The last post ended with Sam concluding his discussion of the content in the newest CP slide deck.These notes begin with Mike White’s discussion and the following Q&A.

• Sam concludes his discussion with a reminder that IBK was instrumental in shepherding Tandem’s RTO into OPEL International
• Lots of work has been done already prior to Sam’s joining the company (the aforementioned meetings with over 2 dozen GR companies
• Indicated that the merger with a GR company might actually involve more than one of the companies they have NDAs with if they choose to be part of what Peat has to offer
• Reminded those in attendance that we are still in the early stages of the transition but they anticipate that the work required will take 4-6 mos. (which I thought was very exciting!)
• Reiterated that Peat is not a shell company working on behalf of POET (no deals thus far) but will work to become a “best in class” GR company
• Reminded that a capital raise will be required to make the transition possible (I assume he meant to compensate the GR Company that will be folded into PEAT and for operating capital)
• Once finished this phase, they will be considered a GR company and will be ready for entry into the GR industry with POET (anticipated, not guaranteed – but I think it will be a VERY high probability) providing the “high octane” technology to create and accelerate the value generation for shareholders
• Repeated that at this time we are not beholden or acting as an agent of POET; and if POET falls through for any reason they have a contingency to make Peat a major force in GR
• Peat will be regarded as a“platform technology” which I took to mean it’s a technology that can be “built in” to devices of all kinds to enable gesture recognition for those devices or products

The presentation was concluded and the meeting was opened for a Q&A period (paraphrased):

When will the transition to the GR technology become subject to shareholder approval?

• This will happen when the pivot to the GR has been completed and then a special AGM will be called asking for shareholder approval in approx 4-6 months

Are we protected from one of the companies we have met with going directly to POET now that they know what POET can do?

• We have alternative for hardware (Luxtera and OneChip were named in the slides) in the event the chance to use POET access was blocked, we have alternative hardware and also we (will) have the software innovation to make the difference
• (For the record, I thought the question was asking why one of the candidate GR companies we have interviewed doesn’t skip us and go to POET to beat us to market?The answer didn’t seem to address that, so I’m hoping the terms of the NDAs prevent that from happening)
• It was noted that the companies they talk with tend to be highly focused on developing the GR tech and do not tend to look at the big picture in the was that Peat is able to understand it, what with POET looming on the horizon

Would you try to take a percentage of the company you are interested in?

• The idea is to roll the new company into Peat like OPEL was rolled into Tandem back in the day.

My Question: Have you met with any GR company whose software stands apart from their competition to the same extent that POET stands apart from its peers in the hardware space?

• Mike White: Yes! (excitedly; laughing knowingly) [handed the question over to Sam]
• Out of 25, about 1/3 are innovating in software; but fewer still are able to answer Sam’s questions in all the right ways.For example, someone who writes a software engine for an Xbox Kinect game may only imagine making more of the same kind of games.The better companies see a broader application of their software approach.
• He suggested that one of the companies might have developed a “neural processing” software technology capable of learning as the player or operator interacts with the software (!) <-- this is the “right answer” to the question of what can your technology do

Does POET make the GR to be provided by these candidate partners a better platform than without POET?

• For some of them.
• Sam gave an example of a meeting where he showed up early to meet with a company and noticed a device that wasn’t part of that they intended to showcase.When Sam asked them about it they were very impressed that it caught Sam’s eye, and it turned out to be the next generation of the hardware they were working on.Sam was able to entice them by telling them how much of an improvement they could expect from the hardware (POET) that Peat would be able to provide.

POET’s platform will be based on hardware and software, how does Peat acquire the (human) brainpower needed to drive the innovation needed to stand out?

• Sam clarified that POET isn’t really a platform that involves software; more a recipe for making superior circuits
• For Peat’s software requirements, the first step is to build the brain trust to get the first products out there
• Peat “2.1” (the next step) would be using the core team to draw more and even greater talent to begin growing in ways the market hasn’t seen.The analogy was given of when POET needed to show that the whole company wasn’t just based on one man, Geoff Taylor (what if something happens to him? what happens to the company?!).POET also had to stop working like a group of university students and more like a company (careful documentation, timelines, etc.)
• Mike mentioned that POET needs something like Peat and other companies to help spread POET technology faster; POET only has enough resources to meet the demands of the data centre vertical at the moment – Peat and others will push POET into other areas simultaneously (POET is looking for these opportunities)
• Peat has been speaking to POET “quite regularly” and they are saying they are very supportive of what Peat is doing.The chairman of POET (must be Ajit) say that GR is just a brilliant space for Peat to be in.
• Sam said that one quote he recalls from their discussions was “Just don’t get ahead of us” :) everyone laughed

What about the timing of the regulatory process? Is this happening now?

• Patricia Mannard said that it’s not underway at the moment because all of the ducks need to be in a row before making an approach to the exchange
• All the work needed to prepare to meet the regulators is being done now leading up to the approach
• Trading will cease for a period once the transition is approved so they want to orchestrate the process as seamlessly as possible to keep the cease trade as short as possible

Is there a budget limit needed to make the transition

• There’s no value that they would provide at this point in time, but they said they thought it would be in line with what was needed for the Tandem/Opel transition: millions, but not tens of millions
• They want as little dilution as possible so they will try to add as much value to the company as they reach the point in time when a financing is needed to fund the transition
• They are trying to amass as much value as they can prior to the acquisition
• Sam recalled that he used to fear dilution with POET, but he recalled that POET’s value has beat the affects of the dilution that accrued as POET grew in value

Are the potential partners private or public?

• The few companies that made the cut are all private (by chance, not by design)

Does the fact that an existing tech company (with personnel and a viable technology) make the process of dealing with the regulators easier in any way?

• Really, the regulators will only care about money; as long as we are cashed up the process will go forward

Final words:

• (Sam):Hang in with us!There is a long process ahead, but it’s definitely doable (he said he wishes he could say more that they have, but we’ll have to wait and see).
• (IBK) Is very excited for what’s ahead and they are looking forward to executing the same kind of plan that made POET successful with Peat.
• (Patricia) Pointed out that the team which has been assembled for this launch is extremely comfortable with each other and their goals are aligned to make Peat a technology company. They are all working very hard to make this transition very profitable for the shareholders

Belated questions:

If this transaction occurs, will we stay on the venture or move up?

• (Mike) There’s always the opportunity to move up if we qualify: POET could move up anytime they wanted, but have chosen not to (probably for lack of time)
• A follow-up question of institutional investors not being able to invest in Venture companies came up and Mike conferred that fewer investors than you would imagine are permitted to buy into a venture company; even with a US QX listing
• POET may not be considering TSX uplist, they certainly are considering NASDAQ so that US institutions can participate
• [The questioner despaired a bit hoping that POET would be announcing a move to the big board at the THM; Mike said that they may well be (he doesn’t know) but he hasn’t been told anything one way or the other (So I don’t think this will be happening)]

How does Peat fund operations currently?

• There was a capital raise last year to fund current operations
• Patricia is the only one drawing any kind of a salary; options are what’s keeping the “volunteers” involved

***

This concluded the meeting, but I was able to corner Mike and Sam (with Patricia and, I think either, John, Michael or Scott) for some one-on-one questions that were quite interesting.I should be able to report on those either tomorrow or the next day