For myself and sent it to my son.....Thought I would post it here...Hope you don't mind
The presentation part 1 (a bit rushed)
Lee starts off by talking about the history of Geoff Taylors work with POET and how unique this situation is in terms of Geoff being able to focus on the development over such a long time frame that was only possible due to funding by the US government.
What really sets Geoff’s work apart from other companies is his approach. Geoff did this in a very different way organizationally and his technical approach instead of developing a little piece of the solution and then trying to run to the end user market with it. He actually stood back and said what do you need to answer the whole questions?
The classic example would be that somebody would develop a great optical technology but it would be terrible at electronics or vice versa. Geoff due to his experience realized that a number of key elements all needed to be in place for any of them to be a success. He brought the discipline to the effort and quite frankly the long attention span required to be successful. By the time we have this technology sold he will have been on this technical problem for 25 years.
Gallium Arsenide today and for the last 30 years has been a very specialized semiconductor material. Basically only used where nothing else would work. It is used for certain high-speed optical and electronic components but no one has ever tried to build any significant integrated circuit out of GaAs and there were some reasons why that couldn’t happen. Geoff has systematically knocked off those technical issues. Now we are in a position where the historical benefits of GaAs are still there but the real strength of this is as a replacement to silicon CMOS.
Silicon CMOS is about one generation away from the end of that train. It has had a great 55 year run. I think it has another 5 years of major technology investment. Once we get to the 11 nanometer feature size we are really running out of atoms on our gates. It means that devices just won’t work anymore. The cost difference from going from 32 to 22 to 14 to 11 nanometers the investment curve becomes very steep. So it looks like only 2 companies in the world will go beyond 20 nanometer CMOS manufacturing or have the technical and financial where with all to do so. As a long time chip architect and semiconductor device designer CMOS has really reached a point where we really can’t get performance improvements. We make something smaller, which historically makes it faster, but due to issues associated with devices which have so few atoms lined up on a gate that it is really coming to a logical end.
The strength of what Geoff has done is that POET is not an enhancement to the existing GaAs or semiconductor market but really something that is applicable to everywhere that semiconductors are used today. Particularly where silicon CMOS is used today. In terms of what Opel has in POET it is something that the technology world has been pursuing for at least 20 years on a pretty organized basis with a many pronged effort across the industry. And for one reason or another every one of those efforts that I am familiar with painted themselves into a technical corner where they got a few functions working very well, committed to that process and started developing products. And then realized when they went back to try and extend it to do more things to try and realize the promise of electro-optical semiconductor integration that they had committed to a technology that could not be expanded.
A question from the audience about the differences between optical and electrical. Lee does a short explanation about how optical is used at the interface. Everything inside the box (PC) is handled electronically.
Optics unlike electrical stuff has to be mechanically aligned. Any optical system has to be very carefully assembled and aligned. Anyone who is familiar with manufacturing knows that the more precisely you have to do something the more expensive it is. So there has been a long term industry interest in taking optical technologies that have to be assembled out of discrete components today with great precision and at a great cost and integrate them onto one chip such that all of your fine tolerances can be done using photolithography and not by using the ever increasing cost of Chinese labour which is how the stuff is built today. So there is the idea of integrating optical and electrical function ability and that has a tremendous value proposition for optical transceivers. Any systems that have optical interfaces.
POET actually goes beyond that. We can integrate electro- optical functionality onto the same die that does purely electrical processing. It can run much faster than CMOS technology can. A CMOS transistor would run at maybe 3.5 GHz which is a little faster than your fastest Intel processor today. Geoff’s first transistor prototype that he produced two and one half years ago ran at 65 GHz and they were 1000 times bigger than the CMOS transistors today (remember that performance increases as the size decreases). So the performance is not really comparable. They are two different worlds and are very different materials. What is interesting about POET. Beyond the electro-optical integration and the very high performance of the electronic processing that can be done… there is also a very significant capability to do optical processing which means actually processing data. The tremendous value of POET is that if we look purely at the electronics business the silicon CMOS replacement technology in POET can do anything that silicon CMOS can do and do it an order of magnitude maybe 10 to 15 times faster than a comparable CMOS technology. We have the ability to integrate optical functionality that today requires multiple separate components and significant assembly costs and testing costs. But also with POET we won’t have to convert optical signals to electrical signals and back, we can do significant processing in the optical form.
End of Part 1.
POET Presentation part 2
Question from the audience: Why is an optical signal better than an electrical signal?
The optical signal is not affected by capacitance. No electrons have to move. They can go at high speeds and they can typically go long distances without attenuation. If anyone remembers how much our phone bills dropped when we went from copper long haul transmission lines to fiber optics its because you can put an optical signal onto a piece of fiber and one watt of power will take you hundreds of kilometers before you have to regenerate the signal. One watt of power in an electrical signal would probably take you maybe hundreds of inches (big laugh from Lee he has a good sense of humour) not very far.
