Mr. Todd Haugen reports

ENABLENCE ANNOUNCES CLOSING OF COMPREHENSIVE FINANCING TRANSACTION

Enablence Technologies Inc. has closed a series of connected transactions that enabled the company to raise additional capital from its primary lender. The company expects the financing transaction to position the company to accelerate the execution of the company's strategic growth plan, and will capitalize on significant and immediate market opportunities in the optical components industry, including the large and growing data centre, and rapidly emerging advanced vision and artificial intelligence markets that the company serves today.

The financing transaction includes a non-revolving term loan, amendments to the company's term loan with Pinnacle Island II LP and a waiver of interest payments under the company's convertible debentures.

Commenting on the financing transaction, Todd Haugen, chief executive officer of Enablence, said: "This new round of financing supports our ongoing strategy to ramp wafer capacity and accelerate product development and deployment efforts of our new AI, data centre and advanced vision products. The new investment will also help us meet strong customer demand across all three businesses: optical communications, compute and sensing. Lastly, the fact that this financing is being supported from an existing investor reflects confidence in our strategic growth plan, which we continue to execute successfully."

Michael Roland, president of the general partner of Pinnacle II, remarked, "Pinnacle Island II LP's continuance of long-term financial support reflects significant confidence in the Enablence leadership team's ongoing ability to capitalize on the generational opportunity of the AI revolution."

Term loan

As part of the financing transaction, Pinnacle II provided a non-revolving term loan of $15-million, with an accordion facility for an additional $5-million upon satisfaction of certain conditions precedent, pursuant to a term loan agreement between Pinnacle II and the company dated June 19, 2026. The interest rate of the term loan is 14 per cent per annum, payable at maturity. In the event of a payment default, default interest accrues at an additional 3 per cent per annum (17 per cent per annum in aggregate) from the date of the payment default and for so long as such default continues. As additional consideration for entering into the term loan, the company is required to pay Pinnacle II a structuring fee equal to the aggregate of: (i) 4.50 per cent of the outstanding principal balance of the facility on the date of the term loan (being $675,000); (ii) 3.75 per cent of the outstanding principal balance on the first anniversary of the term loan; and (iii) 2.75 per cent of the outstanding principal balance on the second anniversary of the term loan, which is fully earned as of the date of the term loan and payable in full on the maturity date. The term loan matures on June 30, 2029.

A portion of the proceeds from the term loan was used to: (i) refinance $11.1-million of cash advances made on a regular basis by Pinnacle II to the company in 2026; and (ii) pay outstanding interest to the company's senior secured lender, Vortex ENA LP, under the existing term loan with Vortex in the amount of approximately $611,039.44. The balance of the proceeds of the term loan is expected to finance certain legal costs (up to $135,000) and for general working capital purposes of the company.

The demand loans consisted of cash advances made by Pinnacle II to the company from time to time to finance its operations, bearing interest at a rate of 14 per cent per annum and payable on demand. As of the date hereof, all outstanding principal under the demand loans has been repaid in full; however, accrued and unpaid interest of $357,134.25 remains owing to Pinnacle II and will be payable on maturity of the term loan.

Loan amendments

As part of the financing transaction, the term loan agreement between the company and Pinnacle II dated April 4, 2025, as amended, was further amended to: (i) extend the maturity date from March 31, 2027, to June 30, 2029, to align with the term loan; (ii) increase the interest rate from 14 per cent per annum to 17 per cent per annum, effective as of April 1, 2026; and (iii) provide that all interest will accrue and be payable at the amended maturity date (being June 30, 2029). Other than these amendments, the terms of the 2025 Pinnacle II loan agreement are materially unchanged. As of the date hereof, the aggregate amount owing under the 2025 Pinnacle II loan agreement is approximately $28,742,027.40, comprising $25-million in outstanding principal and $3,742,027.40 in accrued and unpaid interest.

