PROSPECTUS
SUPPLEMENT
(To
Prospectus dated August 18, 2023)
Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-273853
POET
TECHNOLOGIES INC.
3,333,334
Shares of Common Shares
Warrants
to Purchase up to 3,333,334 Common Shares
(and
the shares of Common Shares underlying such Warrants)
We
are offering 3,333,334 of our common shares (“Common Shares”), without par value, and a warrant or warrants to purchase up
to an aggregate of 3,333,334 Common Shares (the “Warrants”). The combined purchase price for each Common Share and the accompanying
Warrant in respect of one Common Share is $3.00. The Warrants are exercisable at an exercise price of $4.00 per Common Share and, subject
to the Blocker Provision (as defined below), are immediately exercisable and may be exercised for a period of five years following the
issuance date. This offering also relates to (and this prospectus supplement covers) the Common Shares issuable upon exercise of the
Warrants sold in this offering.
The
Common Shares and the accompanying Warrant in respect of one Common Share can only be purchased together in this offering but will be
issued separately.
On
March 28, 2024, the date we filed our Annual Report on Form 20-F for the fiscal year ended December 31, 2023 (the “Annual Report”),
we became subject to the offering limits in General Instruction I.B.5 of Form F-3, which limited the amount of Common Shares we could
offer and sell from time to time under an equity distribution agreement, dated September 1, 2023, to $24,147,911, as set forth in the
prospectus supplement, dated April 2, 2024 (the “2024 ATM Prospectus Supplement”). In the 2024 ATM Prospectus Supplement
we disclosed that if our public float were to increase above $75.0 million, we would no longer be subject to the limits in General Instruction
I.B.5 of Form F-3.
As
of the April 23, 2024, the aggregate market value of our Common Shares held by non-affiliates was approximately $75,303,356, which was
calculated based on 47,660,352 Common Shares held by non-affiliates as of April 23, 2024, and a price of $1.58 per share, the closing
price of our Common Shares on the Nasdaq Capital Market (“Nasdaq”) on April 23, 2024. As a result, our public float has increased
above $75,000,000 and we have not been subject to the limitations contained in General Instruction I.B.5 of Form F-3 since April 23,
2024.
Our
Common Shares are listed and posted for trading on the TSX Venture Exchange (the “TSXV”) under the symbol “PTK”
and on Nasdaq under the symbol “POET”. On July 18, 2024, the last trading day prior to the date of this prospectus
supplement, the closing price of our Common Shares on the TSXV and on Nasdaq was CAD$4.24 and $3.12 per Common Share, respectively.
There is no established trading market for the Warrants, and we do not expect a market to develop. We do not intend to apply for a listing
for the Warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity
of the Warrants will be limited.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” on page S-7 of this prospectus supplement
and in the documents incorporated by reference in this prospectus supplement and the accompanying prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal
offense.
| | |
PER COMMON
SHARE AND ACCOMPANYING WARRANT TO PURCHASE ONE COMMON SHARE | | |
TOTAL | |
| Offering price | |
$ | 3.00 | | |
$ | 10,000,002 | |
| Proceeds to us (before expenses) (1) | |
$ | 3.00 | | |
$ | 10,000,002 | |
| (1) |
The
amount of the offering proceeds to us presented in this table does not give effect to the exercise, if any, of the Warrants being
issued in connection with this offering. There are no placement agent fees payable by the Company in connection with the transaction. |
Delivery
of the securities being offered pursuant to this prospectus supplement and the accompanying prospectus is expected to be made on or about
July 19, 2024.
Prospectus
Supplement dated July 19, 2024.
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT
PROSPECTUS
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus are part of a registration statement on Form F-3 that we have filed with the Securities
and Exchange Commission, or the SEC, using a “shelf” registration process. We provide information to you about this offering
of shares of our Common Shares and accompanying Warrants in two separate documents that are bound together: (1) this prospectus supplement,
which describes the specific details regarding this offering, and (2) the accompanying prospectus, which provides general information,
some of which may not apply to this offering. Generally, unless the context indicates otherwise, when we refer to this “prospectus,”
we are referring to both documents combined. If information in this prospectus supplement is inconsistent with the accompanying prospectus,
you should rely on this prospectus supplement. In addition, to the extent there is a conflict between the information contained in this
prospectus supplement, on the one hand, and the information contained in any document incorporated by reference that was filed with the
SEC before the date of this prospectus supplement, on the other hand, you should rely on the information in this prospectus supplement.
If any statement in one of these documents is inconsistent with a statement in another document having a later date – for example,
a document incorporated by reference in this prospectus supplement – the statement in the document having the later date modifies
or supersedes the earlier statement, as our business, financial condition, results of operations and prospects may have changed since
the earlier dates. You should also read and consider the additional information referenced under the captions “Incorporation of
Certain Information By Reference” in this prospectus supplement.
In
making your investment decision, you should rely only on the information contained or incorporated by reference in this prospectus supplement,
in the accompanying prospectus and in any free writing prospectus with respect to this offering filed by us with the SEC. We have not
authorized any person to provide you with different or additional information. If anyone provides you with different, additional or inconsistent
information you should not rely on it. You should assume that the information appearing in this prospectus supplement, the accompanying
prospectus, any free writing prospectus with respect to the offering filed by us with the SEC and the documents incorporated by reference
herein and therein is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects
may have changed since those dates.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document
that is incorporated by reference herein were made solely for the benefit of the parties to such agreement, including, in some cases,
for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or
covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date they were made. In addition,
the assertions embodied in any representations, warranties and covenants contained in such agreements may be subject to qualifications
with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in disclosure
schedules. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations,
warranties and covenants set forth in the agreements. Accordingly, such representations, warranties and covenants should not be relied
on as accurately representing the current state of our affairs.
We
obtained the industry, market and competitive position data contained or incorporated by reference in this prospectus supplement from
our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted
by third parties. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such
estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in
which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described
under “Risk Factors” and elsewhere in this prospectus supplement and the documents incorporated by reference herein. These
and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and
us.
We
are offering to sell, and seeking offers to buy, Common Shares and Warrants only in jurisdictions where offers and sales are permitted.
The distribution of this prospectus supplement and the accompanying prospectus and the offering of the Common Shares and Warrants in
certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus supplement
and the accompanying prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Common Shares
and Warrants and the distribution of this prospectus supplement and the accompanying prospectus outside the United States. This prospectus
supplement and the accompanying prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation
of an offer to buy, any securities offered by this prospectus supplement and the accompanying prospectus by any person in any jurisdiction
in which it is unlawful for such person to make such an offer or solicitation.
In
this prospectus supplement, we use the term “day” to refer to a calendar day, and we use the term “business day”
to refer to any day other than Saturday, Sunday, a legal holiday or a day on which banks in New York City are authorized or required
to close.
We
have filed or incorporated by reference exhibits to the registration statement of which this prospectus supplement forms a part. You
should read the exhibits carefully for provisions that may be important to you.
All
references in this prospectus supplement to “POET,” the “Company,” “we,” “us,” or “our”
mean POET Technologies Inc. and its subsidiaries unless we state otherwise, or the context otherwise indicates. This prospectus supplement
and the information incorporated herein by reference contain references to trademarks, service marks and trade names owned by us or other
companies. Solely for convenience, trademarks, service marks and trade names referred to in this prospectus supplement and the information
incorporated herein, including logos, artwork, and other visual displays, may appear without the ® or ™ symbols, but such references
are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights
of the applicable licensor to these trademarks, service marks and trade names. We do not intend our use or display of other companies’
trade names, service marks or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Other
trademarks, trade names and service marks appearing in this prospectus supplement are the property of their respective owners.
Unless
otherwise indicated, all dollar amounts in this Prospectus are expressed in United States dollars. Canadian dollars are stated as “CAD$”.
On July 18, 2024, the last business day before the date of this Prospectus, the daily exchange rate as quoted by the Bank of Canada
was CAD$1.00 = US$0.7301 (or US$1.00 = CAD$1.3696).
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights information contained elsewhere or incorporated by reference in this prospectus supplement and in the accompanying
prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our securities.
You should read this entire prospectus supplement and the accompanying prospectus carefully, including the “Risk Factors”
section in this prospectus supplement and the accompanying prospectus and under similar captions in the documents incorporated by
reference into this prospectus supplement and the accompanying prospectus.
Company
Overview
The
legal and commercial name of the Company is POET Technologies Inc. The Company was originally incorporated under the Business Corporations
Act (British Columbia) 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 Business Corporations
Act (British Columbia). By Articles of Continuance dated January 3, 1997, Tandem Resources Ltd. was continued under the Business Corporations
Act (Ontario) (“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 Business Corporations
Act (New Brunswick). 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. Today, the Company is an Ontario-based corporation governed by the OBCA.
The
Company is a reporting issuer in each of the provinces and territories of Canada.
Intercorporate
Structure
The
following is the corporate structure of POET as of the date hereof.
Description
of the Business
The
Company 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 the Company
is on the forefront of providing scalable solutions for current and future AI systems.
Additional
information regarding the business of the Company can be found in the Form 20-F and other documents incorporated by reference herein,
copies of which are available for review under the Company’s issuer profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.
See also “Incorporation of Certain Information by Reference.”
Operations
in Emerging Market Jurisdictions
Guidance
from Canadian securities regulators provides that issuers operating in markets deemed “emerging markets” include additional
disclosure with respect to operations in such markets. The Company has operating subsidiaries located in Singapore and China. Although
Singapore is considered to be a relatively stable jurisdiction for business, it is possible that operating in Singapore and / or China
may expose the Company to a certain degree of political, economic and other risks and uncertainties. For these reasons, the following
disclosure is in included in contemplation of the guidance in Staff Notice 51-720 – Issuer Guide for Companies Operating in Emerging
Markets of the Ontario Securities Commission.
The
establishment and development of POET Technologies Pte. Ltd (“POET Singapore”) (Singapore), POET Optoelectronics Shenzhen
Co. Ltd (“POSC”) (China) and a joint venture with Quanzhou Sanan Optical Communication Technology Co. Ltd. (“Sanan”),
SPX (China), adds an additional regulatory framework to which the Company operates and is supplementary to the existing regulatory framework
existing in Canada.
The
Company’s operating entities in emerging jurisdictions are governed in accordance with applicable local laws and entity-wide governance
principles. The directors and management of the Company’s operating entities in emerging jurisdictions are generally comprised
of a majority of senior management employees and where required by local laws, local residents, who are generally longstanding local
management level employees, or local corporate counsel. In addition, certain members of the Company’s management have experience
of conducting business in China, as detailed below, and in Singapore, where the Company has maintained operations since 2016. The Company
maintains oversight over the operations in Singapore and China. Each jurisdiction will require greater internal controls and adherence
to a regulatory framework that creates challenges in relation to decision-making, communication, and compliance. The Company has experienced
management and retained legal advisors and consultants to help facilitate adherence to regulatory requirements in order to meet this
challenge.
Recent
Developments
The
following section sets out certain of the Company’s key developments since December 31, 2023.
On
January 25, 2024, the Company closed a non-brokered private placement of 5,098,088 units of the Company (the “January 2024 Units”)
at a price of CAD$1.22 per January 2024 Unit, for aggregate gross proceeds of approximately CAD$6.2 million (the “January 2024
Offering”). Each January 2024 Unit was comprised of one Common Share and one common share purchase warrant of the Company (each,
a “January 2024 Warrants”). Each January 2024 Warrant entitles the holder thereof to purchase one additional Common Share
at a price of CAD $1.52 per Common Share for a period of five years following the date of issuance. In connection with the January 2024
Offering, the Company paid a cash finders’ fee of CAD$43,829 to GloRes Securities Inc. and World Source Securities Inc.
On
March 27, 2024, the Company announced a collaboration with MultiLane Inc. (“MultiLane”), a leading provider of high-speed
IO and data center interconnect test solutions, to develop next-generation, performance-optimized pluggable 800G, 1.6T and higher speed
transceivers using the Company’s newly designed transmit and receive optical engines. The Company and MultiLane will focus on jointly
developing pluggable transceivers that will reduce cost and improve power efficiency over existing solutions, and address the increasing
need for more scalable hardware components for AI and cloud data center markets.
On
April 17, 2024, the Company announced that it has augmented its investor outreach through two new engagements with Hybrid Financial Ltd.
and LFG Equities Corp. The Company also announced a management role change whereby Vivek Rajgarhia would transition from the positions
of President and General Manager to the position of Advisor to the Chief Executive Officer, effective immediately.
On
April 30, 2024, the Company entered into a consulting agreement with L5 Capital Inc. (“L5 Capital”) whereby L5 Capital has
agreed to act in an independent contractor capacity to provide special opportunity assessments and corporate development advice to the
Company (the “Consulting Agreement”). In connection with the Consulting Agreement, the Company has agreed to pay to L5 Capital
a total fee in the amount of US$1.5 million comprised of: (i) an upfront fee in the amount of US$750,000, which has been paid to L5 Capital
by the Company; and (ii) an additional fee of US$750,000 which is to be paid to L5 Capital in equal quarterly instalments of US$187,500
over the term of the Consulting Agreement. Pursuant to the terms of the Consulting Agreement, the Company will also pay an additional
fee to L5 Capital in the event the Company completes certain corporate transactions.
On
May 3, 2024, the Company closed a non-brokered private placement of an aggregate of 3,258,390 units of the Company (“May 2024 LIFE
Units”) issued pursuant to the “listed issuer financing exemption” available under Part 5A of National Instrument 45-106
– Prospectus Exemptions issued at a price of CAD$3.069 per May 2024 LIFE Unit for aggregate gross proceeds of approximately CAD$10
million (the “May 2024 LIFE Offering”). Each May 2024 LIFE Unit was comprised of one Common Share and one common share purchase
warrant of the Company (each, a “May 2024 LIFE Warrant”). Each May 2024 LIFE Warrant entitles the holder thereof to acquire
one Common Shares at an exercise price of CAD$4.26 per Common Share for a period of five years from the closing date of the May 2024
LIFE Offering.
On
May 10, 2024, the Company closed a non-brokered private placement of 3,448,275 units of the Company (“May 2024 Units”) issued
at a price of CAD$2.90 per May 2024 Unit for aggregate gross proceeds of approximately CAD$10 million (the “May 2024 Offering”).
Each May 2024 Unit was comprised of one Common Share and one common share purchase warrant of the Company (each, a “May 2024 Warrant”).
Each May 2024 Warrant entitles the holder thereof to acquire one Common Share at an exercise price of CAD$4.26 per Common Share and is
exercisable to acquire one Common Share (each, a “May 2024 Warrant Share”) for a period of five years from the closing date
of the May 2024 Offering.
On
May 14, 2024, the Company announced that Foxconn Interconnect Technology (“FIT”) has selected the Company’s optical
engines, which are silicon photonics integrated circuits (Silicon PIC), for its 800G and 1.6T optical transceiver modules. The Company
and FIT have entered into a collaboration to develop FIT’s 800G and 1.6T pluggable optical transceiver modules using the Company’s
optical engines with an aim to address the growth in demand from cutting-edge AI applications and high-speed data center networks. As
part of the collaboration, the Company will develop and supply its silicon photonics integrated circuit optical engines based on the
patented Optical Interposer technology and FIT will design and supply the high-speed pluggable optical transceivers.
Foreign
Private Issuer Status
As
a foreign private issuer, we are exempt from certain rules under the Exchange Act, including its rules prescribing 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 to publish financial statements as
promptly as U.S. companies in certain instances or follow certain other rules and regulations applicable to U.S. domestic public companies.
THE OFFERING
| Common
Shares offered by us |
|
3,333,334
Common Shares |
| |
|
|
Warrants
offered
by
us |
|
We
are offering a Warrant or Warrants to purchase up to an aggregate of 3,333,334 Common Shares. The Warrants are exercisable at an
exercise price of $4.00 per Common Share. Subject to the Blocker Provision, the Warrants are exercisable immediately upon issuance
and may be exercised at any time until the fifth-year anniversary of the issuance date. The Common Shares and the accompanying Warrant
in respect of one Common Share can only be purchased together in this offering but will be issued separately. This offering also
relates to (and this prospectus supplement covers) the Common Shares issuable upon exercise of the Warrants sold in this offering.
|
| |
|
|
| Common
Shares to be outstanding immediately after this offering |
|
65,025,994
Common Shares, assuming no exercise of any Warrants issued in this offering. |
| |
|
|
| Use
of proceeds |
|
We
intend to use the net proceeds from this offering, if any, for general working capital purposes, including revenue expansion and
the development and production of photonic modules for AI and related markets. We currently have a negative operating cash flow,
which may continue for the foreseeable future. During the fiscal year ended December 31, 2023 and the three-month period ended March
31, 2024, we had negative cash flow from operating activities. We anticipate we will continue to have negative cash flow from operating
activities in future periods until sustained profitable commercial production is achieved on our main products and projects. As a
result, if necessary, certain of the net proceeds from this offering may be used to fund such negative cash flow from operating activities
in future periods. Please see “Reasons for the Offer and Use of Proceeds” on page S-12. |
| |
|
|
| Risk
factors |
|
Investing
in our Common Shares involves a high degree of risk. See “Risk Factors” beginning on page S-7 of this prospectus supplement
and under similar headings in the other documents that are incorporated by reference in this prospectus supplement for a discussion
of factors to consider before deciding to purchase shares of our Common Shares. |
| |
|
|
| Trading
Symbols |
|
Our
Common Shares are listed and posted for trading on the TSX Venture Exchange (the “TSXV”) under the symbol “PTK”
and on Nasdaq under the symbol “POET”. On July 18, 2024, the last trading day prior to the date of this prospectus
supplement, the closing price of our Common Shares on the TSXV and on Nasdaq was CAD$4.24 and $3.12 per Common Share,
respectively. There is no established trading market for the Warrants, and we do not expect a market to develop. We do not intend
to apply for a listing for the Warrants on any securities exchange or other nationally recognized trading system. Without an active
trading market, the liquidity of the Warrants will be limited. |
The
number of Common Shares to be outstanding following this offering is based on 61,692,660 shares issued and outstanding at June 30, 2024
and excludes:
| |
● |
11,768,623
Common Shares issuable upon exercise of warrants issued in previous offerings outstanding as of June 30, 2024, with exercise prices
between CAD$1.52 and CAD$4.95; |
| |
● |
9,227,835
Common Shares issuable upon exercise of options outstanding as of June 30, 2024, with exercise
prices between CAD$1.75 and CAD$2.48; and
|
| |
● |
3,100,757
Common Shares reserved for future grants under our omnibus equity incentive plan. |
Except
as otherwise indicated, all information in this prospectus supplement assumes no exercise of the Warrants issued in this offering.
RISK
FACTORS
Before
purchasing any of the securities offered hereby you should carefully consider the risk factors set forth below and the risk factors incorporated
by reference in this prospectus supplement and the accompanying prospectus from our most recent Annual Report on Form 20-F and any subsequent
updates described in our Current Reports on Form 6-K, as well as the risks, uncertainties and additional information set forth in our
SEC reports on Forms 20-F and 6-K and in the other documents incorporated by reference in this prospectus supplement and accompanying
prospectus. For a description of these reports and documents, and information about where you can find them, see “Additional Information”
and “Incorporation of Certain Information By Reference.” Additional risks not presently known or that we presently consider
to be immaterial could subsequently materially and adversely affect our financial condition, results of operations, business and prospects.
Risks
Related to this Offering
There
is no public market for the Warrants being offered in this offering.
We
expect to initially issue one Warrant to a single purchaser and accordingly for there to initially be only one holder of a single Warrant.
There is no established public trading market for the Warrants being offered in this offering, and we do not expect a market to develop.
In addition, we do not intend to apply to list the Warrants on any securities exchange or nationally recognized trading system, including
Nasdaq or the TSXV. Without an active market, the liquidity of the Warrants will be limited.
Holders
of the Warrants purchased in this offering will have no rights as holders of Common Shares until such holders exercise such Warrants
and acquire our Common Shares.
Until
holders of the Warrants issued in this offering acquire Common Shares upon exercise of such Warrants, the holders will have no rights
with respect to the Common Shares underlying such Warrants. Upon exercise of the Warrants, the holders will be entitled to exercise the
rights of a holder of Common Shares only as to matters for which the record date occurs after the exercise date.
The
Warrants being offered are speculative in nature.
The
Warrants do not confer any rights of Common Share ownership on their holders, such as voting rights or the right to receive dividends,
but rather merely represent the right to acquire Common Shares at a fixed price for a limited period of time. Moreover, following this
offering, the market value of the Warrants, if any, will be uncertain and there can be no assurance that the market value of the Warrants
will equal or exceed their imputed offering price. The Warrants will not be listed or quoted for trading on any market or exchange. There
can be no assurance that the market price of our Common Shares will ever equal or exceed the exercise price of the Warrants, and consequently,
the Warrants may expire valueless.
We
may not receive any additional funds upon the exercise of the Warrants.
