Acquisition of interest - Solaris BioSciences, Inc

Spectra Systems Corporation

("Spectra" or the "Company")

Acquisition of interest in Solaris BioSciences, Inc. ("Solaris")

Spectra Systems Corporation, a leader in machine-readable high-speed banknote authentication and brand protection technologies, is delighted to announce that it has increased its equity interest in Solaris (the principal shareholder of which is Dr. Lawandy, CEO of Spectra) from 4.79 per cent to 48.65 per cent (on an as-converted basis), for an aggregate consideration of c.USD700,000 (c.£522,000) (the "Acquisition"). This transaction is expected to be the first of several over time which are expected to be a vehicle for building additional value for investors in business areas outside the authentication business which have rapidly evolving valuations.  Spectra seeks to find early stage technology companies in the healthcare, biotechnology and energy sectors which draw on its core technology capabilities and where it can minimize the use of cash consideration.

Solaris, which is targeting the medical and biotech markets, has developed and patented a new, high sensitivity, rapid and compact, optically based technology for the characterisation of bio-fluids and as an assay for the detection of proteins, RNA/DNA, antibodies, and other biomolecular moieties using extremely low sample volumes. The technology has been demonstrated and uses nano-particle consumables (particles with sizes less than a micron) and an all solid-state laser source to interrogate the ultra-small samples volumes. When used with precision nano-particles, the method is capable of determining the viscosity of pin-prick volumes obtained using modified test strip methods of biological fluids such as blood plasma, which have been directly correlated with Covid-19 (SARS-2) associated hyper-viscosity, cardio-metabolic risk factors, proteinuria, and homeostasis in cardiac surgery patients in the early postoperative period.  The technology can also be utilized with surface functionalized nano-particles with biological samples containing target molecules specific to a virus or pathogen to act as an ultrasensitive assay.  This application is adaptable and can be readily used for new, yet undiscovered pathogens.

The technology is protected by two issued United States Patent and Trademark Office (USPTO) patents and associated foreign fillings (USPTO 9,970,854 and 10,379,114, "Nondegenerate two-wave mixing for identifying and separating macromolecules").  These patents will be in force for another 16 and 18 years respectively.  Solaris also holds three additional patents, two of which are relevant to the area of commercial focus.

An Executive Summary of the Solaris technology, its applications, and the composition of the board of directors of Solaris is available on the Spectra website at: https://www.spsy.com/investments-in-early-stage-companies . During the prototype development phase financed by this transaction, Dr. Lawandy will serve as the Chief Executive Officer of Solaris without compensation from Spectra or Solaris.

The aggregate consideration, in respect of the Acquisition, of USD700, 000 (c.£522,000) was satisfied:

·    As to USD305,942.26 (c.£228,000), through the subscription by Spectra of new Solaris shares of Convertible Preferred Stock, the consideration being the issue to Solaris of 126,252 shares of new Spectra common stock ("Consideration Shares") , which will be used by Solaris in settlement of all of its outstanding debt, amounting to USD305,942.26 (c.£228,000), provided by five note holders, including three venture capital funds; and

·    As to USD394,057.74 (c.£294,000), through the further subscription by Spectra of new Solaris shares of Convertible Preferred Stock, to be settled as to USD294,057.74 (c.£219,000) in cash and as to the balance through the provision by Spectra to Solaris of USD100,000 (c.£75,000) of research and administration services, to be provided at cost over the ensuing 24 months.

As a result of the Acquisition, the interest (on an as-converted basis) in Solaris of Dr Lawandy has declined from 84.54 per cent to 46.01 per cent. and that of Spectra has increased to 48.65 per cent.

Whilst the transaction is with a related party, the values associated with Solaris relative to Spectra are such that the requirements of AIM Rule 13 are not triggered. The parties assigned a USD 850,000 pre-money valuation of Solaris, which is supported by an independent third party valuation of the two key patents which underpin the technology being commercialized. These patents were independently valued at $535,000.

In accordance with Delaware law, the transaction was (a) unanimously approved by all three of Spectra's non-executive Directors and (b) specially approved by a majority-in-interest of the disinterested stockholders of Solaris.  In addition, going forward Spectra's shares in Solaris will be voted as directed by Spectra's non-executive Directors.

In the year ended 31 December 2019, Solaris incurred a loss after taxation of c.USD 10,000 (c.£7,000) on nil revenue. Its net liabilities at that date amounted to c.USD450,000 (c.£336,000), including the aforementioned loans which at that date amounted to USD305,942.26 (c.£294,000).

Application has been made for the Consideration Shares to be admitted to trading on AIM of the London Stock Exchange ("Admission"). Admission is expected to occur at 8am on or around 15^th December 2020. Following the issue of the Consideration Shares, the issued share capital of Spectra comprises:

820,485 shares in the Regulation S stock line ISIN number USU8457D1091 (AIM:SPSC); and

44,734,239 shares in the unrestricted line ISIN number US84756T1060 (AIM:SPSY).

Spectra Systems has no Shares in treasury, therefore upon Admission, 45,554,724 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's  Disclosure and Transparency Rules.

Commenting on the Acquisition, The Honourable BJ Penn, Chairman of Spectra, stated:

"Solaris intends to deploy, in new markets, technologies related at a core level to those utilized by Spectra in its current markets. This is therefore an exciting acquisition by Spectra which is intended to introduce it into biotech and healthcare markets.

The Directors of Spectra are confident that the transaction described herein will enable Solaris to launch its first prototype device within 24 months."

Enquiries:

Spectra Systems Corporation

The Honourable BJ Penn, Chairman                                                           Tel: +1 (0) 401 274 4700

WH Ireland Limited

Chris Fielding, Managing Director, Corporate Finance                             Tel: +44 (0) 20 7220 1650

Further information on Solaris can be found on the Spectra website at https://www.spsy.com

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.