Further acceleration in revenue growth:+250% 1H year-over-year+160% Q2 year-over-yearOperating expenses reduced by 36% Q2 year-over-yearCash balance increases by 54% over Q1 Fiscal 2025 to $4.4MOttawa, Ontario--(Newsfile Corp. - May 16, 2025) - KWESST Micro Systems Inc. (TSXV: KWE) (TSXV: KWE.WT.U) (NASDAQ: KWE) (NASDAQ: KWESW) ("KWESST" or the "Company") is pleased to announce the highlights of its second quarter of fiscal 2025 ("Q2 Fiscal 2025") results. This announcement is a summary only and should be ...

Ottawa, Ontario--(Newsfile Corp. - April 21, 2025) - KWESST Micro Systems Inc. (TSXV: KWE) (TSXV: KWE.WT.U) (NASDAQ: KWE) (NASDAQ: KWESW) ("KWESST" or the "Company") announces, subject to the final approval of the TSX Venture Exchange (the "TSXV"), that it will effect a consolidation of the Company' issued and outstanding common shares (each, a "Share") on the basis of twenty-one (21) pre-consolidation Shares for each one (1) post-consolidation Share (the "Consolidation"). The Consolidation will be effecti ...

Ottawa, Ontario--(Newsfile Corp. - April 1, 2025) - KWESST Micro Systems Inc. (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) (TSXV: KWE.WT.U) ("KWESST" or the "Company") today announced the results of its special meeting of shareholders (the "Meeting") held virtually via a Zoom video conference on March 31, 2025 at 4:00 PM (Eastern time). The Meeting was called as part of the Company's efforts to regain compliance with the minimum bid price requirement set forth under Nasdaq Listing Rule 5550(a)(2). At the Meeti ...

Core Viewpoint - KWESST Micro Systems Inc. has announced a strategic partnership with U.S.-based Nordon Inc. to enhance its manufacturing capabilities in the United States, aiming to improve product availability and reduce trade barriers while supporting local employment and law enforcement agencies [1][2][3][4]. Group 1: Partnership and Manufacturing Expansion - KWESST has signed a non-binding memorandum of understanding with Nordon Inc. to establish a long-term contract manufacturing arrangement by June 1, 2025 [2]. - The partnership will focus on the production of ARWEN™ less-lethal products, with Nordon already completing tooling for the majority of components related to PARA OPS™ cartridges and projectiles [3]. - This collaboration is expected to strengthen KWESST's U.S. presence and enhance supply chain efficiency while ensuring high-quality production [3][4]. Group 2: Economic and Employment Impact - The partnership with Nordon, a HUBZone-certified manufacturer, is anticipated to drive local employment and support economic development in distressed areas [3]. - KWESST's commitment to U.S. manufacturing is expected to create jobs and contribute to economic growth while providing American-made products to law enforcement [4][6]. Group 3: Strategic Goals and Market Positioning - KWESST aims to enhance product availability and streamline logistics through domestic manufacturing, reinforcing its commitment to quality solutions for law enforcement and civilian markets [4]. - The strategic expansion into U.S. manufacturing addresses logistical challenges and regulatory compliance barriers, ensuring smoother market access for public safety solutions [4]. - KWESST remains committed to maintaining and expanding its manufacturing footprint in Canada for products destined for the Canadian market [4][7].

Core Viewpoint - KWESST Micro Systems Inc. is convening a special shareholder meeting on March 31, 2025, to seek approval for a proposed share consolidation aimed at regaining compliance with Nasdaq's Minimum Bid Price Requirement [1][2][5]. Group 1: Shareholder Meeting Details - The special meeting will take place on March 31, 2025, at 4:00 PM Eastern Time, with relevant materials available on SEDAR+ and the company's website [1]. - Shareholders will vote on the "Consolidation Resolution," which proposes consolidating the company's common shares on a basis of one share for every twenty-five shares outstanding [2][5]. Group 2: Background on Share Consolidation - The need for consolidation arises from a notification received on May 16, 2024, indicating non-compliance with Nasdaq Listing Rule 5550(a)(2) due to the company's share price being below US$1.00 for 30 consecutive business days [3]. - Following a previous consolidation on October 23, 2024, the company was granted an additional 180-day period until May 12, 2025, to regain compliance with the Minimum Bid Price Requirement [4]. Group 3: Implications of Non-Approval - If the Consolidation Resolution is not approved, the company risks serious consequences, including potential delisting from Nasdaq if the share price remains below US$1.00 [6]. - The company asserts that the consolidation is in the best interests of shareholders to ensure compliance with Nasdaq's requirements [7].