The
Warrants may never be exercised, and, in certain limited circumstances specified in the Warrants, the Warrants may be exercised by way
of a cashless exercise, meaning that the holder may not pay a cash purchase price upon exercise and, instead, would receive upon such
exercise the net number of Common Shares determined according to the formula set forth in the Warrant. Accordingly, we may not receive
any additional funds upon the cashless exercise of the Warrants or if the Warrants are not exercised at all.
We
will have broad discretion in how we use the net proceeds of this offering. We may not use these proceeds effectively, which could affect
our results of operations and cause our stock price to decline.
We
will have considerable discretion in the application of the net proceeds of this offering, including for any of the purposes described
in the section titled “Reasons for the Offer and Use of Proceeds.” to use the net proceeds from this offering, if any, for
general working capital purposes, including revenue expansion and the development and production of photonic modules for AI and related
markets. We currently have a negative operating cash flow, which may continue for the foreseeable future. During the fiscal year ended
December 31, 2023 and the three-month period ended March 31, 2024, we had negative cash flow from operating activities. We anticipate
we will continue to have negative cash flow from operating activities in future periods until sustained profitable commercial production
is achieved on our main products and projects. As a result, if necessary, certain of the net proceeds from this offering may be used
to fund such negative cash flow from operating activities in future periods. Further, we may use the net proceeds for purposes that do
not yield a significant return or any return at all for our shareholders. Our failure to use our cash and cash equivalents effectively
could result in financial losses that could have a material adverse effect on our business, cause the price of our Common Shares to decline
and delay the development of our product candidates. In addition, pending their use, we may invest the net proceeds from this offering
in a manner that does not produce income or that loses value.
Sales
of a substantial number of our Common Shares, or the perception that such sales may occur, may adversely impact the price of our Common
Shares.
Sales
of a substantial number of our Common Shares in the public markets could depress the market price of our Common Shares and impair our
ability to raise capital through the sale of additional equity securities. Substantially all of our outstanding Common Shares may be
sold in the public market. If substantial additional Common Shares are sold, or if it is perceived that they will be sold, in the public
market, the trading price of our Common Shares could decline. Sales of a substantial number of Common Shares in the public market could
occur at any time. In addition, the issuance of our Common Shares and Warrants in this offering could result in resales of our Common
Shares by our current shareholders who may be concerned about the potential ownership dilution of their holdings. In turn, these sales
could have the effect of depressing the market price for our Common Shares. We cannot predict the effect that future sales of our Common
Shares would have on the market price of our Common Shares.
Our
constating documents permit the issuance of an unlimited number of Common Shares, and the purchaser of the Common Shares will have no
pre-emptive rights in connection with such further issuance. Our directors have discretion to determine the price and the terms of further
issuances. We cannot predict the size of future sales and issuances of securities or the effect, if any, that such future sales and issuances
of securities will have on the market price of our Common Shares. The issuance of additional securities and the exercise of common share
purchase warrants, stock options and other convertible securities will result in dilution of the equity interests of any persons who
are or may become holders of Common Shares. Sales or issuances of a substantial number of securities, or the perception that such sales
could occur, may adversely affect prevailing market prices of our Common Shares.
You
may experience immediate and substantial dilution in the book value per Common Share you purchase.
Because
the price per Common Share at which Common Shares and Warrants are sold in this offering may be substantially higher than the book value
per Common Share, you may suffer immediate and substantial dilution in the net tangible book value of the Common Shares you purchase
in this offering. After giving effect to the sale of our Common Shares and Warrants at a combined offering price of $3.00 per Common
Share and accompanying Warrant, and assuming no exercise of the Warrants, attributing no value to the Warrants, assuming the Warrants
are treated as equity, and after deducting estimated offering expenses payable by us, our net tangible book value as of March 31, 2024
would have been approximately $14.6 million, or $0.28 per Common Share. This represents an immediate increase in the net tangible book
value of $0.18 per Common Share to our existing shareholders and an immediate and substantial dilution in as-adjusted net tangible book
value of $2.72 per Common Share to new investors who purchase our Common Shares and Warrants in this offering. See “Dilution”
for a more detailed discussion of the dilution you may incur in connection with this offering.
We
do not currently intend to pay dividends on our Common Shares, and, consequently, investors’ ability to achieve a
return on their investment will depend on appreciation in the price of our Common Shares.
We
do not currently intend to pay any cash dividends on our Common Shares for the foreseeable future. Therefore, investors who purchase
Common Shares in this offering are not likely to receive any dividends on our Common Shares for the foreseeable future. Since we do not
intend to pay dividends, investors’ ability to receive a return on their investment will depend on any future appreciation in the
market value of our Common Shares. There is no guarantee that our Common Shares will appreciate or even maintain the price at which investors
have purchased it.
Investors
may not be able to obtain enforcement of civil liabilities against us.
The
enforcement by investors of civil liabilities under the United States federal or state securities laws may be adversely affected by the
fact that we are governed by the OBCA, that several of our officers and directors are residents of Canada and that all, or a substantial
portion, of their assets and a substantial portion of our assets are located outside the United States. It may not be possible for an
investor to effect service of process within the United States on, or enforce judgments obtained in the United States courts against,
us or certain of our directors and officers based upon the civil liability provisions of United States federal securities laws or the
securities laws of any state of the United States.
In
addition, certain of our directors and officers reside outside of both Canada and the United States, and substantially all of the assets
of these persons are located outside of Canada and the United States. It may not be possible for shareholders to effect service of process
against our directors, officers and subsidiaries who are not resident or located in either Canada or the United States. In the event
a judgment is obtained in a Canadian or United States court against one or more of our directors or officers for violations of applicable
securities laws or otherwise, it may not be possible to enforce such judgment against those directors and officers not resident in Canada
or the United States.
In
light of the above, there is doubt as to whether (i) a judgment of a United States court based solely upon the civil liability provisions
of United States federal or state securities laws would be enforceable in Canada against us or our directors and officers and (ii) an
original action could be brought in Canada (or otherwise outside the United States) against us or our directors and officers to enforce
liabilities based solely upon United States federal or state securities laws.
We
may be classified as a passive foreign investment company for U.S. federal income tax purposes for the current year, which could result
in adverse U.S. federal income tax consequences to U.S. holders of Common Shares or Warrants.
We
would be classified as a passive foreign investment company, or PFIC, for any taxable year if, after the application of certain look-through
rules with respect to the income and assets of our corporate subsidiaries in which we own at least 25% (by value) of the stock, either:
(i) 75% or more of our gross income for such year is “passive income” (as defined in the relevant provisions of the Internal
Revenue Code of 1986, as amended (the “Code”)), or (ii) 50% or more of the value of our assets (generally determined on the
basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income.
Based on the market price of the Common Shares and the composition of our income and assets, including goodwill, we do not expect to
be treated as a PFIC for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. However, this is
a factual determination that must be made annually after the close of each taxable year and is dependent on many factors, including the
value of our passive assets, the amount and type of our gross income and market capitalization. Therefore, there can be no assurance
that we will not be classified as a PFIC for the current or future taxable years. Certain adverse U.S. federal income tax consequences
could apply to a U.S. Holder (as defined in “Certain U.S. Federal Income Tax Considerations”) if we are treated as a PFIC
for any taxable year during which such U.S. Holder holds Common Shares or Warrants.
If
a U.S. Holder is treated as owning at least 10% of our Common Shares, such holder may be subject to adverse U.S. federal income tax consequences.
If
a U.S. Holder is treated as owning, directly, indirectly or constructively, at least 10% of the value or voting power of our Common Shares,
such U.S. Holder may be treated as a “United States shareholder” with respect to each “controlled foreign corporation”
in our group, if any. Because our group includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated
as controlled foreign corporations, regardless of whether we are treated as a controlled foreign corporation. A United States shareholder
of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income its pro rata share of “Subpart
F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations,
regardless of whether the corporation makes any distributions. An individual that is a United States shareholder with respect to a controlled
foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States
shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to
significant monetary penalties and may prevent the statute of limitations from starting with respect to such shareholder’s U.S.
federal income tax return for the year for which reporting was due. We cannot provide any assurances that we will assist our investors
in determining whether any of our non-U.S. subsidiaries are treated as a controlled foreign corporation or whether a U.S. Holder is treated
as a United States shareholder with respect to any of such controlled foreign corporations. Further, we cannot provide any assurances
that we will furnish to any U.S. Holder information that may be necessary to comply with the reporting and tax paying obligations described
in this risk factor. U.S. Holders should consult their tax advisors regarding the potential application of these rules to their investment
in the Common Shares or Warrants.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement and the
accompanying prospectus contain, and our officers and representatives may from time to time make, “forward-looking information”
within the meaning of applicable securities laws in Canada and “forward-looking statements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995, as amended (collectively, “forward-looking statements”), which include
information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment
and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,”
“potential,” “continue,” “expects,” “anticipates,” “future,” “intends,”
“plans,” “believes,” “estimates,” “goal,” “seek,” “project,”
“strategy,” “likely,” and similar expressions, as well as statements in future tense, identify forward-looking
statements. Forward-looking statements are neither historical facts, nor should they be read as a guarantee of future performance or
results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based
on information we have when those statements are made or management’s good faith belief as of that time with respect to future
events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed
in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | associated
with the Company’s ability to attract and retain key personnel; |
| ● | associated
with the Company’s history of operating losses; |
| ● | associated
with the Company’s limited operating history in the data center market; |
| ● | associated
with the highly complex and uncertain nature of developing technologically advanced products
in the semiconductor and photonics sectors; |
| ● | associated
with the optical data communications industry, including rapid growth, volatility and dependence
on rapidly changing technologies; |
| ● | that
the Company’s objectives for the development of new products will not be met within
the timelines the Company expects or at all; |
| ● | that
the Company will not be able to compete in the highly competitive market; |
| ● | the
Company’s reliance on the success of its Optical Interposer, and its reliance on a
joint venture to assemble, test, package and sell its products; |
| ● | associated
with the Company’s products being completed, qualified and introduced according to
end-user requirements; |
| ● | associated
with the difficulties of forecasting customer demand and product mix accurately; |
| ● | associated
with engineering, product development and manufacturing; |
| ● | associated
with the Company’s reliance on a limited number of key suppliers and contract manufacturers; |
| ● | associated
with companies operating in the People’s Republic of China; |
| ● | associated
with economic and political uncertainties; |
| ● | associated
with governmental export and import controls; |
| ● | the
Company’s limited financial liquidity; |
| ● | associated
with the liquidity of the Common Shares and the Warrants; |
| ● | associated
with the Company’s need for additional financing, which may not be available on acceptable
terms or at all; |
| ● | that
the trading price of the Common Shares of the Company will be volatile; |
| ● | that
shareholders’ interests will be diluted through future stock offerings or options and
warrant exercises; |
| ● | that
sales of Common Shares, or the prospect of future sales, may depress our stock price; |
| ● | associated
with the Company’s internal control over financial reporting; |
| ● | associated
with successfully protecting patents and trademarks and other intellectual property rights; |
| ● | associated
with potential intellectual property disputes; |
| ● | associated
with disruptions or failures in information technology systems and network infrastructures; |
| ● | associated
with significant disruption in, or breach in security of, our information technology systems
or violations of data protection laws; |
| ● | associated
with 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; |
| ● | related
to periodic changes in a specific country’s or region’s economic conditions,
such as recession; |
| ● | associated
with natural disasters or other catastrophic events; |
| ● | associated
with regulatory matters, including the Company’s ability to obtain all required licenses
to conduct its business, trade related barriers, certification requirements, and Canadian
and foreign anticorruption laws, |
| ● | associated
with fluctuations in foreign currency exchange rates; |
| ● | associated
with the failure to comply with the U.S. Foreign Corrupt Practices Act; |
| ● | concerning
the actual allocation of proceeds from any financings undertaken by the Company. |
| ● | concerning
the Company’s ability to use its net operating losses and certain other tax attributes; |
| ● | associated
with the Company’s ability to maintain its status as a “foreign private issuer”;
that the rights of our shareholders may differ from the rights typically afforded to shareholders
of a U.S. corporation; and |
| ● | associated
the with Company’s potential characterization as a passive foreign investment company. |
The
foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein and
in the documents incorporated by reference herein or risk factors that we are faced with that may cause our actual results to differ
from those anticipated in our forward-looking statements. Factors that may affect our results include, but are not limited to, the risks
and uncertainties discussed in the “Risk Factors” section on page S-7 of this prospectus supplement, in our Annual Report
on Form 20-F or in other reports we file with the SEC.
Moreover,
new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the
impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from
those contained in any forward-looking statements. All forward-looking statements included in this prospectus supplement and in the documents
incorporated by reference in this prospectus supplement and the accompanying prospectus are based on information available to us on the
date of this prospectus or the date of the applicable document incorporated by reference. Except to the extent required by applicable
laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether written or oral, that may
be made from time to time, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained above and throughout this prospectus and in the documents incorporated by reference in this prospectus supplement. We qualify
all of our forward-looking statements by these cautionary statements.
You
should rely only on the information in this prospectus supplement. We have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information, you should not rely upon it.
REASONS
FOR THE OFFER AND USE OF PROCEEDS
We
estimate that our net proceeds from the sale of the Common Shares and accompanying Warrants in this offering will be approximately $9,800,002,
after deducting offering expenses payable by us.
We
currently intend to use the net proceeds from this offering, together with our existing cash and cash equivalents, for general working
capital purposes, including revenue expansion and the development and production of photonic modules for AI and related markets. We currently
have a negative operating cash flow, which may continue for the foreseeable future. During the fiscal year ended December 31, 2023 and
the three-month period ended March 31, 2024, we had negative cash flow from operating activities. We anticipate we will continue to have
negative cash flow from operating activities in future periods until sustained profitable commercial production is achieved on our main
products and projects. As a result, if necessary, certain of the net proceeds from this offering may be used to fund such negative cash
flow from operating activities in future periods.
While
we intend to spend the net proceeds of this offering as stated above, there may be circumstances where, for sound business reasons, a
re-allocation of funds may be necessary or advisable. Investors are cautioned, however, that expenditures may vary substantially from
these uses. Investors will be relying on the judgment of our management, who will have broad discretion regarding the application of
the proceeds of this offering. The amounts and timing of our actual expenditures may vary significantly depending upon numerous factors,
including the amount of cash generated by our operations and other operational factors, as well as any collaborations that we may enter
into with third parties and any unforeseen cash needs. We may find it necessary or advisable to use portions of the proceeds from this
offering for other purposes. The actual amount that we spend in connection with each of the intended uses of proceeds may vary significantly
from the amounts specified above, and will depend on a number of factors, including those listed under the heading “Risk Factors”
in this prospectus supplement, the prospectus and the documents incorporated by reference herein and therein.
Pending
other uses, we intend to invest the proceeds to us in investment-grade, interest-bearing securities such as money market funds, certificates
of deposit, or direct or guaranteed obligations of the U.S. government, or hold as cash. We cannot predict whether the proceeds invested
will yield a favorable, or any, return.
DILUTION
If
you invest in our securities, your interest will be diluted immediately to the extent of the difference between the offering price per
Common Share and the adjusted net tangible book value per Common Share after this offering.
The
net tangible book value of our Common Shares as of March 31, 2024, was approximately $4,822,939, or approximately $0.10 per Common Share.
Net tangible book value per share represents the amount of our total tangible assets, excluding goodwill and intangible assets, less
total liabilities, divided by the total number of Common Shares outstanding. Dilution per Common Share to new investors represents the
difference between the offering price per Common Share and accompanying Warrant in this offering and the net tangible book value per
Common Share immediately following the completion of this offering.
After
giving effect to the sale of the Common Shares and the accompanying Warrants by us in this offering at a combined offering price of $3.00
per Common Share and accompanying Warrant, assuming no exercise of the Warrants, attributing no value to the Warrants, assuming the Warrants
are treated as equity, and after deducting estimated offering expenses payable by us, our pro forma net tangible book value as of March
31, 2024 would have been approximately $14,622,941, or $0.28 per Common Share. This represents an immediate increase in pro forma net
tangible book value of $0.18 per Common Share to our existing stockholders and an immediate dilution of $2.72 per Common Share to investors
purchasing Common Shares and Warrants in this offering.
The
following table illustrates this dilution on a per share basis:
| Offering
price per Common Share and accompanying Warrant | |
| | | |
$ | 3.00 | |
| Net tangible book value
per share at March 31, 2024 | |
$ | 0.10 | | |
| | |
| Increase
to net tangible book value per Common Share attributable to investors purchasing our Common Shares and Warrants in this offering | |
$ | 0.18 | | |
| | |
| | |
| | | |
| | |
| Pro
forma net tangible book value per Common Share as of March 31, 2024, after giving effect to this offering | |
| | | |
$ | 0.28 | |
| | |
| | | |
| | |
| Dilution
of pro forma net tangible book value per Common Share to investors purchasing our Common Shares and Warrants in this offering | |
| | | |
$ | 2.72 | |
The
foregoing tables and calculations (other than the historical net tangible book value calculation) are based on 48,187,038 Common Shares
outstanding as of March 31, 2024, and excludes:
| |
● |
7,281,906
Common Shares issuable upon exercise of warrants issued in previous offerings outstanding as of March 31, 2024, with exercise prices
between CAD$1.52 and CAD$4.95; |
| |
● |
7,918,358
Common Shares issuable upon exercise of options outstanding as of March 31, 2024, with exercised
prices between CAD$1.75 and CAD$11.90; and
|
| |
● |
137,697
Common Shares reserved for future grants under our omnibus equity incentive plan as of March 31, 2024. |
To
the extent that any of these outstanding options or warrants are exercised or we issue additional shares under our equity incentive plans,
there may be further dilution to new investors. In addition, we may choose to raise additional capital due to market conditions or strategic
considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital
is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution
to our shareholders.
Capitalization
and Indebtedness
The
following table sets forth our capitalization and indebtedness as of June 30, 2024, the date of our most recent financial statements,
on an actual basis and on an as adjusted basis after giving effect to issuances of our Common Shares after June 30, 2024, including the
sale of the Common Shares and accompanying Warrant in this offering at a combined public offering price of $3.00 per Common Share and
accompanying Warrant (but excluding the common shares to be issued and the proceeds received, if any, from exercises of the Warrant),
after deducting estimated offering expenses. The amounts shown below are unaudited and represent management’s estimate. The information
in this table should be read in conjunction with and is qualified by reference to the consolidated financial statements and notes thereto
and other financial information incorporated by reference into this prospectus supplement and the accompanying prospectus.
| | |
As
of June 30, 2024 | |
| | |
Actual | | |
As
adjusted | |
| | |
(USD$) | | |
(USD$) | |
| Non-Current Indebtedness: | |
| | | |
| | |
| Lease
liability | |
$ | 207,028 | | |
$ | 207,028 | |
| Derivative warrant
liability | |
$ | 1,348,039 | | |
$ | 1,348,039 | |
| Current Indebtedness: | |
| | | |
| | |
| Accounts payable
and accrued liabilities | |
$ | 1,732,860 | | |
$ | 1,732,860 | |
| Lease liability | |
$ | 197,420 | | |
$ | 197,420 | |
| | |
| | | |
| | |
| Total
Indebtedness | |
$ | 3,485,347 | | |
$ | 3,485,347 | |
| | |
| | | |
| | |
| Shareholders’ equity: | |
| | | |
| | |
| Share capital | |
$ | 185,077,033 | | |
$ | 194,877,035 | |
| Warrants and compensation
options | |
$ | 11,294,095 | | |
$ | 11,294,095 | |
| Contributed surplus | |
$ | 55,464,577 | | |
$ | 55,464,577 | |
| Accumulated other
comprehensive loss | |
$ | (1,768,832 | ) | |
$ | (1,768,832 | ) |
| Deficit | |
$ | (225,247,600 | ) | |
$ | (225,247,600 | ) |
| Total
Equity | |
$ | 24,819,273 | | |
$ | 34,619,275 | |
| | |
| | | |
| | |
| Total
Capitalization | |
$ | 28,304,620 | | |
$ | 38,104,622 | |
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The
following discussion describes certain U.S. federal income tax consequences to U.S. Holders (as defined below) under current U.S. federal
income tax law of an investment in as well as ownership and disposition of the Common Shares (including Common Shares issuable upon the
exercise of Warrants) and the purchase, exercise, disposition and expiration of the Warrants acquired pursuant to this offering. The
effects of any applicable state or local laws, or other U.S. federal tax laws such as estate and gift tax laws, or the Medicare contribution
tax on net investment income or the alternative minimum tax, are not discussed. This summary applies only to U.S. Holders who acquire
and hold the Common Shares and Warrants as capital assets within the meaning of Section 1221 of the Code (generally, property held for
investment) and who have the U.S. Dollar as their functional currency. This discussion is based on the Code, U.S. Treasury regulations
promulgated thereunder, judicial decisions, published rulings and administrative pronouncements of the U.S. Internal Revenue Service
(the “IRS”), all as in effect as of the date of this prospectus supplement. All of the foregoing authorities are subject
to change, which change could apply retroactively and could adversely affect the tax consequences described below.