Back on topic:
System backplanes…If anyone has seen a networking switch from Sisco. There is a bunch of cards that plug into a big circuit board in the back and that card at the back is just full of wires connecting the slots together. Geoff’s technology could illuminate the backplane. All you need is a light pipe with some spigots coming off it. That’s it.
That is just one example of massively simplifying a piece of networking equipment. Really what Geoff has done is he has developed 3 key technologies and they are three firsts. He has developed a complimentary P and N channel transistor pair that has never been made in anything but silicon CMOS before. This is the first time that people have been able to make it work. My comment if you got to the UConn lab tour clips you will hear this from one of Geoff’s team in this clip https://www.youtube.com/watch?v=ALYDMN0NLEs
So those electronic components on their own have a tremendous value proposition leaving the optical stuff alone. The third piece of this technology is something called an optical thyristor and he has spent 12 years just on the thyristor design and we are actually fabricating some of these at BAE over the next few months. These devices are very interesting because they are so versatile. They can be used as a laser. They can be used as several kinds of lasers. They can be used as a detector. They can either be used to detect infrared or visible light. Whatever kind of energy level you want to detect. What is truly unique about this is the same optical thyristor can be used for both. So one of the reasons the US Defense Department has been interested in funding this type of technology and has really funded it for 15 years. We are still getting grants from NASA that we are still spending. Their big motivation to pursue this technology is that you can build an array. Today you can build and array of detectors. That’s the night vision equipment that everyone has seen in the movies or you can build lasers that shoot things or shoot people. Geoff’s technology can do both. So basically you can have a panel, an array that is configured as a detector and in micro seconds I mean millionths of a second you can change the bias on those things and turn them into lasers. So in a military application your radar panel is also your direct energy weapon. It sounds like Star Wars but it actually works. The reason it works is that the US Defense Complex has put money into this technology for years and they believe in it.
The interesting thing about this is there is such a breadth of applications for the technology. There are many processor vendors for example. This will allow their architectures to not be so reliant on multicore parallel processing that most of you have heard about and some have probably invested money in. One of the dirty little secrets about the parallel processing world and the multicore world is that most software can’t take advantage of it. You have to rewrite your programs and think about problems in very different ways and map them out to all these low speed parallel CPU’s. It’s not the natural way that many problems are calculated and solved. And with Geoff’s technology you could make an Intel Atom sized processor that could run single execution streams as fast or faster than any of the 6 or 8 core processors from Intel today to process the parallel workload. So I think that is just one example of how staying away from optics or defense stuff or anything else. There is one industry that is just coming to the end of its current technology life time and this is something that really opens up new architectures with fundamentally lower cost points for all kinds of software applications.
If you look at the electro-optical transceiver business there are a number of companies in the world today that butter their bread by buying electro-optical components… probably 6 or 9 and integrate them together in a high speed module which has fibers coming out one side and electrical signals coming out the other. The POET technology essentially eliminates those companies value proposition because you don’t have to integrate these things together into a high speed module anymore. All of it goes on one chip. No human intervention in terms of having to align parts that use dissimilar materials and have multiple pieces connected to a ceramic board. One chip in a cheap package does it. That’s just two examples of existing industries that are only peripherally related to one another. Each of which can and I believe will be turned on their heads by POET technology.
Question: The $5 million that you are raising. Is that going to take you to a point where this is dressed up for sale?
Lees answer: Yes sir. The reason we are raising that money is to bring this message to the world. Geoff has been working at this for so long that he has flown below everyone’s radar except for some key sponsors in the defense community. So nobody in the mainstream tech business have really been exposed to this. They have been exposed to things like it in the past but nobody has heard of this. What I have found is that once you get past their initial skepticism because almost everyone I have talked to if they have invested in this industry has lost at least some money on this kind of stuff in the past.
Silicon photonics was one of the most recent destroyers of investment capital. In this case once they understand that Geoff actually does have the answer then this technology is ready to bring to the world.
End of Part 2
POET Presentation part 3
POET Presentation part 3
Lee Shepherd (continued)
We have been building devices since 2004. We have been building devices in 3rd party fabs. Essentially to make sure that the recipe is transferable since 2010. 2011 the first ones were completed and that has been going on continuously since and will continue on through calendar year 2013. There is a bunch of milestones listed on the presentation. What these basically are is the culmination of Geoff’s quarter century of work where the parts that he has designed, built and optimized. He is building them in a form that I can go and take and show to folks at Intel, at Samsung, at Philips where ever and say you don’t have to believe what I tell you. I am going to leave this with you take it to your lab and do whatever you want to with it and call me back. I know you will call me back because you will be impressed. So we are spending the year making our physical proof points in our own fab as well as at the BAE fab to go out and show the world what this stuff can do and how it works.
