began trading on the TSX Venture Exchange on a post consolidation basis. The Company’s name and trading symbol remained unchanged. All references to share and per share amounts in these consolidated financial statements and accompanying notes to the consolidated financial statements have been retroactively restated to reflect the ten-for-one share consolidation. Page 14 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 3. ACCOUNTS RECEIVABLE AND CONTRACT LIABILITIES Revenue Contract Balances Opening balance, January 1, 2022 Customer deposits Changes due to payment, fulfillment of performance obligations or revenues recognized Effect of changes in foreign exchange rates Balance, December 31, 2022 Changes due to payment, fulfillment of performance obligations or revenues recognized Effect of changes in foreign exchange rates Balance, December 31, 2023 4. PREPAIDS AND OTHER CURRENT ASSETS The following table reflects the details of prepaids and other current assets at December 31: Contract Receivables Liabilities $ $ - - 62,842 - 62,842 (62,842) - - $ - (779,870) 489,906 15,772 (274,192) 271,069 3,123 - $ $ $ Sales tax recoverable and other current assets Deposits on equipment Prepaid expenses 5. JOINT VENTURE 2023 2022 2021 $ 57,200 - 93,476 $ 128,321 - 147,186 141,568 288,287 50,668 150,676 $ 275,507 $ 480,523 $ $ On October 20, 2020, the Company signed a Joint Venture Agreement (“JVA”) establishing a joint venture, Super Photonics Xiamen Co., Ltd (“SPX”) in Xiamen China, with Xiamen Sanan Integrated Circuit Co. Ltd. (“Sanan IC”) whose purpose is to design, develop, manufacture and sell 100G, 200G and 400G optical engines based on POET’s proprietary Optical Interposer platform technology. SPX was registered on March 12, 2021. SPX will be subsequently capitalized through a combination of committed cash, capital equipment and intellectual property from Sanan IC and intellectual property and know-how from the Company. The Company’s contribution of intellectual property to SPX was independently valued at $22,500,000 at the time of its contribution. During the year ended December 31, 2023, the Company recognized a gain of $1,031,807 (2022 - $1,746,987, 2021 - $2,587,500) related to its contribution of intellectual property to SPX in accordance with IAS 28. The Company only recognized a gain on the contribution of the intellectual property equivalent to the Sanan IC’s interest in SPX, the unrecognized gain of $17,133,706 (2022 - $18,159,632, 2021 - $19,912,500) will be applied against the investment and periodically realized as the Company’s ownership interest in SPX is reduced. As at December 31, 2023, Sanan IC’s and the Company’s ownership interests were approximately 23.9% and 76.1% respectively (2022 - 19.3% and 80.7%, 2021 - 11.5% and 88.5%). SPX was determined to be a joint venture as both Sanan IC and POET exercise joint control over SPX. All relevant activity of SPX require unanimous consent. Page 15 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 5. JOINT VENTURE (Continued) The Company’s investment in joint venture during the year can be summarized as follows: Balance, January 1, 2021 Contribution of intellectual property Unrecognized gain on contribution of intellectual property Share of loss in joint venture for the year ended December 31, 2021 Investment balance, December 31, 2021 Recognized gain on contribution of intellectual property Share of loss in joint venture for the year ended December 31, 2022 Effect of changes in foreign exchange rates Investment balance, December 31, 2022 Recognized gain on contribution of intellectual property Share of loss in joint venture for the year ended December 31, 2023 Effect of changes in foreign exchange rates Investment balance, December 31, 2023 Summarized financial information of the joint venture is as follows: December 31, Current assets Intangible assets Liabilities Owners Equity Net loss $ $ - 22,500,000 (19,912,500) (1,142,249) 1,445,251 1,746,987 (3,211,993) 19,755 - 1,031,807 (1,031,807) - - 2023 2022 2021 $ $ $ 1,758,587 16,155,786 (149,306) (17,765,067) $ 1,951,654 18,708,065 (180,897) (20,478,822) 2,287,252 22,500,000 (44,683) (24,742,569) 3,830,962 $ 4,319,857 $ 1,212,417 The Company recognizes its share of SPX’s profits or losses using the equity method. On a weighted average basis, the Company’s share of the net operating loss was 78.9% or $(3,026,408), however the Company recognized $(1,031,807) of the net operating loss of SPX for the year ended December 31, 2023 (2022 - 83.7% or $(3,211,993), 2021 - $95.3% or $(1,142,249)). In accordance with IAS 28, the Company can only account for a loss to the extent that it carries a net investment in the joint venture on the statement of financial position. The Company’s current share of the operating loss is a result of the high value of the Company’s initial contribution. The Company’s share of the loss will reduce as Sanan IC periodically contributes cash and other assets to SPX. 6. PROPERTY AND EQUIPMENT Cost Balance, January 1, 2021 Additions,net of returns Reclassification Effect of changes in foreign exchange rates Balance,December 31, 2021 Additions, net of returns (1) Reclassification Effect of changes in foreign exchange rates Balance, December 31, 2022 Additions Reclassification Effect of changes in foreign exchange rates Equipment not ready for use Leasehold improvements Machinery and equipment Office equipment Total $ $ 227,147 (128,575) (96,334) (2,238) $ 71,928 - 47,393 (2,206) 3,994,657 842,877 48,941 (56,455) $ - 1,902,713 (141,702) 54,898 1,815,909 206,018 (2,013,090) (8,837) 117,115 - - 6,544 123,659 - - 597 4,830,020 1,087,414 162,917 11,270 6,091,621 949,551 2,013,090 41,246 128,185 57,221 - (2,137) 183,269 21,435 (21,215) (5,587) 177,902 12,384 - 5,560 $ 4,421,917 771,523 - (63,036) 5,130,404 3,011,562 - 67,125 8,209,091 1,167,953 - 38,566 Balance, December 31, 2023 - 124,256 9,095,508 195,846 9,415,610 Page 16 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 6. PROPERTY AND EQUIPMENT (Continued) Accumulated Depreciation Balance, January 1, 2021 Depreciation for the year Effect of changes in foreign exchange rates Balance, December 31, 2021 Depreciation for the year Effect of changes in foreign exchange rates Balance, December 31, 2022 Depreciation for the year Balance, December 31, 2023 Carrying Amounts At December 31, 2021 At December 31, 2022 At December 31, 2023 Property and equipment, carrying amounts Equipment not ready for use Leasehold improvements Machinery and equipment Office equipment Total - - - - - - - - - 10,777 18,891 (142) 29,526 24,079 2,529 56,134 24,684 1,146,014 794,834 (10,122) 1,930,726 1,000,085 27,727 2,958,538 1,600,981 79,372 26,641 (95) 105,918 30,100 (12,106) 123,912 28,133 1,236,163 840,366 (10,359) 2,066,170 1,054,264 18,150 3,138,584 1,653,798 80,818 4,559,519 152,045 4,792,382 $ $ $ $ - 1,815,909 - - $ $ $ $ 87,589$ 67,525$ 43,438$ 43,438$ 2,899,294 3,133,083 4,535,989 4,535,989 $ $ $ $ 77,351 53,990 43,801 43,801 $ $ $ $ 3,064,234 5,070,507 4,623,228 4,623,228 (1) During 2022, the Company returned $196,490 in equipment to a vendor. The equipment was not needed as the Company had alternatives. The equipment was returned without penalty to the Company. 7. PATENTS AND LICENSES Cost Balance, January 1, 2021 Additions Balance, December 31, 2021 Additions Balance, December 31, 2022 Additions Balance, December 31, 2023 Accumulated Amortization Balance, January 1, 2021 Amortization Balance, December 31, 2021 Amortization Balance, December 31, 2022 Amortization Balance, December 31, 2023 Carrying Amounts At December 31, 2021 At December 31, 2022 At December 31, 2023 $ $ $ $ 837,102 159,359 996,461 62,475 1,058,936 79,111 1,138,047 398,425 69,560 467,985 80,246 548,231 87,761 635,992 528,476 510,705 502,055 Page 17 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 8. RIGHT OF USE ASSET AND LEASE LIABILITY The Company recognizes a lease liability and right of use asset relating to its commercial leases. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate of 12%. Right of use asset Cost Balance, January 1, 2021 Effect of changes in foreign exchange rates Balance, December 31, 2021 Lease modification Balance, December 31, 2022 Addition Balance, December 31, 2023 653,232 (4,122) 649,110 81,542 730,652 420,806 1,151,458 Building $ Accumulated Amortization Balance, January 1, 2021 Amortization Effect of changes in foreign exchange rates Balance, December 31, 2021 Amortization Effect of changes in foreign exchange rates Balance, December 31, 2022 Amortization Effect of changes in foreign exchange rates Balance, December 31, 2023 Carrying Amounts At December 31, 2021 At December 31, 2022 At December 31, 2023 132,546 190,596 (922) 322,220 158,648 8,737 489,605 180,602 (1,138) 669,069 326,890 241,047 482,389 Page 18 $ $ $ POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 8. RIGHT OF USE ASSET AND LEASE LIABILITY (Continued) Lease liability Balance, January 1, 2021 Interest expense Lease payments Effect of changes in foreign exchange rates Balance, December 31, 2021 Interest expense Lease modification Lease payments Effect of changes in foreign exchange rates Balance, December 31, 2022 Interest expense Lease modification Additions Lease payments Effect of changes in foreign exchange rates Balance, December 31, 2023 $ $ 531,997 67,675 (237,634) (2,690) 359,348 49,738 81,542 (204,518) (6,847) 279,263 53,613 - 424,021 (252,103) 7,286 512,080 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities at December 31 was as follows: Trade payables Payroll related liabilities Accrued liabilities 10. DERIVATIVE WARRANT LIABILITY 2023 2022 2021 $ $ $ 1,370,658 563,588 367,211 $ 2,723,531 452,751 186,148 987,498 521,692 282,032 2,301,457 $ 3,362,430 $ 1,791,222 On December 4, 2023, the Company raised gross proceeds of $1,607,400 from the issuance of 1,786,000 units through an underwritten public offering in the United States (the “Offering”). The Offering consisted of 1,786,000 common shares of the Company and warrants to purchase up to 1,786,000 warrants. The warrants are exercisable into common shares of the Company at a price of $1.12 until December 4, 2028. Because the functional currency of the entity issuing the warrant is Canadian dollars but the warrants are exercisable in United States dollars, the Company may receive a variable amount in Canadian dollars when the warrants are exercised as the foriegn exchange may vary over the warrant exercise period. The variability in potential future cashflows resulted in a derivative warrant liability which will be periodically remeasured with any gains or losses charged to the consolidated statements of operations and deficit. The fair value of the share purchase warrants was estimated on the date of issuance using the Black-Scholes option pricing model with the following weighted average assumptions: dividend yield of 0%, risk-free interest rate of 3.54%, volatility of 75.66%, and estimated life of 5 years. The estimated fair value assigned to the warrants and recognized as a derivative liability on the date of issuance was $954,537. The derivative liability was remeasured on December 31, 2023. The remeasurement resulted in a loss of $24,865. Page 19 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 10. DERIVATIVE WARRANT LIABILITY (continued) The following table presents the details of the derivative warrant liability: Stock price ($CA) Exercise price ($CA) Expected life in years Volatility Dividend yield Risk free interest rate Fair value of derivative warrant liability 11. SHARE CAPITAL (a) AUTHORIZED Unlimited number of common shares One special voting share (b) COMMON SHARES ISSUED Balance, January 1, 2021 Funds from the exercise of stock options Fair value of stock options exercised Issued on the conversion of convertible debentures (Note 10) Fair value of warrants issued upon conversion of convertible debentures Funds from the exercise of warrants Fair value of warrants exercised Funds from Common shares issued on private placement Fair value of warrants issued on private placement Share issue costs Fair value of broker warrants issued as share issue costs Shares issued to settle accounts payable Balance, December 31, 2021 Funds from Common shares issued on private placement Fair value of warrants issued on private placement Share issue costs Shares issued to settle accounts payable Funds from the exercise of stock options Fair value of stock options exercised Funds from the exercise of warrants and compensation warrants Fair value of warrants and compensation warrants exercised Adjustment for 10 for 1 share consolidation Balance, December 31, 2022 Funds from common shares issued through ATM financing Funds from Common shares issued on private placement Fair value of warrants issued on private placement Share issue costs Funds from the exercise of stock options Fair value of stock options exercised Funds from the exercise of warrants and compensation warrants Fair value of warrants and compensation warrants exercised Balance, December 31, 2023 December 31, 2023 December 4, 2023 $ $ 1.25 1.52 5.00 75.66% 0% 3.54% 1.22 1.52 5.00 75.66% 0% 3.54% 1,002,264 $ 954,537 $ $ $ Number of Shares Amount 29,461,811 1,001,519 - 1,119,750 - 3,144,750 - 1,764,720 - - - 1,678 36,494,228 1,126,635 - - 5,422 143,437 - 72,500 - (272) 37,841,950 227,673 1,786,000 - - 268,356 - 2,364,066 - 42,488,045 $ $ 114,586,260 3,124,392 2,699,042 3,571,342 (1,229,305) 12,994,358 5,351,586 11,815,595 (3,766,007) (1,143,034) (288,197) 13,814 147,729,846 3,184,332 (656,734) (247,892) 40,029 418,845 374,129 284,437 79,547 - 151,206,539 983,194 1,607,400 (954,537) (578,317) 668,259 587,035 7,767,067 4,418,783 165,705,423 Page 20 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 11. SHARE CAPITAL (Continued) 2021 On February 11, 2021, the Company completed a brokered private placement offering of 1,764,720 units at a price of $6.70 (CAD$8.50) per unit for gross proceeds of $11,815,595 (CAD$15,000,120). Each unit consists of one common share and one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at a price of $9.00 (CAD$11.50) per share until February 11, 2023. At any time after June 12, 2021, the Company reserves the right to accelerate the expiry of the warrants if the Company’s average stock price exceeds $18.10 (CAD$23.00) for a period of 10 consecutive trading days. The broker was paid a cash commission of $708,667 (CAD$900,007) equating to 6% of the gross proceeds and received 105,883 broker warrants. Each broker warrant is exercisable into one common share of the Company at a price of $6.70 (CAD$8.50) per broker warrant until February 11, 2023. The Company incurred additional share issuance costs of $434,367 directly related to the private placement and warrant exercises. The fair value of the share purchase warrants and broker warrants was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: dividend yield of 0%, risk-free interest rate of 0.19%, volatility of 75.26%, and estimated life of 2 years. The estimated fair value assigned to the warrants and broker warrants was $3,766,007 and $288,197, respectively. 2022 In 2020, the Company engaged with a firm to assist with its shareholder communications strategy. The terms of the agreement require the Company to issue common shares at certain pre-determined dates in satisfaction of past services rendered. During the year ended December 31, 2022, the Company settled $40,029 (2021 - $13,814) in accounts payable related to services rendered in 2022 under this agreement by issuing 5,422 (2021 - 1,678) common shares at a price of $7.38 (CAD$9.38) (2021 - $8.20 (CAD$10.10)) per share to the firm. On December 2, 2022, the Company completed a non-brokered private placement offering of 1,126,635 units at a price of $2.78 (CAD$3.81) per unit for gross proceeds of $3,184,332 (CAD$4,292,479). Each unit consists of one common share and one half common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at a price of $3.61 (CAD$4.95) per share until December 2, 2025. The Company paid finders’ fees aggregating to $42,090 (CAD$57,897) to four firms. The Company paid other share issue costs of $205,802 related to this private placement offering. One director subscribed for 10,000 units of this private placement offering for gross proceeds of $27,800 (CAD$38,100). The fair value of the share purchase warrants and broker warrants was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: dividend yield of 0%, risk-free interest rate of 3.48%, volatility of 69.93%, and estimated life of 3 years. The estimated fair value assigned to the warrants was $656,734. 2023 During the year ended December 31, 2023, the Company raised gross proceeds of $983,194 from the issuance of 227,673 common shares through an Equity Distribution Agreement, (“EDA”) with multiple agents. Pursuant to the EDA, the Company established an at-the-market (“ATM”) equity offering program whereby the Company may, at its discretion, during the term of the ATM agreement issue and sell, through the agents such number of common shares of the Company as would result in aggregate gross proceeds to the Company of up to US$30 million. The agents were paid a commission of 3% or $29,486 of the gross proceeds raised through the ATM. The Company incurred additional financing costs including legal and filing fees of $291,226. Page 21 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 11. SHARE CAPITAL (Continued) On December 4, 2023, the Company raised gross proceeds of $1,607,400 from the issuance of 1,786,000 units through an underwritten public offering in the United States (the “Offering”). The Offering consisted of 1,600,000 common shares of the Company and warrants to purchase up to 1,600,000 common shares of the Company at a combined public offering price of US$0.90 per common share and accompanying warrant. Each warrant has an exercise price of US$1.12 per common share and is exercisable for five years from the date of issuance. In addition, the Company granted the underwriter a 45 day option to purchase up to an additional 240,000 common shares and/or warrants to purchase up to an additional 240,000 common shares at the public offering price in any combination, less underwriting discounts and commissions, which the underwriter has partially exercised to purchase 186,000 additional common shares and additional warrants to purchase up to 186,000 common shares. The agents were paid a commission of 7% or $112,518 of the gross proceeds raised. The Company incurred additional financing costs including legal and filing fees of $145,089. The fair value of the share purchase warrants was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: dividend yield of 0%, risk-free interest rate of 3.54%, volatility of 75.66%, and estimated life of 5 years. The estimated fair value assigned to the warrants was $954,537 (Note 10). Share Consolidation On February 24, 2022, the Company filed Articles of Amendment to consolidate its common shares on a ten-for-one basis. For further clarity, for every ten (10) pre-consolidated common shares, shareholders received one (1) post-consolidated common share. On February 28, 2022, the Company’s common shares began trading on the TSX Venture Exchange on a post consolidation basis. The Company’s name and trading symbol remained unchanged. All references to share and per share amounts in these consolidated financial statements and accompanying notes to the consolidated financial statements have been retroactively restated to reflect the ten-for-one share consolidation. 