The
following discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances
or to holders subject to particular rules, including, without limitation:
| |
●
|
U.S.
expatriates and certain former citizens or long-term residents of the United States; |
| |
|
|
| |
●
|
persons
whose functional currency is not the U.S. Dollar; |
| |
|
|
| |
●
|
persons
holding the Common Shares or Warrants as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction
or other integrated investment; |
| |
|
|
| |
●
|
banks,
insurance companies and other financial institutions; |
| |
|
|
| |
●
|
real
estate investment trusts or regulated investment companies; |
| |
|
|
| |
●
|
brokers,
dealers or traders in securities, commodities or currencies; |
| |
|
|
| |
●
|
S
corporations or entities or arrangements treated as partnerships for U.S. federal income tax purposes; |
| |
|
|
| |
●
|
tax-exempt
organizations or governmental organizations; |
| |
|
|
| |
●
|
individual
retirement accounts or other tax deferred accounts; |
| |
|
|
| |
●
|
persons
who acquired the Common Shares or Warrants pursuant to the exercise of any employee share option or otherwise as compensation; |
| |
|
|
| |
●
|
persons
that own or are deemed to own 10% or more of our Common Shares by vote or value directly, indirectly or constructively; |
| |
|
|
| |
●
|
persons
subject to special tax accounting rules as a result of any item of gross income with respect to the Common Shares or Warrants being
taken into account in an applicable financial statement; |
| |
|
|
| |
●
|
persons
that hold Common Shares or Warrants through a permanent establishment or fixed base outside the United States; and |
| |
|
|
| |
●
|
persons
deemed to sell Common Shares or Warrants under the constructive sale provisions of the Code. |
U.S.
HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES
AS WELL AS THE U.S. STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE COMMON SHARES
AND WARRANTS.
For
purposes of this discussion, a “U.S. Holder” is a beneficial owner of Common Shares or Warrants that, for U.S. federal income
tax purposes, is or is treated as any of the following:
| |
●
|
an
individual who is a citizen or resident of the United States; |
| |
|
|
| |
●
|
a
corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of
the United States, any state 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 that (1) is subject to the supervision of a U.S. court and the control of one or more “United States persons” (within
the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a United States person for
U.S. federal income tax purposes. |
If
a holder of the Common Shares or Warrants is an entity taxable as a partnership for U.S. federal income tax purposes, such holder and
the partners in such holder should consult their tax advisors regarding the U.S. federal income tax consequences applicable to them.
Allocation
of Purchase Price
The
purchase of our Common Shares and Warrants in this offering by U.S. Holders should be treated for U.S. federal income tax purposes as
a “unit” consisting of one Common Share and its associated Warrant. Each U.S. Holder must allocate its purchase price of
such unit between each Common Share and its associated Warrant, as applicable, based on the respective relative fair market values of
each at the time of issuance. This allocation of the purchase price will establish the U.S. Holder’s initial tax basis for U.S.
federal income tax purposes for each Common Share and its accompanying Warrant. For these purposes, we intend to allocate approximately
$2.9999 of the issue price to each Common Share and approximately $0.0001 of the issue price to the accompanying Warrant
in respect of one Common Share.
Any
disposition of a unit should be treated for U.S. federal income tax purposes as a disposition of the Common Share and the accompanying
Warrant comprising the unit, and the amount realized on the disposition should be allocated between the Common Share and Warrant based
on their respective relative fair market values (as determined by the U.S. Holder based on all relevant facts and circumstances) at the
time of disposition. The separation of Common Shares and Warrants acquired by a U.S. Holder should not be a taxable event for U.S. federal
income tax purposes.
The
foregoing treatment of the Common Shares and Warrants and our purchase price allocation are not binding on the IRS or the courts, and
the IRS or the courts may disagree.
Taxation
of U.S. Holders of our Common Shares and Warrants
Taxation
of Dividends and Other Distributions on the Common Shares
The
discussion in this section “Taxation of Dividends and Other Distributions on the Common Shares” is subject to the discussion
regarding PFICs below.
The
gross amount of any distribution to a U.S. Holder with respect to the Common Shares, including any non-U.S. taxes withheld from the amount
paid, will be included in such U.S. Holder’s gross income as dividend income when actually or constructively received to the extent
that the distribution is paid out of our current or accumulated earnings and profits (as determined applying U.S. federal income tax
principles). To the extent the amount of the distribution exceeds our current and accumulated earnings and profits, it will be treated
first as a return of a U.S. Holder’s tax basis in the Common Shares, and to the extent the amount of the distribution exceeds the
tax basis, as capital gain. We do not intend to calculate our earnings and profits applying U.S. federal income tax principles. Therefore,
a U.S. Holder should expect that distributions will generally be reported as ordinary dividend income.
Dividends
paid on the Common Shares will not be eligible for the dividends-received deduction available to corporations in respect of dividends
received from U.S. corporations. Subject to certain holding period and other limitations, dividends paid on the Common Shares to certain
non-corporate U.S. Holders may be “qualified dividend income” taxable for regular U.S. federal income tax purposes at preferential
tax rates. Non-corporate U.S. Holders should consult their tax advisers regarding the availability of the reduced tax rate on dividends.
Dividends
paid on the Common Shares 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, which will generally be U.S. source ordinary income or loss. A loss might not be deductible
due to certain limitations.
Dividends
will generally constitute foreign source income for foreign tax credit limitation purposes. Any tax withheld from distributions on the
Common Shares may, subject to a number of complex limitations, be claimed as a foreign tax credit against a U.S. Holder’s U.S.
federal income tax liability or may be claimed as a deduction for U.S. federal income tax purposes. The rules with respect to the foreign
tax credit are complex and may depend upon a U.S. Holder’s particular circumstances. U.S. Holders should consult their tax advisor
regarding the availability of the foreign tax credit under their particular circumstances.
Taxation
of Disposition of the Common Shares
The
discussion in this section “Taxation of Disposition of the Common Shares” is subject to the discussion regarding PFICs below.
A
U.S. Holder will recognize gain or loss on any sale, exchange or other taxable disposition of the Common Shares equal to the difference
between the amount realized (in U.S. Dollars) on the disposition and such U.S. Holder’s tax basis (in U.S. Dollars) in the Common
Shares. Any such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if such U.S. Holder has held the
Common Shares for more than one year at the time of the disposition. Otherwise, such gain or loss will be short-term capital gain or
loss. Long-term capital gain recognized by certain non-corporate U.S. Holders, including individuals, generally will be taxable at reduced
rates. The deductibility of capital losses is subject to limitations. Any such gain or loss generally will be treated as U.S. source
income or loss for foreign tax credit limitation purposes. U.S. Holders should consult their tax advisors regarding the proper treatment
of gain or loss in their particular circumstances.
Exercise
of a Warrant
The
discussion in this section “Exercise of a Warrant” is subject to the discussion regarding PFICs below.
Except
as discussed below with respect to the cashless exercise of a Warrant, a U.S. Holder generally will not recognize taxable gain or loss
on the acquisition of Common Shares upon exercise of a Warrant for cash. The U.S. Holder’s tax basis in the Common Shares received
upon exercise of a Warrant generally will be an amount equal to the sum of the U.S. Holder’s tax basis in the Warrant plus the
exercise price. The U.S. Holder’s holding period for the Common Shares received upon exercise of the Warrants will begin on the
date following the date of exercise, and will not include the period during which the U.S. Holder held the Warrant.
The
U.S. federal income tax consequences of a cashless exercise of a Warrant are not clear. A cashless exercise may be tax-free, either because
the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes.
In either tax-free situation, a U.S. Holder’s tax basis in the Common Shares received would equal the holder’s tax basis
of the Warrants exercised therefor. If the cashless exercise were treated as not being a realization event, a U.S. Holder’s holding
period in the Common Shares would not include the period during which the U.S. Holder held the Warrants. If the cashless exercise were
treated as a recapitalization, the holding period of the Common Shares would include the holding period of the Warrants exercised therefor.
It
is possible that a cashless exercise could be treated in part as a taxable exchange in which gain or loss would be recognized. In such
event, a U.S. Holder could be deemed to have surrendered Warrants having a value equal to the exercise price of the total number of Warrants
to be exercised, and would recognize capital gain or loss in an amount equal to the difference between the fair market value of the Warrants
deemed surrendered and the U.S. Holder’s tax basis in the Warrants deemed surrendered. Alternatively, it is possible that a cashless
exercise could be treated as a fully taxable exchange of the Warrants for Common Shares, in which case the U.S. Holder would generally
recognize taxable gain to the extent the fair market value of the Common Shares exceeds the U.S. Holder’s basis in its Warrants
exchanged therefor. In either case, the holding period of the Common Shares received would not include the period during which the U.S.
Holder held the Warrants exchanged therefor.
Due
to the absence of clear authority on the U.S. federal income tax treatment of a cashless exercise, U.S. Holders should consult their
tax advisors regarding the tax consequences of a cashless exercise of a Warrant.
Constructive
Distributions
The
discussion in this section “Constructive Distributions” is subject to the discussion regarding PFICs below.
The
terms of the Warrants allow for changes in the exercise price of the Warrants under certain circumstances specified therein. A change
in exercise price of a Warrant that allows holders to receive more Common Shares on exercise may increase a U.S. Holder’s proportionate
interest in our earnings and profits or assets. In that case, such U.S. Holder may be treated as though it received a taxable distribution
in the form of our Common Shares. A taxable constructive stock distribution would generally result, for example, if the exercise price
is adjusted to compensate holders for distributions of cash or property to our common shareholders. However, a change in exercise price
to prevent the dilution of a U.S. Holder’s interest upon a stock split or other change in capital structure pursuant to a bona
fide reasonable adjustment formula is not treated as a constructive stock distribution for these purposes. Conversely, if an event occurs
that dilutes a U.S. Holder’s interest and the exercise price is not adjusted, the resulting increase in the proportionate interests
of our common shareholders could be treated as a taxable stock distribution to our common shareholders.
Any
taxable constructive stock distributions resulting from a change to, or a failure to change, the exercise price of the Warrants that
is treated as a distribution of Common Shares would be treated for U.S. federal income tax purposes in the same manner as distributions
on our Common Shares paid in cash or other property, resulting in a taxable dividend to the recipient to the extent of our current or
accumulated earnings and profits (with the recipient’s tax basis in its Common Shares or Warrants, as applicable, being increased
by the amount of such dividend), and with any excess treated as a return of capital or as capital gain. U.S. Holders should consult their
own tax advisors concerning these rules and their potential application to the Warrants.
Sale,
Exchange or Other Taxable Disposition or Lapse of a Warrant
The
discussion in this section “Sale, Exchange or Other Taxable Disposition or Lapse of a Warrant” is subject to the discussion
regarding PFICs below.
Upon
a sale, exchange or other taxable disposition of a Warrant, a U.S. Holder generally will recognize capital gain or loss in an amount
equal to the difference between the amount realized in U.S. Dollars on the disposition and such U.S. Holder’s tax basis in the
Warrant. The amount realized will include the amount of any cash and the fair market value of any other property received in exchange
for the Warrant. Gain or loss will be long-term capital gain or loss if the U.S. Holder has held the Warrant for more than one year.
Long-term capital gains of non-corporate U.S. Holders are generally taxed at preferential rates. Upon the expiration (lapse) of a Warrant,
a U.S. Holder will recognize a capital loss in an amount equal to such U.S. Holder’s tax basis in the Warrant. The deductibility
of capital losses is subject to certain limitations.
Passive
Foreign Investment Company
We
will be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year if, after applying certain
look-through rules with respect to subsidiaries in which we own at least 25% (by vote or value) of the stock, either:
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least 75% of our gross income for such taxable year is passive income, or |
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at
least 50% of the total value of our assets (generally based on an average of the quarterly values of the assets during such year)
is attributable to assets, including cash, that produce passive income or are held for the production of passive income. |
We
believe that we were not a PFIC for the year ended December 31, 2023. Based on the market price of our Common Shares and the composition
of our income and assets, including goodwill, we also do not expect to be treated as a PFIC for U.S. federal income tax purposes for
the current taxable year or in the foreseeable future. However, this is a factual determination that must be made annually after the
close 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 the market price of the Common Shares, which could fluctuate significantly. Therefore, there can be no assurance
that we will not be a PFIC for the current or future taxable years.
If
we are a PFIC for any taxable year during a U.S. Holder’s holding period for the Common Shares or Warrants, we generally will continue
to be treated as a PFIC with respect to such holder’s investment in the Common Shares or Warrants for all succeeding years during
which such holder holds the Common Shares or Warrants. In that event, a U.S. Holder would (unless it made one of the elections discussed
below on a timely basis) be taxable on gain recognized on a disposition of the Common Shares or Warrants 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) as if such income had been recognized ratably over the U.S. Holder’s holding period. Tax would be computed
at the highest ordinary income tax rate in effect for each taxable year to which income is allocated, and an interest charge on the tax
as so computed would also apply.
A
U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect
out of the tax treatment discussed above. If a U.S. Holder makes a valid mark-to-market election for the Common Shares, such holder will
include in income for each year that we are treated as a PFIC, an amount equal to the excess, if any, of the fair market value of the
Common Shares as of the close of such holder’s taxable year over the holder’s adjusted basis in the Common Shares. Amounts
included in a U.S. Holder’s income under a mark-to-market election, as well as gain on the actual sale or other disposition of
the Common Shares, will be treated as ordinary income. Ordinary loss treatment will apply to the deductible portion of any mark-to-market
loss on the Common Shares, as well as to any loss realized on the actual sale or disposition of the Common Shares, to the extent the
amount of such loss does not exceed the net mark-to-market gains for the Common Shares previously included in income. A U.S. Holder’s
tax basis in the Common Shares will be adjusted to reflect any such income or loss amounts.
The
mark-to-market election is available only for “marketable stock,” which is stock that is regularly traded on a qualified
exchange or other market, as defined in applicable U.S. Treasury regulations. The Common Shares are listed on Nasdaq, which is a qualified
exchange. Because a mark-to-market election cannot be made for equity interests in any lower-tier PFICs we own, a U.S. Holder generally
will continue to be subject to the PFIC rules with respect to such holder’s indirect interest in any investments held by us that
are treated as an equity interest in a PFIC for U.S. federal income tax purposes. The mark-to-market election will not be available for
the Warrants.
A
mark-to-market election made by a U.S. Holder will apply to Common Shares acquired upon the exercise of a Warrant by such U.S. Holder.
As a result, if a mark-to-market election has been made by a U.S. Holder, Common Shares acquired upon exercise of a Warrant will automatically
be marked-to-market in the year a Warrant is exercised. Under the PFIC rules, a U.S. Holder’s holding period for such Common Shares
includes the period during which such U.S. Holder held the applicable Warrant. As a result, a U.S. Holder will be treated as making a
mark-to-market election with respect to such Common Shares after the beginning of such U.S. Holder’s holding period for such Common
Shares unless the Common Shares are acquired in the same tax year as the year in which the U.S. Holder acquired the Warrant. Consequently,
the mark-to-market gain realized in the tax year in which Common Shares are acquired upon the exercise of a Warrant will be allocated
ratably over the U.S. Holder’s holding period for the applicable Warrant and will be subject to the highest tax rate in effect
for each such year, and an interest charge will be imposed on the resulting tax liability for each such year as described above. The
general mark-to-market rules will apply to such Common Shares in subsequent tax years.
Investors
should consult their tax advisor as to the availability and desirability of a mark-to-market election, as well as the impact of such
election on interests in any lower-tier PFICs.
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 of its holding period
in which we are a PFIC. In the event that we determine that we will be classified as a PFIC, we will also determine at such time whether
we will 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 tax basis in its Common Shares will increase by any amount included in income and decrease by any distributions
of amounts previously taxed under QEF rules.
Notwithstanding
any election made with respect to the Common Shares, if we are a PFIC in either the taxable year of the distribution or the preceding
taxable year, dividends received with respect to the Common Shares will not qualify as “qualified dividends” eligible for
taxation at reduced federal income tax rates.
A
U.S. Holder of a PFIC generally is required to file an IRS Form 8621. U.S. Holders are urged to consult their tax advisor regarding the
potential application of the PFIC rules to an investment in the Common Shares and Warrants.
Information
Reporting and Backup Withholding
Dividend
payments (including constructive dividends) with respect to the Common Shares and proceeds from the sale, exchange or other disposition
of the Common Shares and Warrants may be subject to information reporting to the IRS and U.S. backup withholding. Certain U.S. Holders
are exempt from backup withholding, including corporations and certain tax-exempt organizations. A U.S. Holder will be subject to backup
withholding if such U.S. Holder is not otherwise exempt and such U.S. Holder:
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to furnish the U.S. Holder’s taxpayer identification number, which for an individual is ordinarily his or her social security
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an incorrect taxpayer identification number; |
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notified by the IRS that the U.S. Holder previously failed to properly report payments of interest or dividends; or |
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to certify under penalties of perjury that the U.S. Holder has furnished a correct taxpayer identification number and that the IRS
has not notified the U.S. Holder that backup withholding applies. |
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit
against the U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
U.S. Holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures
for obtaining such an exemption.
Additional
Reporting Requirements
Certain
U.S. Holders who are individuals (and certain entities) that hold an interest in “specified foreign financial assets” (which
may include the Common Shares and Warrants) are required to report information relating to such assets, subject to certain exceptions
(including an exception for Common Shares or Warrants held in accounts maintained by certain financial institutions). Penalties can apply
if U.S. Holders fail to satisfy such reporting requirement. U.S. Holders should consult their tax advisors regarding the applicability
of these requirements to their acquisition and ownership of Common Shares and Warrants.
THE
ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO
THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE COMMON SHARES AND WARRANTS. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS
TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR CIRCUMSTANCES.
Certain
Canadian Federal Income Tax Considerations
The
following is as of the date of this prospectus supplement, a summary of the principal Canadian federal income tax considerations under
the Income Tax Act (Canada) (the “Tax Act”) and the regulations thereunder (the “Regulations”) generally applicable
to an investor who acquires beneficial ownership of our Common Shares and Warrants in this offering and Common Share on the exercise
of Warrants and who, for the purposes of the Tax Act and at all relevant times, (i) deals at arm’s length with us, (ii) is not
affiliated with us, (iii) acquires our Common Shares and Warrants in this offering and holds such Common Shares, Warrants and Common
Shares acquired on the exercise of Warrants as capital property, (iv) has not been and will not be (and has not been and will not be
deemed to be) resident in Canada at any time, and (v) does not use or hold, and is not deemed to use or hold, our Common Shares or Warrants
acquired pursuant to this offering in carrying on a business in Canada (a “Non-Resident Holder”). Generally, our Common Shares
and Warrants acquired pursuant to this offering (and Common Shares acquired on the exercise of Warrants) will be considered to be capital
property to a Non-Resident Holder provided that the Non-Resident Holder does not use or hold such securities in the course of carrying
on a business of trading or dealing in securities and such Non-Resident Holder has not acquired them or been deemed to have acquired
them in one or more transactions considered to be an adventure or concern in the nature of trade.
This
summary is based on the current provisions of the Tax Act and the Regulations in force as of the date hereof and our understanding of
the administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”) published in writing by the
CRA prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act and the Regulations publicly
announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”) and assumes
that the Tax Proposals will be enacted in the form proposed, although no assurance can be given that the Tax Proposals will be enacted
in their current form, or at all. Other than the Tax Proposals, this summary does not otherwise take into account or anticipate any changes
in law, whether by legislative, governmental, administrative or judicial decision or action, nor does it take into account or consider
other federal or any provincial, territorial or foreign income tax considerations, which considerations may differ significantly from
the Canadian federal income tax considerations discussed in this summary. This summary also does not take into account or anticipate
any change in the administrative policies or assessing practices of the CRA.
Special
considerations, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries on (or is
deemed to carry on) an insurance business in Canada and elsewhere or an “authorized foreign bank” (as defined in the Tax
Act). Such Non-Resident Holders should consult their own tax advisors.
This
summary is of a general nature only, is not exhaustive of all possible Canadian federal income tax considerations and is not intended
to be, nor should it be construed to be, legal or tax advice to any particular Non-Resident Holder. Accordingly, Non-Resident Holders
should consult their own tax advisors for advice with respect to the tax consequences to them of acquiring Common Shares and Warrants
pursuant to this offering having regard to their own particular circumstances.
Currency
Subject
to certain exceptions that are not discussed herein, for purposes of the Tax Act, all amounts relating to the acquisition, holding or
disposition of our Common Shares and Warrants issued in this offering must be expressed in Canadian dollars. Amounts denominated in any
other currency must generally be converted into Canadian dollars using the rate of exchange quoted by the Bank of Canada on the day the
amount first arose, or such other rate of exchange as is acceptable to the CRA.
