Mr. Chris Seto reports

SPECTRAL MEDICAL INC. ANNOUNCES CLOSING OF SECOND TRANCHE OF $14.0 MILLION CONVERTIBLE NOTE PRIVATE PLACEMENT

Spectral Medical Inc. has closed the second and final tranche of its previously announced $14.0-million private placement offering of convertible unsecured notes due on Nov. 1, 2031.

2026 note offering

Spectral today issued $6.3-million aggregate principal amount of 2026 notes in the second tranche of the offering. Together with the $7.7-million aggregate principal amount of 2026 notes issued in the first tranche on Oct. 30, 2026, the company has now issued the full $14.0-million aggregate principal amount of 2026 notes under the offering.

Holders may convert all or any portion of their 2026 notes at any time prior to the maturity date into units of the company at a conversion price of $1 per unit, subject to customary anti-dilution adjustments. Each unit consists of one common share of the company and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one common share at an exercise price of $1.10 until the maturity date.

The 2026 notes bear interest at the Canadian overnight repo rate average plus 800 basis points per annum, accruing from the date of issue and payable semi-annually in cash or, at the election of the company, in kind, on the terms described in the company's news release of Nov. 2, 2026.

The company intends to use the net proceeds of the second tranche of the offering for general corporate and working capital purposes.

Paradigm Capital Inc. acted as financial adviser to the company on the offering and received on the closing of the second tranche a cash commission of $157,500, $157,500 principal amount of 2026 notes and 315,000 compensation options, each exercisable for one common share at the conversion price until the maturity date. The 2026 notes issued in the second tranche were purchased by Pinnacle Island II LP and the adviser. The general partner of Pinnacle II is 1000318530 Ontario Inc., a subsidiary of Paradigm Capital Partners Ltd., which is an influential securityholder of the adviser and a limited partner of Pinnacle II.

About Spectral Medical Inc.

Spectral is a phase 3 company seeking U.S. Food and Drug Administration (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 FDA-cleared Endotoxin Activity Assay (EAA), the only FDA-cleared test for endotoxin in blood.

PMX is approved for therapeutic use in Japan and Europe, licensed by Health Canada, and has been used safely and effectively with over 360,000 units sold worldwide to date. In March, 2009, Spectral obtained the exclusive development and commercial rights in the United States for PMX, and in November, 2010, signed an exclusive distribution agreement for this product in Canada. In July, 2022, the U.S. FDA granted breakthrough device designation for PMX for the treatment of endotoxic septic shock. Approximately 330,000 patients are diagnosed with septic shock in North America each year.

Spectral is listed on the Toronto Stock Exchange under the symbol EDT.

We seek Safe Harbor.