12. WARRANTS AND COMPENSATION OPTIONS The following table reflects the continuity of warrants and compensation options: Balance, January 1, 2021 Fair value of warrant issued on private placement (Note 11) Fair value of broker warrants issued on private placement Fair value of warrants issued on conversion of convertible debentures Historical fair value assigned to warrants exercised Fair value of expired warrants Balance, December 31, 2021 Fair value of warrant issued on private placement Historical fair value assigned to warrants exercised Balance, December 31, 2022 Historical fair value assigned to warrants exercised Fair value of expired warrants Fair value of warrant issued on public offering Balance, December 31, 2023 $ $ Historical Average Exercise Price 3.90 9.00 6.70 3.80 3.90 3.90 7.10 1.17 3.90 6.15 3.27 4.50 - 1.77 Number of Warrants/ Compensation options 3,269,050 1,764,720 105,883 1,119,750 (3,144,750) (93,300) 3,021,353 563,318 (72,500) 3,512,171 (2,364,066) (584,787) 1,786,000 2,349,318 $ $ Historical Fair value 5,557,002 3,766,007 288,197 1,229,305 (5,351,586) (160,470) 5,328,455 656,734 (79,547) 5,905,642 (4,418,783) (816,744) - 670,115 Page 22 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 13. STOCK OPTIONS AND CONTRIBUTED SURPLUS Stock Options On June 30, 2023, shareholders of the Company approved a fixed 20% omnibus equity incentive plan (the “Omnibus Plan”). The Omnibus Plan replaces the 2021 stock option plan. The Omnibus Plan provides flexibility to the Company to grant different forms of equity-based incentive awards to directors, officers, employees and consultants. The Omnibus plan provides the Company with the choice of granting stock options (“Options”), share units (“Share Units”) and deferred share units (“DSUs”). The Omnibus Plan provides that the maximum number of common shares issuable pursuant to awards granted under the Omnibus Plan and pursuant to other previously granted awards is limited to 8,056,055 (the “Number Reserved”). Any subsequent increase in the Number Reserved must be approved by shareholders of the Company and cannot, at the time of the increase, exceed 20% of the number of issued and outstanding shares. Awards vest in accordance with the policies determined by the Board of Directors from time to time consistent with the provisions of the Omnibus Plan which grants discretion to the Board of Directors. Stock option transactions and the number of stock options outstanding were as follows: Balance, January 1, 2021 Expired/cancelled Exercised Granted Balance, December 31, 2021 Expired/cancelled Exercised Granted Balance, December 31, 2022 Expired/cancelled Exercised Granted Balance, December 31, 2023 Number of Options Historical Weighted Average Exercise Price 5,114,449 (166,438) (1,001,519) 1,013,125 4,959,617 (117,438) (143,437) 2,043,083 6,741,825 (182,750) (268,356) 1,002,170 7,292,889 $ $ 3.30 3.40 3.00 8.50 4.40 6.02 2.85 3.32 4.10 4.66 2.49 4.11 3.92 During the year ended December 31, 2023, the Company recorded stock-based compensation of $4,201,444 (2022 - $4,436,604, 2021 - $4,534,370) relating to stock options that vested during the year. The stock options granted were valued using the Black-Scholes option pricing model using the following assumptions: Weighted average exercise price Weighted average risk-free interest rate Weighted average dividend yield Weighted average volatility Weighted average estimated life Weighted average share price Share price on the various grant dates: Weighted average fair value 2023 4.11 2.88% - 3.48% 0% 82.17% - 82.45% 10 years 4.11 $4.05 - $4.63 3.42 $ $ $ $ $ $ 2022 3.32 1.80% - 3.48% 0% 83.51% 10 years 3.32 $2.72 - $6.71 2.70 $ $ $ 2021 8.50 0.80% - 1.48% 0% 90.68% 10 years 8.50 $6.20 - $9.50 7.50 Page 23 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 13. STOCK OPTIONS AND CONTRIBUTED SURPLUS (Continued) The underlying expected volatility was determined by reference to the Company’s historical share price movements, its dividend policy and dividend yield and past experience relating to the expected life of granted stock options. The weighted average remaining contractual life and weighted average exercise price of options outstanding and of options exercisable as at December 31, 2023 are as follows: Options Outstanding Options Exercisable Exercise Range $0.83 - $1.97 $1.98 - $2.80 $2.81 - $9.02 Number Outstanding 7,000 1,851,073 5,434,816 7,292,889 14. LOSS PER SHARE Numerator Net loss Denominator Weighted average number of common shares outstanding Weighted average number of common shares outstanding - diluted Basic and diluted loss per share Historical Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) 1.97 2.45 4.44 3.92 4.59 6.17 7.21 6.95 Historical Weighted Average Exercise Price 1.97 2.36 4.38 3.81 Number Exercisable 7,000 1,328,577 3,373,128 4,708,705 $ $ $ $ 2023 2022 2021 (20,267,365) $ (21,036,690) $ (15,669,093) 40,099,752 40,099,752 (0.51) $ 36,739,857 36,739,857 (0.57) $ 34,545,752 34,545,752 (0.45) $ $ $ $ $ $ The effect of common share purchase options, warrants, compensation warrants and shares to be issued on the net loss in 2023, 2022 and 2021 is not reflected as they are anti-dilutive. 15. COMMITMENTS AND CONTINGENCIES The Company has operating leases on four facilities; head office located in Toronto, Canada, design and testing operations located in Allentown, Pennsylvania (formerly in San Jose, California) and operating facilities located in Singapore and China. The Company’s design and testing operations was initiated on April 1, 2021 and expires on September 30, 2025. The lease on the Company’s operating facilities in Singapore terminated on May 31, 2023. The lease was renewed on June 1, 2023 and expires on March 31, 2027. The lease on the Company’s operating facilities in China was initiated in November 19, 2021 and expired on November 18, 2023. The lease on the operating facility in China was renewed for another three year term, expiring on November 18, 2026. As of December 31, 2023, the Company’s head office was on a month to month lease term. Remaining annual lease payments to the lease expiration dates are as follows: 2024 2025 and beyond $ $ 281,048 390,873 671,921 Page 24 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 16. RELATED PARTY TRANSACTIONS Compensation to key management personnel were as follows: Salaries Share-based payments (1) Total 2023 2022 2021 $ $ 2,044,920 1,771,078 3,815,998 $ $ 2,010,479 1,711,716 3,722,195 $ $ 1,782,297 2,077,333 3,859,630 (1)Share-based payments are the fair value of options granted to key management personnel and expensed during the various years as calculated using the Black- Scholes model. All transactions with related parties have occurred in the normal course of operations and are measured at the exchange amounts, which are the amounts of consideration established and agreed to by the related parties. 17. SEGMENT INFORMATION The Company and its subsidiaries operate in a single segment; the design, manufacture and sale of semi-conductor products and services for commercial applications. The Company’s operating and reporting segment reflects the management reporting structure of the organization and the manner in which the chief operating decision maker regularly assesses information for decision making purposes, including the allocation of resources. A summary of the Company’s operations is below: OPEL, ODIS, POET Shenzhen and PTS OPEL, ODIS, POET Shenzhen and PTS are the designers and developers of the POET Optical Interposer platform and optical engines based on the POET Optical Interposer platform. BB Photonics BB Photonics developed photonic integrated components for the datacom and telecom markets utilizing embedded dielectric technology that enabled the partial integration of active and passive devices into photonic integrated circuits. BB Photonics’ operation is currently dormant. On a consolidated basis, the Company operates geographically in Singapore, China (collectively “Asia”), the United States and Canada. Geographical information is as follows: As of December 31, Current assets Property and equipment Patents and licenses Right of use asset Total Assets 2023 Asia 326,926 4,089,653 - 379,462 $ US Canada Consolidated $ 149,227 533,575 502,055 102,927 $ 2,693,592 - - - 3,169,745 4,623,228 502,055 482,389 4,796,041 $ 1,287,784 $ 2,693,592 $ 8,777,417 $ $ Page 25 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 17. SEGMENT INFORMATION (Continued) Year Ended December 31, Revenue Asia US Canada Consolidated $ 465,777 $ - $ - $ 465,777 Selling, marketing and administration Research and development Gain on contribution of intellectual property to joint venture Interest expense Loss on fair value of derivative warrant liability Other income, including interest Share of loss in joint venture Net loss As of December 31, Current assets Investment in joint venture Property and equipment Patents and licenses Right of use asset Total Assets The Year Ended December 31, Revenue Selling, marketing and administration Research and development Gain on contribution of intellectual property to joint venture Interest expense Forgiveness of Covid-19 government support loans Other income, including interest Share of loss in joint venture Net loss As of December 31, Current assets Investment in joint venture Property and equipment Patents and licenses Right of use asset Total Assets (2,753,484) (6,249,120) 1,031,807 (27,906) - - (1,031,807) (6,226,291) (3,662,418) (1,815,380) (166,392) - (42,276) - - - - - (24,865) 234,990 - (10,795,155) (10,077,930) 1,031,807 (70,182) (24,865) 234,990 (1,031,807) (8,564,733) $ (9,930,985) $ (1,771,647) $ (20,267,365) $ $ $ 2022 Asia 664,658 - 4,496,734 - 55,775 5,217,167 Asia 552,748 (2,121,596) (6,344,016) 1,746,987 (17,701) - - (3,211,993) US Canada Consolidated $ $ $ 133,501 - 573,773 510,705 185,272 1,403,251 US - (5,885,970) (4,205,177) - (32,037) - - - 8,770,035 - - - - 8,770,035 Canada - (1,508,705) (197,550) - - - 188,320 - $ $ $ 9,568,194 - 5,070,507 510,705 241,047 15,390,453 Consolidated 552,748 (9,516,271) (10,746,743) 1,746,987 (49,738) - 188,320 (3,211,993) (9,395,571) $ (10,123,184) $ (1,517,935) $ (21,036,690) 2021 Asia 537,647 1,445,251 2,787,273 - 150,134 $ US Canada Consolidated $ 291,772 - 276,961 528,476 176,756 $ 20,959,707 - - - - 21,789,126 1,445,251 3,064,234 528,476 326,890 4,920,305 $ 1,273,965 $ 20,959,707 $ 27,153,977 Page 26 $ $ $ $ $ $ $ POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 17. SEGMENT INFORMATION (Continued) The Year Ended December 31, Revenue Selling, marketing and administration Research and development Forgiveness of Covid-19 government support loans Interest expense Gain on contribution of intellectual to joint venture Other income, including interest Share of loss in joint venture $ $ $ $ Asia 209,100 (1,563,829) (4,849,553) - (35,043) 2,587,500 - (1,142,249) US Canada Consolidated $ $ - (5,460,917) (2,679,452) 186,747 (32,632) - - - $ $ - (2,030,784) (636,123) - (296,944) - 75,084 - 209,100 (9,055,530) (8,165,128) 186,747 (364,619) 2,587,500 75,084 (1,142,249) Net loss $ (4,794,074) $ (7,986,254) $ (2,888,767) $ (15,669,095) 18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Company’s financial instruments consist of cash and cash equivalents, short-term investments, covid-19 government support loans, derivative warrant liability and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest risk arising from these financial instruments. The Company estimates that carrying value of these instruments approximates fair value due to their short term nature. The Company has classified financial assets and (liabilities) as follows at December 31: Financial assets, measured at amortized cost: Cash and cash equivalents Short-term investments Accounts receivable, measured at amortized cost: Accounts receivable Other liabilities, measured at amortized cost: Accounts payable and accrued liabilities Covid-19 government support loans Contract liabilities Fair value through profit or loss (FVTPL): Derivative warrant liability Exchange Rate Risk 2023 2022 2021 $ $ $ $ $ $ $ 3,019,069 - - (2,301,457) (30,200) - (1,002,264) $ $ $ $ $ $ $ 9,229,845 - 62,842 (3,362,430) (29,520) (274,192) - $ $ $ $ $ $ $ 14,941,775 6,366,828 - (1,791,222) (31,660) - - The functional currency of each of the entities included in the accompanying consolidated financial statements is the local currency where the entity is domiciled. Functional currencies include the Chinese Yuan, US, Singapore and Canadian dollar. Most transactions within the entities are conducted in functional currencies. As such, none of the entities included in the consolidated financial statements engage in hedging activities. The Company is exposed to a foreign currency risk when its subsidiaries hold current assets or current liabilities in currencies other than its functional currency. A 10% change in foreign currencies held would increase or decrease other comprehensive loss by $198,000. Liquidity Risk The Company currently does not maintain credit facilities. The Company’s existing cash and cash resources are not considered sufficient to fund operating and investing activities beyond one year from the date of these consolidated financial statements. The Company may, however, need to seek additional financing in the future. Page 27 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 19. CAPITAL MANAGEMENT In the management of capital, the Company includes shareholders’ equity (excluding accumulated other compehensive loss and deficit) and cash. The components of capital on December 31, 2023 were: Cash and cash equivalents Shareholders’ equity $ $ 3,019,069 221,823,499 The Company’s objective in managing capital is to ensure that financial flexibility is present to increase shareholder value through growth and responding to changes in economic and/or market conditions; to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business and to safeguard the Company’s ability to obtain financing should the need arise. In maintaining its capital, the Company has a strict investment policy which includes investing its surplus capital only in highly liquid, highly rated financial instruments. The Company reviews its capital management approach on an ongoing basis. 20. EXPENSES Research and development costs can be analysed as follows: Wages and benefits Subcontract fees Stock-based compensation Supplies Selling, marketing and administration costs can be analysed as follows: Stock-based compensation Wages and benefits Professional fees General expenses Depreciation and amortization Rent and facility costs 21. REVENUE Disaggregated Revenues 2023 2022 2021 $ 4,298,207 1,864,122 1,539,235 2,376,366 $ 4,267,937 2,946,729 2,054,187 1,477,890 3,270,528 1,516,343 1,769,951 1,608,306 10,077,930 $ 10,746,743 $ 8,165,128 $ 2,662,209 2,649,770 1,744,771 1,681,899 1,922,140 134,366 $ 2,382,417 2,648,862 1,173,743 1,860,762 1,293,158 157,329 2,764,419 2,643,451 1,155,316 1,304,690 1,100,522 87,130 10,795,155 $ 9,516,271 $ 9,055,528 $ $ $ $ The Company disaggregates revenue by timing of revenue recognition, that is, at a point in time and revenue over time. During the year ended December 31, 2023, the Company recognized $465,777 (2022 - $552,748, 2021 - $209,100) from non-recurring engineering services. The revenue is recognized over time. Page 28 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 22. INCOME TAXES The following table reconciles the expected income tax recovery at the Canadian statutory income tax rate of 26.5% for 2023 (2022 - 26.5%, 2021 - 26.5%) to the amounts recognized in operations. For the Year Ended December 31, 2023 2022 2021 Net loss before taxes $ (20,267,365) $ (21,036,690) $ (15,669,093) Expected current income tax recovery 5,370,852 5,574,723 4,152,310 Adjustments to income tax recovery: For the Year Ended December 31, Amounts not deductible for tax purposes Other non-deductible items Other deductible items Non-taxable gain (loss) Non-taxable loan forgiveness Deferred R&D expenses, net Foreign tax differential Unrecognized tax recovered (losses) Income tax recovery recognized The following table reflects future income tax assets at December 31: Resource assets Gross unamortized share issue costs Capitalized S.174 expenses Canadian non-capital losses Canadian capital losses US non-capital losses Singapore non-capital losses Unrecognized deferred tax assets Deferred income tax assets recognized $ $ $ $ 2023 2022 2021 $ (1,113,000) (69,000) 191,000 - - (459,000) (905,538) (3,015,314) $ (1,177,000) (66,000) 161,000 (388,000) - (627,000) (828,000) (2,649,723) (1,201,600) (111,000) 157,000 383,000 49,000 - (508,000) (2,920,710) - $ - $ - 2023 2022 2021 $ 1,024,271 810,000 5,900,000 22,585,000 5,300,000 95,300,000 19,300,000 $ 1,024,271 1,081,250 2,368,000 21,955,000 5,156,000 93,000,000 13,800,000 1,024,271 1,114,604 - 21,404,000 5,565,125 86,073,000 9,180,000 150,219,271 (150,219,271) 138,384,521 (138,384,521) 124,361,000 (124,361,000) - $ - $ - Page 29 POET TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in US Dollars) 23. COVID-19 GOVERNMENT SUPPORT LOANS In March 2020, the United States Congress passed the Paycheck Protection Program (“PPP”), authorizing loans to small businesses for use in paying employees that they continue to employ throughout the COVID-19 pandemic and for rent, utilities and interest on mortgages. Loans obtained through the PPP are eligible to be forgiven as long as the proceeds are used for qualifying purposes and certain other conditions are met. On May 3, 2020, the Company received a loan in the amount of $186,747 through the PPP. During the year, the Company received notice from the Small Business Administration of Washington, DC that the PPP loan was forgiven in full. The forgiven loan was reclassified to the consolidated statements of operations and deficit and recognized as income for the year ended December 31, 2021. On April 9, 2020, the Canadian government launched the Canada Emergency Business Account (“CEBA”) which is intended to support businesses during COVID-19 by providing interest free financing of up to $30,200 (CA$40,000) until December 31, 2023. If 75% of the loan is repaid by December 31, 2023 (extended to January 18, 2024), the loan recipient will be eligible for a loan forgiveness of the remaining 25% of the amount loaned. On April 15, 2020, the Company received a loan in the amount of $30,200 through the CEBA. If the loan has not been repaid by January 18, 2024, the outstanding amount will be automatically extended for an additional two years at 5% interest per annum payable monthly and maturing on December 31, 2025. The Company repaid 75% of the amount borrowed on January 15, 2024. 