Allocation
of Subscription Price
A
Non-Resident Holder will be required to allocate the subscription price between our Common Shares and Warrants issued in this offering
on a reasonable basis in order to determine their respective costs for purposes of the Tax Act. The Company intends to allocate as consideration
for their issue $2.9999 to each Common Share and $0.0001 to the accompanying Warrant. The Company believes that such allocation
is reasonable but such allocation will not be binding on the CRA or a Non-Resident Holder. Counsel expresses no opinion with respect
to such allocation. The cost to a Non-Resident Holder of a Common Share must be averaged with the adjusted cost base to the Non-Resident
Holder of all Common Shares, if any, held by such holder as capital property immediately prior to the acquisition of Common Shares issued
in this offering.
Exercise
of Warrants
No
gain or loss will be realized by a Non-Resident Holder upon the exercise of a Warrant to acquire a Common Share. When a Warrant is exercised,
the Non-Resident Holder’s cost of the Common Share acquired thereby will be equal to the aggregate of the Non-Resident Holder’s
adjusted cost base of such Warrant and the exercise price paid for the Common Share. The Non-Resident Holder’s adjusted cost base
of the Common Share so acquired will be determined by averaging the cost of the Common Share with the adjusted cost base to such holder
of all Common Shares, if any, held by the holder as capital property immediately prior to the acquisition of the Common Share.
Expiry
of Warrants
The
expiry of an unexercised Warrant will generally result in a capital loss to the Non-Resident Holder equal to the adjusted cost base of
the Warrant to the subscriber immediately before its expiry. The taxation of capital gains and capital losses is described below under
the subheading “Disposition of Our Warrants Sold in this Offering”.
Taxation
of Dividends
Dividends
paid or credited (or deemed to be paid or credited under the Tax Act) to a Non-Resident Holder by us on our Common Shares issued in this
offering are subject to Canadian withholding tax at the rate of 25% on the gross amount of the dividend unless such rate is reduced by
the terms of an applicable tax treaty or convention. Under the Canada-United States Tax Convention (1980), as amended (the “Treaty”),
the rate of withholding tax on dividends paid or credited to a Non-Resident Holder who is resident in the United States for purposes
of the Treaty, who is the beneficial owner of the dividends and who is fully entitled to the benefits of the Treaty (a “U.S. Treaty
Holder”) is generally limited to 15% of the gross amount of the dividend (or 5% in the case of a U.S. Treaty Holder that is a corporation
that beneficially owns at least 10% of our voting shares). Non-Resident Holders should consult their tax advisors to determine their
entitlement to relief under an applicable income tax treaty.
Disposition
of Our Common Shares Sold in this Offering
A
Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain (and will not be entitled to claim a
capital loss) realized by such Non-Resident Holder on a disposition (or deemed disposition) of our Common Shares sold in this offering
unless such shares constitute “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time
of the disposition and such Non-Resident Holder is not entitled to an exemption from tax pursuant to the terms of an applicable income
tax treaty or convention at the time of the disposition.
Generally,
provided our Common Shares sold in this offering are listed on a “designated stock exchange” as defined in the Tax Act (which
currently includes the TSXV and Nasdaq) at the time of disposition, such shares will not constitute taxable Canadian property of a Non-Resident
Holder, unless at any time during the 60-month period immediately preceding the disposition the following two conditions are met concurrently
(the “TCP Conditions”): (a) 25% or more of the issued shares of any class or series of shares of our capital stock were owned
by or belonged to one or any combination of (i) the Non-Resident Holder, (ii) persons with whom the Non-Resident Holder did not deal
at arm’s length (for the purposes of the Tax Act), and (iii) partnerships in which the Non-Resident Holder or a person described
in (ii) holds a membership interest directly or indirectly through one or more partnerships, and (b) more than 50% of the fair market
value of such shares was derived, directly or indirectly, from one or any combination of real or immovable property situated in Canada,
“Canadian resource property” (as defined in the Tax Act), “timber resource property” (as defined in the Tax Act),
and options in respect of or interests in, or for civil law rights in, any such property (whether or not such property exists). The Tax
Act may also deem our Common Shares sold in this offering to be taxable Canadian property in certain circumstances.
Even
if our Common Shares sold in this offering are taxable Canadian property of a Non-Resident Holder, such Non-Resident Holder may be exempt
from tax under the Tax Act on the disposition of such Common Shares by virtue of an applicable income tax treaty or convention.
Non-Resident
Holders who acquire our Common Shares in this offering that are or may be taxable Canadian property should consult their own tax advisors.
Disposition
of Our Warrants Sold in this Offering
A
Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain (and will not be entitled to claim a
capital loss) realized by such Non-Resident Holder on a disposition (or deemed disposition) of our Warrants sold in this offering unless
such Warrants constitute “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of
the disposition and such Non-Resident Holder is not entitled to an exemption from tax pursuant to the terms of an applicable income tax
treaty or convention at the time of the disposition.
Generally,
provided our Common Shares sold in this offering are listed on a “designated stock exchange” as defined in the Tax Act (which
currently includes the TSXV and Nasdaq) at the time of disposition, a Warrant sold in this offering will not constitute taxable Canadian
property of a Non-Resident Holder, unless at any time during the 60-month period immediately preceding the disposition the TCP Conditions
(described above under “Disposition of Our Common Shares Sold in this Offering”) are met. The Tax Act may also deem our Warrants
sold in this offering to be taxable Canadian property in certain circumstances.
Even
if our Warrants sold in this offering are taxable Canadian property of a Non-Resident Holder, such Non-Resident Holder may be exempt
from tax under the Tax Act on the disposition of such Warrants by virtue of an applicable income tax treaty or convention.
Non-Resident
Holders who acquire our Warrants in this offering that are or may be taxable Canadian property should consult their own tax advisors.
Capital
Gains and Capital Losses
If
a Common Share or Warrant is “taxable Canadian property” to a Non-Resident Holder and such Non-Resident Holder is not exempt
from tax under the Tax Act in respect of the disposition of such Common Share or Warrant pursuant to an applicable income tax treaty
or convention, the Non-Resident Holder will generally realize a capital gain (or a capital loss) equal to the amount, if any, by which
the proceeds of disposition of such Common Share or Warrant, as applicable, net of any reasonable costs of disposition, are greater (or
are less) than the adjusted cost base of such Common Share or Warrant to the Non-Resident Holder immediately before the disposition (or
deemed disposition). The adjusted cost base to a Non-Resident Holder of a Common Share will be determined by averaging the cost of the
Common Share acquired pursuant to this offering with the adjusted cost base (determined immediately before such acquisition of the Common
Share) of all other common shares of the Company held as capital property at that time by the Non-Resident Holder.
The
amount of any capital loss realized on the disposition or deemed disposition of a Common Share by a Non-Resident Holder that is a corporation
may be reduced by the amount of dividends received or deemed to have been received by it on such Common Shares, to the extent and in
the circumstances specified by the Tax Act. Similar rules may apply where a Common Share is owned by a partnership or trust of which
a corporation, trust or partnership is a member or beneficiary.
For
capital gains and capital losses realized on or after June 25, 2024, under Tax Proposals announced in the Federal Budget on April 16,
2024 and introduced in Parliament on June 10, 2024 in a Notice of Ways and Means Motion (the “2024 Capital Gains Proposals”),
and subject to certain transitional rules discussed below, generally, a Non-Resident Holder is required to include in computing its income
two-thirds of the amount of any such capital gain (a “taxable capital gain”) realized in the year, and is required to deduct
two-thirds of the amount of any such capital loss (an “allowable capital loss”) realized in a taxation year from taxable
capital gains realized in the year by such Non-Resident Holder. However, under the 2024 Capital Gains Proposals, a Non-Resident
Holder that is an individual (excluding most types of trusts) is required to include in income only one-half of net capital
gains realized (including net capital gains realized indirectly through a trust or partnership) in a taxation year (and on or after
June 25, 2024) up to a maximum of $250,000, with the two-thirds inclusion rate applying to the portion of net capital gains realized
in the year (and on or after June 25, 2024) that exceed $250,000. Allowable capital losses in excess of taxable capital gains
realized in a taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted
in any following taxation year against taxable capital gains realized in such year to the extent and under the circumstances described
in the Tax Act (as proposed to be amended by the 2024 Capital Gains Proposals).
Subject
to transitional rules in the 2024 Capital Gains Proposals, for a capital gain or capital loss realized prior to June 25, 2024, only one-half
of such capital gain would be included in income as a taxable capital gain and one-half of such capital loss would constitute an allowable
capital loss. Under the 2024 Capital Gains Proposals, different inclusion rates (or a blended inclusion rate) may apply for taxation
years that begin before and end on or after June 25, 2024 (the “Transitional Year”). As a result, for its Transitional Year,
a Non-Resident Holder will be required to separately identify capital gains and capital losses realized before June 25, 2024 (“Period
1”) and those realized on or after June 25, 2024 (“Period 2”). Capital gains and capital losses from the same period
will first be netted against each other. A net capital gain (or net capital loss) will arise if capital gains (or capital losses) from
one period exceed capital losses (or capital gains) from that same period. A Non-Resident Holder would effectively be subject to the
higher inclusion rate of two-thirds in respect of its net capital gains (or net capital losses) arising in Period 2, to the extent that
these net capital gains (or net capital losses) exceed any net capital losses (or net capital gains) incurred in Period 1. Conversely,
a Non-Resident Holder would effectively be subject to the lower inclusion rate of one-half in respect of its net capital gains (or net
capital losses) arising in Period 1, to the extent that these net capital gains (or net capital losses) exceed any net capital losses
(or net capital gains) incurred in Period 2.
The
annual $250,000 threshold for a Non-Resident Holder that is an individual (excluding most types of trusts) will be fully available
in 2024 without proration and will apply only in respect of net capital gains realized in Period 2 less any net capital loss from Period
1. Certain other limitations to the $250,000 threshold may apply.
Under
the 2024 Capital Gains Proposals, two-thirds of capital losses realized prior to June 25, 2024 will be deductible against capital gains
realized on or after June 25, 2024 included in income at the two-thirds inclusion rate.
The
foregoing summary only generally describes the considerations applicable under the 2024 Capital Gains Proposals, and is not an exhaustive
summary of the considerations that could arise in respect of the 2024 Capital Gains Proposals. Furthermore, the announcements accompanying
the 2024 Capital Gains Proposals indicated that additional draft legislation to implement the change to the capital gains inclusion rate
will be released at the end of July 2024. Non-Resident Holders should consult their own tax advisors with regard to the 2024 Capital
Gains Proposals.
DESCRIPTION
OF SECURITIES OFFERED
We
are offering 3,333,334 Common Shares and Warrants to purchase up to 3,333,334 Common Shares. We are also registering the Common Shares
issuable from time to time upon exercise of the Warrants offered hereby.
Common
Shares
See
“Description of Common Shares” on page 32 of the accompanying prospectus for a description of the material terms of our Common
Shares.
Warrants
The
following summary of certain terms and provisions of the Warrants that are being offered hereby is not complete and is subject to, and
qualified in its entirety by, the provisions of the Warrants, the form of which will be filed as an exhibit to a Form 6-K in connection
with this offering and incorporated by reference into the registration statement of which this prospectus supplement forms a part. Prospective
investors should carefully review the terms and provisions of the form of Warrant for a complete description of the terms and conditions
of the Warrants.
Duration
and Exercise Price. The Warrants offered hereby will have an exercise price of $4.00 per Common Share. Subject to the Blocker Provision,
the Warrants will be immediately exercisable and will expire five years following the date of issuance. The exercise price and number
of Common Shares issuable upon exercise of the Warrants are subject to appropriate adjustment in the event of stock splits, stock dividends,
stock combinations or similar events affecting our Common Shares.
Exercisability.
Subject to the Blocker Provision provided in the Warrants and that are summarized below, the Warrants will be immediately exercisable,
at the option of each holder, in whole or in part, by delivering a duly executed exercise notice accompanied by payment in full for the
number of Common Shares purchased upon such exercise (except in the case of a cashless exercise as discussed below).
Exercise
Limitations. We may not effect the exercise of any Warrant, and a holder will not be entitled to exercise any portion of any Warrant
that, upon giving effect to such exercise, would cause the aggregate number of our Common Shares beneficially owned by such holder (together
with its affiliates and any other Persons acting as a group together with the holder or any of the holder’s affiliates) to exceed
9.99% of the number of Common Shares outstanding immediately after giving effect to the exercise (the “Blocker Provision”).
Cashless
Exercise. If, at the time a holder exercises its Warrants, as the case may be, a registration statement registering the issuance
of the Common Shares underlying such Warrants under the Securities Act is not then effective or available, or the prospectus contained
therein is not available for, the issuance of such shares to, or the resale of such shares by, the holder of such Warrants, then in lieu
of making the cash payment to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive
upon such exercise (either in whole or in part) the net number of Common Shares determined according to a formula set forth in the Warrant.
Transferability.
Subject to applicable laws, a Warrant may be transferred at the option of the holder upon surrender of the Warrant to us together with
the appropriate instruments of transfer and payment of funds sufficient to pay any transfer taxes (if applicable).
Fractional
Shares. No fractional Common Shares will be issued upon the exercise of the Warrants. In lieu of fractional shares, we will either
pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.
Trading
Market. There is no established trading market for the Warrants, and we do not expect a market to develop. We do not intend to apply
to list the Warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the
liquidity of the Warrants will be limited.
Rights
as a Shareholder. Except as otherwise provided in the Warrants or by virtue of holders’ ownership of our Common Shares, holders
of the Warrants do not have the rights or privileges of the holders of our Common Shares, including any voting rights, unless and until
such Warrant holders exercise their Warrants. Holders of Warrants will be entitled to purchase rights offered by the Company in subsequent
rights offerings (subject to the beneficial ownership limitation set forth in the Warrants) and pro rata distributions, in each case
that such holder could have acquired if the holders had held the number of Common Shares acquirable upon complete exercise of their Warrants.
The exercise price of the Warrants will be proportionately adjusted to reflect the payment of dividends or distributions on the Common
Shares and subdivisions, combinations or reclassifications of the Common Shares.
Fundamental
Transaction. In the event of a fundamental transaction, as described in the Warrants and generally including, but not limited to,
any reorganization, recapitalization or reclassification of our Common Shares, the sale, transfer or other disposition of all or substantially
all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding
Common Shares, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Common
Shares, the holders of the Warrants will be entitled to receive, subject to the prior approval of the TSXV (and/or other trading market
on which the Common Shares are listed, as applicable) and upon exercise of the Warrants, the kind and amount of securities, cash or other
property that such holders would have received had they exercised the Warrants immediately prior to such fundamental transaction, without
regard to any limitations on exercise contained in the Warrants.
Waivers
and Amendments. No term of any of the Warrants may be amended or waived without our written consent and the written consent of the
holder of such Warrants.
PLAN
OF DISTRIBUTION
In
connection with the offering, we entered into a securities purchase agreement directly with a single purchaser. This agreement includes
representations and warranties by us and the purchaser.
We
will deliver the Common Shares and Warrants being issued to the purchaser upon receipt of funds for the purchase of the Common Shares
and Warrants offered pursuant to this prospectus supplement. We expect to deliver the Common Shares and Warrants being offered pursuant
to this prospectus supplement on or about July 19, 2024.
No
placement agent is involved in this offering.
Listing
and Transfer Agent
Our
Common Shares are listed and posted for trading on the TSXV under the symbol “PTK” and on Nasdaq under the symbol “POET”.
The transfer agent of the Company’s Common Shares is Computershare Inc., a Delaware corporation, and its affiliate, Computershare
Trust Company, N.A., a federally chartered trust company.
LEGAL
MATTERS
Certain
legal matters relating to this offering will be passed upon on behalf of the Company by Katten Muchin Rosenman LLP with respect to the
legality of securities in the United States and Bennett Jones LLP with respect to legality of securities in Canada.
EXPERTS
The
financial statements incorporated in this prospectus supplement by reference to the Annual Report on Form 20-F for the year ended December
31, 2023 have been so incorporated in reliance on the report of Marcum LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
Copies
of the documents incorporated herein by reference may be obtained on request, without charge, from the Corporate Secretary of POET at
Suite 1107, 120 Eglinton Avenue East, Toronto, Ontario, M4P 1E2, telephone: (416) 368-9411. Those documents are also available electronically
through the SEC’s EDGAR website at www.sec.gov/EDGAR. Our filings on the Canadian System for Electronic Document Analysis and Retrieval
and EDGAR, including the documents filed as exhibits thereto, are not incorporated by reference in this prospectus supplement and the
accompanying prospectus except as specifically set out herein and therein.
In
addition to being subject to certain of the information requirements of the Exchange Act and, in accordance therewith, filing reports
and other information with the SEC on EDGAR, we have continuous disclosure obligations under the securities laws of the provinces and
territories of Canada. Under the multijurisdictional disclosure system adopted by the U.S. and Canada, which we elect to take advantage
of in certain cases, our reports and other information filed with the SEC may be prepared in accordance with the disclosure requirements
of Canada, which requirements are different from those of the U.S. In addition, as a foreign private issuer, we are exempt from certain
rules under the Exchange Act prescribing 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 to publish financial statements as promptly as U.S. companies in certain instances or follow certain other rules and
regulations applicable to U.S. public companies.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information we have filed with the SEC into this prospectus supplement and the
accompanying prospectus. This means that we can disclose important information to you by referring to another document filed separately
with the SEC. The information incorporated by reference is an important part of this prospectus supplement and the accompanying prospectus,
and the information we file subsequently with the SEC will automatically update and supersede the information in this prospectus supplement
and the accompanying prospectus. The information that we incorporate by reference in this prospectus supplement and the accompanying
prospectus is deemed to be a part of this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying
prospectus incorporate by reference the documents listed below that we have previously filed with the SEC:
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●
|
Our
Annual Report on Form
20-F for the year ended December 31, 2023, filed with the SEC on March 28, 2024; |
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|
|
| |
●
|
Our
report on Form
6-K filed on May 16, 2024, with respect to our condensed unaudited consolidated interim financial statements for the three months
ended March 31, 2024, and related Management’s Discussion and Analysis. |
| |
|
|
| |
●
|
The
description of our Common Shares contained in Exhibit
2.0 to our annual report on Form 20-F for the year ended December 31, 2019, as filed with the SEC on April 30, 2020, and any
amendments and reports updating such description. |
In
addition, this prospectus supplement and the accompanying prospectus shall also be deemed to incorporate by reference all subsequent
annual reports filed on Form 20-F, Form 40-F or Form 10-K, and all subsequent filings on Forms 10-Q or 8-K (if any) filed by us pursuant
to the Exchange Act prior to the termination of the offering made by this prospectus supplement and the accompanying prospectus. We may
also incorporate by reference into this prospectus supplement and the accompanying prospectus any Form 6-K that is submitted to the SEC
after the date of the filing of the registration statement of which this prospectus supplement and the accompanying prospectus form a
part and before the date of termination of any offering hereunder. Any such Form 6-K that we intend to so incorporate shall state in
such form that it is being incorporated by reference into this prospectus supplement and the accompanying prospectus. The documents incorporated
or deemed to be incorporated herein by reference contain meaningful and material information relating to us, and you should review all
information contained in this prospectus supplement and the accompanying prospectus and the documents incorporated or deemed to be incorporated
herein and therein by reference.
Any
statement contained in this prospectus supplement and the accompanying prospectus, or in a document (or part thereof) incorporated or
deemed to be incorporated by reference in this prospectus supplement and the accompanying prospectus, will be deemed to be modified or
superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or in any
other subsequently filed document (or part thereof) that also is or is deemed to be incorporated by reference in this prospectus supplement
or in the accompanying prospectus, modifies or supersedes such statement. The modifying or superseding statement need not state that
it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes.
The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact
that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.
Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus
supplement or the accompanying prospectus.
Upon
written or oral request made to us at the address or telephone number below, we will, at no cost to the requester, provide to each person,
including any beneficial owner, to whom this prospectus supplement is delivered, a copy of any or all of the information that has been
incorporated by reference in this prospectus supplement (other than an exhibit to a filing, unless that exhibit is specifically incorporated
by reference into that filing), but not delivered with this prospectus supplement. You may also access this information on our website
at http://poet-technologies.com by viewing the “Regulatory Filings” subsection of the “Investors Relations” menu.
No additional information on our website is deemed to be part of or incorporated by reference into this prospectus supplement. We have
included our website address in this prospectus supplement solely as an inactive textual reference.
POET
Technologies Inc.
Attention:
Corporate Secretary
Suite
1107, 120 Eglinton Avenue East Toronto
Ontario,
M4P 1E2Canada
(416)
368-9411
PROSPECTUS
POET
TECHNOLOGIES INC.
$150,000,000
Common
Shares
Debt
Securities
Subscription
Receipts
Warrants
Units
POET
Technologies Inc. may offer and sell, from time to time, in one or more offerings, the securities described in this prospectus. We may
also offer securities of the types listed above that are convertible or exchangeable into one or more of the securities so listed. The
total aggregate offering price for these securities will not exceed $150,000,000 (or the equivalent thereof in other currencies).