Peter Copetti (he has been told he has 15 minutes or less).
So Lee spoke to the science part of it and it gives you at least a bit of an idea as to how important this technology is and what it can do and here are your milestones. So how do we as shareholders or potential shareholders or investors why do I invest in this company? What is management going to do to make me money? That is what you have to be thinking as an investor because if I was in your shoes that is exactly what I would be doing. OK this is all great and dandy but how do I cash out of this thing? Where do I make money? The fact that this story number 1 is untold is a great thing for you guys sitting here in this room because that is more upside. The fact that we are not going to need any more money is another great story because there is no more dilution after this. We have said that, we put in print and we believe that. Thirdly how are we going to get the story out? We were in San Francisco; we are hiring a PR firm in San Francisco that is strictly to do with Silicon Valley types of investors and companies. Deals only with them. They are fantastic; they are going to position us with the leading companies. And line up the dates. I did not clearly hear or get the intent of his next line but I think he was saying that this PR firm will make it known to each of these companies that POET is being presented to all the main players. They have a tremendous institutional following. They are going to put us in front of institutions and funds in the US which we have never had. We will finally be able to tell the story to the funds, we have the time to do it since we have jettisoned out of solar, and we have the people to tell the story properly in front of them. We aren’t going to raise any more money. If they like the story they are going to have to go into the market, we will not be dependent on one or two key guys, one or two funds in Canada to do our work for us. As a company we are driven to number 1 get the story out. Number 2 to increase the share price because when we sell the company as a team we think there is a big gap between what the real value of the company is and what the value is in the stock. So we want to close that gap so when we sell the company we sell it for an appropriate amount of money. We have had board discussions and management discussions about this and we are targeting that as well.
Poet technology the way Lee describes it; there is not a single company in the world that is big enough to use all of POET for what it does. Intel or not anybody else. So we could easily envision someone like an Intel buying it for specific parts then calling in some of their friendly partners for other parts and syndicating it. We would try to put that together ourselves as well. We are producing a white paper now we have targeted about 50 companies we are going to engage. We have already started the monetizing process by engaging and speaking to companies. Lee has done that on his own and we have great feedback already from them. Like he said at first there is disbelief that we are really doing this and when they know that we are half way through the eighth inning of a nine inning game then they can’t believe it. In San Francisco and in the valley they were absolutely shocked of what we have and the fact that nobody really knows about it. So on a risk reward basis as investors that tells me there is a lot of upside. I am not worried about dilution. I know the story is going to get told. I know management is focused. We have a good burn rate. It is a great story. As an investor it is a great story. Nobody in this company has sold stock since Mark and I have arrived. There has not been a sale. There is a new culture at this company not like past practices. The fact that the Chairman has brought that kind of culture he comes from a NY stock type of company. He believes in it, we are not selling stock. We are in for the long run as management and as directors. Lee Shepherd was a missing piece that we didn’t have before, he can really speak to the science and Mark and I can do the business side of it. Geoff Taylor is by far the most important piece of this puzzle. This guy has dedicated his life to it. What you must know as well is that there is another 12 guys around him that absolutely believe in this science they are dedicated to see it to the end. And it’s not just for making money it’s all about changing the world. And that team is what we are going to be selling to a potential syndicate of companies or one company. It is important that Geoff and his team have that vision because it makes the sale that much easier.
POET Presentation – Part 4
I am not going to repeat everything that has been said today except for a couple of things. I can see a couple of our shareholders here who were at our annual shareholders meeting this year. You should ask them questions because they were there and they saw what we have been doing and what Geoff Taylor has been doing. When Peter and I took on this mission we did it with executive titles and the reason for this is that we are actively involved every day. I would love to tell you that I am enjoying every day but I am not. This has become more work than I thought but I think the rewards are going to be there. I have always lived by deeds not words. You heard me say that at the annual meeting. We did that with the solar division. We have refocused the company. A large credit has to go to Peter. The next steps for us are very simple. We have a time frame that says we want to sell this company in the next 12 months with a close in the first quarter of 2014. We have three parallel strategies that are very important. We are going to continue the science; we are going to invest against the science. The reason is the balance of these milestones will add value to our sale process. But the reality is that the largest milestone has already been reached. The second strategy is we must get exposure to this company, the technology to a wider audience than Toronto and Montreal. Let’s call it what it is we are going to spend most of our time and energy in United States. The third strategy on this key, key path is monetization. The number is going to be based on the following. The revenue in this industry blew me away when I looked at it. It was $430 billion (the semiconductor industry). The amount of R&D that they spent in 2011 in the top six companies was $26 billion.