24. SUBSEQUENT EVENTS On January 24, 2024, the Company raised gross proceeds of CA$6,219,667 (US$4,607,161) from the issuance of 5,098,088 units through a private placement financing facility (the “Offering”) at an offering price CA$1.22 (US$0.90). Each unit consisted of one common share of the Company and one common share purchase warrant to purchase up to 5,098,088 common shares for a period of five (5) years from the date of closing at a price of CA$1.52 (US$1.12) per share. The Company paid finder’s fees of CA$43,829 (US$32,466) to certain parties that were instrumental of introducing some of the subscribers to the Company. Directors, management and employees acquired 459,522 units of the offering for gross proceeds of CA$560,617 (US$415,272). Page 30 ex4-16.htm EX-4.16 1 of 40 03/28/2024 04:02 PM Exhibit 4.16 POET TEchnologies inc. (THE “CORPORATION”) OMNIBUS INCENTIVE PLAN ARTICLE 1 INTERPRETATION 1.1 1.2 Definitions Interpretation TABLE OF CONTENTS ARTICLE 2 PURPOSE AND ADMINISTRATION OF THE PLAN; GRANTING OF AWARDS 2.1 2.2 2.3 2.4 2.5 2.6 Purpose of the Plan Implementation and Administration of the Plan Participation in this Plan Shares Subject to the Plan Limits with Respect to Insiders, Individual Limits, Annual Grant Limits, Consultant Limits and Investor Relations Service Providers Granting of Awards ARTICLE 3 OPTIONS 3.1 3.2 3.3 3.4 3.5 3.6 3.7 Nature of Options Option Awards Option Price Option Term Exercise of Options Method of Exercise and Payment of Purchase Price Option Agreements ARTICLE 4 RESTRICTED AND PERFORMANCE SHARE UNITS 4.1 4.2 4.3 4.4 4.5 4.6 4.7 Nature of Share Units Share Unit Awards Share Unit Agreements Vesting of Share Units Redemption / Settlement of Share Units Determination of Amounts Award of Dividend Equivalents ARTICLE 5 DEFERRED SHARE UNITS 5.1 5.2 5.3 5.4 5.5 5.6 Nature of Deferred Share Units Market Fluctuation DSU Awards DSU Agreements Vesting of DSUs Redemption / Settlement of DSUs ARTICLE 6 GENERAL CONDITIONS 6.1 6.2 6.3 General Conditions Applicable to Awards General Conditions Applicable to Options General Conditions Applicable to Share Units ARTICLE 7 ADJUSTMENTS AND AMENDMENTS 7.1 7.2 7.3 Adjustment to Shares Subject to Outstanding Awards Change of Control Amendment or Discontinuance of the Plan ARTICLE 8 MISCELLANEOUS 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 Use of an Administrative Agent and Trustee Tax Withholding Clawback Securities Law Compliance Reorganization of the Corporation Quotation of Shares No Fractional Shares Governing Laws Severability Section 409A of the Tax Code 1 1 6 7 7 7 8 8 9 10 11 11 11 11 11 11 12 13 13 13 13 14 14 14 16 16 17 17 17 17 17 18 18 19 19 20 21 22 22 23 23 25 25 25 25 26 26 26 27 27 27 27 POET TECHNOLOGIES INC. OMNIBUS INCENTIVE PLAN POET Technologies Inc. (the “Corporation”) hereby establishes an omnibus incentive plan for certain qualified directors, executive officers, employees or Consultants (as defined herein) of the Corporation or any of its Subsidiaries (as defined herein). ARTICLE 1 INTERPRETATION 1.1 Definitions Where used herein or in any amendments hereto or in any communication required or permitted to be given hereunder, the following terms shall have the following meanings, respectively, unless the context otherwise requires: “Account” means an account maintained for each Participant on the books of the Corporation which will be credited with Awards in accordance with the terms of this Plan; “Affiliates” has the meaning ascribed thereto in the TSXV Corporate Finance Policies; “Associate” has the meaning ascribed thereto in the TSXV Corporate Finance Policies; “Award” means any of an Option, Share Unit or DSU granted to a Participant pursuant to the terms of the Plan; “Award Agreement” means any of an Option Agreement, Share Unit Agreement or DSU Agreement governing an Option, Share Unit or DSU, respectively, granted to a Participant; “Blackout Period” means the period during which Participants cannot trade securities of the Corporation pursuant to the Corporation’s policy respecting restrictions on trading which is in effect at that time (which, for greater certainty, does not include the period during which a cease trade order is in effect to which the Corporation or in respect of an insider, that insider, is subject); “Blackout Period Expiry Date” means the date on which a Blackout Period expires; “Board” has the meaning ascribed thereto in Section 2.2(1) hereof; “Business Day” means a day other than a Saturday, Sunday or statutory holiday, when banks are generally open for business in Toronto, Ontario for the transaction of banking business; “Cashless Exercise Right” has the meaning ascribed thereto in Section 3.6(3) hereof; “Cause” has the meaning ascribed thereto in Section 6.2(1) hereof; “Change of Control” means, unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions, of any of the following events: (a) any transaction (other than a transaction described in clause (c) below) pursuant to which any Person or group of Persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Corporation representing 50% or more of the aggregate voting power of all of the Corporation’s then issued and outstanding securities entitled to vote in the election of directors of the Corporation; - 2 - (b) (c) (d) (e) there is consummated an arrangement, amalgamation, merger, consolidation or similar transaction involving (directly or indirectly) the Corporation and, immediately after the consummation of such arrangement, amalgamation, merger, consolidation or similar transaction, the shareholders of the Corporation immediately prior thereto do not beneficially own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving or resulting entity in such amalgamation, merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving or resulting entity in such arrangement, amalgamation, merger, consolidation or similar transaction, in each case in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Corporation immediately prior to such transaction; the sale, lease, exchange, license or other disposition, in a single transaction or a series of related transactions, of assets, rights or properties of the Corporation or any of its subsidiaries which have an aggregate book value greater than 50% of the book value of the assets, rights and properties of the Corporation and its Subsidiaries on a consolidated basis to any other person or entity, other than a disposition to a wholly-owned Subsidiary of the Corporation in the course of a reorganization of the assets of the Corporation and its wholly-owned Subsidiaries; the passing of a resolution by the Board or shareholders of the Corporation to substantially liquidate the assets of the Corporation or wind up the Corporation’s business or significantly rearrange its affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Corporation in circumstances where the business of the Corporation is continued and the shareholdings remain substantially the same following the re-arrangement); or individuals who, on the Effective Date, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board; “Charitable Option” means any Option granted by the Corporation to an Eligible Charitable Organization; “Consultant” means in relation to the Corporation, an individual (other than a Director, Officer or Employee of the Corporation or of any of its Subsidiaries) or a company that: (a) (b) is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Corporation or to any of its Subsidiaries, other than services provided in relation to a distribution; provides the services under a written contract between the Corporation or any of its Subsidiaries and the individual or company, as the case may be; and - 3 - (c) in the reasonable opinion of the Corporation, spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or of any of its Subsidiaries; “Consulting Agreement” means, with respect to any Participant, any written consulting agreement between the Corporation or a Subsidiary and such Participant; “Corporation” means POET Technologies Inc., a corporation existing under the Business Corporations Act (Ontario) as amended from time to time; “Designated Broker” means a broker who is independent of, and deals at arm’s length with, the Corporation and its Subsidiaries, and is designated by the Corporation or its Subsidiaries; “Dividend Equivalent” means additional Share Units credited to a Participant’s Account as a dividend equivalent pursuant to Section 4.6(1); “Director” means a director (as defined under Securities Laws) of the Corporation or of any of its Subsidiaries; “DSU” has the meaning ascribed thereto in Section 5.1 hereof; “DSU Agreement” means a written agreement between the Corporation and a Participant evidencing the grant of DSUs and the terms and conditions thereof, a form of which is attached hereto as Exhibit “D”; “DSU Redemption Date” means, with respect to a particular DSU, the date on which such DSU is redeemed in accordance with the provisions of this Plan; “Effective Date” means the effective date of this Plan; “Eligible Charitable Organization” has the meaning ascribed thereto in the TSXV Corporate Finance Policies; “Eligibility Date” means the effective date on which a Participant becomes eligible to receive long-term disability benefits (provided that, for greater certainty, such effective date shall be confirmed in writing to the Corporation by the insurance company providing such long-term disability benefits); “Eligible Participants” means: (i) in respect of a grant of Options, any Director, Officer, Employee, Consultant or Investor Relations Service Provider of the Corporation or any of its Subsidiaries; (ii) in respect of a grant of Share Units, any Director, Officer, Employee, or Consultant of the Corporation or any of its Subsidiaries; and (iii) in respect of a grant of DSUs, any Director, Officer or Employee of the Corporation or any of its Subsidiaries; “Employee” means an individual who is considered an employee of the Corporation or its Subsidiary under the Tax Act; “Employment Agreement” means, with respect to any Participant, any written employment agreement between the Corporation or a Subsidiary and such Participant; “Exchange Hold Period” has the meaning ascribed thereto in the TSXV Corporate Finance Policies; “Exchanges” means the TSXV, NASDAQ or such other stock exchange or quotation system upon which the Shares may be listed or posted for trading from time to time; - 4 - “Exercise Notice” means a notice in writing signed by a Participant and stating the Participant’s intention to exercise a particular Option, if applicable; “Existing Option Plan” means the fixed stock option plan of the Corporation, which was last approved by shareholders of the Corporation on August 27, 2021; “Existing Option” means an option grant made under the Existing Option Plan; “Grant Agreement” means an agreement evidencing the grant to a Participant of an Award, including an Option Agreement, a Share Unit Agreement, a DSU Agreement, an Employment Agreement or a Consulting Agreement; “Insider” means a “reporting insider” as defined in National Instrument 55-104 – Insider Reporting Requirements and Exemptions and includes Associates and Affiliates (as such term is defined under the policies of the TSXV) of such “reporting insider”; “Market Value” means at any date when the market value of Shares is to be determined, (i) if the Shares are listed on the Exchanges, the closing price of the Shares on the Exchanges for the Trading Session on the day prior to the relevant time as it relates to an Award; (ii) if the Shares are not listed on the Exchanges, then as calculated in paragraph (i) by reference to the price on any other stock exchange on which the Shares are listed (if more than one, then using the exchange on which a majority of trading in the Shares occurs); or (iii) if the Shares are not listed on any stock exchange, the value as is determined solely by the Board, acting reasonably and in good faith and such determination shall be conclusive and binding on all Persons; “Net Exercise Right” has the meaning ascribed thereto in Section 3.6(4) hereof; “Officer” means an officer (as defined under Securities Laws) of the Corporation or of any of its Subsidiaries; “Option” means an option granted by the Corporation to a Participant entitling such Participant to acquire a designated number of Shares from treasury at the Option Price, but subject to the provisions hereof; “Option Agreement” means a written agreement between the Corporation and a Participant evidencing the grant of Options and the terms and conditions thereof, a form of which is attached hereto as Exhibit “A”; “Option Price” has the meaning ascribed thereto in Section 3.2 hereof; “Option Term” has the meaning ascribed thereto in Section 3.4 hereof; “Outstanding Issue” means the number of Shares that are outstanding as at a specified time, on a non- diluted basis; “Participants” means Eligible Participants that are granted Awards under the Plan; “Performance Criteria” means specified criteria, other than the mere continuation of employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Option or Share Unit. “Performance Period” means the period determined by the Board at the time any Option or Share Unit is granted or at any time thereafter during which any Performance Criteria and any other vesting conditions specified by the Board with respect to such Option or Share Unit are to be measured; - 5 - “Person” means an individual, corporation, company, cooperative, partnership, trust, unincorporated association, entity with juridical personality or governmental authority or body, and pronouns which refer to a Person shall have a similarly extended meaning; “Plan” means this POET Technologies Inc. Omnibus Incentive Plan, including the exhibits hereto and any amendments or supplements hereto made after the effective date hereof; “Restriction Period” means the period determined by the Board pursuant to Section 4.4 hereof; “Securities Laws” means securities legislation, securities regulation and securities rules, as amended, and the policies, notices, instruments and blanket orders in force from time to time that are applicable to the Corporation; “Shares” means the common shares in the share capital of the Corporation; “Share Compensation Arrangement” means a stock option, stock option plan, employee stock purchase plan, long-term incentive plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Shares from treasury, including a share purchase from treasury by a full-time Employee, Director, Officer, Insider, or Consultant which is financially assisted by the Corporation or a Subsidiary by way of a loan, guarantee or otherwise; “Share Unit” means a right awarded to a Participant to receive a payment in the form of Shares as provided in Article 4 hereof and subject to the terms and conditions of this Plan; “Share Unit Agreement” means a written agreement between the Corporation and a Participant evidencing the grant of Share Units and the terms and conditions thereof, a form of which is attached hereto as Exhibit “C”; “Subsidiary” means a corporation, company or partnership that is controlled, directly or indirectly, by the Corporation; “Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, as amended from time to time; “Tax Obligations” means the aggregate amount of all withholdings, source deductions and similar amounts required under any governing tax law with respect to either (i) the redemption of a Share Unit, or (ii) the exercise or cancellation of an Option (including pursuant to a Cashless Exercise Right or Net Exercise Right), as the context requires, including amounts funded by the Corporation on behalf of previous withholding tax, source deduction or similar payments and owed by the Participant to the Corporation, as applicable (which Tax Obligations are to be determined by the Corporation in its sole discretion); “Termination Date” means (i) in the event of a Participant’s resignation, the date on which such Participant ceases to be a Director, Officer, Employee or Consultant of the Corporation or one of its Subsidiaries, (ii) in the event of the termination of the Participant’s employment, or position as Director, or Officer of the Corporation or a Subsidiary, or Consultant, the effective date of the termination as specified in the notice of termination provided to the Participant by the Corporation or the Subsidiary, as the case may be, and (iii) in the event of a Participant’s death, on the date of death; “Termination of Service” means that a Participant has ceased to be an Eligible Participant; “Trading Session” means a trading session on a day which the applicable Exchange is open for trading; “TSXV” means the TSX Venture Exchange; “US Tax Code” means the United States’ Internal Revenue Code of 1986, as amended; - 6 - “US Taxpayer” means a Participant who is a US citizen, US permanent resident or other person who is subject to taxation on their income under the US Tax Code; “Vested Awards” has the meaning described thereto in Section 6.2(5) hereof; and “VWAP” means the volume weighted average trading price of the Shares on the Exchanges calculated by dividing the total value by the total volume of such securities traded for the five trading days immediately preceding the reference date or if the Shares are not listed on any stock exchange, “VWAP” of Shares means the VWAP on the over-the-counter market determined by dividing the aggregate sale price of the Shares sold by the total number of such Shares so sold on the applicable market for the five days immediately preceding the reference date. 1.2 (1) (2) (3) (4) (5) (6) (7) Interpretation Whenever the Board is to exercise discretion or authority in the administration of the terms and conditions of this Plan, the term “discretion” or “authority” means the sole and absolute discretion of the Board. The provision of a table of contents, the division of this Plan into Articles, Sections and other subdivisions and the insertion of headings are for convenient reference only and do not affect the interpretation of this Plan. In this Plan, words importing the singular shall include the plural, and vice versa and words importing any gender include any other gender. The words “including”, “includes” and “include” and any derivatives of such words mean “including (or includes or include) without limitation”. As used herein, the expressions “Article”, “Section” and other subdivision followed by a number, mean and refer to