Mr. Darren Ma reports

SPECTRA7 ANNOUNCES $15 MILLION BOUGHT DEAL FINANCING

Spectra7 Microsystems Inc. has entered into an agreement with Canaccord Genuity Corp., pursuant to which the underwriter has agreed to purchase, on a bought deal basis, 15,000 units of Spectra7, with each unit comprising one $1,000-principal-amount 7 per cent senior unsecured convertible debenture and 1,425 common share purchase warrants of the company, at a price of $1,000 per unit for aggregate gross proceeds of $15-million.

The principal amount of each convertible debenture will be convertible into common shares of the company 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 (as defined herein), at a conversion price of 35 cents per common share, subject to adjustment upon certain customary events. The convertible debentures shall mature on the date that is three years from the date of issuance. Holders converting their convertible 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.

Each warrant will entitle the holder to acquire one common share of the company at a price of 50 cents per common share for a period of three years following the closing date (as defined herein), subject to adjustment upon certain customary events.

The company will grant the underwriter an option to acquire up to an additional 15 per cent of the total number of units sold under the offering for overallotment and market stabilization purposes, which option is exercisable in whole or in part at the discretion of the underwriter for a period of 30 days from and including the closing date.

The net proceeds from the offering will be used for the repayment of all secured indebtedness of the company and working capital to drive existing business as well as to develop blockchain, data centres and AR/VR (augmented reality/virtual reality) solutions.

The units will be offered by way of a short form prospectus to be filed with the securities commissions and other similar regulatory authorities in each of the provinces of Canada (except Quebec), pursuant to National Instrument 44-101, Short Form Prospectus Distributions, and in those jurisdictions where the offering can lawfully be made including in the United States on a private placement basis pursuant to exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended.

The closing of the offering is scheduled to occur on or about Jan. 9, 2018, and is subject to certain conditions, including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange and the securities regulatory authorities, and the satisfaction of other customary closing conditions.

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.

We seek Safe Harbor.