Waiver of interest on convertible debentures

On April 4, 2025, the company amended the convertible debenture that had been issued to Pinnacle Island LP (Pinnacle I) in the principal amount of $11-million and matures on June 30, 2027. The company also issued convertible debentures with an aggregate principal amount of $29,859,248 to each of Pinnacle I, Pinnacle II and Paradigm Capital Partners Ltd. (PCPL) (together with Pinnacle I and Pinnacle II, the lenders). Pursuant to the terms of the Pinnacle I debenture, interest on the Pinnacle I debenture is payable semi-annually in cash and, pursuant to the terms of the convertible debentures, interest on the convertible debentures is payable quarterly in cash, with the first interest payments on the Pinnacle I debenture and the convertible debentures due on June 30, 2026.

As part of the financing transaction, the lenders have agreed to waive the company's obligations to make interest payments on the Pinnacle I debenture and the convertible debentures. The interest payments waiver is available at the company's option until the respective maturity dates of the Pinnacle I debenture and the convertible debentures. In addition, so long as the company chooses to deploy the cash that would have otherwise been used to settle the interest payments to support the company's business strategy, the lenders will not take any action that would have been contractually available to them as a result of the company not making the interest payments. However, in accordance with their terms, from and after July 1, 2026, the Pinnacle I debenture shall have interest accrue at 9.5 per cent (instead of 7.5 per cent) until all accrued and unpaid interest has been paid in full, after which interest shall revert to the 7.5 per cent base rate, and the convertible debentures shall have interest accrue at 12.5 per cent (instead of 9.5 per cent) until all accrued and unpaid interest has been paid in full, after which interest shall revert to the 9.5 per cent base rate.

Advisory fee

In connection with the financing transaction, an advisory fee of $565,000 is payable to Paradigm Capital Inc. (PCI).

Multilateral Instrument 61-101

The transactions comprising the financing transaction may be considered related party transactions within the definition of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions (and Policy 5.9 of the exchange), because each of Vortex, Pinnacle I, Pinnacle II, PCPL and PCI may be considered a related party of the company, because they have beneficial ownership of, or control or direction over, more than 10 per cent of the common shares of the company on an aggregate basis. Their holdings are aggregated on the basis that they are each affiliates and/or related and connected issuers of PCI and may also be considered joint actors. The company is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The financing transaction is exempt from the formal valuation requirement in Section 5.4 of MI 61-101 in reliance on Section 5.5(b) of MI 61-101, as no securities of the company are listed on a specified market under MI 61-101. Additionally, in respect of the term loan, the company is exempt from the minority shareholder approval requirement in Section 5.6 of MI 61-101 in reliance on Section 5.7(1)(f) of MI 61-101 as the term loan is not convertible, directly or indirectly, into equity or voting securities of the company. In addition, the financing transaction as a whole is exempt from the minority approval requirement in Section 5.6 of MI 61-101 in reliance on Section 5.7(1)(e) of MI 61-101 as: (i) the company is in serious financial difficulty; (ii) the financing transaction is designed to improve the financial position of the company; (iii) the circumstances described in Section 5.5(f) of MI 61-101 are not applicable; (iv) the company's board of directors and at least two-thirds of the board's independent directors (as such term is defined in MI 61-101), acting in good faith, have determined that the company is in serious financial difficulty and the financing transaction was designed to improve its financial position, and that the terms of the financing transaction are reasonable in the circumstances of the company; and (v) there is no other requirement, corporate or otherwise, to hold a meeting to obtain any approval of the company's shareholders.

For additional details, please refer to the material change report of the company, which will be filed in due course on SEDAR+ under Enablence's issuer profile. The company did not file a material change report more than 21 days before the expected closing of the financing transaction, as the details and amounts were not finalized until closer to the closing and the company wished to close the transaction as soon as practicable for sound business reasons.

The financing transaction remains subject to final approval of the exchange.

About Enablence Technologies Inc.

Enablence is a publicly traded company listed on the TSX Venture Exchange that designs, markets and sells optical chips and sub systems, primarily in the form of planar lightwave circuits (PLC), on silicon-based chips for datacom, telecom, automotive and artificial intelligence (AI) applications. Enablence products serve a global customer base, primarily focused today on data centre and other rapidly growing end-markets. Enablence also works with customers that have emerging market uses for its technology, including medical devices, automotive lidar (light detection and ranging), and virtual and augmented reality headsets. In select strategic circumstances, the company also uses its proprietary, non-captive fabrication plant in Fremont, Calif., to manufacture chips designed by third party customers.

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