the specified Article, Section or other subdivision of this Plan, respectively. Unless otherwise specified in the Participant’s Grant Agreement, all references to money amounts are to Canadian currency, and where any amount is required to be converted to or from a currency other than Canadian currency, such conversion shall be based on the exchange rate as quoted by the Bank of Canada on the particular date. For purposes of this Plan, the legal representatives of a Participant shall only include the administrator, the executor or the liquidator of the Participant’s estate or will. If any action may be taken within, or any right or obligation is to expire at the end of, a period of days under this Plan, then the first day of the period is not counted, but the day of its expiry is counted. - 7 - ARTICLE 2 PURPOSE AND ADMINISTRATION OF THE PLAN; GRANTING OF AWARDS 2.1 Purpose of the Plan The purpose of the Plan is to permit the Corporation to grant Awards to Eligible Participants, subject to certain conditions as hereinafter set forth, for the following purposes: (a) (b) (c) (d) to increase the interest in the Corporation’s welfare of those Eligible Participants, who share responsibility for the management, growth and protection of the business of the Corporation or a Subsidiary; to provide an incentive to such Eligible Participants to continue their services for the Corporation or a Subsidiary and to encourage such Eligible Participants whose skills, performance and loyalty to the objectives and interests of the Corporation or a Subsidiary are necessary or essential to its success, image, reputation or activities; to reward Participants for their performance of services while working for the Corporation or a Subsidiary; and to provide a means through which the Corporation or a Subsidiary may attract and retain able Persons to enter its employment or service. Implementation and Administration of the Plan The Plan shall be administered and interpreted by the board of directors of the Corporation (the “Board”) or, if the Board by resolution so decides, by a committee or plan administrator appointed by the Board. If such committee or plan administrator is appointed for this purpose, all references to the “Board” herein will be deemed references to such committee or plan administrator. Nothing contained herein shall prevent the Board from adopting other or additional Share Compensation Arrangements or other compensation arrangements, subject to any required approval. Subject to Article 7 and any applicable rules of an Exchange, the Board may, from time to time, as it may deem expedient, adopt, amend and rescind rules and regulations or vary the terms of this Plan and/or any Award hereunder for carrying out the provisions and purposes of the Plan and/or to address tax or other requirements of any applicable jurisdiction. Subject to the provisions of this Plan, the Board is authorized, in its sole discretion, to make such determinations under, and such interpretations of, and take such steps and actions in connection with, the proper administration and operations of the Plan as it may deem necessary or advisable. The Board may delegate to officers or managers of the Corporation, or committees thereof, the authority, subject to such terms as the Board shall determine, to perform such functions, in whole or in part. Any such delegation by the Board may be revoked at any time at the Board’s sole discretion. The interpretation, administration, construction and application of the Plan and any provisions hereof made by the Board, or by any officer, manager, committee or any other Person to which the Board delegated authority to perform such functions, shall be final and binding on the Corporation, its Subsidiaries and all Eligible Participants. No member of the Board or any Person acting pursuant to authority delegated by the Board hereunder shall be liable for any action or determination taken or made in good faith in the administration, interpretation, construction or application of the Plan or any Award granted hereunder. Members of the Board or and any person acting at the direction or on behalf of the Board, shall, to the extent permitted by law, be fully indemnified and protected by the Corporation with respect to any such action or determination. 2.2 (1) (2) (3) (4) - 8 - (5) 2.3 (1) (2) (3) 2.4 (1) (2) The Plan shall not in any way fetter, limit, obligate, restrict or constrain the Board with regard to the allotment or issuance of any Shares or any other securities in the capital of the Corporation. For greater clarity, the Corporation shall not by virtue of this Plan be in any way restricted from declaring and paying stock dividends, repurchasing Shares or varying or amending its share capital or corporate structure. Participation in this Plan The Corporation makes no representation or warranty as to the future market value of the Shares or with respect to any income tax matters affecting any Participant resulting from the grant of an Award, the exercise or cancellation of an Option, the redemption of a Share Unit or transactions in the Shares or otherwise in respect of participation under the Plan. Neither the Corporation, nor any of its directors, officers, employees, shareholders or agents shall be liable for anything done or omitted to be done by such Person or any other Person with respect to the price, time, quantity or other conditions and circumstances of the issuance of Shares hereunder, or in any other manner related to the Plan. For greater certainty, no amount will be paid to, or in respect of, a Participant (or a Person with whom the Participant does not deal at arm’s length) under the Plan or pursuant to any other arrangement, and no additional Awards will be granted to such Participant (or Person with whom the Participant does not deal at arm’s length) to compensate for a downward fluctuation in the price of the Shares, nor will any other form of benefit be conferred upon, or in respect of, a Participant (or a Person with whom the Participant does not deal at arm’s length) for such purpose. The Corporation and its Subsidiaries do not assume and shall not have responsibility for the income or other tax consequences resulting to any Participant and each Participant is advised to consult with his or her own tax advisors. Participants (and their legal representatives) shall have no legal or equitable right, claim, or interest in any specific property or asset of the Corporation or any of its Subsidiaries. No asset of the Corporation or any of its Subsidiaries shall be held in any way as collateral security for the fulfillment of the obligations of the Corporation or any of its Subsidiaries under this Plan. Unless otherwise determined by the Board, this Plan shall be unfunded. To the extent any Participant or his or her estate holds any rights by virtue of a grant of Awards under this Plan, such rights (unless otherwise determined by the Board) shall be no greater than the rights of an unsecured creditor of the Corporation. Unless otherwise determined by the Board, the Corporation shall not offer financial assistance to any Participant in regards to the exercise of any Award granted under this Plan. Shares Subject to the Plan Subject to adjustment pursuant to Article 7 hereof, the securities that may be acquired by Participants pursuant to Awards under this Plan shall consist of authorized but unissued Shares. The maximum number of Shares reserved for issuance, in the aggregate, under this Plan shall be [●] Shares and, for greater certainty, shall not exceed 20% of the Outstanding Issue as at the date of implementation of the Plan by the Corporation, less any Shares underlying Options granted under the Existing Option Plan or other Share Compensation Arrangement of the Corporation, if any. For the purposes of calculating the number of Shares reserved for issuance under this Plan, each Share subject to a Share Unit shall be counted as reserving one Share under the Plan, each Share subject to a DSU shall be counted as reserving one Share under the Plan and each Share subject to an Option shall be counted as reserving one Share under the Plan. - 9 - (3) (4) (5) (6) 2.5 (1) (2) (3) (4) No Award that can be settled in Shares issued from treasury may be granted if such grant would have the effect of causing the total number of Shares available for issuance under this Plan to exceed the above noted total numbers of Shares reserved for issuance pursuant to the settlement of Awards. No new grants of Options will be made under the Existing Option Plan. If an outstanding Award or Existing Option (or portion thereof) expires or is forfeited, surrendered, cancelled or otherwise terminated for any reason without having been exercised or settled in full, or if Shares acquired pursuant to an Award or Existing Option, as applicable, subject to forfeiture are forfeited, the Shares covered by such Award or Existing Option, if any, will again be available for issuance under the Plan. Shares will not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. For greater certainty, any Shares acquired by a Participant under an Award or an Existing Option shall not continue to be issuable under the Plan. All Awards are subject to applicable limitations on sale or resale under Securities Laws and the policies of the Exchanges. If an Exchange Hold Period is applicable, all such Options and any Shares issued thereunder exercised prior to the expiry of the Exchange Hold Period must be legended with the Exchange Hold Period commencing on the date the Options were granted. Limits with Respect to Insiders, Individual Limits, Annual Grant Limits, Consultant Limits and Investor Relations Service Providers The maximum number of Shares that are issuable to Insiders, at any time pursuant to Awards granted under the Plan, or when combined with all of the Corporation’s other Share Compensation Arrangement (including the Existing Option Plan), cannot exceed ten percent (10%) of the Corporation’s total issued and outstanding Shares. The maximum number of Shares that are issuable to Insiders, within any 12 month period, pursuant to Awards granted under the Plan, or when combined with all of the Corporation’s other Share Compensation Arrangement (including the Existing Option Plan), cannot exceed ten percent (10%) of the Corporation’s total issued and outstanding Shares. The maximum number of Shares that are issuable pursuant to all Awards granted under the Plan, or when combined with all the Corporation’s other Share Compensation Arrangement (including the Existing Option Plan), granted or issued in any 12 month period to any one Person, cannot exceed five percent (5%) of the Outstanding Issue as of the date of grant or issue, unless the requisite disinterested shareholder approval has been obtained by the Corporation in accordance with the policies of the Exchanges. The maximum number of Shares that are issuable to any one Consultant, pursuant to all Awards granted under the Plan, or when combined with all the Corporation’s other Share Compensation Arrangement (including the Existing Option Plan), cannot exceed two percent (2%) of the Outstanding Issue as of the date of grant or issue, unless the requisite disinterested shareholder approval has been obtained by the Corporation in accordance with the policies of the Exchanges. (5) The maximum number of Shares that are issuable to all Investor Relations Service Providers, pursuant to Options granted under the Plan or when combined with all the Corporation’s other Share Compensation Arrangement (including the Existing Option Plan), cannot exceed two percent (2%) of the Outstanding Issue as of the date of grant or issue. (6) Options granted to any Investor Relations Service Provider must vest in stages over a period of not less than 12 months such that: - 10 - (a) (b) (c) (d) no more than ¼ of the Options vest no sooner than three months after the Options were granted; no more than another ¼ of the Options vest no sooner than six months after the Options were granted; no more than another ¼ of the Options vest no sooner than nine months after the Options were granted; and the remainder of the Options vest no sooner than 12 months after the Options were granted. (7) The maximum number of Shares that are issuable to Eligible Charitable Organizations, pursuant to all outstanding Charitable Options must not exceed one percent (1%) of the Outstanding Issue as of the date of grant. (8) A Charitable Option must expire on or before the earlier of: (a) (b) the date that is 10 years from the date of grant of the Charitable Option; and the 90th day following the date that the holder of the Charitable Option ceases to be an Eligible Charitable Organization. (9) Any Award granted pursuant to the Plan, or securities issued under the Existing Option Plan or any other Share Compensation Arrangement, prior to a Participant becoming an Insider, shall be excluded from the purposes of the limits set out in Section 2.5(1) and Section 2.5(2). 2.6 Granting of Awards Any Award granted under the Plan shall be subject to the requirement that, if at any time counsel to the Corporation shall determine that the listing, registration or qualification of the Shares subject to such Award, if applicable, upon any stock exchange or under any law or regulation of any jurisdiction, or the consent or approval of any stock exchange or any governmental or regulatory body, is necessary as a condition of, or in connection with, the grant of such Awards or exercise of any Option or the issuance or purchase of Shares thereunder, if applicable, such Award may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Board. Nothing herein shall be deemed to require the Corporation to apply for or to obtain such listing, registration, qualification, consent or approval. - 11 - ARTICLE 3 OPTIONS 3.1 Nature of Options An Option is an option granted by the Corporation to a Participant entitling such Participant to acquire a designated number of Shares from treasury at the Option Price, but subject to the provisions hereof. For the avoidance of doubt, no Dividend Equivalents shall be granted in connection with an Option. 3.2 Option Awards Subject to the provisions set forth in this Plan and any shareholder or regulatory approval which may be required, the Board shall, from time to time by resolution, in its sole discretion, (i) designate the Eligible Participants who may receive Options under the Plan, (ii) fix the number of Options, if any, to be granted to each Eligible Participant and the date or dates on which such Options shall be granted, (iii) determine the price per Share to be payable upon the exercise of each such Option (the “Option Price”) and the relevant vesting provisions (including Performance Criteria, if applicable) and the Option Term, the whole subject to the terms and conditions prescribed in this Plan or in any Option Agreement, and any applicable rules of an Exchange. 3.3 Option Price The Option Price for Shares that are the subject of any Option shall be determined and approved by the Board when such Option is granted, but shall not be less than the Market Value of such Shares at the time of the grant. 3.4 Option Term The Board shall determine, at the time of granting the particular Option, the period during which the Option is exercisable, which shall not be more than ten (10) years from the date the Option is granted (“Option Term”). Unless otherwise determined by the Board, all unexercised Options shall be cancelled at the expiry of such Options. Notwithstanding the expiration provisions hereof, if the date on which an Option Term expires falls within a Blackout Period or within nine Business Days after a Blackout Period Expiry Date, the expiration date of the Option will be the date that is ten Business Days after the Blackout Period Expiry Date. The Blackout Period must expire following the general disclosure of the undisclosed material information; provided that if an additional Blackout Period is subsequently imposed by the Corporation during the ten Business Days after the initial Blackout Period, then Blackout Period Expiry Date shall be such the tenth trading day following the end of the last imposed Blackout Period. 3.5 Exercise of Options Prior to its expiration or earlier termination in accordance with the Plan, each Option shall be exercisable at such time or times and/or pursuant to the achievement of such Performance Criteria and/or other vesting conditions as the Board at the time of granting the particular Option, may determine in its sole discretion. For greater certainty, any exercise of Options by a Participant shall be made in accordance with the Corporation’s insider trading policy. The Corporation shall not issue any Shares to a Participant prior to the Corporation being satisfied in its sole discretion that all applicable taxes under Section 8.2 will be timely withheld or received and remitted to the appropriate taxation authorities in respect of any particular Participant and any particular Option. 