I appreciate how you simplified Poet's deal with DL Shanghai. However, Poet is not selling a used car. They already have developed a key component (OI) for any new car, bus, truck, train, whatever and it is scalable and open basically to any kind of manufacturer in its space. Poet's true value will unlock once the key component (Poet's product) is tested with already workable prior versions of Poet's customers' products that get enhanced/upgraded into the photonic age. And DL Shanghai, in particular, goes along for the ride to manufacturer in volume for its number one customer, Poet. 

DL Shanghai is getting a bargain now in my opinion. Mimimal risk for them with tremendous upside from Poet. Splitting the purchase price, to me, is the equivalent of a standard practice in the customized manufacturing. In essence, they are like milestone payments (holdbacks) based upon an agreed progress timeline between the two parties. 

In my opinion overall and in response to your post, Poet would not have ever had a deal if they were viewed, as you have modeled, as a "used car." Poet is leading-edge technology with tremendous value.

DL Shanghai has made an investment in Denselight that Poet upgraded. DL Shanghai, as its own entity, is spending $100 million that Poet does not have to spend to create a modern manufacturing facility to produce the anticipated volumes expected. The arrangements between DL Shanghai, to me, is like two autonomous entities sharing a partnership agreement. Therefore, both entities are trying to co-exist and help each other and not "s"crew each other.

Monolithic