First Tranche of approximately $10.2 Million expected to close on or about
May 8
Following closing, an improved capital
structure and growth capital expected to allow Spectra7 to support
hyperscaler customer needs
THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN
CANADA ONLY AND IS
NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR
FOR DISSEMINATION IN THE UNITED
STATES.
TORONTO, May 6, 2024
/CNW/ -- (TSXV: SEV) (OTCQB: SPVNF) Spectra7 Microsystems Inc.
("Spectra7" or the "Company"), a leader in
high-performance analog semiconductors for broadband connectivity
markets, such as AI networks, hyperscale data centers, and AR/VR,
is pleased to announce a proposed non-brokered private placement
(the "Private Placement") to certain institutional
investors, other investors and insiders of the Company (the
"Subscribers") of units ("Units"), with each Unit
consisting of either: (i) one common share (each a "Common
Share") and one common share purchase warrant (each a
"Warrant"); or (ii) if the Share Ownership Threshold
(defined below) would be exceeded by a Subscriber as a result of
their subscription for Units or a Subscriber otherwise opts for,
one pre-funded common share purchase warrant (each, a
"Pre-Funded Warrant") and one Warrant, at a purchase price
of $0.10 per Unit. The Company
expects to issue up to 102,000,000 Units for aggregate gross
proceeds of up to $10.2 million in a
first tranche of the Private Placement.
Each Warrant will be exercisable immediately and will entitle
the holder thereof to purchase either: (i) one Common Share; or
(ii) if the Share Ownership Threshold would be exceeded by a
Subscriber as a result of the exercise of their Warrants, one
Pre-Funded Warrant, at an exercise price of $0.11 per Common Share or Pre-Funded Warrant for
a period of five years from the date of issuance. The expiry date
of the Warrant can be accelerated by the Company at any time prior
to the expiry date of the Warrants if the closing price of the
Common Shares on the TSX Venture Exchange (the "TSXV") is
greater than $0.33 for any period of
10 consecutive trading days and certain volume trading thresholds
are met during those 10 consecutive trading days.
The "Share Ownership Threshold" is (i) 9.99% of the number of
Common Shares outstanding immediately after giving effect to the
purchase of the Units, exercise of the Warrants, or conversion of
the 9% Debentures or 14% Debentures, as applicable; or (ii) if the
relevant Subscriber or holder has filed and the TSXV has cleared
for acceptance a personal information form in the form prescribed
by the TSXV, 19.99% of the number of Common Shares outstanding
immediately after giving effect to the purchase of the Units,
exercise of the Warrants, or conversion of the 9% Debentures or 14%
Debentures, as applicable; provided, however, that neither the
9.99% nor the 19.99% threshold shall apply if the requisite
disinterested shareholder approval has been obtained in accordance
with applicable TSXV policies.
The Company may complete subsequent tranches of the Private
Placement to bring the total aggregate gross proceeds up to
$24 million. The net proceeds of the
Private Placement are expected to be used for working capital and
general corporate purposes.
Craig-Hallum Capital Group is acting as the sole placement agent
for the Private Placement for purchasers in the United States, other than existing
shareholders.
Amendments to Existing Debentures
Spectra7 also announces that it has received commitments from
holders of the requisite 80% of the outstanding principal amount of
each of its existing $8.873 million
14% unsecured convertible debentures ("14% Debentures") and
its existing $2.828 million 9%
unsecured convertible debentures (the "9% Debentures") to
amend (the "Proposed Debenture Amendments") each series of
debentures such that holders may, at any time prior to maturity,
convert such debentures, and such that the Company has the right to
convert such debentures, at any time prior to maturity, into: (a)
in the case of the 14% Debentures, 7,538 units for each
$1,000 principal amount of 14%
Debentures, with each unit consisting of one Common Share and one
common share purchase warrant (each, a "14% Warrant") or, if
the Share Ownership Threshold would be exceeded by the
warrantholder as a result of the conversion, one Pre-Funded Warrant
and one 14% Warrant and (b) in the case of the 9% Debentures,
7,538 units for each $1,000 principal
amount of 9% Debentures, with each unit consisting of one Common
Share and 0.80 of a common share purchase warrant (each whole
warrant, a "9% Warrant") or, if the Share Ownership
Threshold would be exceeded by the warrantholder as a result of the
conversion, one Pre-Funded Warrant and 0.80 of a 9% Warrant. Each
14% Warrant shall be exercisable into one Common Share or, if the
Share Ownership Threshold would be exceeded by a holder as a result
of the exercise of their warrants, one Pre-Funded Warrant, at an
exercise price of $0.13 until
July 26, 2027. Each 9% Warrant shall
be exercisable into one Common Share or, if the Share Ownership
Threshold would be exceeded by a holder as a result of the exercise
of their warrants, one Pre-Funded Warrant, at an
exercise price of $0.13 until
September 14, 2028.
