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August 25th, 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 the closing of the second tranche of its private placement (the “Offering”) of 14% unsecured convertible debentures (the “Debentures”). The closing of the second tranche of the Offering, which was upsized, consisted of the issuance of $5,064,000 principal amount of Debentures for gross proceeds of $4,962,720. Together with the first tranche, the Company has issued a total of $8,873,000 principal amount of Debentures for gross proceeds of $8,695,540. All dollar amounts referenced in this release are in Canadian dollars.

“We are thrilled with the support from our existing shareholders and insiders who are invested in Spectra7’s growth objectives. We also attracted new investors who understand our signal conditioning technology deployed in Active Copper Cable as a game changer for the growing hyperscale data center interconnect market,” said Bonnie Tomei, Chief Financial Officer. “The new Debentures also permit us to borrow senior debt of up to $5 million which was not available under the previous convertible debentures. This available capacity could provide for additional working capital to help satisfy more of our confirmed orders.”

Each $1,000 principal amount of Debentures was sold at a subscription price of $980. The Debentures 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 Company has a right to force conversion of the outstanding principal amount in connection with certain transactions where the Common Shares are trading above 200% of the conversion price.

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 and prior to the settlement of any interest payment in Common Shares. No holder may convert Debentures that would result in the holder holding more than 19.9% of the issued and outstanding Common Shares.

Insiders of the Company participated in the second tranche of the Offering purchasing an aggregate of $1,531,000 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 subscribed for a total of $2,037,000 of the Debentures. The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101, as neither the fair market value of the Debentures, nor the consideration paid, exceeded 25% of the Company’s market capitalization. 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 $273,900 and issued 283,548 finder’s warrants (each, a “Finder’s Warrant”) to arm’s length parties in connection with the second 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.

REPAYMENT OF THE PREVIOUS CONVERTIBLE DEBENTURES

The Company also announced the expected repayment of its 7% unsecured convertible debentures in full on September 2, 2022, which includes $5,422,400 principal amount and $65,370 of accrued and unpaid interest thereon as well as $199,978 of extension bonus and $1,438 of associated interest.

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.

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, the Company’s anticipated repayment of its 7% unsecured convertible debentures, the Company’s strategy, 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 information form for the year ended December 31, 2021. 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:

Matt Kreps/Jim Fanucchi
Darrow Associates
214-597-8200
ir@spectra7.com

Spectra7 Microsystems Inc.
Bonnie Tomei
Chief Financial Officer
669-212-1089
ir@spectra7.com

Spectra7 Microsystems Inc.
John Mitchell
Public Relations
650-269-3043
pr@spectra7.com