Mr. Raouf Halim reports

SPECTRA7 ANNOUNCES 50% Y-O-Y REVENUE GROWTH IN FIRST QUARTER 2023, AFFIRMS OUTLOOK FOR Q2 2023

Spectra7 Microsystems Inc. has released its financial results for the three months ended March 31, 2023, and reaffirmed its outlook for Q2 2023. A copy of the consolidated financial statements for the three months ended March 31, 2023, and the corresponding management's discussion and analysis (MD&A) will be available under the company's profile on SEDAR. Unless otherwise indicated, all dollar amounts in this news release are expressed in U.S. dollars.

"We are off to a strong start in the first quarter, increasing revenue by 50 per cent year over year, following exceptional growth in 2022. Our gross margin for the quarter increased to 63 per cent. In addition, we continue to advance key relationships across all our end-markets, including AR/VR and hyperscale data centres. The hyperscale data centre partners and customers are readying 800-gigabit and 1.6-terabit products for expected deployment in the second half of this year, a critical part of the next data centre upgrade cycle," said Raouf Halim, chief executive officer.

"Test and qualification activities are increasingly focused on new switches that require 800-gigabit and 1.6-terabit data rate interconnects. These tests continue to demonstrate that active copper cables enabled by Spectra7 are the most power and cost-efficient solutions to meet the requirements for top-of-the-rack and short-run connectivity, an estimated $1-billion market by 2026. We expect this process to generate orders from key data centre customers in North America in the second half of 2023.

"Based on these activities and indications that supply availability will improve steadily throughout 2023 and support a return to higher margins, we have established a goal of EBITDA profitability by the end of the year," said Mr. Halim.

First quarter 2023 financial highlights:

• First quarter 2023 revenue of $3.1-million, up approximately 50 per cent year over year;
• Gross margin as a percentage of revenue in the first quarter increased to 63 per cent, from 43 per cent in the same quarter in the prior year;
• Non-IFRS (international financial reporting standards) operating expenses were $2.2-million in the first quarter, down from $2.5-million in the same quarter in the prior year as the company continues to control its spending;
• Basic and diluted loss per share for the first quarter was three cents, compared with a basic and diluted loss per share of eight cents in the same period a year ago;
• EBITDA (earnings before interest, taxes, depreciation and amortization) loss in the first quarter was $70,000, compared with an EBITDA loss of $1.3-million in the same period a year ago;
• The company strengthened its balance sheet with gross proceeds of a $6.0-million (Canadian) private placement in March, 2023.

Q2 2023 outlook

The company anticipates revenue for second quarter of 2023 to be in the range of $3.1-million to $3.3-million.

About Spectra7 Microsystems Inc.

Spectra7 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 a design centre in Cork, Ireland, and a technical support location in Dongguan, China.

We seek Safe Harbor.