Core Points - KWESST Micro Systems Inc. has closed the first tranche of a private placement, raising approximately CAD$3.5 million (around US$2.5 million) [1] - The first tranche included the issuance of 903,700 common shares and 2,884,179 pre-funded warrants at a price of CAD$0.928 (approximately US$0.66) per share or warrant [2] - Each common share or pre-funded warrant was bundled with a common share purchase warrant, exercisable at CAD$1.16 (approximately US$0.817) for 60 months [2] - The company paid a cash fee of CAD$263,636 (7.5% of gross proceeds) and issued 189,394 warrants to ThinkEquity as compensation for services rendered [3] - Due to investor interest, KWESST is increasing the offering size with a second tranche expected to close on or before February 25, 2025, raising an additional CAD$142,070 (approximately US$100,000) [4] - The net proceeds from the offering will be used for general working capital purposes [4] - The securities offered have not been registered under the U.S. Securities Act and cannot be sold in the U.S. without registration or exemption [6] Company Overview - KWESST develops and commercializes next-generation tactical systems for military and security forces, including digitization of tactical forces and countermeasures against various threats [8] - The company is headquartered in Ottawa, Canada, with offices in London, UK, and Abu Dhabi, UAE [8]

Core Points - KWESST Micro Systems Inc. has entered into definitive securities purchase agreements for a private placement, aiming to raise approximately CAD$3.5 million (around US$2.5 million) [1] - The offering includes the issuance of 3,787,879 common shares and/or pre-funded warrants at a price of CAD$0.928 (approximately US$0.66) per share or warrant [2] - The net proceeds from the offering will be used for general working capital purposes [3] Financial Details - The common shares or pre-funded warrants will be bundled with common share purchase warrants, each exercisable at CAD$1.16 (approximately US$0.817) for a period of 60 months [2] - ThinkEquity is acting as the sole placement agent, receiving a cash fee of 7.5% of the gross proceeds and warrants equal to 5.0% of the pre-funded warrants sold [4] Regulatory Information - The offering is subject to approval from the TSX Venture Exchange [5] - The securities offered have not been registered under the U.S. Securities Act and cannot be sold in the U.S. without registration or an exemption [6] Company Overview - KWESST develops next-generation tactical systems for military and security forces, including digitization of tactical forces and countermeasures against various threats [8]

Core Viewpoint - KWESST Micro Systems reported a significant revenue growth of 588% in Q1 Fiscal 2025 compared to Q1 Fiscal 2024, indicating a successful transition from development to revenue generation [1][4][2] Financial Performance - Revenue for Q1 Fiscal 2025 reached CAD 887,658, up from CAD 129,068 in Q1 Fiscal 2024, driven by government contracts and the pilot of the Lightning SaaS product [5][4] - Gross profit for the quarter was CAD 404,522, representing a gross margin of 45.6%, a notable improvement from a gross loss of CAD 53,805 in the same period last year [4][5] - Operating loss increased to CAD 2,916,186 in Q1 Fiscal 2025 from CAD 2,508,240 in Q1 Fiscal 2024, reflecting higher operating expenses [5][8] Revenue Drivers - The revenue increase was primarily attributed to the DSEF and Land C4ISR government contracts, the Canadian Red Cross pilot, and growth in the ARWEN business [4][6] - The digitization business line contributed an additional CAD 0.6 million, while the non-lethal business line added CAD 0.1 million from ARWEN product sales [6] Operating Expenses - Total operating expenses rose by CAD 0.9 million year-over-year, driven by increased general and administrative costs, sales and marketing expenses, and research and development expenses [8][9] - General and administrative expenses increased by CAD 0.6 million due to higher professional fees and personnel costs [9] Future Outlook - The company anticipates further revenue growth with the commercial launch of KWESST Lightning and expected demand for new ARWEN products [7] - Management is focused on ramping up activities related to the DSEF and Land C4ISR programs, with a maximum potential workshare of approximately CAD 48 million and CAD 27 million respectively [12] Major Highlights - The company reported CAD 0.8 million in unfavorable changes in the fair value of warrant liabilities and CAD 1.8 million in share offering costs during the quarter [11] - A public offering in November 2024 raised approximately CAD 4.9 million before expenses, indicating strong market interest [13] Financial Position - As of December 31, 2024, total assets were CAD 8,070,198, with cash and cash equivalents significantly increasing to CAD 2,854,256 from CAD 256,828 [10] - Total liabilities decreased to CAD 3,057,657 from CAD 4,248,861, reflecting improved financial health [10]