These
securities may be offered or sold to or through one or more underwriters, dealers or agents, or directly to purchasers, on a continued
or delayed basis. We will provide the names of any such agents and underwriters used in connection with the sale of any of these securities,
as well as any fees, commissions or discounts we may pay to such agents and/or underwriters in connection with the sale of these securities,
in the applicable prospectus supplement.
This
prospectus describes the general terms of these securities and the general manner in which we will offer them. Each time we offer and
sell securities, we will provide the specific terms of those securities, and the manner in which they are being offered, in a supplements
to this prospectus. The supplement may also add, update or change information contained in this prospectus with respect to that offering.
You should read this prospectus, any post-effective amendment and the applicable prospectus supplement, as well as any documents we have
incorporated into this prospectus by reference, carefully before you invest in any of our securities. Where required by statute, regulation
or policy, and where securities are offered in currencies other than U.S. dollars, appropriate disclosure of foreign exchange rates applicable
to the securities will be included in the prospectus supplement describing the securities. This prospectus does not qualify in any of
the provinces or territories of Canada the distribution of the securities to which it relates.
The
head and registered office of POET Technologies Inc. is located at Suite 1107, 120 Eglinton Avenue East, Toronto, Ontario, M4P 1E2, and
our telephone number is (416) 368-9411.
The
outstanding common shares in the capital of POET Technologies Inc. are listed and posted for trading on the TSX Venture Exchange (the
“TSXV”) under the symbol “PTK” and on The Nasdaq Capital Market (“Nasdaq”) under the symbol “POET.”
On August 8, 2023, the closing price of our common shares on the TSXV and Nasdaq was CAD$5.51 and US$4.15 per common share, respectively.
There is currently no market through which the securities, other than the common shares, may be sold and purchasers may not be able to
resell the securities purchased under this prospectus. This may affect the pricing of the securities in the secondary market, the transparency
and availability of trading prices, the liquidity of the securities and the extent of issuer regulation. The applicable prospectus supplement
will contain information, where applicable, as to any other listing, if any, of the securities covered by the prospectus supplement on
Nasdaq or any other securities market or other securities exchange.
Investing
in our securities involves a high degree of risk. Before buying our securities, you should consider carefully the risks described under
the caption “Risk Factors” beginning on page 7 of this prospectus and in the documents incorporated by reference in this
prospectus and refer to the risk factors that may be included in a prospectus supplement and in our reports and other information that
we file with the U.S. Securities and Exchange Commission.
Neither
the U.S. Securities and Exchange Commission nor any state or Canadian securities commission or regulator has approved or disapproved
of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This
prospectus is dated August 9, 2023.
Table
of Contents
About
This Prospectus
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (“SEC”) using a
“shelf” registration process. Under this shelf registration process, we may sell any combination of the securities described
in this prospectus in one or more offerings.
This
prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses
to be provided to you that may contain material information relating to any such offering. Such prospectus supplement or free writing
prospectus may also add, update or change information contained in this prospectus. If there is any inconsistency between the information
in the prospectus and the applicable prospectus supplement or free writing prospectus, you should rely on the information in the prospectus
supplement or free writing prospectus, as applicable. You should read the information in this prospectus and the applicable prospectus
supplement (and any free writing prospectuses) together with the additional information incorporated by reference herein as provided
for under the heading “Incorporation of Certain Information by Reference.”
Owning
securities may subject you to tax consequences in the U.S. and/or Canada. This prospectus or any applicable prospectus supplement may
not describe these tax consequences fully. You should read the tax discussion in any prospectus supplement with respect to a particular
offering and consult your own tax advisor with respect to your own particular circumstances.
You
should rely only on the information contained in or incorporated by reference into this prospectus or in any prospectus supplement or
related free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not authorized anyone to provide
you with information in addition to or different from that contained in this prospectus or any applicable prospectus supplement. We are
not making an offer to sell or soliciting an offer to buy these securities in any jurisdiction in which the offer or solicitation is
not authorized or in which the person making the offer or solicitation is not qualified to do so or to anyone to whom it is unlawful
to make the offer or solicitation. You should assume that the information contained in this prospectus and in any applicable prospectus
supplement or free writing prospectus is accurate only as of the date on the front cover of this prospectus or the applicable prospectus
supplement or free writing prospectus, as applicable, and the information incorporated by reference into this prospectus or any prospectus
supplement is accurate only as of the date of the document incorporated by reference.
Any
of the securities described in this prospectus and in a prospectus supplement may be convertible or exchangeable into other securities
that are described in this prospectus or will be described in a prospectus supplement and may be issued separately, together or as part
of a unit consisting of two or more securities, which may or may not be separate from one another. These securities may include new or
hybrid securities developed in the future that combine features of any of the securities described in this prospectus.
The
registration statement that contains this prospectus, including the exhibits to the registration statement, contains additional information
about us and the securities offered under this prospectus. You can find the registration statement at the SEC’s website under the
heading “Where You Can Find More Information.”
Financial
statements included or incorporated by reference herein have been prepared in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board, which we refer to as IFRS, and may be subject to foreign auditing and auditor
independence standards, and thus may not be comparable to financial statements of United States companies.
Unless
the context otherwise indicates, the terms “us,” “we,” “our,” “POET” and the “Company”
refer to POET Technologies Inc. and our subsidiaries.
All
trademarks, trade names and service marks appearing in this prospectus or in any prospectus supplement, including the documents incorporated
by reference herein or therein, are the property of their respective owners. Use or display by us of other parties’ trademarks,
trade dress or products is not intended to and does not imply a relationship with, or endorsements or sponsorship of, us by the trademark
or trade dress owner. Solely for convenience, trademarks and tradenames referred to in this prospectus and any prospectus supplement
appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert,
to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and
trade names.
Unless
stated otherwise or as the context otherwise requires, all references to dollar amounts in this prospectus and any prospectus supplement
are references to U.S. dollars. References to “$,” “US$” or “USD$” are to U.S. dollars and references
to “CAD$” are to Canadian dollars.
Where
You Can Find More Information
Copies
of the documents incorporated herein by reference may be obtained on request, without charge, from the Corporate Secretary of POET at
Suite 1107, 120 Eglinton Avenue East, Toronto, Ontario, M4P 1E2, telephone: (416) 368-9411. Those documents are also available electronically
through the SEC’s EDGAR website at www.sec.gov/EDGAR. The Company’s filings on the Canadian System for Electronic Document
Analysis and Retrieval (“SEDAR”) and EDGAR, including the documents filed as exhibits thereto, are not incorporated by reference
in this prospectus except as specifically set out herein.
In
addition to being subject to certain of the information requirements of the Securities Exchange Act of 1934, as amended (“Exchange
Act”) and, in accordance therewith, filing reports and other information with the SEC on EDGAR, the Company has continuous disclosure
obligations under the securities laws of the provinces and territories of Canada. Under the multijurisdictional disclosure system adopted
by the U.S. and Canada, which the Company elects to take advantage of in certain cases but, the Company’s reports and other information
filed with the SEC may be prepared in accordance with the disclosure requirements of Canada, which requirements are different from those
of the U.S. In addition, as a foreign private issuer, we are exempt from certain rules under the Exchange Act prescribing 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 to publish financial statements
as promptly as U.S. companies in certain instances or follow certain other rules and regulations applicable to U.S. public companies.
See “Risk Factors.”
This
prospectus is a part of a registration statement on Form F-3 filed with the SEC under the Securities Act of 1933, as amended (the “Securities
Act”), with respect to the securities. This prospectus, including the documents incorporated by reference herein, which forms a
part of the registration statement, does not contain all of the information set forth in the registration statement, certain parts of
which are contained in the exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information
with respect to the Company and the securities, reference is made to the registration statement and the exhibits thereto. Statements
contained in this prospectus, including the documents incorporated by reference herein, as to the contents of certain documents are not
necessarily complete, and, in each instance, reference is made to the copy of the document filed as an exhibit to the registration statement.
Each such statement is qualified in its entirety by such reference.
Incorporation
of Certain Information by Reference
The
SEC allows us to “incorporate by reference” information we have filed with the
SEC into this prospectus. This means that we can disclose important information to you by referring to another document filed separately
with the SEC. The information incorporated by reference is an important part of this prospectus, and the information we file subsequently
with the SEC will automatically update and supersede the information in this prospectus. The information that we incorporate by reference
in this prospectus is deemed to be a part of this prospectus. This prospectus incorporates by reference the documents listed below that
we have previously filed with the SEC:
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● |
Our
annual report on Form
20-F for the year ended December 31, 2022, filed with the SEC on March 31, 2023 (the “Annual Report”); |
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|
|
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● |
Our
report on Form 6-K, furnished to the SEC on May
16, 2023, with respect to our condensed consolidated interim financial statements for the three months ended March 31, 2023,
and related Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “Interim MD&A”);
and |
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|
|
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● |
The
description of our common shares contained in Exhibit
2.0 to our annual report on Form 20-F for the year ended December 31, 2020, as filed with the SEC on April 29, 2020, and any
amendments and reports updating such description. |
Each
prospectus supplement containing the specific terms of any offering of the Company’s securities, if any, will be filed with the
SEC and will be deemed to be incorporated by reference in this prospectus as of the date of the prospectus supplement and only for the
purposes of the offering of the Company’s securities to which that prospectus supplement pertains.
In
addition, this prospectus shall also be deemed to incorporate by reference all subsequent annual reports filed on Form 20-F, Form 40-F
or Form 10-K, and all subsequent filings on Forms 10-Q and 8-K (if any) filed by us pursuant to the U.S. Exchange Act prior to the termination
of the offering made by this prospectus. We may also incorporate by reference into this prospectus any Form 6-K that is submitted to
the SEC after the date of the filing of the registration statement of which this prospectus forms a part and before the date of termination
of any offering hereunder. Any such Form 6-K that we intend to so incorporate shall state in such form that it is being incorporated
by reference into this prospectus. The documents incorporated or deemed to be incorporated herein by reference contain meaningful and
material information relating to us, and you should review all information contained in this prospectus and the documents incorporated
or deemed to be incorporated herein by reference.
Any
statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will
be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein, in any prospectus
supplement hereto, or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies
or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement
or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement
is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation,
an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to
make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not
be deemed, except as so modified or superseded, to constitute a part of this prospectus.
Documents
which we incorporate by reference are available from us without charge, excluding all exhibits, unless we have specifically incorporated
by reference an exhibit in this prospectus. You may obtain documents incorporated by reference in this prospectus by requesting them
in writing or by telephone from us at:
POET
Technologies Inc.
Attention:
Corporate Secretary
Suite
1107, 120 Eglinton Avenue East Toronto
Ontario,
M4P 1E2Canada
(416)
368-9411
Forward-Looking
Statements
This
prospectus and the documents that are incorporated by reference herein and therein may contain “forward-looking information”
within the meaning of applicable securities laws in Canada and “forward-looking statements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995, as amended (collectively, “forward-looking information”).
Forward-looking information may relate to our future financial outlook and anticipated events or results and may include information
regarding our financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy,
plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or
opportunities or the markets in which we operate is forward-looking information. In some cases, forward-looking information can be identified
by the use of forward-looking terminology such as “plans,” “targets,” “expects,” “does not
expect,” “is expected,” “scheduled,” “estimates,” “outlook,” “intends,”
“anticipates,” “does not anticipate,” “believes,” or variations (including negative and grammatical
variations) of such words and phrases or state that certain actions, events or results “may,” “could,” “would,”
“might,” “will,” “will be taken,” “occur” or “be achieved.” In addition,
any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain
forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s
expectations, estimates and projections regarding future events or circumstances.
This
forward-looking information includes, among other things, statements relating to:
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the
Company’s expectations regarding its anticipated revenue, expenses and operations; |
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the
Company’s anticipated cash needs, its needs for additional financing or funding costs; |
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the
Company’s plans for and timing of expansion of its products and services; |
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the
Company’s future growth plans; |
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● |
the
Company’s ability to attract and retain personnel; |
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the
Company’s competitive position and the regulatory environment in which the Company operates; |
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anticipated
trends and challenges in the Company’s business and the markets in which it operates; and |
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● |
the
completion of any offering of securities. |
This
forward-looking information and other forward-looking information are based on our opinions, estimates and assumptions in light of our
experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we
currently believe are appropriate and reasonable in the circumstances. There can be no assurance that the underlying opinions, estimates
and assumptions will prove to be correct. Given these assumptions, investors should not place undue reliance on this forward-looking
information. Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is
subject to a number of known and unknown risks, uncertainties, assumptions and other factors that are discussed in greater detail or
incorporated by reference in the section entitled “Risk Factors” or elsewhere in, or incorporated by reference into this
prospectus, including, without limitation, risks:
| |
● |
associated
with our history of operating losses; |
| |
● |
associated
with the Company’s need for additional financing in the future, which may not be available on acceptable terms or at all; |
| |
|
|
| |
● |
that
the Company will not be able to compete in the highly competitive semiconductor and photonics markets; |
| |
|
|
| |
● |
that
the Company’s objectives will not be met within the timelines the Company expects or at all; |
| |
● |
associated
with engineering, product development and manufacturing; |
| |
|
|
| |
● |
associated
with successfully protecting patents and trademarks and other intellectual property; |
| |
|
|
| |
● |
associated
with joint venture development; |
| |
|
|
| |
● |
concerning
the need to control costs and the possibility of unanticipated expenses; |
| |
|
|
| |
● |
that
the trading price of the common shares will be volatile; |
| |
|
|
| |
● |
that
shareholders’ interests will be diluted through future security offerings as well as exercises of currently outstanding convertible
securities; |
| |
|
|
| |
● |
that
the Company’s business is subject to a variety of other U.S. and foreign laws, many of which are unsettled and still developing,
and which could subject the Company to claims or otherwise harm the Company’s business; |
| |
|
|
| |
● |
that
the Company is a “foreign private issuer” under U.S. securities laws and in certain cases utilizes “MJDS,”
and as a result, is subject to disclosure obligations different from requirements applicable to U.S. domestic registrants listed
on Nasdaq; |
| |
|
|
| |
● |
that
the Company could lose its foreign private issuer status and/or MJDS eligibility in the future, which could result in significant
additional costs and expenses to the Company and adversely affect its ability to raise capital in the U.S.; |
| |
|
|
| |
● |
that,
if the Company were to be a passive foreign investment company for U.S. federal income tax purposes under the Internal Revenue Code
of 1986, as amended, U.S. holders of the common shares (or securities exercisable for or convertible into the common shares) may
suffer adverse tax consequences; and |
| |
|
|
| |
● |
the
other factors discussed under the heading “Risk Factors” in the Annual Report and the Interim MD&A. |
If
any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information
prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The
opinions, estimates or assumptions referred to above and described in greater detail in “Risk Factors” in this prospectus,
the Annual Report, the Interim MD&A and other documents incorporated by reference herein should be considered carefully by readers.
Although
we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking
information, there may be other risk factors not presently known to us or that we presently believe are not material that could also
cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no
assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated
in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as of the
date made. The forward-looking information contained in this prospectus and in the information incorporated by reference herein and therein
represents our expectations as of the date of this prospectus (or as of the date such forward-looking information is otherwise stated
to be made), and is subject to change after such date. However, we disclaim any intention, obligation or undertaking to update or revise
any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable
securities laws. All of the forward-looking information contained in this prospectus and in the information incorporated by reference
herein and therein is expressly qualified by the foregoing cautionary statements. Investors should read this entire prospectus and any
applicable prospectus supplement and consult their own professional advisors to ascertain and assess the income tax, legal, risk factors
and other aspects of their investment in the securities of the Company.
About
The Company
General
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 Business Corporations Act (Ontario) (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. Today,
the Company is an Ontario-based corporation governed by the OBCA.
The
Company’s head and registered office is located at Suite 1107, 120 Eglinton Avenue East, Toronto, Ontario, M4P 1E2 our telephone
number is (416) 368-9411. The Company’s website is www.poet-technologies.com.
Intercorporate
Structure
Description
of the Business
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.
Transfer
Agent and Registrar
The
transfer agent and registrar of the Company’s common shares is Computershare Trust Company of Canada, 510 Burrard Street, 3rd
Floor, Vancouver, British Colombia, V6C 3B9.
Listing
Our
common shares are listed and posted for trading on the TSXV under the symbol “PTK” and on Nasdaq under the symbol “POET.”
Risk
Factors
Investing
in our securities involves a high degree of risk. Please see the “Risk Factors” section in any prospectus supplement and
in our most recent Annual Report on Form 20-F, along with any disclosure related to the risk factors contained in our subsequent reports,
in each case which are incorporated by reference in this prospectus, as amended, supplemented or superseded from time to time by other
reports we file with the SEC in the future. Before making an investment decision, you should carefully consider these risks as well as
all other information contained or incorporated by reference in this prospectus. If any of the events described in such “Risk Factors”
section occurs or the risks described therein actually materialize, our business, financial condition, results of operations, cash flow
or prospects could be materially adversely affected. Risks and uncertainties not presently known to us or that we currently deem immaterial
may also impair our business operations, our financial results and the value of our securities. The prospectus supplement applicable
to each type or series of securities we offer may contain a discussion of additional risks applicable to an investment in us and the
particular type of securities we are offering under that prospectus supplement.
Offer
Statistics and Expected Timetable
We
may sell from time to time pursuant to this prospectus (as may be described in more detail in one or more prospectus supplements) an
indeterminate number of securities as shall have a maximum aggregate offering price of $150,000,000. The actual per share price of the
securities that we will offer pursuant hereto, if any, will depend on a number of factors that may be relevant as of the time of offer.
See “Plan of Distribution” below.
Material
Changes
Except
as otherwise disclosed in this prospectus, there have been no material changes to our operations that have occurred since December 31,
2022, and that have not been described in a report on Form 6-K, including the documents filed as exhibits thereto, filed or furnished
under the U.S. Exchange Act and incorporated by reference into this prospectus.
Reasons
for the Offer and Use of Proceeds
Unless
otherwise indicated in a prospectus supplement relating to a particular offering of securities, the net proceeds to be received by the
Company from the issue and sale from time to time of the securities, if any, will be used for general working capital purposes related
to research and development of its optical engines for transceivers and light source modules for the AI market, capital asset purchases
and selling and general and administrative expenses. The Company currently has a negative operating cash flow, which may continue for
the foreseeable future. During the fiscal year ended December 31, 2022 and three-month period ended March 31, 2023, the Company had negative
cash flow from operating activities. The Company anticipates it will continue to have negative cash flow from operating activities in
future periods until sustained profitable commercial production is achieved on its main products and projects. As a result, if necessary,
certain of the net proceeds may be used to fund such negative cash flow from operating activities in future periods.
Additional
information on the use of net proceeds we receive from the sale of securities covered by this prospectus may be set forth in the prospectus
supplement relating to a specific offering.
While
the Company intends to spend the net proceeds of the offering of securities pursuant to this prospectus as stated above, there may be
circumstances where, for sound business reasons, a re-allocation of funds may be necessary or advisable. The actual amount that the Company
spends in connection with each of the intended uses of proceeds will depend on a number of factors, including those listed under the
heading “Risk Factors” in this prospectus, any prospectus supplement and the documents incorporated by reference herein and
therein.
Description
of Share Capital and Memorandum and Articles of Association
The
authorized capital of the Company consists of an unlimited number of common shares, without par value, of which there were 40,516,799
common shares issued and outstanding as of July 31, 2023, and one special voting share, of which there were nil special voting shares
issued and outstanding as of July 31, 2023. Our common shares are listed and posted for trading on the TSXV under the symbol “PTK”
and on Nasdaq under the symbol “POET”.
As
of July 31, 2023, the Company had 703,818 share purchase warrants outstanding as follows:
| Number
of Share Purchase Warrants | | |
Exercise
Price (CAD$) | | |
Expiry
Date | |
| | 95,000 | | |
$ | 5.00 | | |
| August
2, 2023 | |
| | 45,500 | | |
$ | 5.00 | | |
| September
19, 2023 | |
| | 563,318 | | |
$ | 4.95 | | |
| December
2, 2025 | |
| | 703,818 | | |
| | | |
| | |
Certain
of these warrants are subject to anti-dilution adjustment based upon the outstanding common shares at the time of exercise.
