Equity Financings Totaling CDN $7.9 million
Expected to Close on August 21, Providing Working Capital for the
Data Center Production Ramp
(TSX:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the
“Company”), a leading provider of high-performance analog
semiconductor products for broadband connectivity markets, today
announced its unaudited financial results for the three and six
month periods ended June 30, 2019. A copy of the unaudited
consolidated financial statements prepared in accordance with
International Financial Reporting Standards and the corresponding
management’s discussion and analysis (“MD&A”) for the three and
six month periods ended June 30, 2019, can be found under the
Company’s profile at www.sedar.com. Unless otherwise indicated, all
amounts in this release are expressed in US dollars.
Q2 2019 Financial Summary
- Revenue of approximately $1.0 million, up 20% year-over-year
but down 29% sequentially. Revenue was lighter than expected as
constrained working capital impacted product supply, resulting in
approximately $0.6 million of unfilled orders for Q2;
- Gross margin1 as a percentage of revenue was approximately 55%,
flat from the prior quarter and approximately flat from the same
period in the prior year;
- Non-IFRS operating expenses were $2.5 million, representing a
decrease of $0.3 million from the prior quarter and down
approximately $0.4 million from the same period in the prior year;
and
- EBITDA2 loss of approximately $1.6 million compared to a loss
of approximately $1.7 million in the prior quarter and a $0.5
million improvement from the same period in the prior year due to
strong operating expense management.
CEO COMMENTARY
“Before commenting on our second quarter results, I am delighted
with the strong demand as well as insider participation in our
recently announced equity financing. We welcome new investors from
the U.S. and other regions and appreciate the continued
participation and support from existing investors. The net proceeds
of the financings will help to alleviate the supply constraints
experienced by the Company in Q2 and will also strengthen the
balance sheet as we begin our data center production ramp,” said
Raouf Halim, Spectra7’s CEO. “Interest for our data center
semiconductor products remains strong from both our cable
interconnect partners and their customers, who represent some of
the largest data center operators in the world. I am also pleased
with the formation of the Copper Reach Extension (CRX) Consortium
with Tencent, a significant milestone and evidence of the success
of our Active Copper Cable (“ACC”) technology in the data center
market.”
Quarterly Highlights
- Tencent and Spectra7 announced CRX Consortium to accelerate the
adoption of ACC technology with initial deployments expected in the
second half of 2019;
- Spectra7 continued to experience strong traction with its data
center solutions and announced nine new customer design-ins in Q2
2019, for a total of 64 to date; and
- Key partnerships with 4 of the top 5 global cable data center
interconnect companies remain strong with their promotion of ACCs
to Tier 1 OEMs and Hyperscalers increasing.
Financing Update
As previously announced, the Company filed a short form
prospectus on August 9, 2019 in connection with a public offering
of units (each, a “Unit”) at a price of CDN$0.05 per Unit for
aggregate gross proceeds of CDN$3,262,774. Each Unit consists of
one common share in the capital of the Company and one-half of one
common share purchase warrant (each, a “Unit”), with each whole
warrant exercisable at a price of CDN$0.08 per share for a period
of 5 years from the date of closing, subject to acceleration in
certain circumstances. Also as previously announced, the Company
has received subscription agreements in connection with a
concurrent private placement in respect of 93,176,081 Units for
additional gross proceeds of CDN$4,658,804. The Company expects to
close the public offering and private placement concurrently on or
about August 21, 2019.
Outlook
The Company has entered the third quarter of 2019 with
significantly increased backlog compared to the starting backlog
for the second quarter of 2019. The Company also expects the start
of its data center production ramp in the third quarter.
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's future financial
position and results of operations, outlook, revenue growth,
revenue in the 2019 financial year, deployment of the Company’s
technology by its customers, timing of the Company’s capital
raising activities, 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 and the Company’s short form prospectus dated
August 9, 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.
1 Gross margin is a non-IFRS measure. Refer to “Revenue and
Gross Margin” in the Company’s annual MD&A for the year ended
December 31, 2018 for reconciliation to measures reported in the
Company’s financial statements.
2 EBITDA or earnings before interest, tax, depreciation, and
amortization is a non-IFRS measure. EBITDA excludes share-based
compensation, amortization, depreciation, interest, and tax
expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190814005770/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