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(TSX:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the
“Company”) is pleased to announce that it has filed a final
short form prospectus in connection with its previously announced
best efforts prospectus offering of 65,255,480 units
(“Units”) at a price of $0.05 per Unit for aggregate gross
proceeds of $3,262,774 (the “Public Offering”). The
syndicate of agents (the “Agents”) for the Public Offering
is being led by Haywood Securities Inc., and includes Canaccord
Genuity Corp. and Eight Capital.
The Company is also pleased to announce that it has received
subscription agreements in connection with the private placement of
Units previously announced on June 17, 2019 (the “Private
Placement” and, together with the Public Offering, the
“Offerings”) in respect of 93,176,081 Units for additional
gross proceeds of $4,658,804.
Each Unit issued pursuant to the Offerings consists of one
common share of the Company (a “Common Share”) and one-half
of one common share purchase warrant (each whole warrant, a
“Warrant”). Each Warrant entitles the holder to acquire one
Common Share at an exercise price of $0.08 per Common Share for a
period of sixty months following the closing of the Offerings. The
expiry date of the Warrants may be accelerated by the Company at
any time if the volume weighted average trading price of the Common
Shares on the facilities of the Toronto Stock Exchange (the
“TSX”) (or such other exchange on which the Common Shares
trade) is greater than $0.16 for any 10 consecutive trading days
following the date that is four months and one day after the
issuance of the Warrants. The securities issued pursuant to the
Private Placement in Canada are subject to a statutory hold period
of four months and one day in accordance with applicable Canadian
securities law.
In consideration for the services provided by the Agents in
connection with the Public Offering, the Company will pay the
Agents a cash commission, a corporate finance fee, and issue an
aggregate of 4,567,883 non-transferable compensation options (the
“Compensation Options”). Each Compensation Option is
exercisable into one Common Share at a price of $0.05 for a period
of sixty months from the date of closing of the Public Offering. In
connection with the provision of certain financial advisory
services, the Company will also pay Haywood Securities Inc. a cash
advisory fee and issue an aggregate of 5,900,000 non-transferable
advisory options (the “Advisory Options”). The Advisory
Options will have the same terms as the Compensation Options.
The net proceeds from the Offerings will be used for research
and development, interest payment on its outstanding convertible
debentures and for working capital and general corporate
purposes.
As the aggregate number of Common Shares issuable in connection
with the Private Placement exceeds 25% of the currently issued and
outstanding Common Shares, and since greater than 10% of the
currently issued and outstanding Common Shares are issuable to
insiders of the Company in connection with the Private Placement,
the Company would ordinarily be required to obtain shareholder
approval pursuant to Sections 607(g)(i) and (ii) of the TSX Company
Manual (the “Manual”). The number of Common Shares issuable
pursuant to the Private Placement (assuming the exercise of the
Warrants) and issuable to insiders of the Company represent 58.4%
and 13.2%, respectively, of the current issued and outstanding
Common Shares. Pursuant to the provisions of Section 604(e)
of the Manual, the Company has applied for an exemption from
shareholder approval requirements of the TSX, on the basis that the
Company is currently in financial difficulty and that the Private
Placement is designed to improve the Company’s financial situation
to meet its business objectives including its objectives in the
growing data center market. If granted, the Company will avail
itself of the shareholder approval exemption. The Company’s Board
of Directors has carefully reviewed the terms of the Private
Placement and has unanimously determined that completion of the
Private Placement and reliance on the financial hardship exemption
is reasonable, that completion of the Private Placement and the
Public Offering will substantially improve the financial position
of the Company and are in the best interest of the Company and its
stakeholders. Pursuant to Section 604(e) of the Manual, the TSX
cannot issue its conditional approval letter for the Private
Placement until August 16, being five business days following the
issue of this news release. There is no assurance that the TSX
shall grant such conditional approval and the completion of the
Public Offering and the Private Placement are subject to the TSX
providing its approval to the Private Placement.
Assuming the TSX grants its conditional approval with respect to
the Private Placement, the Company will be the subject of a
remedial delisting review by the TSX. It is routine for the TSX to
require any issuer utilizing the financial hardship exemption to be
the subject of such review. Pursuant to this delisting review, the
TSX will require that the Company demonstrate to the TSX that the
Company complies with all of the TSX requirements for continued
listing after completion of the Offerings. The Company expects that
it will meet the TSX’s continued listing requirements and thus
maintain its listing on the TSX.
The issuance of units to insiders of the Company in the Private
Placement is considered to be a “related party transaction” as
defined Multilateral Instrument 61-101 Protection of Minority
Security Holders in Special Transactions (“MI 61-101”), however,
the Company is relying on exemptions from the formal valuation and
minority shareholder approval requirements provided under MI 61-101
on the basis that the aggregate value of the units issued to
insiders does not exceed 25% of the fair market value of the
Company’s market capitalization.
This press release shall not constitute an offer to sell or
the solicitation of an offer to buy the securities in the United
States nor shall there be any sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
“1933 Act”), or any state securities laws and may not be offered or
sold in the United States unless registered under the 1933 Act and
any applicable securities laws of any state of the United States or
an applicable exemption from the registration requirements is
available.
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 design centers in
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 meeting the
continued listing requirements of the TSX, 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, 2018. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190809005417/en/
For more information, please contact:
Spectra7 Microsystems Inc. Sean Peasgood Investor Relations
647-503-1034 ir@spectra7.com
Spectra7 Microsystems Inc. Darren Ma Chief Financial Officer
669-284-3170 pr@spectra7.com