KWESST Micro Systems (KWE) - 2024 Q4 - Annual Report

Financial Performance - KWESST reported a net loss of CAD $7.4 million for Fiscal 2024, a reduction of CAD$1.9 million compared to Fiscal 2023[3]. - Revenue for Fiscal 2024 increased by 22% to CAD $1.5 million, driven by government contracts in the DSEF and Land C4ISR programs[4]. - Gross profit for Fiscal 2024 was CAD$0.5 million, representing a gross margin of 32.3%, compared to a gross loss of CAD $0.2 million in Fiscal 2023[10]. - Total operating expenses decreased by CAD$1.6 million, or 14%, over Fiscal 2023, primarily due to reductions in general and administrative and selling and marketing costs[13]. - Cash and cash equivalents decreased to CAD $256,828 as of September 30, 2024, down from CAD$5.4 million in the previous year[14]. - Total liabilities decreased to CAD $4.2 million in Fiscal 2024 from CAD$7.8 million in Fiscal 2023[14]. Business Development and Strategy - The Company expects revenue growth with the commercial launch of KWESST Lightning in calendar 2025 and increased demand for new ARWEN 40mm ammunition[9]. - KWESST's digitization business generated CAD $1.0 million in sales in Fiscal 2024, with ongoing contracts contributing significantly[8]. - The Company plans to expand its ARWEN business, including the introduction of a new 40mm cartridge for riot control launchers[15]. - The Company plans to ramp up volume production of its PARA OPS products in early 2024, with initial production having started in fall 2023[18]. - The Company has engaged an external manufacturer for the assembly of its Arwen ammunition and is discussing potential outsourcing and distribution agreements for PARA OPS products[18]. Capital and Funding - The Company received gross proceeds of approximately US$1,000,000 from a public offering of 153,850 Common Shares at a price of US$6.50 per share on April 4, 2024[20]. - The Company announced a public offering of 3,889,000 pre-funded warrants at a price of US$0.90 per share, resulting in gross proceeds of approximately US$3,500,000 on November 1, 2024[25]. - The Company has entered into definitive agreements for the purchase and sale of 471,500 Common Shares at US$2.00 per share, generating gross proceeds of approximately US$943,000 on August 12, 2024[23]. Contracts and Partnerships - The Company reported an annualized revenue of approximately CAD$3.3 million from its subcontract with Thales Canada for the Canadian Department of National Defence contracts[22]. - The Company has been awarded a contract by the Ontario Provincial Police to deliver training and certification for its TAK users and trainers[20]. Leadership and Management - The Company appointed Sean Homuth as President and CEO and Kris Denis as interim CFO and Chief Compliance Officer on November 27, 2023[18]. Product Development and Innovation - The Company showcased a new 40mm baton cartridge at the SHOT Show in January 2024, responding to significant interest from law enforcement agencies[18]. - KWESST develops next-generation tactical systems for military and security forces, including real-time shared situational awareness and targeting information[27]. - The company offers a proprietary non-lethal product line branded PARA OPS, applicable across all segments of the non-lethal market, including law enforcement[27]. - KWESST's products can operate stand-alone or integrate with OEM products and battlefield management systems, all integrated with TAK[27]. Risks and Forward-Looking Statements - Forward-looking statements indicate potential risks, including the inability to secure contracts and subcontracts for its products in 2024-2025[30]. - Management believes that assumptions underlying forward-looking statements are reasonable but may prove incorrect due to various risk factors[30]. - The company faces uncertainties related to financing the scale-up to full commercial production levels for its physical products[30]. - There is a risk of overall interest in KWESST's products being lower than anticipated, affecting future sales[30]. - The company does not undertake any obligation to publicly update or revise forward-looking statements unless required by applicable securities laws[30]. Regulatory and Compliance - The Company received a letter from Nasdaq granting an additional 180-day period until May 12, 2025, to regain compliance with the minimum bid price requirement of US$1.00 per share[25]. - The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of the release[31].