3.6 (1) Method of Exercise and Payment of Purchase Price - 12 - Subject to the provisions of the Plan, an Option granted under the Plan shall be exercisable (from time to time as provided in Section 3.5 hereof) by the Participant (or by the liquidator, executor or administrator, as the case may be, of the estate of the Participant) by delivering a fully completed Exercise Notice, a form of which is attached hereto as Exhibit “B”, to the Corporation at its registered office to the attention of the Chief Financial Officer of the Corporation (or the individual that the Chief Financial Officer of the Corporation may from time to time designate) or give notice in such other manner as the Corporation may from time to time designate, which notice shall specify the number of Shares in respect of which the Option is being exercised and shall be accompanied by full payment, by cash, certified cheque, bank draft or any other form of payment deemed acceptable by the Board of the purchase price for the number of Shares specified therein and, if required by Section 8.2, the amount necessary to satisfy any taxes. (2) Upon the exercise, the Corporation shall, as soon as practicable after such exercise but no later than ten (10) Business Days following such exercise, forthwith cause the transfer agent and registrar of the Shares either to: (a) (b) deliver to the Participant (or to the liquidator, executor or administrator, as the case may be, of the estate of the Participant) a certificate in the name of the Participant representing in the aggregate such number of Shares as the Participant (or to the liquidator, executor or administrator, as the case may be, of the estate of the Participant) shall have then paid for and as are specified in such Exercise Notice; or in the case of Shares issued in uncertificated form, cause the issuance of the aggregate number of Shares as the Participant (or the liquidator, executor or administrator, as the case may be, of the estate of the Participant) shall have then paid for and as are specified in such Exercise Notice to be evidenced by a book position on the register of the shareholders of the Corporation to be maintained by the transfer agent and registrar of the Shares. (3) The Board may, in its discretion and at any time, determine to grant a Participant the alternative right (the “Cashless Exercise Right”), when entitled to exercise an Option, to elect to deal with such Option on a “cashless exercise” basis, in whole or in part by notice in writing to the Corporation, where the Corporation has an arrangement with a brokerage firm pursuant to which the following events shall occur in the order specified below: (a) (b) (c) (d) the brokerage firm agrees to loan money to the Participant equal to the amount of the Option Price of the Options to be exercised; the Participant exercises the Option using the proceeds of the loan referred to in (a) above; the brokerage firm receives such number of Shares underlying the Options to sell, at the direction of and on behalf of the Participant, the aggregate proceeds of which are sufficient to cover the Option Price in order to permit the Participant to repay the loan made to the Participant; and the Participant receives the balance of the Shares underlying the Options pursuant to such exercise, or cash proceeds from the sale of the balance of the Shares underlying the Options. - 13 - (4) The Board may, in its discretion and at any time, determine to permit a Participant (other than an Investor Relations Service Provider) to, when entitled to exercise an Option, elect to exercise such Option through a net exercise mechanism (the “Net Exercise Right”), in whole or in part by notice in writing to the Corporation, such that the Corporation does not receive any cash from the exercise of such Option and the Participant receives, disregarding fractions, only the number of Shares from the exercise of the Option that is equal to the quotient obtained by dividing: (A) the product of the number of Options being exercised and the difference between the VWAP of the underlying Shares and the Option Price of the subject Options; by (B) the VWAP of the underlying Shares. 3.7 Option Agreements Options shall be evidenced by an Option Agreement, in such form not inconsistent with the Plan as the Board may from time to time determine with reference to the form attached as Exhibit “A”. The Option Agreement shall contain such terms that may be considered necessary in order that the Option will comply with any provisions respecting options in the income tax or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or the rules of any regulatory body having jurisdiction over the Corporation. 4.1 Nature of Share Units ARTICLE 4 RESTRICTED AND PERFORMANCE SHARE UNITS A Share Unit is an Award in the nature of a bonus for services rendered, or for future services to be rendered, and that, upon settlement, entitles the recipient Participant to receive a cash payment equal to the Market Value of a Share or at the discretion of the Corporation (or applicable Subsidiary) one Share or any combination of cash and Shares as the Corporation (or applicable Subsidiary) in its sole discretion may determine, pursuant and subject to such restrictions and conditions on vesting as the Board may determine at the time of grant, unless such Share Unit expires prior to being settled. Restrictions and conditions on vesting conditions may, without limitation, be based on the passage of time during continued employment (or other service relationship), in which case the Award is what is commonly referred to as a “Restricted Share Unit” or “RSU”, or the achievement of specified Performance Criteria, in which case the Award is what is commonly referred to as a “Performance Share Unit” or “PSU”, or both. 4.2 (1) (2) Share Unit Awards The Board shall, from time to time by resolution, in its sole discretion, (i) designate the Eligible Participants who may receive Share Units under the Plan, (ii) fix the number of Share Units, if any, to be granted to each Eligible Participant and the date or dates on which such Share Units shall be granted, (iii) determine the relevant conditions, vesting provisions (including the applicable Performance Period and Performance Criteria, if any) and Restriction Period of such Share Units, and (iv) any other terms and conditions applicable to the granted Share Units, which need not be identical and which, without limitation, may include non-competition provisions, subject to the terms and conditions prescribed in this Plan and in any Share Unit Agreement. Subject to the vesting and other conditions and provisions in this Plan and in the Share Unit Agreement, each Share Unit awarded to a Participant shall entitle the Participant to receive on settlement, a cash payment equal to the Market Value of a Share or at the discretion of the Corporation (or applicable Subsidiary) one Share or any combination of cash and Shares as the Corporation (or applicable Subsidiary) in its sole discretion may determine, in each case less any applicable withholding taxes. For greater certainty, no Participant shall have the right to demand to be paid in, or receive, Shares in respect of any Share Unit, and, notwithstanding any discretion exercised by the Corporation (or applicable Subsidiary) to settle any Share Unit, or portion thereof, in the form of Shares, the Corporation (and each Subsidiary) reserves the right to change such form of payment at any time until the payment is actually made. 4.3 (1) (2) Share Unit Agreements - 14 - The grant of a Share Unit by the Board shall be evidenced by a Share Unit Agreement in such form not inconsistent with the Plan as the Board may from time to time determine with reference to the form attached as Exhibit “C”. Such Share Unit Agreement shall be subject to all applicable terms and conditions of this Plan and may be subject to any other terms and conditions (including without limitation any recoupment, reimbursement or claw-back compensation policy as may be adopted by the Board from time to time) which are not inconsistent with this Plan and which the Board deems appropriate for inclusion in a Share Unit Agreement. The provisions of the various Share Unit Agreements issued under this Plan need not be identical. The Share Unit Agreement shall contain such terms that the Corporation considers necessary in order that the Share Unit will comply with any provisions respecting restricted share units in the income tax or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or the rules of any regulatory body having jurisdiction over the Corporation. 4.4 Vesting of Share Units The Board shall have sole discretion to determine if any Performance Criteria and/or other vesting conditions with respect to a Share Unit, and as contained in the Share Unit Agreement governing such Share Unit, have been met and shall communicate to a Participant as soon as reasonably practicable when any such applicable vesting conditions or Performance Criteria have been satisfied and the Share Units have vested (the “Vesting Date”). Notwithstanding the foregoing, if the date on which any Share Units have vested falls within a Blackout Period or within nine Business Days after a Blackout Period Expiry Date, the vesting of such Share Units will be deemed to occur on the date that is ten Business Days after the Blackout Period Expiry Date. The Blackout Period must expire following the general disclosure of the undisclosed material information; provided that if an additional Blackout Period is subsequently imposed by the Corporation during the ten Business Days after the initial Blackout Period, then Blackout Period Expiry Date shall be such the tenth trading day following the end of the last imposed Blackout Period. The period between the date of the grant of Share Units and the last Vesting Date in respect of the last portion of such Share Units is referred to as the “Restriction Period.” 4.5 (1) (2) Redemption / Settlement of Share Units Subject to the terms of the applicable Share Unit Agreement (including confirmation of satisfaction of any vesting conditions or Performance Criteria, which shall be at the sole discretion of the Corporation), vested Share Units shall be redeemed by the Corporation on the 15th day following the Vesting Date (the “Redemption Date”). Subject to the provisions of this Section 4.5 and Section 4.6, during the period between the Vesting Date and the Redemption Date in respect of a Participant’s vested Share Units, the Corporation (or any Subsidiary that is a party to an Employment Agreement or Consulting Agreement with the Participant whose vested Share Units are to be redeemed) shall, at its sole discretion, be entitled to elect to settle all or any portion of the cash payment obligation otherwise arising in respect of the Participant’s vested Share Units either (i) by the issuance of Shares to the Participant (or the legal representative of the Participant, if applicable) on the Redemption Date, or (ii) by paying all or a portion of such cash payment obligation to the Designated Broker, who shall use the funds received to purchase Shares in the open market, which Shares shall be registered in the name of the Designated Broker in a separate account for the Participant’s benefit. (3) Settlement of a Participant’s vested Share Units shall take place on the Redemption Date as follows: - 15 - (a) where the Corporation (or applicable Subsidiary) has elected to settle all or a portion of the Participant’s vested Share Units in Shares issued from treasury: (i) (ii) in the case of Shares issued in certificated form, by delivery to the Participant (or to the legal representative of the Participant, if applicable) of a certificate in the name of the Participant (or the legal representative of the Participant, if applicable) representing the aggregate number of Shares that the Participant is entitled to receive, subject to satisfaction of any applicable withholding in accordance with Section 8.2; or in the case of Shares issued in uncertificated form, by the issuance to the Participant (or to the legal representative of the Participant, if applicable) of the aggregate number of Shares that the Participant is entitled to receive, subject to satisfaction of any applicable withholding tax under Section 8.2, which Shares shall be evidenced by a book position on the register of the shareholders of the Corporation to be maintained by the transfer agent and registrar of the Shares; where the Corporation or a Subsidiary has elected to settle all or a portion of the Participant’s vested Share Units in Shares purchased in the open market, by delivery to the Designated Broker of readily available funds in an amount equal to the Market Value of a Share as of the Redemption Date multiplied by the number of vested Share Units to be settled in Shares purchased in the open market, less the amount of any applicable withholding tax under Section 8.2, along with directions instructing the Designated Broker to use such funds to purchase Shares in the open market for the benefit of the Participant and to be evidenced by a confirmation from the Designated Broker of such purchase; any cash payment to which the Participant is entitled (excluding, for the avoidance of doubt, any amount payable in respect of the Participant’s Share Units that the Corporation or a Subsidiary has elected to settle in Shares) shall, subject to satisfaction of any applicable withholding tax under Section 8.2, be paid to the Participant (or to the legal representative of the Participant, if applicable) by the Corporation or Subsidiary of which the Participant is a Director, Employee, Officer or Consultant, in cash, by cheque or by such other payment method as the Corporation and Participant may agree; and where the Corporation or a Subsidiary has elected to settle a portion, but not all, of the Participant’s vested Share Units in Shares, the Participant shall be deemed to have instructed the Corporation or Subsidiary, as applicable, to withhold from the cash portion of the payment to which the Participant is otherwise entitled such amount as may be required in accordance with Section 8.2 and to remit such withheld amount to the applicable taxation authorities on account of any withholding tax obligations, and the Corporation or Subsidiary, as applicable, shall deliver any remaining cash payable, after making any such remittance, to the Participant (or to the legal representative of the Participant, if applicable) as soon as reasonable practicable. In the event that the cash portion payable to settle a Participant’s Share Units in the foregoing circumstances is not sufficient to satisfy the withholding obligations of the Corporation or a Subsidiary pursuant to Section 8.2, the Corporation or Subsidiary, as applicable, shall be entitled to satisfy any remaining withholding obligation by any other mechanism as may be required or determined by the Corporation or Subsidiary as appropriate. (b) (c) (d) (4) Notwithstanding any other provision in this Article 4, no payment, whether in cash or in Shares, shall be made in respect of the settlement of any Share Units later than December 15 of the third (3rd) calendar year following the end of the calendar year in respect of which such Share Unit is granted. 4.6 (1) (2) Determination of Amounts - 16 - If the Corporation (or applicable Subsidiary), in its sole discretion, elects to settle all or a portion of the Participant’s vested Share Units in cash, the cash payment obligation arising in respect of the redemption and settlement of a vested Share Unit pursuant to Section 4.5 shall be equal to the Market Value of a Share as of the applicable Redemption Date. For the avoidance of doubt, the aggregate cash amount to be paid to a Participant (or the legal representative of the Participant, if applicable) in respect of a particular redemption of the Participant’s vested Share Units shall, subject to any adjustments in accordance with Section 7.1 and any withholding required pursuant to Section 8.2, be equal to the Market Value of a Share as of the Redemption Date for such vested Share Units multiplied by the number of vested Share Units in the Participant’s Account at the commencement of the Redemption Date. If the Corporation (or applicable Subsidiary), in its sole discretion, elects to settle all or a portion of the Participant’s vested Share Units by the issuance of Shares, the Corporation shall, subject to any adjustments in accordance with Section 7.1 and any withholding required pursuant to Section 8.2, issue to the Participant (or the legal representative of the Participant, if applicable), for each vested Share Unit which the Corporation (or applicable Subsidiary) elects to settle in Shares, one Share. Where, as a result of any adjustment in accordance with Section 7.1 and/or any withholding required pursuant to Section 8.2, the aggregate number of Shares to be received by a Participant upon an election by the Corporation (or applicable Subsidiary) to settle all or a portion of the Participant’s vested Share Units in Shares includes a fractional Share, the aggregate number of Shares to be received by the Participant shall be rounded down to the nearest whole number of Shares. 4.7 Award of Dividend Equivalents Dividend Equivalents may, as determined by the Board in its sole discretion, be awarded in respect of unvested Share Units in a Participant’s Account on the same basis as cash dividends declared and paid on Shares as if the Participant was a shareholder of record of Shares on the relevant record date, subject to the permitted limits on participation as outlined in Section 2.5. Dividend Equivalents, if any, will be credited to the Participant’s Account in additional Share Units, the number of which shall be equal to a fraction where the numerator is the product of (i) the number of Share Units in such Participant’s Account on the date that dividends are paid multiplied by (ii) the dividend paid per Share and the denominator of which is the Market Value of one Share calculated as of the date that dividends are paid. Any additional Share Units credited to a Participant’s Account as a Dividend Equivalent shall be subject to the same terms and conditions (including vesting and Restriction Periods) as the Share Units in respect of which such additional Share Units are credited and shall be deemed to have been awarded on the same date and subject to the same expiry date as the Share Units of which such additional Share Units are credited. In the event that the Participant’s applicable Share Units do not vest, all Dividend Equivalents, if any, associated with such Share Units will be forfeited by the Participant and returned to the Corporation’s account. - 17 - ARTICLE 5 DEFERRED SHARE UNITS 5.1 Nature of Deferred Share Units A deferred share unit (“DSU”) is an Award in the nature of a deferral of payment for services rendered, or for future services to be rendered, and that, upon settlement, entitles the recipient Participant to receive cash or acquire Shares, as determined by the Corporation in its sole discretion, unless such DSU expires prior to being settled. Subject to Article 7, DSUs shall only vest, and a Participant is only entitled to redemption of a DSU, when the Participant ceases to be any of a Director, Officer or Employee of the Corporation for any reason, including termination, retirement or death. 5.2 Market Fluctuation For greater certainty, no amount will be paid or benefit provided to, or in respect of, a Participant, or to any person who does not deal at arm’s length with a Participant for the purposes of the Tax Act, under the Plan or pursuant to any other arrangement, and no additional Awards will be granted to such Participant for the purpose of reducing the impact, in whole or in part, of any reduction in the fair market value of the shares of the Corporation or any corporation related thereto. 