Mr. David Mier reports

SPECTRA7 ANNOUNCES PRELIMINARY THIRD QUARTER 2017 RESULTS

Spectra7 Microsystems Inc. has released preliminary selected unaudited financial results for the three-month period ended Sept. 30, 2017. Unless otherwise indicated, all dollar amounts in this press release are expressed in U.S. dollars.

Preliminary Q3 2017 results

The company expects to report revenues for the quarter ended Sept. 30, 2017, of approximately $2-million (1) as compared with $1-million in the same period in the prior year, representing a 100-per-cent year-over-year increase in revenue, but a 35-per-cent decline from the quarter ended June 30, 2017. The company encountered manufacturing delays and supply-side pushouts 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 margin (2) as a percentage of revenues is projected to fall within the range of 55 per cent to 58 per cent, reflecting new product ramp up costs. Operating expenditures for the company, excluding non-cash items, are expected to increase by $300,000 from the prior quarter, stemming from one-time prototype build costs.

(1) All information herein is subject to change based on the reported unaudited Q3 results, expected in November, 2017.

(2) Additional generally accepted accounting principles 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 writedowns from revenue. Management of the company believes that providing this information allows investors to better understand the company's historical and future financial performance.

Chief executive officer commentary

"Production ramp issues and supply constraints left unfilled orders on the books as the quarter ended," said Spectra7 chief executive officer 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 has hired Antony Ng Yukshing 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 multihundred-million-dollar businesses. Mr. Ng Yukshing has a BEng (honours) in electronic and electrical engineering from King's College London (United Kingdom) and an MSc in microelectronics from Brunel University London (U.K.).

"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 vice-president 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 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 centres and other connectivity markets. Spectra7 is based in San Jose, Calif., with design centres in Markham, Ont., Cork, Ireland, and Little Rock, Ark. For more information, visit the company's website.

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