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POET Technologies Uplisting: An Angel Investor Opportunity For The Individual Investor
As commercialization approaches, POET Technologies (OTCQX:POETF), trading on the Canadian Venture Exchange and the OTC as a foreign equity, is a prime candidate for an uplisting to a US market.
POET's cable business network advertisements in the US point toward an upcoming uplisting into US equity markets.
Investors purchasing shares of POETF prior to a move to the Nasdaq could benefit from pre-listing pricing discount similar to that experienced by angel investors in an IPO.
Introduction
POET Technologies utilizes gallium arsenide (GaAs) fabrication processes never before achieved to deliver much higher semiconductor performance (up to 10x), significantly lower power usage and multifunctional capabilities on a single chip, including universal memory, electrical and optical functionality. Simply stated, the step function advancements will change the semiconductor industry, which is struggling with yields and delays at advanced nodes, along with rapidly accelerating capital and per unit costs at lower nodes.
A Nasdaq Listing
As a Canadian company, access to POET's shares is largely restricted to individual investors and Canadian investment firms, and the current share price ($1.23 US) and market cap (approximately $215 million) reflects this lack of visibility to American investors. POET appears poised to list on the Nasdaq to increase institutional awareness and liquidity as it moves from late stage development to commercialization.
In order to achieve and maintain a stable share price adequate for listing, tangible evidence of POET's capabilities will likely be required. POET anticipates the completion of two key semiconductor devices that provide independent validation no later than the end of this quarter. Positive results will likely spur a flurry of potential partnerships and licensing agreement negotiations. Such activity should favorably impact the current share price and facilitate an uplisting.
The Opportunity
While POET's listing would have many characteristics of an IPO, it becomes the initial chance for US institutional investors to secure positions in the company. A marketing campaign will likely precede the listing to pique interest. "First day listed" demand for shares will drive interest and attention well beyond that seen in normal day to day trading as POET is introduced to the US investment community on an unprecedented scale. Early participants may benefit from the confluence of demand, marketing, and announcement of material events required for a successful listing.
POET's is currently running TV ads on business channels in the US to increase visibility. As there are not yet specific devices commercially available, these ads are likely intended to create market awareness during the run-up to a Nasdaq listing.
From Development to Commercialization: The Power of Four
POET's apparent emergence is increasingly supported by the addition of three industry leading semiconductor scientists/executives joining with Dr. Geoffrey Taylor, the inventor of the POET (Planar Opto Electronic Technology) Process and world renowned expert in GaAs semiconductor technology; Dr. Ajit Manocha, Executive Vice Chairman, former CEO of Global Foundries, and member of President Obama's Advanced Manufacturing Partnership Steering Committee; Dr. Sukesh Venkatesan, CEO, formerly Senior Vice President of Technology for GlobalFoundries; and Dr. Subhash Deshmukh, COO, formerly VP Emerging Technologies and Products, Applied Materials. The CEO and COO assumed their responsibilities last week. These four highly respected and accomplished individuals have more than a century of combined semiconductor development experience and achievements.
Highly accomplished professionals simply do not leave leadership roles at multi-billion corporations for a tiny developmental tech firm on a whim. They do so only to pursue career defining opportunities in their distinguished careers. For them it appears POET may represent a historical opportunity.
The addition of former executives from Triquint and Applied Materials to the Board of Directors, and the establishment of a Technology Roadmap Advisory Board (TRAB), whose mandate is specifically to guide commercialization of the POET process, serve as further evidence of both validation and the move toward monetization.
The potential is for POET to be both complimentary and disruptive to the $600 billion semiconductor industry. It's an elegant solution to the growing complexities associated with improvement within stand alone silicon based semiconductors. POET's processes can be readily introduced to current silicon CMOS fabs, saving companies tens of millions of dollars in retooling, upgrades, and R&D.
Risks
Delays in the completion of their milestone devices may impact other activities, including an application for a Nasdaq listing. However, the decisions of the new CEO and COO to accept their roles point to the likelihood that these milestones are at or near completion.
While the interim CEO Peter Copetti suggested a Nasdaq listing may be in their future, the new CEO has not stated his intent at this time. The prolonged delay of a listing may negate the impact of material news, as the market has not responded to earlier events indicative of progress toward commercialization.
POET's technology may not only compliment existing fabrication processes, it could be seen to displace current CMOS technology as it evolves. It is likely that established industry leaders that have sought to perfect their processes over decades, at incurred development costs in the hundreds of billions of dollars, continue to improve their products . History describes attempts at industry disruptive achievements as rarely successful due to the enormous advantages of time, resources, and capital available to the established leaders in any industry. POET will need to overcome such historical barriers to succeed.
Companies with no revenues almost always face the risk of capital exhaustion prior to achievement of their goals. POET has managed their capital in outstanding fashion, and, at last report, had nearly $15 million in cash and a burn rate of less than $500,000 per month. While this will increase with the addition of top level executives, capital to continue operations should extend well into 2016, with revenue generation still anticipated to commence this year, thus further reducing any potential capital concerns.
Summary
The recent acquisition of industry leading executive talent, the anticipated completion of key devices demonstrating the power of POET's technology, and the potential to up-list to the Nasdaq create a rare and compelling proposition for individual investors to gain an early entry into a revolutionary semiconductor technology. As one of their advertisements states "One company is changing the foundation of electronics". Should their plans succeed, it could change the foundation of many investment portfolios as well.
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