5.3 (1) (2) 5.4 (1) DSU Awards The Board shall, from time to time by resolution, in its sole discretion, (i) designate the Eligible Participants who may receive DSUs under the Plan, (ii) fix the number of DSUs, if any, to be granted to each Eligible Participant and the date or dates on which such DSUs shall be granted, and (iii) any other terms and conditions applicable to the granted DSUs. Subject to the vesting and other conditions and provisions in this Plan and in any DSU Agreement, each DSU awarded to a Participant shall entitle the Participant to receive on settlement a cash payment equal to the Market Value of a Share, or at the discretion of the Corporation, one Share or any combination of cash and Shares as the Corporation in its sole discretion may determine. For greater certainty, no Participant shall have any right to demand to be paid in, or receive, Shares in respect of any DSU, and, notwithstanding any discretion exercised by the Corporation to settle any DSU, or portion thereof, in the form of Shares, the Corporation reserves the right to change such form of payment at any time until payment is actually made. DSU Agreements The grant of a DSU by the Board shall be evidenced by a DSU Agreement in such form not inconsistent with the Plan as the Board may from time to time determine with reference to the form attached as Exhibit “D”. Such DSU Agreement shall be subject to all applicable terms and conditions of this Plan and may be subject to any other terms and conditions (including without limitation any recoupment, reimbursement or claw-back compensation policy as may be adopted by the Board from time to time) which are not inconsistent with this Plan and which the Board deems appropriate for inclusion in a DSU Agreement. The provisions of the various DSU Agreements issued under this Plan need not be identical. - 18 - (2) The DSU Agreement shall contain such terms that the Corporation considers necessary in order that the DSU will comply with any provisions respecting restricted share units in the income tax or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or the rules of any regulatory body having jurisdiction over the Corporation. 5.5 Vesting of DSUs DSUs will be fully vested on the Termination Date of the applicable Participant. Notwithstanding the foregoing, if the date on which any DSUs have vested falls within a Blackout Period or within nine Business Days after a Blackout Period Expiry Date, the vesting of such DSUs will be deemed to occur on the date that is ten Business Days after the Blackout Period Expiry Date. The Blackout Period must expire following the general disclosure of the undisclosed material information; provided that if an additional Blackout Period is subsequently imposed by the Corporation during the ten Business Days after the initial Blackout Period, then Blackout Period Expiry Date shall be such the tenth trading day following the end of the last imposed Blackout Period. 5.6 (1) Redemption / Settlement of DSUs DSUs shall be redeemed and settled by the Corporation as soon as reasonably practicable following the Participant ceasing to be any of a Director, Officer or Employee of the Corporation but in any event not later than December 15 of the year following the calendar year in which the Participant ceases to be any of a Director, Officer or Employee. On redemption and settlement, the Corporation shall deliver the applicable number of Shares, or, in the sole discretion of the Corporation, cash equal to the redemption amount of such DSU specified in the applicable DSU Agreement, subject to the satisfaction of any applicable withholding tax under Section 8.2. (2) The Corporation, will have, at its sole discretion, the ability to elect to settle all or any portion of the cash payment obligation arising in respect of the redemption and settlement of the Participant’s DSUs by issuance of Shares. (3) The redemption and settlement of a Participant’s DSUs shall occur on the applicable DSU Redemption Date as follows: (a) where the Corporation has elected to settle all or a portion of the Participant’s DSUs in Shares, (i) (ii) in the case of Shares issued in certificated form, delivery to the Participant (or to the liquidator, executor or administrator, as the case may be, of the estate of the Participant) of a certificate in the name of the Participant representing in the aggregate such number of Shares as the Participant (or to the liquidator, executor or administrator, as the case may be, of the estate of the Participant) shall be entitled to receive, subject to satisfaction of any applicable withholding tax under Section 8.2; or in the case of Shares issued in uncertificated form, issuance of the aggregate number of Shares as the Participant (or the liquidator, executor or administrator, as the case may be, of the estate of the Participant) shall be entitled to receive, subject to satisfaction of any applicable withholding tax under Section 8.2, to be evidenced by a book position on the register of the shareholders of the Corporation to be maintained by the transfer agent and registrar of the Shares; - 19 - (b) (c) any cash payment to which the Participant is entitled (excluding, for the avoidance of doubt, any amount payable in respect of the Participant’s DSUs that the Corporation has elected to pay in Shares) shall, subject to satisfaction of any applicable withholding tax under Section 8.2, be paid to the Participant (or to the legal representative of the Participant, if applicable) by the Corporation in cash, by cheque or by such other payment method as the Corporation and Participant may agree; and where the Corporation has elected to settle a portion, but not all, of the Participant’s DSUs in Shares, the Participant shall be deemed to have instructed the Corporation to withhold from the cash portion of the payment to which the Participant is otherwise entitled such amount as may be required in accordance with Section 8.2 and to remit such withheld amount to the applicable taxation authorities on account of any withholding obligations of the Corporation, and the Corporation shall deliver any remaining cash payable, after making any such remittance, to the Participant (or to the legal representative of the Participant, if applicable) as soon as reasonable practicable. In the event that the cash portion elected by the Corporation to settle the Participant’s Share Units is not sufficient to satisfy the withholding obligations of the Corporation pursuant to Section 8.2, any remaining amounts shall be satisfied by the Corporation by any other mechanism as may be required or determined by the Corporation as appropriate. 6.1 General Conditions Applicable to Awards Each Award, as applicable, shall be subject to the following conditions: ARTICLE 6 GENERAL CONDITIONS (1) (2) (3) Vesting Period. Each Award granted hereunder shall vest in accordance with the terms of this Plan and the Grant Agreement entered into in respect of such Award. Subject to policies and vesting limits of the Exchanges, the Board has the right, in its sole discretion, to waive any vesting conditions or accelerate the vesting of any Award (other than the date upon which DSUs become exercisable), or to deem any Performance Criteria or other vesting conditions to be satisfied, notwithstanding the vesting schedule set forth for such Award. Employment. Notwithstanding any express or implied term of this Plan to the contrary, the granting of an Award pursuant to the Plan shall in no way be construed as a guarantee by the Corporation or a Subsidiary to the Participant of employment or another service relationship with the Corporation or a Subsidiary. The granting of an Award to a Participant shall not impose upon the Corporation or a Subsidiary any obligation to retain the Participant in its employ or service in any capacity. Nothing contained in this Plan or in any Award granted under this Plan shall interfere in any way with the rights of the Corporation or any of its Subsidiaries in connection with the employment, retention or termination of any such Participant. The loss of existing or potential profit in Shares underlying Awards granted under this Plan shall not constitute an element of damages in the event of termination of a Participant’s employment or service in any office or otherwise. Grant of Awards. Eligibility to participate in this Plan does not confer upon any Eligible Participant any right to be granted Awards pursuant to this Plan. Granting Awards to any Eligible Participant does not confer upon any Eligible Participant the right to receive nor preclude such Eligible Participant from receiving any additional Awards at any time. The extent to which any Eligible Participant is entitled to be granted Awards pursuant to this Plan will be determined in the sole discretion of the Board. Participation in the Plan shall be entirely voluntary and any decision not to participate shall not affect an Eligible Participant’s relationship or employment with the Corporation or any Subsidiary. - 20 - (4) (5) (6) (7) Rights as a Shareholder. Neither the Participant nor such Participant’s personal representatives or legatees shall have any rights whatsoever as shareholder in respect of any Shares covered by such Participant’s Awards by reason of the grant of such Award until such Award has been duly exercised, as applicable, and settled and Shares have been issued in respect thereof. Without in any way limiting the generality of the foregoing, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such Shares have been issued. Conformity to Plan. In the event that an Award is granted or a Grant Agreement is executed which does not conform in all particulars with the provisions of the Plan, or purports to grant Awards on terms different from those set out in the Plan, the Award or the grant of such Award shall not be in any way void or invalidated, but the Award so granted will be adjusted to become, in all respects, in conformity with the Plan. Non-Transferrable Awards. Except as specifically provided in a Grant Agreement approved by the Board, each Award granted under the Plan is personal to the Participant and shall not be assignable or transferable by the Participant, whether voluntarily or by operation of law, except by will or by the laws of succession of the domicile of the deceased Participant. No Award granted hereunder shall be pledged, hypothecated, charged, transferred, assigned or otherwise encumbered or disposed of on pain of nullity. Participant’s Entitlement. Except as otherwise provided in this Plan or unless the Board permits otherwise, upon any Subsidiary of the Corporation ceasing to be a Subsidiary of the Corporation, Awards previously granted under this Plan that, at the time of such change, are held by a Person who is a Director, Officer, Employee or Consultant of such Subsidiary of the Corporation and not of the Corporation itself, whether or not then exercisable, shall automatically terminate on the date of such change. 6.2 General Conditions Applicable to Options Each Option shall be subject to the following conditions: (1) (2) Termination for Cause. Upon a Participant ceasing to be an Eligible Participant for Cause, any vested or unvested Option granted to such Participant shall terminate automatically and become void immediately. For the purposes of the Plan, the determination by the Corporation that the Participant was discharged for Cause shall be binding on the Participant. “Cause” shall include, among other things, gross misconduct, theft, fraud, breach of confidentiality or breach of the Corporation’s codes of conduct and any other reason determined by the Corporation to be cause for termination. Termination not for Cause. Upon a Participant ceasing to be an Eligible Participant as a result of his or her employment or service relationship with the Corporation or a Subsidiary being terminated without Cause, (i) any unvested Option granted to such Participant shall terminate and become void immediately and (ii) any vested Option granted to such Participant may be exercised by such Participant. Unless otherwise determined by the Board, in its sole discretion, such Option shall only be exercisable within the earlier of ninety (90) days after the Termination Date, or the expiry date of the Award set forth in the Grant Agreement, after which the Option will expire. - 21 - (3) (4) (5) (6) Resignation. Upon a Participant ceasing to be an Eligible Participant as a result of his or her resignation from the Corporation or a Subsidiary, (i) each unvested Option granted to such Participant shall terminate and become void immediately upon resignation and (ii) each vested Option granted to such Participant will cease to be exercisable on the earlier of ninety (90) days following the Termination Date and the expiry date of the Option set forth in the Grant Agreement, after which the Option will expire. Permanent Disability/Retirement. Upon a Participant ceasing to be an Eligible Participant by reason of retirement or permanent disability, (i) any unvested Option shall terminate and become void immediately, and (ii) any vested Option will cease to be exercisable on the earlier of the ninety (90) days from the date of retirement or the date on which the Participant ceases his or her employment or service relationship with the Corporation or any Subsidiary by reason of permanent disability, and the expiry date of the Award set forth in the Grant Agreement, after which the Option will expire. Death. Upon a Participant ceasing to be an Eligible Participant by reason of death, any vested Option granted to such Participant may be exercised by the liquidator, executor or administrator, as the case may be, of the estate of the Participant for that number of Shares only which such Participant was entitled to acquire under the respective Options (the “Vested Awards”) on the date of such Participant’s death. Such Vested Awards shall only be exercisable within twelve (12) months after the Participant’s death or prior to the expiration of the original term of the Options whichever occurs earlier. Leave of Absence. Upon a Participant electing a voluntary leave of absence of more than twelve (12) months, including maternity and paternity leaves, the Board may determine, at its sole discretion but subject to applicable laws, that such Participant’s participation in the Plan shall be terminated, provided that all vested Options in the Participant’s Account shall remain outstanding and in effect until the applicable exercise date, or an earlier date determined by the Board at its sole discretion. 6.3 General Conditions Applicable to Share Units Each Share Unit shall be subject to the following conditions: (1) (2) Termination for Cause and Resignation. Upon a Participant ceasing to be an Eligible Participant for Cause or as a result of his or her resignation from the Corporation or a Subsidiary, the Participant’s participation in the Plan shall be terminated immediately, all Share Units credited to such Participant’s Account that have not vested shall be forfeited and cancelled, and the Participant’s rights that relate to such Participant’s unvested Share Units shall be forfeited and cancelled on the Termination Date. Death, Leave of Absence or Termination of Service. Except as otherwise determined by the Board from time to time, at its sole discretion, upon a Participant electing a voluntary leave of absence of more than twelve (12) months, including maternity and paternity leaves, or upon a Participant ceasing to be Eligible Participant as a result of (i) death, (ii) retirement, (iii) Termination of Service for reasons other than for Cause, (iv) his or her employment or service relationship with the Corporation or a Subsidiary being terminated by reason of injury or disability or (v) becoming eligible to receive long-term disability benefits, all unvested Share Units in the Participant’s Account as of such date relating to a Restriction Period in progress shall remain outstanding and in effect pursuant to the terms of the applicable Share Unit Agreement, and - 22 - (a) (b) If the Board determines that the vesting conditions are not met for such Share Units, then all unvested Share Units credited to such Participant’s Account shall be forfeited and cancelled and the Participant’s rights that relate to such unvested Share Units shall be forfeited and cancelled; and If the Board determines that the vesting conditions are met for such Share Units, the Participant shall be entitled to receive pursuant to Section 4.5 that number of cash or Shares or combination thereof, as the case may be, equal to the number of Share Units outstanding in the Participant’s Account in respect of such Restriction Period multiplied by a fraction, the numerator of which shall be the number of completed months of service of the Participant with the Corporation or a Subsidiary during the applicable Restriction Period as of the date of the Participant’s death, retirement, termination or Eligibility Date and the denominator of which shall be equal to the total number of months included in the applicable Restriction Period (which calculation shall be made as of the date that the applicable Share Units are to be settled) and the Corporation shall (i) pay the amount of cash or issue such number of Shares or provide a combination thereof, as determined in its sole discretion, to the Participant or the liquidator, executor or administrator, as the case may be, of the estate of the Participant, as soon as practicable thereafter, but no later than the end of the Restriction Period, and (ii) debit the corresponding number of Share Units from the Account of such Participant’s or such deceased Participants’, as the case may be, and the Participant’s rights to all other cash or Shares that relate to such Participant’s Share Units shall be forfeited and cancelled. (3) General. For greater certainty, where (i) a Participant’s employment or service relationship with the Corporation or a Subsidiary is terminated pursuant to Section 6.3(1) or Section 6.3(2) hereof or (ii) a Participant elects for a voluntary leave of absence pursuant to Section 6.3(2) hereof following the satisfaction of all vesting conditions in respect of particular Share Units but before receipt of the corresponding distribution or payment in respect of such Share Units, the Participant shall remain entitled to such distribution or payment. 