Numbers are from 2011

Third Party Valuation

Commercial Market Key Valuation Assumptions

The following are key assumptions that we integrated into the valuation model for the commercial market:

• The first market application for POET in the commercial market would be for general- purpose microprocessors for server computers.
• The second market application for POET in the commercial market would be for general- purpose microprocessors for desktop computers.
• The third market application for POET in the commercial market would be for general- purpose microprocessors for laptop computers.
• ODIS will likely license POET to one or all of the top general computer microprocessor manufacturers on an exclusive basis.
• In each target market, POET platform would nominally allow a manufacturer to capture its current nominal market share deploying it.
• The server processor market would start at 6,939,877 annual units, growing at 0% per year.
• Server processors would enter the market 48 months from the effective date of the valuation.
• Server processors average $828.89 per unit, which would serve as a basis for a negotiated royalty payment.
• Each server would require two processors.
• The desktop processor market would start at 128,200,000 annual units, growing at 1.13% per year.
• Desktop processors would enter the market 48 months from the effective date of the valuation.
• Desktop processors average $93.22 per unit, which would serve as a basis for a negotiated royalty payment.
• Each desktop would require one processor.
• The laptop processor market would start at 231,900,000 annual units, growing at 12.43% per year.
• Laptop processors would enter the market 48 months from the effective date of the valuation.
• Laptop processors average $93.22 per unit, which would serve as a basis for a negotiated royalty payment.
• Each laptop would require one processor.

Smartphone Market Key Valuation Assumptions

The following are key assumptions that we integrated into the valuation model for the smartphone market:

• The POET platform would nominally allow a smartphone microprocessor manufacturer to capture its current nominal market share deploying it.
• ODIS will likely license POET to one or all of the top smartphone microprocessor manufacturers on an exclusive basis.
• The desktop processor market would start at 188,100,000 annual units, growing at 10.00% in Year 1, 18.18% in Year 2, 15.38% in Year 3, 13.33% in Year 4, 11.28% in Year 5, 9.23% in Year 6, 7.18% in Year 7, 5.13% in Year 8, 3.08% in Year 9, and 1.03% in Year 10.
• Smartphone processors would enter the market 48 months from the effective date of the valuation.
• Smartphone value creation averages $78.96 per unit, which would serve as a basis for a negotiated royalty payment.
• Each smartphone would require one processor.