18 February 2021
POET reports on financing activities ahead of special meeting
POET Technologies Inc of Toronto, Ontario, Canada — designer and developer of the POET Optical Interposer and photonic integrated circuits (PICs) for the data-center and telecom markets — has added about C$24m (US$18.8m) to its cash balance as a result of the closing of a brokered private placement, warrants and stock options exercised since 1 October.
Exercise of options and warrants
The firm has received about C$10m from the exercise of options and warrants since 1 October. Approximately C$2.7m (US$2.1m) came from the exercise of about 7 million options by former employees and directors at prices ranging from C$0.28 to $0.52. About C$7.3m (US$5.7m) came from the exercise of warrants from its public offering in November 2016 in which 34.8 million units, consisting of one common share and one common share purchase warrant with an exercise price of C$0.52 per share, were placed.
Most of those warrants remained unexercised until recently. From 2 November 2016 through 30 September 2020 only 2.8 million had been exercised. However, since the beginning of fourth-quarter 2020, warrant holders have exercised about 14 million of the 32 million warrants outstanding, with about 18 million still unexercised. The firm believes that the outstanding warrants are held mainly by Canadian investors. If fully exercised, the remaining warrants would result in proceeds of approximately C$9.4m (US$7.3m) being realized by the firm. If unexercised, the warrants will expire on 2 November.
Warrants associated with convertible debentures
POET also issued warrants in connection with its private placement of 2-year convertible debentures in the period April through September 2019. Holders of the debentures have the option of redeeming for cash or converting into units consisting of one common share and one common share purchase warrant. The common share purchase warrant forming a part of such unit has an exercise price of C$0.50 per share. Approximately C$5m (US$3.75m) worth of the debentures were issued, representing about 12.5 million warrants that would be issuable upon conversion into units.
Since being issued, the firm’s debt has been reduced by C$750,000, resulting in the issuance of 1.875 million shares and an equal number of warrants. Assuming that all of the remaining debentures are converted and the associated warrants exercised, the remainder of the debt would be extinguished, and the firm would issue an additional 10.6 million units. Upon exercise of the associated warrants, POET would receive an additional C$5.3m (US$4.1m). Depending on the purchase date, holders of the debentures have 2-7 months remaining to convert or redeem the convertible debentures.
POET has clarified its intention for the Special Meeting on 19 February, which is being held virtually (at 1pm EST via the LUMI Meeting platform) for the sole purpose of seeking authorization from shareholders to amend the articles of the company to enable the board of directors to consolidate the total outstanding shares within a certain range. The proposed range (to be effected if, as and when the board of directors determines within its sole discretion to do so) is on the basis of one post-consolidation common share for a number of pre-consolidation common shares of between two and 14.
“The purpose of seeking authorization from the shareholders for a consolidation is both to enable an additional listing on the NASDAQ Capital Market and to offer a combination of share price and total shares outstanding that meets or exceeds the minimum requirements of some of the larger institutional investors in the USA and Canada,” notes executive VP & chief financial officer Thomas Mika. “The board intends to consolidate shares only in connection with the additional listing and to do so only when the timing is appropriate, both internally and when market conditions allow. We cannot predict when conditions may be appropriate, so we cannot say for certain when a consolidation may be implemented. Until then, we intend to continue to be listed on the TSX Venture Exchange (TSXV) in Canada and on the OTCQX in the USA,” he adds. “So far, we are pleased to say that we have received overwhelming support for the resolution.”
The board’s authority to consolidate the shares in its sole discretion is conditional upon the prior approval of shareholders and the TSXV. If approved, the consolidation would take place upon a decision by the board within the proposed range agreed to by the shareholders following approval.