POET Technologies Inc (PTK)

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Defense Market Key Valuation Assumptions:
The following are key assumptions that we integrated into the valuation model for the defense market:
- ODIS will continue to receive annual revenues from Small Business Innovation Research (SBIR) grants and other awards, in accordance with a projected schedule provided by ODIS representatives
- ODIS will likely license POET to one or all of the top ten defense contractors.
- Each defense contractor’s licensing decision is an equally probable binary outcome (i.e., they will either license it or not, each occurrence having equal probability).
- Each defense contractor’s licensing decision is independent of other defense contractors (i.e., we modeled no conditional licensing probabilities).
- A time gap that ranges between 2 and 18 months exists that captures when each defense contractor considers executing a license.
- The defense contractors would pay an initial, nonexclusive license fee that may range between $20 million and $50 million
Defense contractors would make monthly royalty payments thereafter of $250,000 to account for any product-specific royalties.