7.1 Adjustment to Shares Subject to Outstanding Awards ARTICLE 7 ADJUSTMENTS AND AMENDMENTS At any time after the grant of an Award to a Participant and prior to the expiration of the term of such Award or the forfeiture or cancellation of such Award, in the event of (i) any subdivision of the Shares into a greater number of Shares, (ii) any consolidation of Shares into a lesser number of Shares, (iii) any reclassification, reorganization or other change affecting the Shares, (iv) any merger, amalgamation or consolidation of the Corporation with or into another corporation, or (v) any distribution to all holders of Shares or other securities in the capital of the Corporation, of cash, evidences of indebtedness or other assets of the Corporation (excluding an ordinary course dividend in cash or shares, but including for greater certainty shares or equity interests in a subsidiary or business unit of the Corporation or one of its subsidiaries or cash proceeds of the disposition of such a subsidiary or business unit) or any transaction or change having a similar effect, then the Board shall in its sole discretion, subject to the required approval of any Exchange, determine the appropriate adjustments or substitutions to be made in such circumstances in order to maintain the economic rights of the Participant in respect of such Award in connection with such occurrence or change, including, without limitation: (a) adjustments to the exercise price of such Award without any change in the total price applicable to the unexercised portion of the Award; 7.2 (1) (2) 7.3 (1) (b) (c) adjustments to the number of Shares to which the Participant is entitled upon exercise of such Award; or adjustments to the number of kind of Shares reserved for issuance pursuant to the Plan. Change of Control - 23 - In the event of a potential Change of Control, the Board shall have the power, in its sole discretion, to modify the terms of this Plan and/or the Awards to assist the Participants to tender into a takeover bid or participating in any other transaction leading to a Change of Control. For greater certainty, in the event of a take-over bid or any other transaction leading to a Change of Control, the Board shall have the power, in its sole discretion, subject to any required approval of the Exchanges, to (i) provide that any or all Awards shall thereupon terminate, provided that any such outstanding Awards that have vested shall remain exercisable until consummation of such Change of Control, and (ii) permit Participants to conditionally exercise their vested Options, such conditional exercise to be conditional upon the take-up by such offeror of the Shares or other securities tendered to such take-over bid in accordance with the terms of such take-over bid (or the effectiveness of such other transaction leading to a Change of Control). If the Corporation completes a transaction constituting a Change of Control and within twelve (12) months following the Change of Control a Participant who was also an Officer or Employee of, or Consultant to, the Corporation prior to the Change of Control has their position, employment or consulting agreement terminated, or the Participant is constructively dismissed, then all unvested Awards of the Participant shall immediately vest and become exercisable, and remain open for exercise until the earlier of their expiry date as set out in the Award Agreement and for certainty in the case of Options, the date that is 90 days after such termination or dismissal. Amendment or Discontinuance of the Plan The Board may suspend or terminate the Plan at any time, or from time to time amend or revise the terms of the Plan or any granted Award without the consent of the Participants provided that such suspension, termination, amendment or revision shall: (a) (b) not adversely alter or impair the rights of any Participant, without the consent of such Participant except as permitted by the provisions of the Plan; and be in compliance with applicable law and with the prior approval, if required, of the shareholders of the Corporation, the Exchanges, or any other regulatory body having authority over the Corporation. (2) Subject to Sections 7.3(1) and 7.3(3), the Board may, from time to time, in its absolute discretion and without approval of the shareholders of the Corporation make the following amendments to this Plan, unless where required by law or the requirements of the Exchanges: (a) (b) any amendment to the vesting provisions, if applicable, of Options and Share Units, or assignability provisions of the Awards; any amendment to the expiration date of an Award that does not extend the terms of the Award past the original date of expiration of such Award; (c) (d) (e) (f) (g) (h) any amendment regarding the effect of termination of a Participant’s employment or engagement; any amendment which accelerates the date on which any Option may be exercised under the Plan; - 24 - any amendment necessary to comply with applicable law or the requirements of the Exchanges or any other regulatory body; any amendment of a “housekeeping” nature, including to clarify the meaning of an existing provision of the Plan, correct or supplement any provision of the Plan that is inconsistent with any other provision of the Plan, correct any grammatical or typographical errors or amend the definitions in the Plan; any amendment regarding the administration of the Plan; any amendment to add provisions permitting the grant of Awards settled otherwise than with Shares issued from treasury, or adopt a clawback provision applicable to equity compensation; and (i) any other amendment that does not require the approval of the shareholders of the Corporation under Section 7.3(3). (3) Notwithstanding Section 7.3(2), the Board shall be required to obtain disinterested shareholder approval, if required under the rules of the Exchanges, to make the following amendments: (a) (b) (c) (d) (e) any increase to the maximum number of Shares issuable under the Plan, except in the event of an adjustment pursuant to Article 7; except in the case of an adjustment pursuant to Article 7, any amendment which reduces the exercise price of an Option or any cancellation of an Option and replacement of such Option with an Option with a lower exercise price; any amendment reduction in the price of an Option or extension of the term of an Option if the Participant is an Insider of the Corporation at the time of the proposed amendment; any amendment which extends the expiry date of any Award, or the Restriction Period of any Share Unit beyond the original expiry date or Restriction Period; any amendment which increases the maximum number of Shares that may be issuable under the Plan and any other proposed or established Share Compensation Arrangement pursuant to Section 2.5(3) and 2.5(4); and (f) any amendment to the definition of an Eligible Participant under the Plan; provided that Shares held directly or indirectly by Insiders benefiting from the amendments shall be excluded when obtaining such shareholder approval. - 25 - ARTICLE 8 MISCELLANEOUS 8.1 Use of an Administrative Agent and Trustee The Board may in its sole discretion appoint from time to time one or more entities to act as administrative agent or trustee to administer the Awards granted under the Plan and to act as trustee to hold and administer the assets that may be held in respect of Awards granted under the Plan, the whole in accordance with the terms and conditions determined by the Board in its sole discretion. The Corporation and the administrative agent will maintain records showing the number of Awards granted to each Participant under the Plan. 8.2 (1) Tax Withholding Notwithstanding any other provision of this Plan, all distributions, delivery of Shares or payments to a Participant (or to the liquidator, executor or administrator, as the case may be, of the estate of the Participant) under this Plan shall be made net of any applicable withholdings, including in respect of applicable withholding taxes required to be withheld at source and other source deductions, as the Corporation determines. If the event giving rise to the withholding obligation involves an issuance or delivery of Shares, then, the withholding may be satisfied in such manner as the Corporation determines, including by (a) the sale of a portion of such Shares sold by the Corporation, the Corporation’s transfer agent and registrar or any trustee appointed by the Corporation pursuant to Section 8.1 hereof, on behalf of and as agent for the Participant as soon as permissible and practicable, with the proceeds of such sale delivered to the Corporation, which in turn will remit such amounts to the appropriate governmental authorities, or (b) any other mechanism as may be required or determined by the Corporation as appropriate. (2) Notwithstanding Section 8.2(1), the applicable tax withholdings may be waived where a Participant directs in writing that a payment be made directly to the Participant’s registered retirement savings plan in circumstances to which subsection 100(3) of the regulations made under the Tax Act apply. 8.3 Clawback Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Corporation pursuant to any such law, government regulation or stock exchange listing requirement) or any policy adopted by the Corporation. Without limiting the generality of the foregoing, the Board may provide in any case that outstanding Awards (whether or not vested or exercisable) and the proceeds from the exercise or disposition of Awards or Shares acquired under Awards will be subject to forfeiture and disgorgement to the Corporation, with interest and other related earnings, if the Participant to whom the Award was granted violates (i) a non-competition, non- solicitation, confidentiality or other restrictive covenant by which he or she is bound, or (ii) any policy adopted by the Corporation applicable to the Participant that provides for forfeiture or disgorgement with respect to incentive compensation that includes Awards under the Plan. In addition, the Board may require forfeiture and disgorgement to the Corporation of outstanding Awards and the proceeds from the exercise or disposition of Awards or Shares acquired under Awards, with interest and other related earnings, to the extent required by law or applicable stock exchange listing standards, including any related policy adopted by the Corporation. Each Participant, by accepting or being deemed to have accepted an Award under the Plan, agrees to cooperate fully with the Board, and to cause any and all permitted transferees of the Participant to cooperate fully with the Board, to effectuate any forfeiture or disgorgement required hereunder. Neither the Board nor the Corporation nor any other person, other than the Participant and his or her permitted transferees, if any, will be responsible for any adverse tax or other consequences to a Participant or his or her permitted transferees, if any, that may arise in connection with this Section 8.3. 8.4 (1) (2) (3) (4) Securities Law Compliance - 26 - The Plan (including any amendments to it), the terms of the grant of any Award under the Plan, the grant of any Award, the exercise of any Option, the delivery of Shares upon exercise of any Option, and the Corporation’s obligation to sell and deliver Shares in respect of any Awards, shall be subject to all applicable federal, provincial, state and foreign laws, rules and regulations, the rules and regulations of applicable Exchanges and to such approvals by any regulatory or governmental agency as may, as determined by the Corporation, be required. The Corporation shall not be obliged by any provision of the Plan or the grant of any Award or exercise of any Option hereunder to issue, sell or deliver Shares in violation of such laws, rules and regulations or any condition of such approvals. No Awards shall be granted, and no Shares shall be issued, sold or delivered hereunder, where such grant, issue, sale or delivery would require registration of the Plan or of the Shares under the securities laws of any jurisdiction or the filing of any prospectus for the qualification of same thereunder, and any purported grant of any Award or purported issue or sale of Shares hereunder in violation of this provision shall be void. The Corporation shall have no obligation to issue any Shares pursuant to this Plan unless upon official notice of issuance such Shares shall have been duly listed with an Exchange. Shares issued, sold or delivered to Participants under the Plan may be subject to limitations on sale or resale under applicable securities laws. If Shares cannot be issued to a Participant upon the exercise of an Option due to legal or regulatory restrictions, the obligation of the Corporation to issue such Shares shall terminate and any funds paid to the Corporation in connection with the exercise of such Option will be returned to the applicable Participant as soon as practicable. 8.5 Reorganization of the Corporation The existence of any Awards shall not affect in any way the right or power of the Corporation or its shareholders to make or authorize any adjustment, reclassification, recapitalization, reorganization or other change in the Corporation’s capital structure or its business, or any amalgamation, combination, merger or consolidation involving the Corporation or to create or issue any bonds, debentures, shares or other securities of the Corporation or the rights and conditions attaching thereto or to affect the dissolution or liquidation of the Corporation or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar nature or otherwise. 8.6 Quotation of Shares So long as the Shares are listed on one or more Exchanges, the Corporation must apply to such Exchange or Exchanges for the listing or quotation, as applicable, of the Shares underlying the Awards granted under the Plan, however, the Corporation cannot guarantee that such Shares will be listed or quoted on any Exchange. 8.7 No Fractional Shares - 27 - No fractional Shares shall be issued upon the exercise of any Option granted under the Plan and, accordingly, if a Participant would become entitled to a fractional Share upon the exercise of such Option, or from an adjustment permitted by the terms of this Plan, such Participant shall only have the right to purchase the next lowest whole number of Shares, and no payment or other adjustment will be made with respect to the fractional interest so disregarded. 8.8 Governing Laws The Plan and all matters to which reference is made herein shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 8.9 Severability The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision and any invalid or unenforceable provision shall be severed from the Plan. 8.10 Section 409A of the Tax Code It is intended that any payments under the Plan to US Taxpayers shall be exempt from or comply with Section 409A of the Code, and all provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes and penalties under Section 409A of the Code. - 28 - EXHIBIT “A” TO OMNIBUS INCENTIVE PLAN OF POET TECHNOLOGIES INC. FORM OF OPTION AGREEMENT This Option Agreement is entered into between POET Technologies Inc. (the “Corporation”) and the Participant named below, pursuant to the Corporation’s Omnibus Incentive Plan (the “Plan”), a copy of which is attached hereto, and confirms that on: 1. 2. 3. 4. 5. ___________________ (the “Grant Date”), ___________________ (the “Participant”) was granted options (“Options”) to purchase ___________________ common shares of the Corporation (each, a “Share”), in accordance with the terms of the Plan, which Options will bear the following terms: (a) Exercise Price and Expiry. Subject to the vesting conditions specified below, the Options will be exercisable by the Participant at a price of $ ____________ per Share (the “Option Price”) at any time prior to expiry on ____________ (the “Expiration Date”). (b) Vesting; Time of Exercise. Subject to the terms of the Plan, the Options shall vest and become exercisable as follows: Number of Options Vested On If the aggregate number of Shares vesting in a tranche set forth above includes a fractional common share, the aggregate number of Shares will be rounded down to the nearest whole number of Shares. Notwithstanding anything to the contrary herein, the Options shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the Expiration Date. The Option Price is denominated in Canadian dollars (C$). The Options shall be exercisable only by delivery to the Corporation of a duly completed and executed notice in the form attached to this Option Agreement (the “Exercise Notice”), together with payment of the Option Price for each Share covered by the Exercise Notice (plus an amount equal to any applicable Tax Obligations, as defined in the Plan) and/or, if applicable, a notice that the Participant intends to utilize the Participant’s Cashless Exercise Right as set out in the Plan or terminate the Options in lieu of exercise, pursuant to the Participant’s Net Exercise Right as set out in the Plan. Subject to the terms of the Plan, unless otherwise specified in the Exercise Notice, the Options shall be deemed to be: (i) exercised upon receipt by the Corporation of such written Exercise Notice accompanied by (a) the aggregate Option Price (plus an amount equal to any applicable Tax Obligations), or (b) notice of exercise of the Participant’s Cashless Exercise Right and receipt (from the broker on behalf of the Participant) of the aggregate Option Price, or (ii) terminated upon election by the Participant in lieu of exercise, pursuant to the Participant’s Net Exercise Right. 6. The Participant hereby represents and warrants (on the date of this Option Agreement and upon each exercise or termination of Options) that: (a) (b) (c) (d) (e) (f) (g) the Participant has not received any offering memorandum, or any other documents (other than annual financial statements, interim financial statements or any other document the content of which is prescribed by statute or regulation, other than an offering memorandum) describing the business and affairs of the Corporation that has been prepared for delivery to, and review by, a prospective purchaser in order to assist it in making an investment decision in respect of the Shares; the Participant is acquiring the Shares without the requirement for the delivery of a prospectus or offering memorandum, pursuant to an exemption under applicable securities legislation and, as a consequence, is restricted from relying upon the civil remedies otherwise available under applicable securities legislation and may not receive information that would otherwise be required to be provided to it; the Participant has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Corporation and does not desire to utilize a registrant in connection with evaluating such merits and risks; the Participant acknowledges that an investment in the Shares involves a high degree of risk, and represents that it understands the economic risks of such investment and is able to bear the economic risks of this investment; the Participant acknowledges that he or she is responsible for paying any applicable taxes and withholding taxes arising from the exercise or termination (including upon exercise of the Cashless Exercise Right or Net Exercise Right) of any Options, as provided in Section 8.2 of the Plan; this Option Agreement constitutes a legal, valid and binding obligation of the Participant, enforceable against him in accordance with its terms; and the execution and delivery of this Option Agreement and the performance of the obligations of the Participant hereunder will not result in the creation or imposition of any lien, charge or encumbrance upon the common shares. The Participant acknowledges that the Corporation is relying upon such representations and warranties in granting the Options and issuing any common shares upon exercise thereof. 7. The Participant’s delivery of the signed Exercise Notice to exercise the Options (in whole or in part) shall be accompanied by full payment of the aggregate Option Price for the Shares being purchased (plus an amount equal to the Tax Obligations) and/or a notice that the Participant intends to exercise the Participant’s Cashless Exercise Right or Net Exercise Right as set out in the Plan. Payment for the Shares may be made by certified cheque or wire transfer in readily available funds. 