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July 26th, 2022
Toronto, ON - (PR NewsWire) – (TSXV:SEV) (OTCQB:SPVNF) Spectra7 Microsystems Inc. (“Spectra7” or the “Company”), a leading provider of high-performance analog semiconductor products for broadband connectivity markets, announced today a proposed non-brokered private placement basis (the “Offering”) up to $8.0 million of 14% unsecured convertible debentures (the “Debentures”) and the closing of the first tranche of the Offering consisting of the issuance of $3,809,000 principal amount of Debentures for gross proceeds of $3,732,820. All dollar amounts referenced in this release are in Canadian dollars.

Each $1,000 principal amount of Debentures will be sold at a subscription price of $980 for expected gross proceeds of up to $7,840,000. The Debentures shall mature on December 31, 2024 (the "Maturity Date") and the principal amount of each Debenture will be convertible into common shares of the Company (each, a "Common Share") at the option of the holder at any time prior to the close of business on the last business day immediately preceding the Maturity Date, at a conversion price of $1.02 per Common Share, subject to adjustment upon certain customary events. Holders converting their Debentures will receive accrued and unpaid interest thereon for the period from and including the date of the latest interest payment date to, and including, the date of conversion.

The net proceeds from the Offering will be used for the repayment of the existing convertible debentures of the Company.

All securities issuable in the Offering are subject to a statutory hold period until the date that is four months and one day from the date of issuance. Approval of the TSX Venture Exchange is required prior any conversion of Debentures that would result in a holder holding more than 9.9% of the issued and outstanding common shares of the Corporation and prior to the settlement of any interest payment in common shares. The second tranche of the Offering is expected to close on or before August 25, 2022.

Insiders of the Company participated in the first tranche of the Offering purchasing an aggregate of $506,000 principal amount of Debentures. Pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the Offering constitutes a "related party transaction" as insiders of the Company are expected to subscribe for up to 25% of the Debentures. The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101. The Company did not file a material change report more than 21 days before the closing of the Offering as the details of the related parties’ participation in the Offering had not been settled. The Offering was approved by all of the independent directors of the Company.

The Company paid finder’s fees totaling $47,373 and issued 118,055 finder’s warrants (each, a “Finder’s Warrant”) to arm’s length parties, including Cormark Securities Inc., in connection with the first tranche of the Offering. Each Finder’s Warrant entitles the holder to purchase one Common Share at a price of $1.02 for a period of two years from issuance.

This news release does not constitute an offer to sell or the solicitation of an offer to buy the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold in the United States or to U.S. Persons unless registered under the U.S. Securities Act and any applicable state securities laws or an exemption from such registration is available.

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 data centers, 5G infrastructure, virtual and augmented reality, and other connectivity markets. Spectra7 is based in San Jose, California with a design center in Cork, Ireland and technical support location in Dongguan, China.

Neither the TSX Venture Exchange nor its regulation services provided (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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