KWESST Micro Systems Inc. Announces Pricing of Public Offering

Rhea-AI Summary

KWESST Micro Systems has announced the pricing of a public offering of 3,889,000 common shares at US$0.90 per share, aiming to raise approximately US$3.5 million in gross proceeds. The offering includes pre-funded warrants as an alternative to common shares. Half of the net proceeds will fund product development for BLDS, KWESST Lightning™, ARWEN and PARA OPS™, while the remaining half will support working capital and general corporate purposes. ThinkEquity is serving as the sole placement agent, with the offering expected to close on November 1, 2024.

Positive

• Secured US$3.5 million in gross proceeds through public offering
• Strategic allocation of funds for product development across multiple product lines
• Successfully completed registration with SEC for Form F-1

Negative

• Potential shareholder dilution through issuance of 3,889,000 new shares
• Share price set at relatively low US$0.90 per share

Insights

Financial Analyst

This $3.5M public offering at $0.90 per share represents significant dilution, pricing well below the current market value. With approximately 3.89M new shares being issued, this will substantially increase the float and likely put downward pressure on the stock price. The split allocation of proceeds between product development and working capital suggests both operational needs and growth initiatives, though the working capital portion indicates potential cash flow concerns. The involvement of ThinkEquity as placement agent adds credibility, but the timing and pricing suggest urgency in raising capital. The pre-funded warrants structure provides flexibility but also adds complexity to the capital structure. Investors should note this dilution represents a significant portion of the company's current market cap, signaling potential near-term stock price weakness.

Ottawa, Ontario--(Newsfile Corp. - October 30, 2024) - KWESST Micro Systems Inc.  (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) ("KWESST" or the "Company"), today announced the pricing of a best efforts public offering of 3,889,000 common shares (or pre-funded warrants ("Pre-funded Warrants") in lieu thereof) at a public offering price of US$0.90 per common share (inclusive of the Pre-Funded Warrant exercise price), for gross proceeds of approximately US$3,500,000, before deducting placement agent fees and offering expenses. All of the common shares (or Pre-funded Warrants) are being offered by the Company. The offering is expected to close on November 1, 2024, subject to satisfaction of customary closing conditions.

The Company intends to use approximately one half of the net proceeds from this Offering for product development and business development relating to BLDS, KWESST Lightning™, ARWEN and PARA OPS^TM and approximately one half of the net proceeds for working capital and other general corporate purposes.

ThinkEquity is acting as sole placement agent for the offering.

A registration statement on Form F-1 (File No. 333- 282626), relating to the shares was filed with the Securities and Exchange Commission ("SEC") and became effective on October 30, 2024. This offering is being made only by means of a prospectus. Copies of the final prospectus, when available, may be obtained from ThinkEquity, 17 State Street, 41^st Floor, New York, New York 10004.

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

About KWESST

KWESST (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) (FSE: 62U) 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 OPS^TM 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 as well as representative offices in London, UK and Abu Dhabi, UAE.

For more information, please visit https://kwesst.com/

Contact:

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

David Luxton, Executive Chairman: luxton@kwesst.com

Kris Denis, CFO and Chief Compliance Officer: denis@kwesst.com

Jason Frame, Investor Relations: frame@kwesst.com 587.225.2599

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.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/228418

FAQ

What is the price per share for KWESST's (KWE) October 2024 public offering?

KWESST's public offering is priced at US$0.90 per common share.

How many shares is KWESST (KWE) offering in their October 2024 public offering?

KWESST is offering 3,889,000 common shares or pre-funded warrants.

How much money is KWESST (KWE) raising in their October 2024 public offering?

KWESST aims to raise approximately US$3.5 million in gross proceeds.

What will KWESST (KWE) use the proceeds from their October 2024 offering for?

Half of the proceeds will fund product development for BLDS, KWESST Lightning, ARWEN and PARA OPS, while the other half will support working capital and general corporate purposes.