Financial Performance - KWESST Micro Systems reported revenue of CAD 887,658 for the three months ended December 31, 2024, a significant increase from CAD 129,068 in the same period of 2023, representing a growth of 687%[5] - The company's gross profit for the same period was CAD 404,522, compared to a gross loss of CAD 53,805 in the prior year[5] - KWESST reported a net loss of CAD 3,457,015 for the three months ended December 31, 2024, compared to a net loss of CAD 398,973 in the same period of 2023, indicating a substantial increase in losses[5] - KWESST reported a net loss of $3.5 million for the three months ended December 31, 2024, compared to a net loss of $0.4 million in the same period of 2023, indicating a significant increase in losses[15] - The company had negative operating cash flows of $3.2 million for the three months ended December 31, 2024, compared to negative operating cash flows of $2.9 million in the prior year[15] - The company recorded share-based compensation of $51,055 for the three months ended December 31, 2024, compared to $63,489 in 2023, showing a reduction of 20%[98] - For the three months ended December 31, 2024, total interest expense was $63,863, a slight decrease from $64,336 in the same period of 2023[104] Assets and Liabilities - The total assets of KWESST increased to CAD 8,070,198 as of December 31, 2024, up from CAD 5,617,148 at the end of September 2024, marking a growth of 43%[3] - Cash and cash equivalents rose to CAD 2,854,256 at the end of December 2024, compared to CAD 256,828 at the end of September 2024, reflecting a significant increase of 1,010%[3] - The company’s total liabilities decreased to CAD 3,057,657 as of December 31, 2024, down from CAD 4,248,861 at the end of September 2024, a reduction of 28%[3] - Shareholders' equity increased to CAD 5,012,541 as of December 31, 2024, compared to CAD 1,368,287 at the end of September 2024, representing a growth of 267%[3] - As of December 31, 2024, KWESST had $2.8 million in working capital, a recovery from negative working capital of $1.1 million as of September 30, 2024[15] - Accumulated deficit increased to $46.1 million as of December 31, 2024, up from $42.7 million on September 30, 2024[15] - Total trade and other receivables increased to $1.04 million as of December 31, 2024, compared to $0.57 million on September 30, 2024[33] - Inventory decreased slightly to $529,778 as of December 31, 2024, from $533,163 on September 30, 2024[35] - Accounts payable and accrued liabilities totaled $1.13 million as of December 31, 2024, down from $1.66 million on September 30, 2024[39] - Contract liabilities decreased to $92,986 as of December 31, 2024, from $120,571 on September 30, 2024[41] Capital Raising Activities - The company raised CAD 4,871,033 from a U.S. public offering and CAD 3,421,635 from a private placement in November 2024, contributing to its cash position[7] - KWESST Micro Systems Inc. closed a U.S. public offering on April 9, 2024, generating gross proceeds of CAD$1.4 million (US$1 million) by issuing 80,350 pre-funded warrants[44] - On August 13, 2024, KWESST closed a direct offering for 471,500 common shares at US$2.00 per share, resulting in gross proceeds of CAD$1.3 million (US$0.9 million)[47] - The company announced a public offering on November 1, 2024, raising gross proceeds of CAD$4.9 million (US$3.5 million) by selling 80,000 common shares and 3,809,000 pre-funded warrants[51] - KWESST exercised 639,000 pre-funded warrants at a weighted average exercise price of US$0.01, recognizing a gain of CAD$693,328 in the change in fair value of warrant liabilities before reclassifying them to equity[54] - The company raised gross proceeds of $4.9 million (US$3.5 million) in a November U.S. Public Offering, with warrants exercised resulting in additional proceeds of $0.8 million (US$0.6 million)[105] Shareholder Information - KWESST's weighted average number of shares outstanding increased to 3,032,168 for the three months ended December 31, 2024, compared to 561,678 in the same period of 2023[5] - As of December 31, 2024, the total number of outstanding common shares increased to 7,887,223, up from 1,579,176 on September 30, 2024, reflecting a significant issuance for various purposes[57] - The company reported a total of 1,006,645 outstanding securities as of December 31, 2024[49] - The company issued 119,047 common shares at a deemed price of CAD$0.84 per share for debt settlement, representing a 20% discount on the closing price prior to the announcement[80] Revenue Breakdown - The revenue from the digitization product line was $718,983, compared to $92,769 in the prior year, indicating a year-over-year increase of 676%[101] - KWESST's contracted not yet recognized revenue as of December 31, 2024, was $158,011, down from $392,636 in 2023, reflecting a decrease of 60%[101] Other Financial Metrics - The company has incurred significant losses and negative cash flows since inception, primarily funded through financing activities[15] - The company recognized a loss of CAD$104,227 in fair value of warrant liabilities during the year ended September 30, 2024[46] - At December 31, 2024, KWESST reported a gain of CAD$461,340 in fair value of warrant liabilities, compared to nil in 2023[50] - The fair value of the 2024 warrants was calculated at CAD$0.06 per warrant, with an exercise price of US$2.50[50] - The exchange rate used for the fair value calculations was USD/CAD 1.4389[50] - KWESST's warrant liabilities are classified as financial liabilities under IFRS due to the exercise price being denominated in U.S. dollars[45] - The company had a minimum royalty commitment of $2,000,000, with $1,000,000 due beyond five years[107] - Total contractual obligations amounted to $3,447,428, with $1,344,218 due within one year[107] - Non-cash working capital changes for the three months ended December 31, 2024 resulted in a decrease of $957,235, compared to a decrease of $768,042 in 2023[108] - During the three months ended December 31, 2024, the company recorded a foreign exchange gain of $113,283, compared to a gain of $91,710 in 2023[106] - The net U.S. dollar exposure was $1,158,750, with a potential impact of $57,938 on profit or loss from a 5% movement in the U.S. dollar[106] - At December 31, 2024, the company had one right-of-use asset valued at $41,699, down from $72,315 in 2023[112]