The
Company has also issued incentive options to certain directors, officers, and consultants of the Company. As at July 31, 2023, the following
options were outstanding and exercisable:
| Number
of Options | |
Exercise
Price (CAD$) | | |
Expiry
Date | |
| 60,000 | |
| 8.60 | | |
| 07-Jul-2026 | |
| 12,500 | |
| 9.20 | | |
| 18-Jul-2026 | |
| 100,000 | |
| 6.20 | | |
| 02-Nov-2026 | |
| 50,000 | |
| 3.85 | | |
| 16-Jan-2027 | |
| 373,400 | |
| 2.80 | | |
| 13-Jul-2027 | |
| 4,500 | |
| 2.80 | | |
| 01-Sep-2027 | |
| 52,500 | |
| 3.00 | | |
| 05-Sep-2027 | |
| 1,225 | |
| 3.40 | | |
| 14-Sep-2027 | |
| 1,175 | |
| 3.60 | | |
| 20-Sep-2027 | |
| 487,000 | |
| 5.20 | | |
| 28-Mar-2028 | |
| 169,467 | |
| 3.30 | | |
| 21-Jun-2028 | |
| 7,000 | |
| 2.60 | | |
| 03-Aug-2028 | |
| 24,500 | |
| 2.65 | | |
| 13-Dec-2028 | |
| 4,000 | |
| 3.40 | | |
| 27-Mar-2029 | |
| 822,667 | |
| 3.80 | | |
| 29-May-2029 | |
| 332,400 | |
| 3.30 | | |
| 04-Nov-2029 | |
| 3,549 | |
| 4.20 | | |
| 06-Feb-2030 | |
| 119,500 | |
| 2.95 | | |
| 17-Mar-2030 | |
| 3,750 | |
| 4.30 | | |
| 01-Apr-2030 | |
| 620,789 | |
| 5.30 | | |
| 11-Jun-2030 | |
| 22,460 | |
| 5.00 | | |
| 04-Dec-2030 | |
| 135,000 | |
| 8.10 | | |
| 08-Jan-2031 | |
| 405,625 | |
| 11.90 | | |
| 06-Apr-2031 | |
| 65,000 | |
| 10.90 | | |
| 22-Jun-2031 | |
| 30,000 | |
| 11.10 | | |
| 16-Jul-2026 | |
| 105,000 | |
| 10.60 | | |
| 11-Oct-2031 | |
| 50,000 | |
| 10.30 | | |
| 15-Nov-2031 | |
| 100,000 | |
| 8.20 | | |
| 01-Dec-2031 | |
| 110,000 | |
| 8.73 | | |
| 06-Apr-2032 | |
| 100,000 | |
| 7.97 | | |
| 10-May-2032 | |
| 4,745 | |
| 7.16 | | |
| 01-Jun-2032 | |
| 5,194 | |
| 6.59 | | |
| 21-Jun-2032 | |
| 5,000 | |
| 5.61 | | |
| 05-Aug-2032 | |
| 400,000 | |
| 3.83 | | |
| 19-Oct-2032 | |
| 20,000 | |
| 6.25 | | |
| 08-Feb-2033 | |
| 30,000 | |
| 5.46 | | |
| 05-May-2033 | |
| 15,000 | |
| 3.60 | | |
| 06-Dec-2029 | |
| 15,000 | |
| 3.60 | | |
| 06-Dec-2029 | |
| 676,250 | |
| 3.54 | | |
| 11-Nov-2032 | |
| 718,894 | |
| 4.00 | | |
| 11-Nov-2032 | |
| 88,750 | |
| 2.80 | | |
| 13-Jul-2027 | |
| 12,000 | |
| 2.80 | | |
| 13-Jul-2027 | |
| 25,000 | |
| 3.70 | | |
| 15-Jan-2030 | |
| 25,000 | |
| 3.70 | | |
| 15-Jan-2030 | |
| 15,473 | |
| 5.20 | | |
| 28-Mar-2028 | |
| 162,170 | |
| 5.70 | | |
| 14-Jul-2023 | |
| 6,591,483 | |
| | | |
| | |
History
of Share Capital
A
discussion of the changes in the Company’s share capital for the years ending December 31, 2022, 2021 and 2020 is contained in
notes 11, 12, 13 and 14 to our historical annual consolidated financial statements included in our Annual Report on Form 20-F filed with
the SEC on March 31, 2023 (File No. 000-55135) and is incorporated by reference herein.
The
following table includes changes to the Company’s share capital occurring subsequent to those changes disclosed in our Annual Report:
| Date of
Issuance | |
Description | |
Number
of Securities | |
Issue
Price / Exercise Price ($) | | |
Total
Gross Consideration | |
| 3/29/2023 | |
Warrant exercise | |
25,000 Common Shares | |
| 5.00 | | |
| 125,000.00 | |
| 3/29/2023 | |
Warrant exercise | |
15,600 Common Shares | |
| 5.00 | | |
| 78,000.00 | |
| 3/29/2023 | |
Warrant exercise | |
5,000 Common Shares | |
| 5.00 | | |
| 25,000.00 | |
| 3/31/2023 | |
Warrant exercise | |
25,000 Common Shares | |
| 5.00 | | |
| 125,000.00 | |
| 4/03/2023 | |
Warrant exercise | |
81,250 Common Shares | |
| 5.00 | | |
| 406,250.00 | |
| 4/27/2023 | |
Warrant exercise | |
42,500 Common Shares | |
| 5.00 | | |
| 212,500.00 | |
| 5/02/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 5/02/2023 | |
Warrant exercise | |
50,000 Common Shares | |
| 5.00 | | |
| 250,000.00 | |
| 5/02/2023 | |
Warrant exercise | |
15,000 Common Shares | |
| 5.00 | | |
| 75,000.00 | |
| 5/02/2023 | |
Warrant exercise | |
25,000 Common Shares | |
| 5.00 | | |
| 125,000.00 | |
| 5/04/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 5/05/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 5/05/2023 | |
Grant of Stock Options | |
30,000 Stock Options | |
| 5.46 | | |
| — | |
| 5/08/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 5/09/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 5/15/2023 | |
Stock Option exercise | |
2,800 Common Shares | |
| 2.80 | | |
| 7,840.00 | |
| 5/15/2023 | |
Warrant exercise | |
6,000 Common Shares | |
| 5.00 | | |
| 30,000.00 | |
| 5/17/2023 | |
Warrant exercise | |
62,500 Common Shares | |
| 5.00 | | |
| 312,500.00 | |
| 5/18/2023 | |
Stock Option exercise | |
800 Common Shares | |
| 2.80 | | |
| 2,240.00 | |
| 5/23/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 5/24/2023 | |
Stock Option exercise | |
7,500 Common Shares | |
| 3.30 | | |
| 24,750.00 | |
| 5/25/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 5/26/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 5/29/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 5/30/2023 | |
Warrant exercise | |
9,000 Common Shares | |
| 5.00 | | |
| 45,000.00 | |
| 5/30/2023 | |
Warrant exercise | |
25,000 Common Shares | |
| 5.00 | | |
| 125,000.00 | |
| 5/30/2023 | |
Warrant exercise | |
25,000 Common Shares | |
| 5.00 | | |
| 125,000.00 | |
| 06/01/2023 | |
Warrant exercise | |
38,000 Common Shares | |
| 5.00 | | |
| 190,000.00 | |
| 06/02/2023 | |
Warrant exercise | |
25,000 Common Shares | |
| 5.00 | | |
| 125,000.00 | |
| 06/02/2023 | |
Warrant exercise | |
20,000 Common Shares | |
| 5.00 | | |
| 100,000.00 | |
| 06/05/2023 | |
Stock Option exercise | |
4,600 Common Shares | |
| 3.30 | | |
| 15,180.00 | |
| 06/07/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 06/08/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 06/09/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 06/12/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 2.80 | | |
| 14,000.00 | |
| 6/14/2023 | |
Stock Option exercise | |
10,000 Common Shares | |
| 2.65 | | |
| 26,500.00 | |
| 6/15/2023 | |
Stock Option exercise | |
13,000 Common Shares | |
| 3.30 | | |
| 42,900.00 | |
| 6/16/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 6/19/2023 | |
Stock Option exercise | |
7,500 Common Shares | |
| 3.30 | | |
| 24,750.00 | |
| 6/20/2023 | |
Stock Option exercise | |
7,500 Common Shares | |
| 3.30 | | |
| 24,750.00 | |
| 6/20/2023 | |
Stock Option exercise | |
562 Common Shares | |
| 2.80 | | |
| 1,573.60 | |
| 6/21/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 7/05/2023 | |
At-the-Market sale | |
500 Common Shares | |
| 5.85 | | |
| 2,925.00 | |
| 7/06/2023 | |
At-the-Market sale | |
49,400 Common Shares | |
| 6.00 | | |
| 296,400.00 | |
| 7/07/2023 | |
Stock Option exercise | |
7,500 Common Shares | |
| 3.30 | | |
| 24,750.00 | |
| 7/07/2023 | |
At-the-Market sale | |
40,900 Common Shares | |
| 6.00 | | |
| 245,400.00 | |
| 7/07/2023 | |
At-the-Market sale | |
7,321 Common Shares | |
| 5.96 | | |
| 43,633.16 | |
| 7/10/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 7/11/2023 | |
At-the-Market sale | |
30,000 Common Shares | |
| 5.81 | | |
| 174,384.33 | |
| 7/11/2023 | |
At-the-Market sale | |
7,100 Common Shares | |
| 5.83 | | |
| 41,393.00 | |
| 7/12/2023 | |
At-the-Market sale | |
10,200 Common Shares | |
| 5.80 | | |
| 59,168.00 | |
| 7/13/2023 | |
At-the-Market sale | |
16,100 Common Shares | |
| 5.76 | | |
| 92,780.00 | |
| 7/14/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 7/14/2023 | |
Grant of Stock Options | |
162,170 Stock Options | |
| 5.70 | | |
| — | |
| 7/17/2023 | |
At-the-Market sale | |
5,600 Common Shares | |
| 5.70 | | |
| 31,932.00 | |
| 7/17/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 7/19/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 7/20/2023 | |
At-the-Market sale | |
21,900 Common Shares | |
| 5.62 | | |
| 123,078.00 | |
| 7/20/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 7/21/2023 | |
Stock Option exercise | |
2,500 Common Shares | |
| 3.30 | | |
| 8,250.00 | |
| 7/31/2023 | |
Stock Option exercise | |
5,000 Common Shares | |
| 3.30 | | |
| 16,500.00 | |
| 7/31/2023 | |
Stock Option exercise | |
15,000 Common Shares | |
| 5.00 | | |
| 75,000.00 | |
Memorandum
and Articles of Association
The
Company was originally incorporated under the British Columbia Company Act on February 9, 1972 as Tandem Resources Ltd. (“Tandem”).
Subsequently, Tandem amalgamated with Stanmar Resources Ltd. and Keezic Resources Ltd. pursuant to Articles of Amalgamation on November
14, 1985, with Tandem as the successor amalgamated entity. Tandem then filed an Articles of Continuance on January 3, 1997 and continued
from under the laws of the province of British Columbia to under the laws of the province of Ontario. 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. The Company filed Articles
of Amendment on February 24, 2022 to consolidate all of its issued and outstanding common shares on a 10:1 basis. Today, the Company
is an Ontario corporation governed by the OBCA. The following is a summary of certain key provisions of our constating documents and
certain related sections of the OBCA. This is only a summary and is not intended to be exhaustive. For further information please refer
to the full version of our constating documents attached as exhibits to our Annual Report on Form 20-F for the year ended December 31,
2022, filed with the SEC on March 31, 2023.
Register,
Entry Number and Purposes
Our
Articles of Continuance became effective on November 30, 2010, with the latest Articles of Amendment filed on February 24, 2022. Our
corporation number in Ontario is 641402. The articles of the Company, as amended to date (collectively, the “Articles”),
do not contain a statement of the Company’s objects and purposes. The Articles 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.
Board
of Directors
Pursuant
to our Amended and Restated By-Law No. 1 (as amended from time to time, the “bylaws”) 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. With respect to any material contract or transaction or proposed material contract or transaction that, in the ordinary
course of the corporation’s business, would not require approval by the directors or shareholders, a director or officer shall
disclose in writing to the corporation or request to have entered in the minutes of meetings of directors the nature and extent of his
or her interest forthwith after the director or officer becomes aware of the contract or transaction or proposed contract or transaction.
A director interested in a contract 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 bylaws 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, subject to certain director independence
requirements in accordance with applicable laws. 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 Company 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. Nothing in the Company’s bylaws 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 Each Class of 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. The holder of the special voting share,
if any, is entitled to a number of votes as is equal to the number of common shares that may be acquired upon exercise of the holder
of the exchange rights attached to all outstanding shares of exchangeable common shares of the Company (the “Exchangeable Shares”)
as of the close of business on the record date for the applicable meeting. The holders of common shares and the holder, if any, of the
special voting share vote together as a single class on all matters, unless voting as a separate class is required by applicable law.
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. Any dividend unclaimed after a period of six years from the
date on which the same has been declared to be payable shall be forfeited and shall revert to 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.
Special
voting shares shall be automatically redeemed by the Company without the requirement to provide any prior notice to the holder of the
special voting share, immediately once no Exchangeable Shares or rights or options to acquire Exchangeable Shares, remain outstanding
(a “Redemption Event”). Following the occurrence of a Redemption Event, the Company shall pay to the holder of the special
voting share an amount equal to the stated capital attributable to the special voting share as a class as shown on the books of the Company
at the time of the Redemption Event.
No
shares have been issued subject to call or assessment. Other than as outlined above, 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
special voting share is not issued or outstanding.
Annual
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 Securities
Act (Ontario) 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. In addition,
as the Company is a reporting issuer under Canadian securities laws, the Company is subject to the proxy solicitation requirements under
National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting
Issuer, which prescribes, among other things, (i) notification of meeting and record dates at least 25 days before the record
date, (ii) establishment of a record date no fewer than 30 and no more than 60 days before the meeting date, and (iii) delivery of proxy-related
materials at least 21 days before the meeting date, except where the Company uses notice-and-access (in which case, notices and delivery
would be subject to such notice-and-access timelines) and/or abridges the prescribed timelines (where available).
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 bylaws 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 “ICA”).The ICA requires any person that is non-Canadian (as defined in the ICA)
who acquires “control” (as defined in the ICA) of an existing Canadian business to file a pre-closing application for review
or notification with Innovation, Science and Economic Development Canada.
An
acquisition of control is a reviewable transaction where prescribed financial thresholds are exceeded. For example, a direct acquisition
of control of a Canadian business (outside of the cultural sector) by a non-Canadian that is controlled by nationals of a specified trade
agreement state (the European Union, the United States, Mexico, Australia, Brunei, Chile, Colombia, Honduras, Japan, Malaysia, New Zealand,
Panama, Peru, Singapore, South Korea, the United Kingdom or Vietnam), or a sale of a Canadian business when it is controlled by nationals
of these nations, is subject to mandatory pre-closing review if the enterprise value of the Canadian business is CAD$1.931 billion or
more. For investments by investors controlled by nationals of a World Trade Organization (“WTO”) member state that is not
a trade agreement state, the direct acquisition of control of a Canadian business, or the sale of a Canadian business controlled by a
WTO investor, is subject to mandatory pre-closing review if the enterprise value of the Canadian business is CAD$1.287 billion or more.
Different review thresholds apply if the investor and seller are not WTO nationals or if the investor is a state-owned enterprise, or
if there is an acquisition of a Canadian cultural business. In these situations, much lower thresholds apply and are based on the total
worldwide book value assets of the Canadian business, rather than its enterprise value. The ICA generally prohibits the implementation
of a reviewable transaction unless, after review, the relevant minister is satisfied that the acquisition is likely to be of a net benefit
to Canada.
Where
the acquisition of control of a Canadian business by a non-Canadian does not meet the prescribed review thresholds, the investor is required
to file a notification no later than 30 days after the completion of the transaction.
A
non-Canadian would be deemed to acquire control of the Company for purposes of the ICA 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.
Certain
transactions involving our common shares would be exempt from the ICA, including:
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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; |
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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 ICA; and |
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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. |
Under
the national security regime in the ICA, the Canadian federal government may undertake a discretionary review of a broader range of investments
by a non-Canadian to determine whether such investments by a non-Canadian could be “injurious to national security.” Review
on national security grounds is at the discretion of the Canadian federal government and may occur on a pre- or post-closing basis.
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 a Change of Control
The
take-over bid regime in Canada is governed by, among other things, National Instrument 62-104 – Take-Over
Bids and Issuer Bids (“NI 62-104”). Under NI 62-104, a “take-over bid” is defined as an offer to acquire
the outstanding voting securities or equity securities of a class made to one or more persons or companies in a jurisdiction of Canada
(also referred to as a local jurisdiction) or whose last address on the books of the target company is in the local jurisdiction, where
the securities subject to the offer, together with the offeror’s securities, constitute 20% or more of the outstanding securities
of the class.
Pursuant
to NI 62-104, all non-exempt take-over bids are required to abide by certain technical requirements, including:
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Initial
Deposit Period – The offer must remain open for an initial deposit period of at least 105 days from the date of the bid.
A shorter initial deposit period (not less than 35 days from the date of the bid) is available in circumstances where a target company
issues a deposit period news release in respect of a proposed or commenced take-over bid. In this circumstance, an outstanding or
subsequent competing take-over bid may avail itself of the shorter deposit period specified in the bid referred to in the deposit
period news release. A shorter initial deposit period (of at least 35 days from the date of the bid) is also available in the case
of an outstanding or subsequent competing bid in circumstances where a target company issues a news release announcing its intention
to effect a negotiated alternative transaction. |
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Minimum
Tender Requirement – An offeror may not take up securities under the terms of its take-over bid unless the bid has met
a minimum tender requirement consisting 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) having been deposited under the bid and not withdrawn |
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Mandatory
10-day extension period – If, at the end of the initial deposit period, an offeror is obligated to take up securities deposited
under the terms of a take-over bid, the offeror must extend the period during which securities may be deposited under the period
of the bid for a mandatory 10-day extension period and promptly issue a news release announcing that, among other things, the minimum
tender requirement has been satisfied, the number of securities deposited and not withdrawn as at the expiry of the initial deposit
period and the period during which securities may be deposited under the bid has been extended for the mandatory ten-day extension
period. |
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Equal
Treatment – The take-over bid rules require that all holders of the same class of securities be offered identical consideration
(or an identical choice of consideration). If a bidder increases the consideration to be paid for the securities during a take-over
bid, this consideration must be increased for all shareholders, even if the bidder has already taken up and paid for some shares.
The bidder (and anyone acting jointly or in concert with the bidder) is prohibited from entering into any collateral agreements or
understanding that will (directly or indirectly) provide a shareholder of the target company with consideration of greater value
than that paid or payable to other shareholders of the same class, subject to certain exemptions. |
In
addition to NI 62-104, there are also further regulations and guidance (including certain disclosure requirements) provided pursuant
to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider
Reporting Issues (“NI 62-103”), National Policy 62-202 – Take-Over Bids
– Defensive Tactics, National Policy 62-203 – Take-Over Bids and Issuer Bids,
and applicable exchange rules.
Stockholder
Ownership Disclosure Threshold in Bylaws
Neither
our articles nor our bylaws contain a provision governing the ownership threshold above which shareholder ownership must be disclosed.
Pursuant to Canadian 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 issued and outstanding Common Shares of the Company.
Special
Conditions for Changes in Capital
The
conditions imposed by the Company’s articles are not more stringent than required under the OBCA.
Comparison
of Ontario and Delaware Corporate Law
The
Company is a corporation governed by the OBCA. The OBCA differs in some material respects from the laws generally applicable to Delaware
corporations under the Delaware General Corporation Law (the “DGCL”). Below is a summary of certain of those material differences.
This summary is qualified in its entirety by reference to the DGCL, the OBCA, and the Company’s Articles and bylaws.
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Delaware |
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OBCA |
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Stockholder/
Shareholder
Approval
of
Business
Combinations;
Fundamental
Changes |
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Under
the DGCL, certain fundamental changes, such as amendments to the certificate of incorporation, a merger, consolidation, sale, lease,
exchange or other disposition of all or substantially all of the property of a corporation not in the usual and regular course of
the corporation’s business, or a dissolution of the corporation, are generally required to be approved by the affirmative vote
of the holders of a majority of the outstanding stock present in person or represented by proxy and entitled to vote on the matter,
unless a corporation’s certificate of incorporation or the bylaws require a higher percentage.
However,
Section 251(h) of the DGCL provides that stockholders of a constituent corporation need not vote to approve a merger if: (i) the
merger agreement permits or requires the merger to be effected under Section 251(h) and provides that the merger shall be effected
as soon as practicable following the tender offer or exchange offer, (ii) a corporation consummates a tender or exchange offer for
any and all of the outstanding stock of such constituent corporation that would otherwise be entitled to vote to approve the merger,
(iii) immediately following the consummation of the offer, the stock accepted for purchase or exchanges plus the stock owned by the
consummating corporation equals at least the percentage of stock that would be required to adopt the agreement of merger under the
DGCL, (iv) the corporation consummating the offer merges with or into such constituent corporation and (v) each outstanding share
of each class or series of stock of the constituent corporation that was the subject of and not irrevocably accepted for purchase
or exchange in the offer is to be converted in the merger into, or the right to receive, the same consideration to be paid for the
shares of such class or series of stock of the constituent corporation irrevocably purchased or exchanged in such offer. |
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Under
the OBCA, certain corporation alterations, such as changes to authorized share structure, continuances, into or out of province,
certain amalgamations, sales, leases or other dispositions of all or substantially all of the property of a corporation (other than
in the ordinary course of business) liquidations, dissolutions, and certain arrangements are required to be approved by ordinary
or special resolution as applicable.
