Spectra7 Announces Preliminary Record First Quarter 2017 Financial Results

PALO ALTO, CA--(Marketwired - April 18, 2017) - Spectra7 Microsystems Inc. ("Spectra7" or the "Company") (TSX: SEV), a leading provider of high-performance analog semiconductor products for virtual reality (VR), augmented reality (AR), mixed reality (MR), data center and other connectivity markets, today announced preliminary selected unaudited financial results for the three months ended March 31, 2017. Unless otherwise indicated, all dollar amounts in this press release are expressed in US dollars.

Preliminary Q1 2017 Results

The Company expects to report revenues of approximately $2.7 million⁽¹⁾ for the first quarter of 2017, representing an all-time high quarterly revenue. Growth in the first quarter was driven by increasing adoption of its patented active copper cable technology. Gross margin⁽²⁾ as a percentage of revenue is expected to be approximately 59%-61%, consistent with the prior quarter. Operating expenditures for the Company decreased by over $700,000 from the prior quarter, primarily due to lower general and administrative expenses which are expected to continue through 2017. As a result, the Company's operating losses decreased by over 25% sequentially quarter over quarter.

CEO Commentary

"The first quarter was one of tremendous achievements across our business," said Spectra7 CEO Raouf Halim. "I'm delighted to report record revenues of $2.7 million⁽¹⁾ in the first quarter, with this strong revenue growth accomplished in what is seasonally a weak quarter for the industry. Furthermore, we had record revenue while maintaining healthy gross margins from previous quarters and reducing our operating expenditures, greatly improving the profitability of the Company. We are also pleased to have achieved expanded market acceptance of our Data Center solutions, transformative design wins in the AR/VR/MR markets, and sequentially higher backlog due to growth in our AR/VR portfolio. These achievements are the hallmark of our first quarter. We look forward to an exciting year ahead."

Other Quarterly Highlights

• The Company secured three Tier-one design wins in Q1 that management believes could be the three most important wins in the AR/VR/MR industry. One of these design wins is expected to contribute material revenue growth in the second half of 2017.

• The Company began to sample its GaugeChanger Plustm to leading cable and OEM partners in the data center market, with early testing underway.

• The Company significantly expanded its technical and sales support organization in the Asia Pacific region in support of its rapidly expanding AR/VR/MR and data center customer base.

Unaudited financial statements for the Company's first quarter ended March 31, 2017 are expected to be released in May 2017. The Company looks forward to providing further updates on its progress this year.

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 Palo Alto, California with design centers in Markham, Ontario, Cork, Ireland, and Little Rock, Arkansas. For more information, please visit www.spectra7.com.

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 Company's future financial position and results of operations, strategy, proposed acquisitions, 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 MD&A for the year ended December 31, 2016. 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.

⁽¹⁾ All information contained herein is subject to change based on the reported unaudited Q1 results, expected in May 2017.

⁽²⁾ Additional GAAP 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 write-downs from revenue. Management of the Company believes that providing this information allows investors to better understand the Company's historical and future financial performance.