Results of Operations - Total revenue for Fiscal 2024 increased by $0.3 million compared to Fiscal 2023, driven by $0.2 million from the digitization business line and $0.1 million from the less-lethal business line [1] - Revenue for Fiscal 2024 increased by 22% over Fiscal 2023, attributed to government contracts in the Directorate Land Command Systems Program Management Software Engineering Facility (DSEF) and Land C4ISR [28] - The company recorded a net loss of $7.4 million for Fiscal 2024, a reduction of $1.9 million from Fiscal 2023 [28] Gross Profit - Gross profit for Fiscal 2024 was $0.5 million, representing a gross margin of 32.3%, compared to a gross loss of $0.2 million with a gross margin of -15.5% in Fiscal 2023 [29][31] Operating Expenses - Total operating expenses decreased by $1.6 million, or 14%, over Fiscal 2023, primarily due to reductions in selling and marketing costs and general administrative expenses [46] - General and administrative expenses decreased by $1.0 million, or 13%, mainly due to an impairment charge on the Phantom intangible asset in Fiscal 2023 and a decrease in general administrative expenditures [3] - Research and development expenses increased by $0.8 million, or 51%, due to costs associated with the KWESST LightningTM and BLDS projects, as well as the write-off of obsolete inventory [4] Other Income and Expenses - Total other income for Fiscal 2024 was $2.4 million, compared to $2.8 million for Fiscal 2023, reflecting a decrease of $0.4 million [48] - The change in other income was primarily driven by a $3.0 million gain on the change in fair value of warrant liabilities due to a decrease in the underlying common share price [48] Balance Sheet Highlights - As of September 30, 2024, total assets were approximately CAD$5.6 million, down from CAD$11.8 million in 2023 [49] - Total liabilities decreased to CAD$4.2 million from CAD$7.8 million in the previous year [49] Strategic Developments - The company announced plans to issue 4,670 common shares at a deemed price of CAD$20.90 to settle a debt of approximately CAD$97,615 [8] - The appointment of Sean Homuth as President and CEO and Kris Denis as interim CFO and Chief Compliance Officer was announced [9] - The company engaged Dave Ibbetson as a Strategic Defence Advisor [10] Future Outlook - The company expects revenue to increase with the commercial launch of KWESST LightningTM anticipated in calendar 2025, along with expected demand for new ARWEN 40mm ammunition and PARA OPS products [44] - Gross profit margins are expected to continue increasing in Fiscal 2025 due to ramp-up on Canadian Government contracts [45]