8. 9. The Participant acknowledges and represents that: (a) the Participant fully understands and agrees to be bound by the terms and provisions of this Option Agreement and the Plan; (b) agrees and acknowledges that the Participant has received a copy of the Plan and that the terms of the Plan form part of this Option Agreement, and (c) hereby accepts these Options subject to all of the terms and provisions hereof and of the Plan. To the extent of any inconsistency between the terms of this Option Agreement and those of the Plan, the terms of the Plan shall govern. The Participant has reviewed this Option Agreement and the Plan, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement. This Option Agreement and the terms of the Plan incorporated herein (with the Exercise Notice, if the Option is exercised) constitutes the entire agreement of the Corporation and the Participant (collectively the “Parties”) with respect to the Options and supersedes in its entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Parties. This Option Agreement and the terms of the Plan incorporated herein are to be construed in accordance with and governed by the laws of the Province of Ontario. Should any provision of this Option Agreement or the Plan be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan. [Remainder of page left intentionally blank] IN WITNESS WHEREOF the Corporation and the Participant have executed this Option Agreement as of ______________________, 20__. If the Participant is an individual: EXECUTED by [●] in the presence of: Signature Print Name Address Occupation If the Participant is not an individual: Note to Plan Participants ) ) ) ) ) ) ) ) ) ) ) ) ) ) POET TECHNOLOGIES INC. Per: Authorized Signatory [NAME OF PARTICIPANT] [NAME OF PARTICIPANT] Per: Authorized Signatory This Agreement must be signed where indicated and returned to the Corporation within 30 days of receipt. Failure to acknowledge acceptance of this grant will result in the cancellation of your Options. EXHIBIT “B” TO OMNIBUS INCENTIVE PLAN OF POET TECHNOLOGIES INC. FORM OF OPTION EXERCISE NOTICE TO: POET TECHNOLOGIES INC. This Exercise Notice is made in reference to stock options (“Options”) granted under the Omnibus Incentive Plan (the “Plan”) of POET Technologies Inc. (the “Corporation”). The undersigned (the “Participant”) holds options (“Options”) under the Plan to purchase [●] common shares of the Corporation (each, a “Share”) at a price per Share of $[●] (the “Option Price”) pursuant to the terms and conditions set out in that certain option agreement between the Participant and the Corporation dated [●] (the “Option Agreement”). The Participant confirms the representations and warranties contained in the Option Agreement. The Participant hereby: irrevocably gives notice of the exercise of ___ Options held by the Participant pursuant to the Option Agreement at the Option Price for an aggregate exercise price of $________ (the “Aggregate Option Price”) on the terms specified in the Option Agreement and encloses herewith a certified cheque payable to the Corporation or evidence of wire transfer to the Corporation in full satisfaction of the Aggregate Option Price. The Participant acknowledges that, in addition to the Aggregate Option Price, the Corporation will require that the Participant also provide to the Corporation a certified cheque or evidence of wire transfer equal to the amount of any Tax Obligations (as defined in the Plan) associated with the exercise of such Options before the Corporation will issue any Shares to the Participant in settlement of the Options. The Corporation shall have the sole discretion to determine the amount of any such Tax Obligations and shall inform the Participant of this amount as soon as reasonably practicable upon receipt of this completed Exercise Notice. ☐ - or - irrevocably gives notice of the Participant’s exercise of the Cashless Exercise Right (as defined in the Plan) with respect to ___ Options held by the Participant pursuant to the Option Agreement, and agrees to receive that number of common shares of the Corporation equal to the following (with the remaining Shares subject to the Options to be sold by the broker on its behalf as provided in the Plan): ((A – B) x C) - D A ☐ where A is the price per Share at which the underlying Shares are being sold by the brokerage firm, B is the Option Price, C is the number of Options being exercised in this Exercise Notice, and D is the amount of Tax Obligations (as defined in the Plan) applicable to the Options subject to exercise of the Cashless Exercise Right pursuant to this Exercise Notice. For greater certainty, where a Participant elects to exercise his/her Cashless Exercise Right, the amount of any Tax Obligation determined pursuant to the above formula will be deemed to have been directed by the Participant to be paid in cash by the broker on its behalf to the Corporation out of the proceeds of the Shares, which cash will be withheld by the Corporation and remitted to the applicable taxation authorities as may be required. - or - irrevocably gives notice of the Participant’s exercise of the Net Exercise Right (as defined in the Plan) with respect to ___ Options held by the Participant pursuant to the Option Agreement, and agrees to receive that number of Shares of the Corporation equal to the following: ((A – B) x C) - D A ☐ where A is the VWAP (as defined in the Plan) per Share on the date prior to the date of this Exercise Notice, B is the Option Price, C is the number of Options being exercised in this Exercise Notice, and D is the amount of Tax Obligations (as defined in the Plan) applicable to the Options terminated at the election of the Participant pursuant to this Exercise Notice. For greater certainty, where a Participant elects to exercise his/her Net Exercise Right, the amount of any Tax Obligation determined pursuant to the above formula will be deemed to have been paid in cash by the Corporation to the Participant as partial consideration for the termination of the Options, which cash will be withheld by the Corporation and remitted to the applicable taxation authorities as may be required. Registration: The Shares issued pursuant to this Exercise Notice (other than any Shares to be sold by a broker pursuant to the Cashless Exercise Right) are to be registered in the name of the undersigned and are to be delivered, as directed below: Name: Address: Date Date Name of Participant Signature of Participant or Authorized Signatory EXHIBIT “C” TO OMNIBUS INCENTIVE PLAN OF POET TECHNOLOGIES INC. FORM OF SHARE UNIT AGREEMENT This Share Unit Agreement is entered into between POET Technologies Inc. (the “Corporation”) and the Participant named below, pursuant to the Corporation’s Omnibus Incentive Plan (the “Plan”), a copy of which is attached hereto, and confirms that on: 1. 2. 3. 4. ___________________ (the “Grant Date”) ___________________ (the “Participant”) was granted Share Units (“Share Units”), in accordance with the terms of the Plan, which Share Units will vest as follows: Number of Share Units Time Vesting Conditions Performance Vesting Conditions all on the terms and subject to the conditions set out in the Plan. Subject to the terms and conditions of the Plan, including provisions governing the vesting of Awards while the Corporation is in a Blackout Period, the performance period for this grant of Share Units commences on the Grant Date and ends at the close of business on [●] (the “Performance Period”). The restriction period for this grant of Share Units commences on the Grant Date and ends at the close of business on [●] (the “Restriction Period”). Subject to the terms and conditions of the Plan, Shares Units will be redeemed and settled fifteen days after the applicable Vesting Date, all in accordance with the terms of the Plan. 5. By signing this agreement, the Participant: (a) (b) acknowledges that he or she has read and understands the Plan, agrees with the terms and conditions thereof which shall be deemed to be incorporated into and form part of this Share Unit Agreement (subject to any specific variations contained in this Share Unit Agreement); acknowledges that, subject to the vesting and other conditions and provisions in this Share Unit Agreement, each Share Unit awarded to the Participant shall entitle the Participant to receive on settlement an aggregate cash payment equal to Market Value of a Share or, at the election of the Corporation and in its sole discretion, one Share of the Company. For greater certainty, no Participant shall have any right to demand to be paid in, or receive, Shares in respect of any Share Unit, and, notwithstanding any discretion exercised by the Company to settle any Share Unit, or portion thereof, in the form of Shares, the Company reserves the right to change such form of payment at any time until payment is actually made; (c) (d) (e) (f) acknowledges that he or she is responsible for paying any applicable taxes and withholding taxes arising from the vesting and redemption of any Share Unit, as determined by the Corporation in its sole discretion; agrees that a Share Unit does not carry any voting rights; acknowledges that the value of the Share Units granted herein are denominated in Canadian dollars (C$), and such value is not guaranteed; recognizes that, at the sole discretion of the Corporation, the Plan can be administered by a designee of the Corporation by virtue of Section 2.2 of the Plan and any communication from or to the designee shall be deemed to be from or to the Corporation. 6. 7. The Participant acknowledges and represents that: (a) the Participant fully understands and agrees to be bound by the terms and provisions of this Share Unit Agreement and the Plan; (b) agrees and acknowledges that the Participant has received a copy of the Plan and that the terms of the Plan form part of this Share Unit Agreement, and (c) hereby accepts these Share Units subject to all of the terms and provisions hereof and of the Plan. To the extent of any inconsistency between the terms of this Share Unit Agreement and those of the Plan, the terms of the Plan shall govern. The Participant has reviewed this Share Unit Agreement and the Plan, has had an opportunity to obtain the advice of counsel prior to executing this Share Unit Agreement. This Share Unit Agreement and the terms of the Plan incorporated herein constitutes the entire agreement of the Corporation and the Participant (collectively the “Parties”) with respect to the Share Units and supersedes in its entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Parties. This Share Unit Agreement and the terms of the Plan incorporated herein are to be construed in accordance with and governed by the laws of the Province of Ontario. Should any provision of this Share Unit Agreement or the Plan be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan. [Remainder of page left intentionally blank] IN WITNESS WHEREOF the Corporation and the Participant have executed this Share Unit Agreement as of _____________________, 20__. If the Participant is an individual: EXECUTED by [●] in the presence of: Signature Print Name Address Occupation If the Participant is not an individual: Note to Plan Participants ) ) ) ) ) ) ) ) ) ) ) ) ) ) POET TECHNOLOGIES INC. Per: Authorized Signatory [NAME OF PARTICIPANT] [NAME OF PARTICIPANT] Per: Authorized Signatory This Agreement must be signed where indicated and returned to the Corporation within 30 days of receipt. Failure to acknowledge acceptance of this grant will result in the cancellation of your Share Units. EXHIBIT “D” TO OMNIBUS INCENTIVE PLAN OF POET TECHNOLOGIES INC. FORM OF DSU AGREEMENT This DSU Agreement is entered into between POET Technologies Inc. (the “Corporation”) and the Participant named below, pursuant to the Corporation’s Omnibus Incentive Plan (the “Plan”), a copy of which is attached hereto, and confirms that on: 1. 2. 3. 4. 5. 6. 7. 8. ___________________ (the “Grant Date”), ___________________ (the “Participant”) was granted deferred share units (“DSUs”), in accordance with the terms of the Plan. The DSUs subject to this DSU Agreement will be fully vested on the Termination Date of the Participant. The settlement of the DSUs, either in common shares of the Corporation, a lump sum cash payment or a combination of the foregoing, shall be payable to you net of any applicable withholding taxes in accordance with the Plan not later than December 15 of the year following the end of the calendar year in which the Termination Date occurs. By signing this agreement, the Participant: (a) (b) (c) (d) (e) acknowledges that he or she has read and understands the Plan, agrees with the terms and conditions thereof which shall be deemed to be incorporated into and form part of this DSU Agreement (subject to any specific variations contained in this DSU Agreement); acknowledges that he or she is responsible for paying any applicable taxes and withholding taxes arising from the vesting and redemption of any DSU, as determined by the Corporation in its sole discretion; agrees that a DSU does not carry any voting rights; acknowledges that the value of the DSUs granted herein are denominated in Canadian dollars (C$), and such value is not guaranteed; recognizes that, at the sole discretion of the Corporation, the Plan can be administered by a designee of the Corporation by virtue of Section 2.2 of the Plan and any communication from or to the designee shall be deemed to be from or to the Corporation. The Participant acknowledges and represents that: (a) the Participant fully understands and agrees to be bound by the terms and provisions of this DSU Agreement and the Plan; (b) agrees and acknowledges that the Participant has received a copy of the Plan and that the terms of the Plan form part of this DSU Agreement, and (c) hereby accepts these DSUs subject to all of the terms and provisions hereof and of the Plan. To the extent of any inconsistency between the terms of this DSU Agreement and those of the Plan, the terms of the Plan shall govern. The Participant has reviewed this DSU Agreement and the Plan, has had an opportunity to obtain the advice of counsel prior to executing this DSU Agreement. This DSU Agreement and the terms of the Plan incorporated herein constitutes the entire agreement of the Corporation and the Participant (collectively the “Parties”) with respect to the DSUs and supersedes in its entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Parties. This DSU Agreement and the terms of the Plan incorporated herein are to be construed in accordance with and governed by the laws of the Province of Ontario. Should any provision of this DSU Agreement or the Plan be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan. [Remainder of page left intentionally blank] IN WITNESS WHEREOF the Corporation and the Participant have executed this DSU Agreement as of ________________, 20__. If the Participant is an individual: EXECUTED by [●] in the presence of: Signature Print Name Address Occupation If the Participant is not an individual: Note to Plan Participants ) ) ) ) ) ) ) ) ) ) ) ) ) ) POET TECHNOLOGIES INC. Per: Authorized Signatory [NAME OF PARTICIPANT] [NAME OF PARTICIPANT] Per: Authorized Signatory This Agreement must be signed where indicated and returned to the Corporation within 30 days of receipt. Failure to acknowledge acceptance of this grant will result in the cancellation of your DSUs. ex4-18.htm EX-4.18 1 of 51 03/28/2024 04:02 PM Exhibit 4.18 ex4-20.htm EX-4.20 1 of 20 03/28/2024 04:02 PM Exhibit 4.20 ex4-22.htm EX-4.22 1 of 7 03/28/2024 04:02 PM Exhibit 4.22 ex4-23.htm EX-4.23 1 of 51 03/28/2024 04:02 PM Exhibit 4.23 ex4-24.htm EX-4.24 1 of 42 03/28/2024 04:02 PM Exhibit 4.24 ex8-1.htm EX-8.1 1 of 1 03/28/2024 04:02 PM Exhibit 8.1 ex12-1.htm EX-12.1 1 of 1 03/28/2024 04:02 PM Exhibit 12.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Suresh Venkatesan, certify that: 1. I have reviewed this annual report on Form 20-F of POET Technologies Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Date: March 28, 2024 By: /s/ Suresh Venkatesan Suresh Venkatesan Chief Executive Officer ex12-2.htm EX-12.2 1 of 1 03/28/2024 04:02 PM Exhibit 12.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Thomas Mika, certify that: 1. I have reviewed this annual report on Form 20-F of POET Technologies Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Date: March 28, 2024 By: /s/ Thomas Mika Thomas Mika Chief Financial Officer ex13-1.htm EX-13.1 1 of 1 03/28/2024 04:02 PM Exhibit 13.1 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Suresh Venkatesan, the Chief Executive Officer of POET Technologies Inc. (the “Company”), hereby certify, that, to my knowledge: 1. The Annual Report on Form 20-F for the year ended December 31, 2023 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act of 2002 and is not intended to be used or relied upon for any other purpose. Date: March 28, 2024 /s/ Suresh Venkatesan Name: Suresh Venkatesan Title: Chief Executive Officer ex13-2.htm EX-13.2 1 of 1 03/28/2024 04:02 PM Exhibit 13.2 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Thomas Mika, the Chief Financial Officer of POET Technologies Inc. (the “Company”), hereby certify, that, to my knowledge: 1. The Annual Report on Form 20-F for the year ended December 31, 2023 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes- Oxley Act of 2002 and is not intended to be used or relied upon for any other purpose. Date: March 28, 2024 /s/ Thomas Mika Name: Thomas Mika Title: Chief Financial Officer ex23-1.htm EX-23.1 1 of 1 03/28/2024 04:02 PM Exhibit 23.1 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT We consent to the incorporation by reference in the Registration Statement of POET Technologies Inc. on Form F-10 (File Nos. 333-255631, 333-227873 and 333-213422) of our report dated March 15, 2024 which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the consolidated financial statements of POET Technologies Inc. as of December 31, 2023, 2022 and 2021 and for the years ended December 31, 2023, 2022 and 2021 and our report dated March 15, 2024 with respect to our audit of internal control over financial reporting of POET Technologies Inc. as of December 31, 2023. Our report on the effectiveness of internal control over financial reporting expressed an adverse opinion because of the existence of a material weakness. These reports are included in this Annual Report on Form 20-F of POET Technologies Inc. for the year ended December 31, 2023 /s/ Marcum LLP Marcum (cid:3461)(cid:3461)(cid:3465) Hartford, CT March 28, 2024 ex97-1.htm EX-97.1 1 of 6 03/28/2024 04:02 PM Exhibit 97.1 

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