Delayed Shipments Expected to Impact Q3 Results; Industry Veteran Joins as Vice President of Operations

OCTOBER 10, 2017 SAN JOSE, CALIFORNIA--(Marketwired) - Spectra7 Microsystems Inc. (TSX:SEV) ("Spectra7" or the "Company"), a leading provider of high-performance analog semiconductor products for broadband connectivity markets, today announced preliminary selected unaudited financial results for the three month period ended September 30, 2017. Unless otherwise indicated, all dollar amounts in this press release are expressed in US dollars.

PRELIMINARY Q3 2017 RESULTS

The Company expects to report revenues for the quarter ended September 30, 2017 of approximately $2.0 million1 as compared to $1.0 million in the same period in the prior year, representing a 100% year-over-year increase in revenue, but a 35% decline from the quarter ended June 30, 2017. The Company encountered manufacturing delays and supply-side push outs late in the quarter, affecting its ability to meet demand and consequently impacting third quarter revenue. These supply chain issues are now being resolved. Demand remains robust, however, and the Company expects to return to a normal shipping schedule in the fourth quarter of 2017. Gross margin2 as a percentage of revenues is projected to fall within the range of 55-58%, reflecting new product ramp-up costs. Operating expenditures for the Company, excluding non-cash items, are expected to increase by $0.3 million from the prior quarter, stemming from one-time prototype build costs.

CEO COMMENTARY

"Production ramp issues and supply constraints left unfilled orders on the books as the quarter ended", said Spectra7 CEO Raouf Halim. "We want to emphasize that this was a supply-driven issue during the quarter, and that our customers remain committed. We are working diligently to complete and ship these unfilled orders early in the fourth quarter".

SEMICONDUCTOR VETERAN JOINS AS VICE PRESIDENT OF OPERATIONS

Spectra7 is pleased to announce that Antony Ng Yukshing is joining the Company as Vice President of Operations. Mr. Ng Yukshing joins Spectra7 from Marvell Technology Group, a company focused on network infrastructure, storage, and wireless solutions, where his most recent role was Senior Director of the Operations Group. Mr. Ng Yukshing joined Marvell in 2005, and previously spent over 10 years as a semiconductor designer at Cypress Semiconductor. He is experienced in scaling semiconductor and system level product lines, such as Wi-Fi modules and enterprise storage solutions, into multi-hundred-million-dollar businesses. Mr. Ng Yukshing has a BEng (Hons) in Electronic and Electrical Engineering from King's College London (UK) and a MSc in Microelectronics from Brunel University London (UK).

"I'm excited to be joining Spectra7 Microsystems, given its large market opportunities in the high-performance analog semiconductor market," said Mr. Ng Yukshing. "Over my career, I've been selective with the companies that I've worked with and I have focused on businesses like Spectra7 that have large scale potential."

"We are pleased that a respected industry veteran like Antony is joining Spectra7 as VP of Operations," said Mr. Halim. "Antony brings decades of semiconductor industry experience that will be critical to Spectra7 manufacturing operations going forward."

ABOUT SPECTRA7 MICROSYSTEMS INC.

Spectra7 Microsystems Inc. is a high performance analog semiconductor company delivering unprecedented bandwidth, speed and resolution to enable disruptive industrial design for leading electronics manufacturers in virtual reality, augmented reality, mixed reality, data centers and other connectivity markets. Spectra7 is based in San Jose, California with design centers in Markham, Ontario, Cork, Ireland, and Little Rock, Arkansas. For more information, please visitwww.spectra7.com.

CAUTIONARY NOTES

Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's future financial position and results of operations, strategy, proposed acquisitions, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to the risk factors discussed in the Company's annual MD&A for the year ended December 31, 2016. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.

For more information, please contact:

Spectra7 Microsystems Inc.
Sean Peasgood
Investor Relations
416-565-2805
ir@spectra7.com

Spectra7 Microsystems Inc.
Dave Mier
Chief Financial Officer
669-284-3170
pr@spectra7.com

• 1 All information herein is subject to change based on the reported unaudited Q3 results, expected in November 2017.
• 2 Additional GAAP Measure - Gross margin is presented in this press release consistent with information presented in the Company's financial statements. Gross margin has been calculated by deducting manufacturing cost of sales, and provision for inventory write-downs from revenue. Management of the Company believes that providing this information allows investors to better understand the Company's historical and future financial performance.