An
ordinary resolution means a resolution that is (i) submitted to a meeting of the shareholders of a corporation and passed, with or
without amendment, by at least a majority of the votes cast, or (ii) consented to in writing by each shareholder of the corporation
(or their authorized attorney) entitled to vote at such a meeting.
A
special resolution means a resolution that is (i) submitted to a special meeting of the shareholders and passed, with or without
amendment, by at least two-thirds of the votes cast, or (ii) consented to in writing by each shareholder of the corporation (or their
authorized attorney) entitled to vote at such a meeting.
Under
the OBCA, unless otherwise provided for in the articles, an action that adds to, removes or changes the rights, privileges, restrictions
or conditions attached to issued shares of a class or series must be approved by a special separate resolution of the holders of
the class or series of shares being affected.
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Delaware |
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OBCA |
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The
DGCL does not contain a procedure comparable to a plan of arrangement under the OBCA. |
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Arrangements
are permitted under the OBCA. In general, a plan of arrangement is approved by a corporation’s board of directors and then
is submitted to a court for approval. It is customary for a corporation in such circumstances to apply to a court initially for an
interim order governing various procedural matters prior to calling any security holder meeting to consider the proposed arrangement.
Subject to any order of the court, a plan of arrangement must be approved, in each case by special resolution, by (i) the shareholders
of a corporation, and (ii) holders of shares of each class or series entitled to vote.
The
court may determine, among other things, to whom notice shall be given and whether any shareholders may dissent from the proposed
arrangement and receive payment of the fair value of their shares. Following compliance with the procedural steps contemplated in
any such interim order (including as to obtaining security holder approval), the court would conduct a final hearing, which would,
among other things, assess the fairness of the arrangement and approve or reject the proposed arrangement.
The
OBCA does not contain a provision comparable to Section 251(h) of the DGCL. |
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Delaware |
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OBCA |
Special
Vote Required
for
Combinations with
Interested
Stockholders/
Shareholders |
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Unless
a Delaware corporation’s certificate of incorporation provides that it elects not to be governed by Section 203 of the DGCL,
a Delaware corporation may not engage in a business combination with an interested stockholder for a period of three years after
the time of the transaction in which the person became an interested stockholder, unless (i) the board of directors of the corporation,
prior to the time of the transaction in which the person became an interested stockholder, approves either the business combination
or the transaction in which the stockholder becomes an interested stockholder; (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares owned by directors and officers of the corporation and shares
held in certain types of employee stock plans); or (iii) the board of directors and the holders of at least two-thirds of the outstanding
voting stock not owned by the interested stockholder approve the business combination on or after the time of the transaction in
which the person became an interested stockholder.
For
purposes of Section 203, the DGCL, subject to specified exceptions, generally defines an interested stockholder to include any person
who, together with that person’s affiliates or associates, (i) owns 15% or more of the outstanding voting stock of the corporation
(including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise
of conversion or exchange rights, and stock with respect to which the person has voting rights only), or (ii) is an affiliate or
associate of the corporation and owned 15% or more of the outstanding voting stock of the corporation at any time within the previous
three years. |
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The
OBCA does not contain a provision comparable to Section 203 of the DGCL with respect to business combinations. |
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Delaware |
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OBCA |
Appraisal
Rights;
Rights
to Dissent |
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Under
the DGCL, a stockholder of a corporation participating in some types of major corporate transactions may, under varying circumstances,
be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount of the fair market value of such
stockholder’s shares in lieu of the consideration such stockholder would otherwise receive in the transaction.
For
example, a stockholder is entitled to appraisal rights in the case of a merger or consolidation if the shareholder is required to
accept in exchange for the shares anything other than: (i) shares of stock of the corporation surviving or resulting from the merger
or consolidation, or depository receipts in respect thereof; (ii) shares of any other corporation, or depository receipts in respect
thereof, that on the effective date of the merger or consolidation will be either listed on a national securities exchange or held
of record by more than 2,000 shareholders; (iii) cash instead of fractional shares of the corporation or fractional depository receipts
of the corporation; or (iv) any combination of the foregoing.
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The
OBCA provides that shareholders of a corporation are entitled to exercise dissent rights in respect of certain matters and to be
paid the fair value of their shares in connection therewith. Dissent rights are applicable when a corporation resolves to (i) amend
its articles to change the restrictions on the issuance, transfer or ownership of the corporation’s shares; (ii) amend its
articles to alter the restrictions on the powers of the corporation or on the business it is permitted to carry on; (iii) amalgamate
with another corporation; (iv) continue the corporation into another jurisdiction; (v) continue the corporation under the Co-Operative
Corporations Act or the Not-For-Profit Corporations Act, 2010; or (vi) sell,
lease or exchange all or substantially all its property
A
court may also make an order permitting a shareholder to dissent in certain circumstances.
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Acquisition |
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Under
the DGCL, a merger in which one corporation owns, prior to the merger, 90% or more of each class of stock of a second corporation
may be completed without the vote of the second corporation’s board of directors or shareholders. |
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The
OBCA provides that if, within 120 days after the making of a bid to acquire shares, the offer is accepted by the holders of not less
than 90% of the shares (other than the shares held by the offeror or an affiliate or associate of the offeror) of any class of shares
to which the bid relates, the offeror is entitled, upon complying with the section, to acquire the shares held by dissenting offerees.
An
offeror may acquire the shares held by a dissenting offeree by sending, on or before the earlier of the sixtieth (60th) day following
the termination of the bid and the one hundred and eightieth (180th) day following the date of the bid, an offeror’s notice
to each dissenting offeree.
Dissenting
offerees who have demanded payment for the fair value of his or her security may, within 30 days of receiving the offeror’s
notice, apply to the court for additional security of payment for the fair value of their shares. |
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Delaware |
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OBCA |
Stockholder/
Shareholder
Consent
to
Action Without
Meeting |
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Under
the DGCL, unless otherwise provided in a corporation’s certificate of incorporation, any action that can be taken at a meeting
of the stockholders may be taken without a meeting if written consent to the action is signed by the holders of outstanding stock
having not less than the minimum number of votes necessary to authorize or take the action at a meeting of the stockholders. |
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Under
the OBCA and the Company’s bylaws, and subject to certain exceptions, shareholders may take action without a meeting by executing
a written resolution signed by all of the shareholders (or their authorized attorney) entitled to vote on that resolution.
A
resolution in writing is as valid as if it had been passed at a meeting of the shareholders. |
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Special
Meetings of
Stockholders/
Shareholders |
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Under
the DGCL, a special meeting of shareholders may be called by the board of directors or by such persons authorized in the certificate
of incorporation or the bylaws. |
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Under
the OBCA, the directors of the corporation may, at any time, call a special meeting of shareholders.
In
addition, the holders of not less than five percent of the issued shares of a corporation that carry the right to vote at a meeting
sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition. All
shareholders entitled to vote as of the record date are entitled to notice of the meeting.
Subject
to certain conditions, if the directors do not call a meeting within twenty-one days after receiving the shareholder’s requisition,
any shareholder who signed the requisition may call the meeting. |
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Distributions
and Dividends;
Repurchases
and
Redemptions |
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Under
the DGCL, subject to any restrictions contained in the certificate of incorporation, a corporation may pay dividends out of its capital
surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared or the preceding fiscal
year, as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than
the aggregate amount of the capital represented by issued and outstanding shares having a preference upon the distribution of assets.
Surplus is defined in the DGCL as the excess of the net assets over capital, as such capital may be adjusted by the board.
A
Delaware corporation may purchase or redeem shares of any class for cash or other property except when its capital is impaired or
would be impaired by the purchase or redemption. A corporation may, however, purchase or redeem out of capital shares that are entitled,
upon any distribution of its assets, to a preference over another class or series of its shares or, if no shares entitled to a preference
are outstanding, any of its shares if such shares will be retired and the capital reduced. |
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Under
the OBCA, and subject to a corporation’s articles or any unanimous shareholder agreement, a corporation may pay a dividend
in money or other property (including by issuing shares or warrants by way of dividend) unless there are reasonable grounds for believing
that the corporation is insolvent, or the payment of the dividend would render the corporation insolvent.
The
OBCA provides that no rights, privileges, restrictions or conditions attached to a series of shares shall confer on the series a
priority in respect of dividends or return of capital over any other series of shares of the same class.
Under
the OBCA, a corporation may purchase or otherwise acquire any of its issued shares or warrants. However, the acquisition is generally
subject to solvency tests similar to those applicable to the payment of dividends (as set out above).
A
corporation may also redeem, on the terms and in the manner provided in its articles, any of its shares that has a right of redemption
attached to it, subject to similar solvency tests (as set out above). |
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Delaware |
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OBCA |
Vacancies
on Board of
Director |
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Under
the DGCL, a vacancy or a newly created directorship may be filled by a majority of the directors then in office, although less than
a quorum, or by the sole remaining director, unless otherwise provided in the certificate of incorporation or bylaws. Any newly elected
director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term
of the class of directors to which the newly elected director has been elected expires. |
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Under
the Company’s bylaws, a director ceases to hold office if he or she dies, is removed
from office by the shareholders, ceases to be qualified for election as a director or, subject
to the OBCA, resigns by a written resignation received by the Company.
Also
under the Company’s bylaws, but subject to the OBCA, a quorum of directors may fill a vacancy on the board of directors. A
director appointed or elected to fill a vacancy holds office for the unexpired term of his predecessor.
Under
the OBCA, if there is not a quorum of directors, or if there has been a failure to elect the number of directors required by the
articles or the OBCA, the directors in office shall call a special meeting of shareholders to fill the vacancy. If the directors
fail to call a meeting, a shareholder may call the meeting.
In
accordance with the OBCA and the Company’s bylaws, the board of directors may appoint an additional director provided that
the total number of directors, after that appointment, would not be greater than one and one-third times the number of directors
required to have been elected at the last annual meeting of shareholders. |
| |
|
Delaware |
|
OBCA |
Removal
of Directors;
Terms
of Directors |
|
Under
the DGCL, except in the case of a corporation with a classified board or with cumulative voting, any director or the entire board
may be removed, with or without cause, by the holders of a majority of the shares entitled to vote at an election of directors. If
a Delaware corporation has a classified board, unless its certificate of incorporation provides otherwise, any director or the entire
board may only be removed by stockholders for cause. |
|
Under
the OBCA, and the Company’s bylaws, the shareholders of the corporation may by ordinary
resolution remove any director(s) from office. If the holders of any class or series have
an exclusive right to elect one or more directors, a director may only be removed by an ordinary
resolution of that class or series.
A
director’s vacancy may be filled at the meeting at which a director was removed.
According
to the Company’s bylaws, the board of directors shall be elected at each annual meeting of shareholders, and each director
will hold office until the close of the first annual meeting following his or her election, subject to certain exceptions. All directors
are eligible for re-election or re-appointment. |
| |
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Inspection
of Books
and
Records |
|
Under
the DGCL, any holder of record of stock or a person who is the beneficial owner of shares of such stock held either in a voting trust
or by a nominee on behalf of such person has the right during usual business hours to inspect the corporation’s books and records
for a proper purpose. |
|
Under
the OBCA, directors, registered holders of shares, beneficial owners of shares and creditors
of the corporation, (including their agents and legal representatives) may examine and take
extracts of certain corporation records free of charge.
Public
companies will allow any other person to examine certain records of the corporation upon payment of a reasonable fee. |
| |
|
Delaware |
|
OBCA |
Amendment
of
Governing
Documents |
|
Under
the DGCL, a certificate of incorporation may be amended if: (i) the board of directors adopts
a resolution setting forth the proposed amendment, declares the advisability of the amendment
and directs that it be submitted to a vote at a meeting of shareholders; provided that, unless
required by the certificate of incorporation, no meeting or vote is required to adopt an
amendment for certain specified changes; and (ii) the holders of a majority of the outstanding
shares of stock entitled to vote on the matter approve the amendment, unless the certificate
of incorporation requires the vote of a greater number of shares.
If
a class vote on the amendment is required by the DGCL, a majority of the outstanding stock of the class is required, unless a greater
proportion is specified in the certificate of incorporation or by other provisions of the DGCL.
Under
the DGCL, the board of directors may amend a corporation’s bylaws if so authorized in the certificate of incorporation. The
shareholders of a Delaware corporation also have the power to amend bylaws. |
|
Under
the OBCA, amendments to the articles of incorporation generally require the approval of not
less than two-thirds of the votes cast by shareholders entitled to vote on the resolution.
The
directors may, by resolution, make, amend or repeal any bylaws that regulate the business or affairs of a corporation. The directors
must submit the bylaw, amendment or repeal to the shareholders at the next meeting of shareholders, and the shareholders may confirm,
reject or amend the bylaw, amendment or repeal.
|
| |
|
Delaware |
|
OBCA |
Indemnification
of
Directors
and Officers |
|
Under
the DGCL, subject to specified limitations in the case of derivative suits brought by a corporation’s
stockholders in its name, a corporation may indemnify any person who is made a party to any
action, suit or proceeding on account of being a director, officer, employee or agent of
the corporation (or was serving at the request of the corporation in such capacity for another
corporation, partnership, joint venture, trust or other enterprise) against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding, provided that there
is a determination that: (i) the individual acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation; and (ii) in a
criminal action or proceeding, the individual had no reasonable cause to believe his or her
conduct was unlawful.
Without
court approval, however, no indemnification may be made in respect of any derivative action in which an individual is adjudged liable
to the corporation, except to the extent the Court of Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication but in view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity.
The
DGCL requires indemnification of directors and officers for expenses (including attorneys’ fees) actually and reasonably relating
to a successful defense on the merits or otherwise of a derivative or third-party action.
Under
the DGCL, a corporation may advance expenses to any director or officer relating to the defense of any proceeding upon the receipt
of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified. |
|
Pursuant
to the Company’s bylaws, the Company will indemnify a director or officer, a former
director or officer or a person who acts or acted at the Company’s request as a director
or officer, or an individual acting in a similar capacity, to the fullest extent permitted
by the OBCA.
Under
the OBCA, a corporation may indemnify a present or former director or officer or another individual who acts or acted at the corporation’s
request as a director or officer, or in a similar capacity, of another entity (the “indemnified individual”), against
all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred by the indemnified
individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the indemnified individual
is involved because of that association with the Company or such other entity, and provided that the indemnified individual (i) acted
honestly and in good faith with a view to the best interests of the Company, and, (ii) in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, such indemnified individual had reasonable grounds for believing that
his or her conduct was lawful.
The
Company may indemnify, with court approval, an indemnified individual in respect of an action by or on behalf of the Company or such
other entity to obtain a judgment in its favor, to which the indemnified individual is made a party because of their association
with the Company or such other entity.
An
indemnified individual is entitled to indemnification from the Company as a matter of right if such indemnified individual was not
judged by a court or other competent authority to have committed any fault or omitted to do anything that the indemnified individual
ought to have done and fulfilled the conditions set forth above. |
| |
|
Delaware |
|
OBCA |
Limited
Liability of
Directors
and Officers |
|
The
DGCL permits the adoption of a provision in a corporation’s certificate of incorporation limiting or eliminating the monetary
liability of a director or officer to a corporation or its shareholders by reason of a director or officer’s breach of the
director or officer’s fiduciary duties, except for (i) any breach the duty of loyalty to the corporation or its shareholders;
(ii) any act or omission not in good faith or involving intentional misconduct or a known violation of law; (iii) any breach in which
the director or officer obtains an improper personal benefit from the corporation; (iv) with respect to directors, the unlawful payment
of a dividend or the unlawful approval a stock repurchase; or (v) in the case of an officer, any actions brought by or in the right
of a corporation. |
|
Under
the OBCA, every director and officer of a corporation in exercising his or her powers and
discharging his or her duties to the corporation shall (i) act honestly and in good faith
with a view to the best interests of the corporation, and (ii) exercise the care, diligence
and skill that a reasonably prudent person would exercise in comparable circumstances.
Subject
to the OBCA’s unanimous shareholder agreement provisions, no provision in a contract, the articles of amalgamation, the bylaws
or a resolution relieves a director or officer from the duty to act in accordance with the OBCA and the regulations thereunder or
relieves him or her from liability for a breach thereof. |
| |
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|
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Stockholder/
Shareholder
Lawsuits |
|
Under
the DGCL, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation; provided,
however, that under Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction that
is the subject of the suit, but also throughout the duration of the derivative suit. Delaware law also requires that the derivative
plaintiff make a demand on the directors of the corporation to assert the derivative claim before the suit may be prosecuted by the
derivative plaintiff, unless such demand would be futile. An individual also may commence a class action suit on behalf of himself
or herself and other similarly situated stockholders where the requirements for maintaining a class action have been met. |
|
Under
the OBCA, (i) a current or former shareholder (including a beneficial shareholder); (ii)
a current or former director of a corporation; or (iii) any person who, in the discretion
of the court, is an appropriate person (a “complainant”) may bring an application
to prosecute, defend, or discontinue an action on behalf of a corporation (a derivative action).
A
complainant may apply to the court for leave to bring an action in the name and on behalf of a corporation or any of its subsidiaries
or intervene in an action in which any such body corporate is a party, for the purpose of prosecuting, defending or discontinuing
the action on behalf of a body corporate if the complainant has given fourteen days’ notice to the directors of the corporation,
and the court is satisfied that (i) the directors of the corporation will not bring, prosecute, defend or discontinue the action;
(ii) the complainant is acting in good faith; and (iii) it appears to be in the best interest of the corporation for the action to
be prosecuted or defended.
Under
the OBCA, upon the final disposition of a derivative action, the court may make any order it determines to be appropriate, including
an order requiring the corporation to pay reasonable legal fees and any other costs reasonably incurred by the complainant in connection
with the action. |
| |
|
Delaware |
|
OBCA |
| Oppression
Remedy |
|
Although
the DGCL imposes upon directors and officers fiduciary duties of loyalty (i.e., a duty to act in a manner believed to be in the best
interest of the corporation and its stockholders) and care, the DGCL does not provide for a remedy for a breach of fiduciary duties
that is comparable to the OBCA’s oppression remedy. |
|
The
OBCA’s oppression remedy enables a court to make an order (interim or final) to rectify
conduct that is oppressive or unfairly prejudicial to or that unfairly disregards the interests
of any security holder, creditor, director or officer of the corporation. To determine whether
the oppression remedy is appropriate, the court will consider the corporation’s actions
and/or omissions (including decisions made by the directors), and the business and affairs
of the corporation.
Under
the OBCA, a complainant (as defined above) may bring an oppression application.
The
oppression remedy provides the court with extremely broad and flexible jurisdiction to intervene in corporate affairs to protect
shareholders. |
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Blank
Check
Preferred
Stock/Shares |
|
Under
the DGCL, the certificate of incorporation of a corporation may give the board the right
to issue new classes of preferred shares with voting, conversion, dividend distribution,
and other rights to be determined by the board at the time of issuance, which could prevent
a takeover attempt and thereby preclude shareholders from realizing a potential premium over
the market value of their shares.
In
addition, the DGCL does not prohibit a corporation from adopting a shareholder rights plan, or “poison pill,” which could
prevent a takeover attempt and preclude shareholders from realizing a potential premium over the market value of their shares. |
|
According
to the Company’s bylaws, shares of the Company may be issued at such times and to such
persons and for such consideration as the directors determine.
Under
the OBCA, the articles of a corporation may authorize the issuance of any class of shares in one or more series and may determine
the designation, rights, privileges, restrictions and conditions attaching to the shares of each series.
Under
the OBCA, each share of a series of shares must have the same special rights or restrictions as are attached to every other share
of that series of shares. In addition, the special rights or restrictions attached to shares of a series of shares must be consistent
with the special rights or restrictions attached to the class of shares of which the series of shares is part.
In
addition, the OBCA does not prohibit a corporation from adopting a shareholder rights plan, or “poison pill,” which could
prevent a takeover attempt and preclude shareholders from realizing a potential premium over the market value of their shares. |
| |
|
Delaware |
|
OBCA |
Advance
Notification
Requirements
for
Proposals
of Stockholders/Shareholders |
|
Delaware
corporations typically have provisions in their bylaws, often referred to as “advance
notice bylaws,” that require a stockholder proposing a nominee for election to the
board of directors or other proposals at an annual or special meeting of the stockholders
to provide notice of any such proposals to the corporation in advance of the meeting for
any such proposal to be brought before the meeting of the stockholders. In addition, advance
notice bylaws frequently require the stockholder nominating a person for election to the
board of directors to provide information about the nominee, such as his or her age, address,
employment and beneficial ownership of shares of the corporation’s capital stock. The
stockholder may also be required to disclose information about the stockholder, including,
among other things, his or her name, share ownership and agreement, arrangement or understanding
with respect to such nomination.
