Subsequently Closed C$10.7 Million in New Capital in May 2024
Eliminated C$11.7 Million in Convertible Debt
SAN JOSE, Calif., May 30, 2024 /PRNewswire/ -- (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, today announced its financial results for the three months ended March 31, 2024. A copy of the interim consolidated financial statements for the three months ended March 31, 2024, and the corresponding management's discussion and analysis (the "MD&A") will be available under the Company's profile on www.sedarplus.ca. Unless otherwise indicated, all dollar amounts in this press release are expressed in US dollars.
(PRNewsfoto/Spectra7 Microsystems Inc.)
First quarter 2024 financial highlights
First quarter 2024 revenue was $0.8 million, increased from $0.3 million in the fourth quarter 2023 and decreased from $3.1 million in the first quarter 2023.
Gross margin1 was 41%, compared to 57% in the preceding quarter and 63% in the prior year first quarter.
Non-IFRS operating expenses2 were $2.1 million, decreased from $3.5 million in the fourth quarter 2023 and $2.2 million in the first quarter 2023.
Basic and diluted loss per share for the first quarter 2024 was $(0.06), compared with a basic and diluted loss per share of $(0.11) in the fourth quarter 2023 and $(0.03) in the first quarter 2023.
EBITDA3 loss for the first quarter was $1.4 million, compared with an EBITDA loss of $3.2M for the fourth quarter 2023 and an EBITDA loss of $70,000 in the first quarter 2023.
Subsequent to the first quarter end, the Company completed a non-brokered private placement of units for C$10.7 million in gross proceeds. Additionally, the Company amended its C$11.7 million of existing debentures to provide the Company with the right to convert such debentures into equity securities at its option at any time prior to maturity. The Company effected the forced conversion of the debentures on May 15, 2024, effectively eliminating the Company's long-term debt.
Spectra7 remains focused on advancing to commercial orders from top global datacenter customers for its active copper cable products, expected in the second half of 2024.4
"We are pleased to have strengthened our balance sheet and eliminated our long term debt in support of our growth plans," said Raouf Halim, Chief Executive Officer.
NOTES:
1 Gross margin is a non-GAAP measure which is computed as revenue less cost of sales divided by revenue. Refer to "Revenue and Gross Margin" in the MD&A and the table below, for reconciliation to measures reported in the Company's interim financial statements.
The table below sets forth the details of revenue and gross margin for the three months ended March 31, 2024 and March 31, 2023.
Three Months Ended March 31,
(In thousands)
2024
2023
Change
$
$
$
%
Revenue
816
3,134
(2,318)
(74 %)
Cost of sales
483
1,172
(689)
(59 %)
Gross profit
333
1,963
(1,629)
(83 %)
Gross margin %
41 %
63 %
(22 %)
2 Non-IFRS operating expenses is a non-GAAP measure which includes research and development, sales and marketing, general and administrative expenses and depreciation and amortization for capital equipment and right-of-use assets and excludes share-based compensation expense, non-recurring termination costs, interest and related financing costs, change in fair value of warrant liabilities, foreign exchange gain/loss and gain/loss from property and equipment disposal. Refer to "Non-GAAP Measures" in the MD&A and the table below for reconciliation to measures reported in the Company's interim financial statements.
in thousands
2022
2023
2024
Jun 30
Sep 30
Dec 31
Mar 31
Jun 30
Sep 30
Dec 31
Mar 31
$
$
$
$
$
$
$
$
Total expenses - IFRS
3,331
2,936
3,210
3,053
3,330
3,086
4,479
2,575
Share?based compensation
646
567
469
541
486
288
334
182
Interest on lease obligation of right-of-use assets
5
4
3
1
4
4
3
1
Accretion expense
389
463
425
370
389
411
493
538
Other income
(12)
-
-
-
(12)
(30)
(9)
-
Foreign exchange gain
57
(9)
354
(72)
57
(110)
143
(211)
Non-IFRS operating expenses
2,246
1,911
1,959
2,212
2,407
2,523
3,515
2,065
in thousands
2022
2023
2024
Jun 30
Sep 30
Dec 31
Mar 31
Jun 30
Sep 30
Dec 31
Mar 31
$
$
$
$
$
$
$
$
Research and development, net of investment tax credits and including amortization of licenses
1,158
985
928
995
1,195
1,409
1,154
1,040
Sales and marketing
258
224
280
269
252
271
325
279
General and administrative
875
635
684
881
891
762
1,947
657
Depreciation of right-of-use assets
113
60
60
60
60
60
60
60
Depreciation of property and equipment
10
7
8
8
8
21
28
28
Non-IFRS operating expenses
2,414
1,911
1,959
2,212
2,407
2,523
3,515
2,065
3 EBITDA or earnings before interest, tax, depreciation, and amortization is a non-GAAP measure. EBITDA excludes share-based compensation, amortization, depreciation, interest, and tax expenses. Refer to "Non-GAAP Measures" in the MD&A and the table below for reconciliation to measures reported in the Company's interim financial statements.
in thousands
2022
2023
2024
Jun 30
Sep 30
Dec 31
Mar 31
Jun 30
Sep 30
Dec 31
Mar 31
$
$
$
$
$
$
$
$
Net loss
(1,586)
(1,461)
(1,231)
(1,090)
(1,275)
(1,500)
(4,315)
(2,242)
Depreciation of right-of-use assets
113
60
60
60
60
60
60
60
Depreciation of property and equipment
10
7
8
8
8
21
28
28
Depreciation expense - COGS
18
31
35
35
30
31
31
32
Amortization - intangible assets
145
137
55
76
105
90
179
167
Share-based compensation
646
567
469
541
486
288
334
182
Interest on lease obligation of right-of-use assets
5
4
3
1
4
4
3
1
Accretion expense
232
463
425
370
389
411
493
538
Other income
-
-
-
-
(12)
(30)
(9)
-
Foreign Tax
-
-
(216)
-
-
-
(119)
-
Foreign exchange gain
34
(9)
354
(72)
57
(110)
143
(211)
Extingushment of original convertible debt
-
-
-
-
-
-
-
-
Other income
(217)
-
-
-
-
-
-
-
EBITDA
(600)
(201)
(38)
(70)
(148)
(734)
(3,172)
(1,445)
4 This is forward-looking information and is based on a number of assumptions. See "Cautionary Notes," below.
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 a technical support location in Dongguan, China. For more information, please visit www.spectra7.com.
Neither the TSX Venture Exchange nor its regulation services provider (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, the Company's anticipated increase in commercial orders in the second half of 2024 for its datacenter products, which is dependent on the success of various sampling efforts currently underway; and the Company's 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 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, Managing Director Darrow Associates Investor Relations [email protected] 214-597-8200
Spectra7 Microsystems Inc. Dave Mier Interim Chief Financial Officer 925-858-7011 [email protected]
