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Spectra7 Announces Term Sheet to Amend and Extend Convertible Debentures

V.SEV | October 30, 2020

CA-SPECTRA7-MICROSYSTEMS

(TSX-V:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the “Company”), a leading provider of high-performance analog semiconductor products for broadband connectivity markets, today announced that it has entered into a term sheet with a requisite percentage of debenture holders setting out the Company’s intention to amend certain terms of its existing $12.775 million 7% unsecured convertible debentures (the “Debentures”) due to mature in January 2021. All dollar amounts referenced in this release are in Canadian dollars.

Pursuant to the term sheet, the maturity date of the Debentures is to be extended 18 months from January 9, 2021 to July 9, 2022, subject to adjustment, and the conversion price of the principal amount of the Debentures is to be reduced from $0.35 per common share to $0.05 per common share. In consideration for the amendments, the Company has agreed to increase the outstanding principal obligations of the Debentures by 10%. The interest rate on the Debentures is not being amended.

The term sheet also provides that the Debentures shall be amended to allow the Company to conduct patent sales or patent secured debt financings without approval of the debentureholders provided that the Company uses 50% of the net proceeds received from such sales or debt financings towards the pro rata repayment of the principal amount of the Debentures and accrued and unpaid interest on such amount with the remaining 50% applied to working capital of the Company. Finally, the Debentures shall be amended to include a make-whole interest payment to the maturity date for Debentures that are converted prior to maturity.

The amendments to the Debentures are subject to approval by the TSX Venture Exchange and formal approval of holders of greater than 66 2/3% of the outstanding Debentures. The Company shall issue a further release once the amendments have been finalized and approved.

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 virtual reality, augmented reality, mixed reality, data centers 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. For more information, please visit www.spectra7.com .

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, those regarding the completion of the amendments to the Debentures contemplated under the Letter of Intent, the Company's outlook, 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 and annual MD&A for the year ended December 31, 2019. 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.