The Proposed Debenture Amendments are subject to approval by the
TSXV, formal approval from the holders of the requisite principal
amount of the debentures, and the finalization of supplemental
indentures. The Company shall issue a further press release once
the Proposed Debenture Amendments have been approved and
finalized.
Upon completion of the Proposed Debenture Amendments, Spectra7
intends to exercise its right to force the conversion of the 14%
Debentures and 9% Debentures (the "Debenture
Conversion").
"We are pleased that the anticipated conversion of the
outstanding debentures into Common Shares and Warrants, together
with the new issuance of Units, will simplify the capital structure
of the Company, eliminate interest payments on debentures, and
provide additional capital for operations," said Ron Pasek, Chairman of the Board.
All dollar amounts in this news release are denominated in
Canadian dollars.
Closing of the Private Placement is subject to all necessary
regulatory and stock exchange approvals, including the approval of
the TSXV. In the United States,
the Units will be offered on a private placement basis pursuant to
exemptions from the registration requirements of the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"). No
securities regulatory authority has either approved or disapproved
of the contents of this news release. Securities offered and sold
in Canada shall be subject to a
statutory four month resale restriction under National Instrument
45-102 – Resale of Securities. This news release shall not
constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of the securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any
such jurisdiction. This news release is not an offer to sell or the
solicitation of an offer to buy the securities in the United States or in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
qualification or registration under the securities laws of such
jurisdiction. The securities being offered have not been, nor will
they be, registered under the U.S. Securities Act, and such
securities may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons absent registration or an applicable
exemption from U.S. registration requirements and applicable U.S.
state securities laws.
Pursuant to Multilateral Instrument 61-101 Protection of
Minority Security Holders in Special Transactions ("MI
61-101"), the Private Placement and Debenture Conversion
(together, the "Restructuring") are expected to
constitute a "related party transaction" as insiders of the Company
are expected to purchase Units in the Private Placement and to
receive units as a result of the Debenture Conversion. The Company
is relying on exemptions from the formal valuation requirement of
MI 61-101, pursuant to the exemption provided under Section 5.5(b)
of MI 61-101, as the Company is not listed on a market specified in
that section, and from the minority approval requirement of MI
61-101, pursuant to the "financial hardship" exemption provided
under Section 5.7(1)(e) of MI 61-101, as the Company is (i) in a
situation of serious financial difficulty, (ii) the Restructuring
is designed to improve the financial position of the Company, (iii)
the circumstances described in Section 5.5 (f) of MI 61-101 are not
applicable, and (iv) the Company's board of directors and
independent directors (as such term is defined in MI 61-101) have,
acting in good faith, determined that (i) and (ii) apply and the
terms of the Restructuring are reasonable in the circumstances of
the Company. The securities issued to insiders of the Company in
the Private Placement will be subject to resale restriction for a
period of four months and one day after closing of the Private
Placement.
About Spectra7 Microsystems
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 a technical support location
in Dongguan, China.
For more information, please visit www.spectra7.com.
CAUTIONARY NOTES
Certain statements contained in this press release constitute
"forward-looking statements" or "forward-looking information"
(collectively, "forward-looking statements") under applicable
securities laws in the United
States and Canada. All
statements other than statements of historical fact contained in
this press release, including, without limitation, 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. Forward looking statements
in this press release include, but are not limited to, statements
with respect to the size, terms, participants and timing of the
Private Placement, the ability of the Company to complete the
Private Placement on the terms described herein or at all, the
ability of the Company to raise up to $24
million, the ability of the Company to obtain the necessary
regulatory and stock exchange approvals for the Private Placement,
the use of proceeds for the Private Placement, the ability of the
Company to complete the Proposed Debenture Amendments on the terms
described herein or at all and to obtain the necessary regulatory,
stock exchange, and debentureholder approvals for such Proposed
Debenture Amendments, and the Company's ability to support
hyperscaler customer needs. 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, including,
but not limited to, the risk that the Company is unable to complete
the Private Placement on the terms or timing described herein or at
all, the Company not being able to obtain the necessary regulatory
or stock exchange approvals for the Private Placement, the proceeds
of the Private Placement being insufficient for the Company's
needs, or being used in a manner other than as disclosed herein.
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
management's discussion and analysis for the year ended
December 31, 2023. 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.
For more information, please contact:
Matt Kreps
Darrow Associates
214-597-8200
ir@spectra7.com
Spectra7 Microsystems Inc.
Ron Pasek
Chair of the Board of
Directors
408-710-6462
ronpasek@yahoo.com
Spectra7 Microsystems Inc.
Dave Mier
Interim Chief Financial Officer
925-858-7011
ir@spectra7.com
Spectra7 Microsystems Inc.
John
Mitchell
Public
Relations
650-269-3043
pr@spectra7.com
SOURCE Spectra7 Microsystems Inc.