Spectral Medical Inc. Announces $10 Million Offering

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES TORONTO, July 21, 2021 (GLOBE NEWSWIRE) — Spectral Medical Inc. (TSX: EDT) (“Spectral” or the “Company”) is pleased to announce that further to its previously announced overnight marketed public offering of units of the Company (the “Units”), Paradigm Capital Inc. (the “Lead Underwriter”) and A.G.P./Alliance Global Partners, the exclusive U.S. placement agent for the Offering (together, the “Underwriters”), have agreed to purchase on a bought deal basis 23,530,000 Units at a price of $0.425 per Unit (the “Issue Price”) for aggregate gross proceeds of $10 million (the “Offering”). Each Unit will consist of one common share of the Company (a “Common Share”) and one-half (½) of one Common Share purchase warrant of the Company (each whole Common Share purchase warrant, a “Warrant”), with each Warrant entitling the holder thereof to acquire one Common Share (a “Warrant Share”) at a price of $0.50 for a period of 36 months following the Closing Date (as defined below). The Company has granted the Underwriters an over-allotment option (the “Over-Allotment Option”) to purchase up to an additional 3,529,500 Units at the Issue Price per Unit, to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option will be exercisable in whole or in part, at the sole discretion of the Underwriters, at any time, and from time to time, for a period of 30 days from and including the Closing Date and shall be exercisable for additional Units, Warrants and/or Common Shares (or any combination thereof). If the Over-Allotment Option is exercised in full, the total gross proceeds to the Company will be $11,500,288. The Underwriters will be paid by the Company on the closing of the Offering and closing of the Over-Allotment Option, if any, a cash commission equal to 6.5% of the gross proceeds of the Offering (including on any exercise of the Over-Allotment Option) (the “Cash Commission”); provided that the cash commission on sales of up to $1,000,000 of Units to certain parties (the “President’s List Sales”) shall be reduced to 3.25%. The Company shall also issue to the Underwriters that number of compensation options (the “Compensation Options”) as is equal to 6.5% of the Units issued under the Offering (including on any exercise of the Over-Allotment Option); provided that the number of compensation options for the President’s List Sales shall be reduced to 3.25%, each exercisable for one Common Share at an exercise price of $0.485 for a period of two years following the Closing Date. The Company intends to use the net proceeds from the Offering for its Phase III registration trial for its PMX treatment for endotoxemic septic shock, patient enrolment into the DIMI usability trial, product development and regulatory approval for the DIMI device, an observational study in support of Tigris, and for general corporate and working capital purposes. The Offering will be conducted by way of a prospectus supplement (the “Prospectus Supplement”) to the Company’s short-form base shelf prospectus dated July 3rd, 2020 (the “Base Prospectus”, and together with the Prospectus Supplement, the “Prospectus”) in each of the provinces of Canada, other than Québec (collectively, the “Jurisdictions”). It is expected that the Company and the Underwriters will enter into a definitive underwriting agreement and file the Prospectus Supplement on July 23, 2021. The Units will be offered for sale in the Jurisdictions pursuant to the Prospectus. The Units may also be offered for sale in the United States 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”) and applicable state securities laws, as well as other jurisdictions outside of Canada and the United States as the Company and Underwriters may agree, on an exempt basis in accordance with applicable securities laws. The Offering is expected to close on or about July 27, 2021 (the “Closing Date”) and is subject to certain customary conditions, including but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange (the “TSX”). This press release does not constitute an offer to sell or a solicitation of an offer to buy the Units in any jurisdiction, nor will there be any offer or sale of the Units in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Units have not and will not be registered under the U.S. Securities Act or any U.S. state securities laws, and therefore will not be offered or sold within the United States except pursuant to applicable exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws. About Spectral Spectral is a Phase 3 company seeking U.S. FDA approval for its unique product for the treatment of patients with septic shock, Toraymyxin™ (“PMX”). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream and is guided by the Company’s Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis. PMX is approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 300,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for PMX, and in November 2010, signed an exclusive distribution agreement for this product in Canada. Approximately 330,000 patients are diagnosed with severe sepsis and septic shock in North America each year. Spectral, through its wholly owned subsidiary, Dialco Medical Inc., is also commercializing a new set of proprietary platforms addressing renal replacement therapy (“RRT”) across the dialysis spectrum. SAMI is targeting the acute RRT market, while DIMI is targeting the chronic RRT market. Dialco is currently pursuing regulatory approval for U.S. in-home use of DIMI, which is based on the same RRT platform as SAMI, but will be intended for home hemodialysis use. DIMI recently received its FDA 510k clearance for use in hospital and clinical settings, and obtained its Health Canada license for use within Canadian hospitals, clinics and in home. Spectral is listed on the Toronto Stock Exchange under the symbol EDT. For more information, please visit www.spectraldx.com. Forward-Looking Statement Information in this news release that is not current or historical factual information may constitute forward-looking information or forward-looking statements within the meaning of securities laws and includes, without limitation, statements regarding the Offering generally, expectations about the likelihood of completing the Offering, the anticipated use of proceeds and the receipt of requisite TSX approval. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral’s senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, including but not limited to the ongoing impact of COVID-19. Certain assumptions with respect to the Offering include those relating to the filling of the prospectus supplement, completion of the Offering in a timely manner and the ability to obtain all necessary regulatory approvals in connection with the Offering. Risks and other factors that could cause actual results or events to differ materially from current expectations with respect to the Offering include, but are not limited to, the inability of the Company to satisfy all conditions to the completion of the Offering. Actual results could differ materially from what is currently expected and readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, the Company disclaims any obligation to update or revise any forward-looking statements. Reference is also made to the other risks and uncertainties that may affect the Company which are more fully described in Spectral’s Annual Information Form dated March 25, 2021, the Prospectus and other filings of Spectral with the securities regulatory authorities which are available at www.sedar.com. The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement. For further information, please contact: Chris SetoCEOSpectral Medical Inc.416-626-3233 ext. [email protected] Ali MahdaviCapital Markets & Investor RelationsSpinnaker Capital Markets [email protected] David Waldman/Natalya RudmanUS Investor RelationsCrescendo Communications, [email protected]