KWESST Micro Systems (KWE) Announces $5.6M US Private Placement

KWESST Micro Systems Inc. (NASDAQ: KWE) (NASDAQ: KWESW) is pleased to announce that it has entered into definitive agreements dated July 19, 2023 with a group of accredited and institutional investors for the issuance and sale of the Company's common shares (or common share equivalents), on a brokered private placement basis, for aggregate gross proceeds of approximately US$5.6 million (approximately CAD$7.3 million) (the "Offering").

As a part of the Offering, the Company will be issuing a combination of common shares in the capital of the Company at a price of US$2.26 (CAD$2.98) per common share (each a "Common Share") and pre-funded warrants at a price of US$2.259 (CAD$2.979) per pre-funded warrant (each a "Pre-funded Warrant"), totaling approximately 2,474,700 common share (or common share equivalents). Each Common Share and Pre-funded Warrant being bundled with one common share purchase warrant of the Company (each a "Common Warrant"). Each Pre-Funded Warrant will entitle the holder to acquire one Common Share at an exercise price of US$0.001 per Common Share, and each Common Warrant will be immediately exercisable and entitle the holder to acquire one Common Share at an exercise price of US$2.66 (CAD$3.50) per Common Share for a period of 60 months following the closing of the Offering. Although the Common Shares and Pre-funded Warrants are each bundled with a Common Warrant, each security will be issued separately.

KWESST intends to use the aggregate net proceeds from the Offering for general working capital purposes. The Offering is expected to close on or around July 21, 2023 (the "Closing"), subject to customary closing conditions, including approval of the TSX Venture Exchange.

ThinkEquity is acting as sole placement agent for the Offering. As compensation for services rendered, the Company will (i) pay to ThinkEquity, at the Closing, a cash fee (the "Cash Fee") equal to 8.5% of the aggregate gross proceeds of the Offering and (ii) issue to ThinkEquity or its designees such number of warrants to purchase a number of Common Shares equal to 5% of the Common Shares and sold in the Offering (the "Placement Agent Warrants" and the Common Shares underlying the Placement Agent Warrants. The Placement Agent Warrants, will be exercisable, in whole or in part, immediately upon issuance and will expire 60 months after the closing date of the Offering at an initial exercise price of US$2.66 (CAD$3.50) per Common Share.

The securities offered and sold by KWESST in the Offering have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States, or to or for the account or benefit of U.S. persons, absent registration under the Securities Act and all applicable state securities laws or pursuant to an exemption from such registration requirements.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or 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 jurisdiction.

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