For
other proposals, the proposing stockholder is often required by the bylaws to provide a description of the proposal and any other
information relating to such stockholder or beneficial owner, if any, on whose behalf that proposal is being made, required to be
disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for the proposal
and pursuant to and in accordance with the Exchange Act and the rules and regulations promulgated thereunder. |
|
Under
the Company’s bylaws, a shareholder may nominate a director pursuant to a proposal
or requisition made in accordance with the provisions of the OBCA.
In
addition, any person who at (i) the close of business on the date of giving notice; and (ii) on the record date for notice of such
meeting, is a registered security holder of one or more shares carrying the right to vote, or who beneficially owns shares that are
entitled to be voted (“Nominating Shareholder”), may elect a director, subject to fulfilling certain notice procedures.
A Nominating Shareholder is required to give timely notice in the proper written form, as outlined in the bylaws.
To
be in proper form, the notice of the Nominating Shareholder must set forth, amongst other things, (i) each proposed director nominee,
and any other information relating to the nominee that would be required to be disclosed in a dissident’s proxy circular under
the OBCA and applicable security laws, and (ii) any proxy, contract, arrangement, understanding or relationship pursuant to which
such Nominating Shareholder has a right to vote any shares of the Company and any other information relating to such Nominating Shareholder
that would be required to be made in a dissident’s proxy circular under the OBCA and applicable security laws.
In
certain circumstances, the corporation may refuse to process a proposal. |
Description
of the Securities
This
prospectus contains summary descriptions of the common shares, debt securities, subscription receipts, warrants, rights and units that
we may offer from time to time. These summary descriptions are not meant to be complete descriptions of each security. We will also set
forth in the applicable prospectus supplement a description of the securities that may be offered under this prospectus. The applicable
prospectus supplement may add, update or change the terms and conditions of the securities as described in this prospectus. The terms
of the offering of securities, the initial offering price and the net proceeds to us will be contained in the prospectus supplement and/or
other offering material relating to such offering. You should read the applicable prospectus supplement relating to the securities being
offered pursuant to this prospectus and any other offering materials that we may provide.
Description
of Common Shares
We
may issue, separately or together with, or upon conversion, exercise or exchange of other securities, common shares from time to time,
as set forth in the applicable prospectus supplement. See “Description of Share Capital” above.
Description
of Debt Securities
The
following description of the terms of the debt securities sets forth certain general terms and provisions of the debt securities in respect
of which a prospectus supplement will be filed. The particular terms and provisions of the debt securities offered by any prospectus
supplement, and the extent to which the general terms and provisions described below may apply thereto, will be described in a prospectus
supplement filed in respect of such debt securities.
Debt
securities may be offered separately or in combination with one or more other securities. The Company may, from time to time, issue debt
securities and incur additional indebtedness other than through the issue of debt securities pursuant to this prospectus.
Debt
securities will be issued under one or more indentures (each, a “debt indenture”), in each case between the Company and an
appropriately qualified entity authorized to carry on business as a trustee. The description below is not exhaustive and is subject to,
and qualified in its entirety by reference to, the detailed provisions of the applicable debt indenture.
The
following description sets forth certain general terms and provisions of the debt securities and is not intended to be complete. We have
filed a form of indenture as Exhibit 4.4 to the registration statement of which this prospectus is a part. When debt securities are offered
in the future, the prospectus supplement will explain the particular terms of those securities and the extent to which these general
provisions may apply. Capitalized terms used in the summary have the meanings specified in the indenture.
General
The
debt securities may be issued from time to time in one or more series and may be convertible into other securities. The Company may specify
a maximum aggregate principal amount for the debt securities of any series and, unless otherwise provided in the applicable prospectus
supplement, a series of debt securities may be reopened for issuance of additional debt securities of such series.
Any
prospectus supplement for debt securities will contain the specific terms and other information with respect to the debt securities being
offered thereby, including:
| |
● |
the
designation, aggregate principal amount and authorized denominations of such debt securities; |
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● |
any
limit upon the aggregate principal amount of such debt securities; |
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● |
the
currency or currency units for which such debt securities may be purchased and the currency or currency units in which the principal
and any interest is payable (in either case, if other than Canadian dollars); |
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● |
the
issue price (at par, at a discount or at a premium) of such debt securities; |
| |
● |
the
date or dates on which such debt securities will be issued and delivered; |
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● |
the
date or dates on which such debt securities will mature, including any provision for the extension of a maturity date, or the method
of determination of such date(s); |
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● |
the
rate or rates per annum (either fixed or floating, respectively) at which such debt securities
will bear interest (if any) and, if floating, the method of determination of such rate; |
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● |
the
date or dates from which any such interest will accrue and on which such interest will be payable and the record date or dates for
the payment of such interest, or the method of determination of such date(s); |
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● |
if
applicable, the provisions for subordination of such debt securities to other indebtedness of the Company; |
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● |
any
redemption term or terms under which such debt securities may be defeased whether at or prior to maturity; |
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● |
any
repayment or sinking fund provisions; |
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● |
any
events of default applicable to such debt securities; |
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● |
whether
such debt securities are to be issued in registered form or in the form of temporary or permanent global securities and the basis
of exchange, transfer and ownership thereof; |
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● |
any
exchange or conversion terms and any provisions for the adjustment thereof; |
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● |
if
applicable, the ability of the Company to satisfy all or a portion of any redemption of such debt securities, any payment of any
interest on such debt securities or any repayment of the principal owing upon the maturity of such debt securities through the issuance
of securities of the Company or of any other entity, and any restriction(s) on the persons to whom such securities may be issued;
and |
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● |
any
other specific terms or covenants applicable to such debt securities. |
The
Company may include in a prospectus supplement specific terms pertaining to the debt securities that are in addition to, or in lieu of,
the terms debt securities as described in this prospectus. To the extent that any particular terms of the debt securities described in
a prospectus supplement differ from any of the terms of the debt securities described in this prospectus, the description of such terms
set forth in this prospectus shall be deemed to have been superseded by the description of such differing terms set forth in such prospectus
supplement with respect to such debt securities.
Unless
otherwise specified in a prospectus supplement, the debt securities will be direct unsecured obligations of the Company and will rank
pari passu (except as to sinking funds) with all other unsubordinated and unsecured indebtedness of the Company, including other
debt securities issued under the debt indenture.
Description
of Subscription Receipts
The
Company may issue subscription receipts, independently or together with other securities. Subscription receipts will be issued under
one or more subscription receipt agreements.
A
subscription receipt is a security of the Company that will entitle the holder to receive one or more common shares or a combination
of common shares and warrants, upon the completion of a transaction, typically an acquisition by the Company of the assets or securities
of another entity. After the offering of subscription receipts, the subscription proceeds for the subscription receipts are held in escrow
by the designated escrow agent, pending the completion of the transaction. Holders of subscription receipts will not have any rights
of shareholders of the Company. Holders of subscription receipts are only entitled to receive common shares or warrants or a combination
thereof upon the surrender of their subscription receipts to the escrow agent or to a return of the subscription price for the subscription
receipts together with any payments in lieu of interest or other income earned on the subscription proceeds.
Selected
provisions of the subscription receipts and the subscription receipt agreements are summarized below. This summary is not complete. The
statements made in this prospectus relating to any subscription receipt agreement and subscription receipts to be issued thereunder are
summaries of certain anticipated provisions thereof and are subject to, and are qualified in their entirety by reference to, all provisions
of the applicable subscription receipt agreement.
A
prospectus supplement will set forth the following terms relating to the subscription receipts being offered:
| |
● |
the
designation of the subscription receipts; |
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● |
the
aggregate number of subscription receipts offered and the offering price; |
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● |
the
terms, conditions and procedures for which the holders of subscription receipts will become entitled to receive common shares or
warrants or a combination thereof; |
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● |
the
number of common shares or warrants or a combination thereof that may be obtained upon the conversion of each subscription receipt
and the period or periods during which any conversion must occur; |
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● |
the
designation and terms of any other securities with which the subscription receipts will be offered, if any, and the number of subscription
receipts that will be offered with each security; |
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● |
the
gross proceeds from the sale of such subscription receipts, including (if applicable) the terms applicable to the gross proceeds
from the sale of such subscription receipts, plus any interest earned thereon; |
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● |
the
material income tax consequences of owning, holding and disposing of such subscription receipts; |
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● |
whether
such subscription receipts will be listed on any securities exchange; |
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● |
any
terms, procedures and limitations relating to the transferability, exchange or conversion of the subscription receipts; and |
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● |
any
other material terms and conditions of the subscription receipts. |
Description
of Warrants
This
section describes the general terms that will apply to any warrants for the purchase of common shares (the “equity warrants”)
or for the purchase of debt securities (the “debt warrants”).
Warrants
may be offered separately or together with other securities, as the case may be. Each series of warrants may be issued under a separate
warrant indenture or warrant agency agreement to be entered into between the Company and one or more banks or trust companies acting
as warrant agent or may be issued as stand-alone contracts. The applicable prospectus supplement will include details of the warrant
agreements governing the warrants being offered. The warrant agent is expected to act solely as the agent of the Company and will not
assume a relationship of agency with any holders of warrant certificates or beneficial owners of warrants. The following sets forth certain
general terms and provisions of the warrants that may be offered hereunder. The specific terms of the warrants, and the extent to which
the general terms described in this section apply to those warrants, will be set forth in the applicable prospectus supplement, if any.
Equity
Warrants
The
particular terms of each issue of equity warrants will be described in a related prospectus supplement. This description will include,
where applicable:
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● |
the
designation and aggregate number of the equity warrants; |
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● |
the
price at which the equity warrants will be offered; |
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● |
the
currency or currencies in which the equity warrants will be offered; |
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● |
the
date on which the right to exercise the equity warrants will commence and the date on which the right will expire; |
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● |
the
class and/or number of common shares that may be purchased upon exercise of each equity warrant and the price at which and currency
or currencies in which the common shares may be purchased upon exercise of each equity warrant; |
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● |
the
terms of any provisions allowing for adjustment in (i) the class and/or number of common shares or other securities or property that
may be purchased, or (ii) the exercise price per common share; |
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● |
whether
the Company will issue fractional shares; |
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● |
the
designation and terms of any securities with which the equity warrants will be offered, if any, and the number of the equity warrants
that will be offered with each security; |
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● |
the
date or dates, if any, on or after which the equity warrants and the related securities will be transferable separately; |
| |
● |
whether
the equity warrants will be subject to redemption and, if so, the terms of such redemption provisions; |
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● |
whether
the Company has applied to list the equity warrants and/or the related common shares on a stock exchange; and |
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● |
any
other material terms or conditions of the equity warrants. |
Debt
Warrants
The
particular terms of each issue of debt warrants, if any, will be described in a prospectus supplement. Such description will include,
where applicable:
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● |
the
designation and aggregate number of debt warrants; |
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● |
the
price at which the debt warrants will be offered; |
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● |
the
currency or currencies in which the debt warrants will be offered; |
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● |
the
designation and terms of any securities with which the debt warrants are being offered, if any, and the number of the debt warrants
that will be offered with each security; |
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● |
the
date or dates, if any, on or after which the debt warrants and the related securities will be transferable separately; |
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● |
the
principal amount of debt securities that may be purchased upon exercise of each debt warrant and the price at which and currency
or currencies in which that principal amount of debt securities may be purchased upon exercise of each debt warrant; |
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● |
the
date on which the right to exercise the debt warrants will commence and the date on which the right will expire; |
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|
|
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● |
the
minimum or maximum amount of debt warrants that may be exercised at any one time; |
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|
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● |
whether
the debt warrants will be subject to redemption, and, if so, the terms of such redemption provisions; and |
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|
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● |
any
other material terms or conditions of the debt warrants. |
Description
of Units
The
Company may issue units comprised of one or more of the other securities described herein in any combination. A prospectus supplement
relating to the particular units offered, if any, will describe the terms of such units and, as applicable, the terms of such other securities.
Each
unit is expected to be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder
of a unit is expected to have the rights and obligations of a holder of each included security. The unit agreement under which a unit
is issued, as the case may be, may provide that the securities included in the unit may not be held or transferred separately, at any
time or at any time before a specified date.
The
applicable prospectus supplement may describe:
| |
● |
the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those
securities may be held or transferred separately; |
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| |
● |
any
provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and |
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● |
any
other material terms and conditions of the units. |
The
preceding description and any description of units in an applicable prospectus supplement does not purport to be complete and is subject
to and is qualified in its entirety by reference to the unit agreement and, if applicable, collateral arrangements and depositary arrangements
relating to such units.
Plan
of Distribution
We
may sell the securities covered by this prospectus from time to time by one or more of the following methods, or any combination thereof,
or through any other method permitted by law: to or through underwriters, brokers or dealers, with or without an underwriting syndicate,
for them to offer and sell to the public; directly to one or more purchasers in negotiated purchases or in competitively bid transactions;
through designated agents; directly to holders of warrants exercisable for our securities upon the exercise of warrants; or through a
combination of any of these methods of sale. We reserve the right to accept or reject, in whole or in part, any proposed purchase of
securities, whether the purchase is to be made directly or through agents.
Each
time that we use this prospectus to sell our securities, we will also provide a prospectus supplement that contains the specific terms
of the offering, including the name or names of any underwriters, dealers or agents and the types and amounts of securities underwritten
or purchased by each of them; the public offering price of the securities and the proceeds to us; any over-allotment options under which
underwriters may purchase additional securities from us; any agency fees or underwriting discounts or other items constituting agents’
or underwriters’ compensation; any discounts, commissions or concessions allowed or reallowed or paid to underwriters, agents or
dealers; any securities exchange or market on which the securities may be listed; and any delayed delivery arrangements.
The
offer and sale of the securities described in this prospectus by us, the underwriters, or the third parties described above may be effected
from time to time in one or more transactions: at a fixed price or prices, which may be changed; at market prices prevailing at the time
of sale; in “at the market offerings” within the meaning of Rule 415(a)(4) of the Securities Act, to or through a market
maker or into an existing trading market, on an exchange, or otherwise; at prices related to the prevailing market prices; or at negotiated
prices.
Any
public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
Unless
otherwise specified in the related prospectus supplement, each series of securities will be a new issue with no established trading market,
other than our common shares, which are listed on the TSXV and Nasdaq. We may elect to list any securities on an exchange, but we are
not obligated to do so. It is possible that one or more underwriters may make a market in the securities, but such underwriters will
not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity
of, or the trading market for, any offered securities.
If
underwriters are used in the sale of any securities, the securities will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. The securities may be either offered to the public through underwriting syndicates represented
by managing underwriters, or directly by underwriters. Generally, the underwriters’ obligations to purchase the securities will
be subject to certain conditions precedent set forth in the applicable underwriting agreement. We may offer the securities to the public
through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. The underwriters will be
obligated to purchase all of the securities if they purchase any of the securities. Only underwriters that we have named in the prospectus
supplement will be underwriters of the securities offered by that prospectus supplement.
If
we use dealers in the sale of securities, we may sell securities to such dealers as principals. The dealers may then resell the securities
to the public at varying prices to be determined by such dealers at the time of resale. If we use agents in the sale of securities, unless
otherwise indicated in the prospectus supplement, they will use their reasonable best efforts to solicit purchases for the period of
their appointment. We may solicit offers to purchase the securities directly, and we may sell the securities directly to institutional
or other investors, who may be deemed underwriters within the meaning of the Securities Act with respect to any resales of those securities.
Unless otherwise indicated in a prospectus supplement, if we sell directly, no underwriters, dealers or agents will be involved. The
terms of these sales will be described in the applicable prospectus supplement. We will not make an offer of securities in any jurisdiction
that does not permit such an offer.
We
may authorize underwriters, dealers, or agents to solicit offers by certain types of institutional investors to purchase our securities
at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. The contracts will be subject only to those conditions set forth in the prospectus supplement,
and the prospectus supplement will set forth any commissions or discounts we pay for solicitation of these contracts.
Agents
and underwriters may be entitled to indemnification by us against civil liabilities, including liabilities under the Securities Act,
or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities. Agents and underwriters
may engage in transactions with, or perform services for, us in the ordinary course of business.
In
connection with any offering, the underwriters may purchase and sell securities in the open market. These transactions may include short
sales, over-allotment, stabilizing transactions and purchases to cover positions created by short sales and penalty bids. Short sales
involve the sale by the underwriters of a greater number of securities than they are required to purchase in an offering. Over-allotment
involves sales in excess of the offering size, which create a short position. Stabilizing transactions consist of certain bids or purchases
of the offered securities or any underlying securities made for the purpose of preventing or retarding a decline in the market price
of the securities while an offering is in progress. Short-covering transactions involve purchases of the securities, either through exercise
of the over-allotment option or in the open market after the distribution is completed, to cover short positions. Penalty bids permit
the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a stabilizing
or covering transaction to cover short positions. These activities by the underwriters may stabilize, maintain or otherwise affect the
market price of the securities. As a result, the price of the securities may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the underwriters at any time. These transactions may be effected
on an exchange (if the securities are listed on an exchange) in the over-the-counter market or otherwise.
We
may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates in connection with those derivatives, then the third parties
may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so,
the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open
borrowings of shares, and may use securities received from us in settlement of those derivatives to close out any related open borrowings
of securities. The third party in any such sale transaction will be an underwriter and will be identified in the applicable prospectus
supplement (or a post-effective amendment).
In
connection with the distribution of the securities offered under this prospectus, we may enter into swap or other hedging transactions
with, or arranged by, underwriters or agents or their affiliates. These underwriters or agents or their affiliates may receive compensation,
trading gain or other benefits from these transactions.
Under
the securities laws of some states, to the extent applicable, the securities may be sold in such states only through registered or licensed
brokers or dealers. In addition, in some states, certain of the securities may not be sold unless such securities have been registered
or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
Expense
of the Issuance and Distribution
The
following table sets forth those expenses to be incurred by us in connection with the issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All of the amounts shown are estimates, except the SEC registration fee.
| SEC
registration fee | |
$ | 16,530 | |
| Printing
and postage expenses | |
| | (1) |
| Legal
fees and expenses | |
| | (1) |
| Trustee
fees and expenses | |
| | (1) |
| Accounting
fees and expenses | |
| | (1) |
| Rating
agency fees | |
| | (1) |
| Taxes | |
| | (1) |
| Total | |
| | (1) |
(1)
These expenses are not presently known and cannot be estimated at this time as they are based upon the amount and type of security being
offered, as well as the number of offerings. The aggregate amount of these expenses will be reflected in the applicable prospectus supplement.
Certain
Income Tax Considerations
Material
Canadian and/or U.S. income tax consequences relating to the purchase, ownership and disposition of any of the securities offered by
this prospectus will be set forth in the applicable prospectus supplement relating to the offering of those securities. You are urged
to consult your own tax advisors prior to any acquisition of our securities.
Enforceability
of Civil Liabilities
The
Company is incorporated under and governed by the OBCA. Some of the directors and officers of the Company, as well as some of the entities
named as experts in this prospectus, are residents of Canada or otherwise reside outside of the U.S., and all or a substantial portion
of their assets are located outside the U.S. It may be difficult for investors who reside in the U.S. to effect service within the U.S.
upon those directors, officers and experts who are not residents of the U.S. It may also be difficult for investors who reside in the
U.S. to realize in the U.S. upon judgments of courts of the U.S. predicated upon our civil liability and the civil liability of the Company’s
directors, officers and experts under the U.S. federal securities laws. A final judgment for a liquidated sum in favor of a private litigant
granted by a U.S. court and predicated solely upon civil liability under U.S. federal securities laws would, subject to certain exceptions
identified in the law of individual provinces and territories of Canada, likely be enforceable in Canada if the U.S. court in which the
judgment was obtained had a basis for jurisdiction in the matter that would be recognized by the domestic Canadian court for the same
purposes. There is a significant risk that a given Canadian court may not have jurisdiction or may decline jurisdiction over a claim
based solely upon U.S. federal securities law on application of the conflict of laws principles of the province or territory in Canada
in which the claim is brought.
Legal
Matters
Certain
legal matters in connection with the securities offered hereby will be passed upon on behalf of POET by Katten Muchin Rosenman LLP with
respect to U.S. legal matters and by Bennett Jones LLP with respect to Canadian legal matters. In addition, if legal matters in connection
with any offering of securities made pursuant to this prospectus are passed upon by counsel for any underwriters, dealers or agents,
such counsel will be named in the prospectus supplement relating to such offering.
Experts
The
consolidated financial statements of POET Technologies Inc. as of December 31, 2022, 2021 and 2020 and for each of the three years in
the period ended December 31, 2022 incorporated in this prospectus by reference to the Company’s Annual Report on Form 20-F have
been audited by Marcum LLP, an independent registered public accounting firm, as stated in their report incorporated by reference herein,
and have been incorporated in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
POET
TECHNOLOGIES INC.
3,333,334
Shares of Common Shares
Warrants
to Purchase up to 3,333,334 Common Shares
(and
the shares of Common Shares underlying such Warrants)
PROSPECTUS
SUPPLEMENT
July
19, 2024
POET Technologies (NASDAQ:POET)
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