KWESST Micro Systems Inc. Announces Closing of United States Public Offering

Rhea-AI Summary

KWESST Micro Systems Inc. (NASDAQ: KWE) announced the closing of its public offering of 2,900,000 common shares at US$0.58 per share, resulting in gross proceeds of approximately US$1,682,000 before deducting placement agent fees of US$0.0435 per share and other offering expenses.

ThinkEquity acted as the sole placement agent, receiving 145,000 common share purchase warrants at an exercise price of US$0.725 per share as compensation. The net proceeds will be used for working capital, general corporate purposes, and business advancement.

The offering was made under an effective shelf registration statement with the SEC.

Positive

• Raised approximately US$1,682,000 in gross proceeds.
• Received significant interest, resulting in the issuance of 2,900,000 common shares.
• Proceeds to be used for working capital, general corporate purposes, and advancing business objectives.
• 145,000 common share purchase warrants issued to placement agent, indicating strong support from financial partners.

Negative

• Placement agent fees of US$0.0435 per share, totaling US$126,150, reduce net proceeds.
• Dilution of existing shares with the issuance of 2,900,000 new common shares.
• Additional offering expenses further decreasing net proceeds.

Insights

Financial Analyst

The recent public offering by KWESST Micro Systems Inc. has several direct implications for its financial health and future operations. The company raised approximately US$1.682 million, which, after deducting placement agent fees and offering expenses, will be used for working capital and to further its business objectives. This infusion of capital can help the company manage its short-term liabilities and invest in growth initiatives. However, issuing 2,900,000 new shares at US$0.58 per share also means potential dilution for existing shareholders, which could affect the stock price negatively in the short term.

The issuance of 145,000 common share purchase warrants to the placement agent with an exercise price of US$0.725 per share is another important aspect. If these warrants are exercised, it could lead to further dilution but also bring in additional capital. Investors should note that the offering was made under an effective shelf registration with the SEC, ensuring regulatory compliance and transparency.

For retail investors, understanding the balance between fundraising benefits and potential dilution is key. In the short-term, the stock price might experience volatility due to these new shares entering the market. Long-term benefits depend on how effectively the company uses the raised funds to achieve its business goals.

Market Research Analyst

From a market perspective, KWESST Micro Systems’ recent offering indicates the company’s intent to bolster its cash reserves amid what could be strategic growth or operational needs. The public offering price of US$0.58 per share suggests the company is leveraging current market conditions to optimize fundraising. It's essential to consider the market's appetite for KWESST's shares at this pricing level, as it reflects investor confidence in the company's future performance. The net proceeds anticipated to be channeled into working capital and general corporate purposes signal a focus on maintaining liquidity and operational readiness.

The involvement of ThinkEquity as the sole placement agent adds a layer of credibility, as reputable placement agents typically engage in thorough due diligence before facilitating offerings. Investors should also watch for how the market reacts to the potential dilution and the company's ability to convert this capital into tangible growth.

In the broader context, this move can indicate KWESST's proactive approach in securing necessary funds amidst an evolving market landscape. The company's ability to successfully close the offering could also be interpreted as a positive signal about its standing and prospects.

Ottawa, Ontario--(Newsfile Corp. - June 14, 2024) - KWESST Micro Systems Inc. (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) (TSXV: KWE.WT.U) ("KWESST" or the "Company"), today announced the closing of its previously announced public offering of 2,900,000 common shares at a public offering price of US$0.58 per share, less the placement agent fees. The gross proceeds from the offering, before deducting placement agent fees of $0.0435 per common share (being an aggregate of US$126,150 or 7.5% of the public offering price of the securities) and estimated offering expenses payable by the Company, were approximately US$1,682,000. In addition, the Company issued to the placement agent as compensation for its services 145,000 common share purchase warrants with an exercise price of US$0.725 per share. All of the common shares were offered by the Company.

ThinkEquity acted as the sole placement agent for the offering.

The Company intends to use the net proceeds from the offering primarily for working capital requirements, general corporate purposes and the advancement of its business objectives.

The offering was made pursuant to an effective shelf registration statement that has been filed with the U.S. Securities and Exchange Commission (the "SEC"). The final prospectus supplement relating to the offering was filed with the SEC and is available on the SEC's website at http://www.sec.gov. Copies of the final prospectus supplement and the accompanying prospectus relating to the offering may be obtained from ThinkEquity, 17 State Street, 41^st Floor, New York, New York 10004. Attention: Prospectus Department.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

About KWESST
KWESST (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) (FSE: 62UA) develops and commercializes breakthrough next-generation tactical systems for military and security forces. The Company's current portfolio of offerings includes digitization of tactical forces for real-time shared situational awareness and targeting information from any source (including drones) streamed directly to users' smart devices and weapons. Other KWESST products include countermeasures against threats such as electronic detection, lasers and drones. These systems can operate stand-alone or integrate seamlessly with OEM products and battlefield management systems, and all come integrated with TAK. The company also has a new proprietary non-lethal product line branded PARA OPSTM with application across all segments of the non-lethal market, including law enforcement. The Company is headquartered in Ottawa, Canada with operations in Guelph, Ontario Canada, and Youngsville, North Carolina, USA as well as representative offices in London, UK and Abu Dhabi, UAE.

Forward-Looking Statements
This press release contains "forward-looking statements" and "forward-looking information" within the meaning of Canadian and United States securities laws (collectively, "forward-looking statements"), which may be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of KWESST's management and are based on assumptions and subject to risks and uncertainties. Although KWESST's management believes that the assumptions underlying such statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this press release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting KWESST, including general economic and stock market conditions; loss of markets; and many other factors beyond the control of KWESST. Although KWESST has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and KWESST undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its respective Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The offering remains subject to the approval of the TSX Venture Exchange.

Investor Contact
Kris Denis, CFO and Chief Compliance Officer: denis@kwesst.com 613-250-9752

David Luxton, Executive Chairman: luxton@kwesst.com

Sean Homuth, President and CEO: homuth@kwesst.com

Jason Frame, Investor Relations: frame@kwesst.com 587-225-2599

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/213150

FAQ

What was the purpose of KWESST's public offering?

The purpose was to raise funds for working capital, general corporate purposes, and advancing business objectives.

How many shares were offered in KWESST's public offering?

A total of 2,900,000 common shares were offered.

What was the price per share in KWESST's public offering?

The public offering price was US$0.58 per share.

How much did KWESST raise from the public offering before expenses?

KWESST raised approximately US$1,682,000 in gross proceeds.

What are the placement agent fees for KWESST's public offering?

The placement agent fees were US$0.0435 per share, totaling US$126,150.

What will KWESST use the net proceeds for?

The net proceeds will be used for working capital, general corporate purposes, and advancing business objectives.

Who was the sole placement agent for KWESST's public offering?

ThinkEquity acted as the sole placement agent for the offering.

Were any additional securities issued as part of KWESST's offering?

Yes, 145,000 common share purchase warrants were issued to the placement agent.

What is the exercise price for the warrants issued by KWESST?

The exercise price for the warrants is US$0.725 per share.

Where can the final prospectus supplement for KWESST's offering be found?

The final prospectus supplement can be found on the SEC's website at http://www.sec.gov.