Sunrise Telecom Incorporated Announces Extension of Stockholder Rights Agreement

WEST PALM BEACH, Fla., June 5, 2017

The purpose of the Rights Agreement is to help protect the Company's net operating loss carryforwards ("NOLs"), which can be used in certain circumstances to offset future taxable income and reduce the company's federal income tax liability. As of December 31, 2016, the company had approximately $83 million in NOLs.

The company's ability to use its NOLs to offset future income tax liability could be substantially limited if there is an "ownership change" as defined under Section 382 of the Internal Revenue Code. Ownership changes under Section 382 generally relate to the cumulative change in ownership among stockholders with an ownership interest of 5% or more (as determined under Section 382's rules) over a rolling three-year period. The Rights Agreement reduces the likelihood of such an "ownership change" occurring.

Under the Rights Agreement, if any person or group acquires 4.95% or more of the company's common stock without the approval of the Board of Directors, the person or group's ownership interest in the company will be subject to significant dilution. Persons or groups who owned 4.95% or more of the company's common stock on the original effective date of the Rights Agreement will only be subject to such dilution if they acquire additional shares of common stock without the approval of the Board of Directors. As amended, the Rights Agreement will expire on May 28, 2020, subject to earlier termination under certain circumstances.

The extension of the term of the Rights Agreement will not affect the Company's earnings per share, nor is it a taxable event to the Company or its shareholders.

CONTACT:
Alan B. Howe
(858) 829-6713
ahowe@bbi-llc.com

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