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Corporate Presentation November 2017

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Page 1: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Corporate Presentation November 2017

Page 2: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Disclaimers

2

Certain statements contained in this presentation constitute “forward-looking statements”. All statements other than statements of historical fact contained in this presentation, including, without limitation, those regarding the market opportunity of the Company’s products, capabilities of the Company’s products, Company’s future financial position and results of operations, 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 annual MD&A for the year ended December 31, 2016 which is available at www.sedar.com. 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 presentation 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 presentation 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. Cautionary Note Regarding United States Securities Laws This presentation does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities of the Spectra7 Microsystems Inc., in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The securities of Spectra7 Microsystems Inc. have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons, “as such term is defined in Regulations under the U.S. Securities Act, unless an exemption from such registration is available

Page 3: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Spectra7 Overview •  High performance analog semiconductor company targeting high value, high

growth markets with patented advanced signal processing technology

•  Headquartered in San Jose, California.

4 From

bulky data, audio, power & video cables.

1 Ultra-thin and light-weight

interconnect.

Spectra7 makes electronic products smaller, lighter, and faster.

Spectra7 delivers the performance of optical networking using low- cost, low-power active copper cable solutions.

3

Page 4: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Share Structure and Key Statistics

4

Share Price $ 0.41 CAD*

Market capitalization $ 66.6M CAD*

TTM revenue (00/30/17) $ 8.7 M

TTM gross margin (09/30/17) 59%

Insider ownership 4.5% Est. Shares %

*As of 09/30/17 Market Close See disclaimers on slide 2

Listed as SEV

Commonsharesissued 163M 100

Page 5: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Investment Highlights

5

Focused, targeted go-to-market strategies fuelling business momentum

New transformative design win pipeline with industry leaders in AR/VR/MR

Encouraging market acceptance and testing of Data Center products

Growing Visibility in the AR / VR / MR Space

Operational efficiency programs supporting improved margin performance

I

II

III

IV

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Seecau:onarynotesonpage2

Page 6: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Spectra7 Team

6

Dr.AndrewKimCTO&VP,ENGINEERING

20YearsExperience:Samsung,Intersil

RaoufHalimCEO

CEOicClarityCEOMindspeedTechnologies

32YearsExperience

DarrenMaCFO

15YearsExperienceinFinanceIntel,Semtech,GigPeak

JohnMitchellCHIEFMARKETINGOFFICER20yearsofProductMarke:ng:

Intersil,Quellan

AntonyNgYukshingVP,OPERATIONS

23yearsSemiconductorEngineeringCypress,Marvell

EbrahimAbunasrahVP,INTERCONNECTPRODUCT

GROUP10yearsProductDevelopment

Molex

GeraldHamiltonSENIORVP,WORLDWIDESALES

27YearsSemiconductorExperience:Mindspeed,icClarity

Page 7: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

High Gross Margin / Single Sourced / Secured by over 50 Patents

The Leader in Active Copper Cable Technology

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Page 8: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Augmented/ Mixed Reality

Data Center

Virtual Reality

Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies

1-Estimated Hardware Revenue from Digi Capital(2016) 2- Gartner (2016)

$6 billion by 20201 3D gaming- Immersive Content -VR social

platforms

$4 billion market in 20192 Data Center Market Drivers

Cloud data storage- Real time streaming analytics

$42 billion by 20201 Workplace collaboration-Virtual desktop

Increased productivity- Job training

8

Page 9: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

VR Market Opportunity: 99% CAGR (‘15-’20) Global Virtual & Augmented/ Mixed Reality Head-Mounted Display Shipments

9

AR/MR2

VR1

See disclaimers on slide 2 1-BI Intelligence: The virtual Reality Content Report (2015) 2-AugmentedReality.org:Smart Glasses Market Report (2015)

Page 10: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

New Design Driving Growth: DreamWeVR™

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Spectra7’s 4 new chips featuring

SpectraLinear™ technology enabling

AR, VR, and MR devices to drive

resolutions of 4K / 5K with low latency

over an ultra-thin unified interconnect.

Potential Applications for Spectra7’s ultra-thin wearable interconnects: •  UHD Video

•  Data Control

•  Gesture recognition

•  Gyro interface Up to 50 Gbps

Page 11: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Significant AR/VR/MR Customer & Market Demand1

11

•  FACEBOOK •  SONY •  APPLE •  LG

•  HTC •  TENCENT •  SAMSUNG •  GOOGLE

•  MICROSOFT •  ACER •  DELL •  LENOVO

1-Digi-Capital-TherealityofAR.VRbusinessmodels-April2016

Page 12: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

•  Microsoft Reference MR Design

•  Developer Kits shipped

•  $299 retail price point •  Windows 10 Bundles with PC OEM

laptops this holiday season (2017)

12

Mixed Reality Design Partner & Customer

First Head Mounted Display “HMD” enabled by Spectra7 Active Cable on display at GDC in

March 2017

Growing Roster of Customer Partners

Page 13: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Poised to Enter Data Center Market

Glo

bal D

CI R

even

ue, $

M

Multi-slot Small Form Factor

Ovum, 2016

Data Center Interconnect Optical Revenue

58.5%CAGR

13

Page 14: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Spectra7 Proposition: Design Drives Value

14

Upto10XreducVonin

cablediameter

Passivecablebundle

Page 15: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Replacement Opportunity: Compelling Efficiency Gains

Up to 80% power reduction over fiber1

Up to 65% lower cost over fiber1

Major Recent Developments:

!  Collaboration with Foxconn, one of six

interconnect suppliers who serve 10 major

Data Center Operators.

!  Prototype orders in Q3’17.

!  Revenue expected to ramp in 2018.

15

1.   Company Estimates 2.   Ovum: Ovum Says it is Good to be a Data Center Interconnect Supplier (2015)

Page 16: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

VR8200 Display Port Module

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HT8181 HDMI 2.0 Module

VR8183-M-71 USB 3.1 Gen1 Type-C™ Module

VR7050-M-01-STDA USB 3.1 Gen1 Std A Module

Broad Multi-Market Cable Technology Platform

Camera Connectivity HDTV, 4K, OLED Displays Digital Signage Tablets

Page 17: Corporate Presentation - Spectra7Data Center Virtual Reality Spectra7 Target Markets: High Value, High Growth, Disruptive Technologies 1-Estimated Hardware Revenue from Digi Capital(2016)

Investment Highlights

17

Focused, targeted go-to-market strategies fuelling business momentum

New transformative design win pipeline with industry leaders in AR/VR/MR

Encouraging market acceptance and testing of Data Center products

Growing Visibility in the AR / VR / MR Space

Operational efficiency programs supporting improved margin performance

I

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III

IV

V

Seedisclaimersonslide2