Workflow
KWESST Micro Systems (KWE) - 2025 Q1 - Quarterly Report
KWEKWESST Micro Systems (KWE)2025-02-15 02:43

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 3.5millionforthethreemonthsendedDecember31,2024,comparedtoanetlossof3.5 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 3.2millionforthethreemonthsendedDecember31,2024,comparedtonegativeoperatingcashflowsof3.2 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 51,055forthethreemonthsendedDecember31,2024,comparedto51,055 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,aslightdecreasefrom63,863, 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 2.8millioninworkingcapital,arecoveryfromnegativeworkingcapitalof2.8 million in working capital, a recovery from negative working capital of 1.1 million as of September 30, 2024[15] - Accumulated deficit increased to 46.1millionasofDecember31,2024,upfrom46.1 million as of December 31, 2024, up from 42.7 million on September 30, 2024[15] - Total trade and other receivables increased to 1.04millionasofDecember31,2024,comparedto1.04 million as of December 31, 2024, compared to 0.57 million on September 30, 2024[33] - Inventory decreased slightly to 529,778asofDecember31,2024,from529,778 as of December 31, 2024, from 533,163 on September 30, 2024[35] - Accounts payable and accrued liabilities totaled 1.13millionasofDecember31,2024,downfrom1.13 million as of December 31, 2024, down from 1.66 million on September 30, 2024[39] - Contract liabilities decreased to 92,986asofDecember31,2024,from92,986 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 CAD1.4million(US1.4 million (US1 million) by issuing 80,350 pre-funded warrants[44] - On August 13, 2024, KWESST closed a direct offering for 471,500 common shares at US2.00pershare,resultingingrossproceedsofCAD2.00 per share, resulting in gross proceeds of CAD1.3 million (US0.9million)[47]−ThecompanyannouncedapublicofferingonNovember1,2024,raisinggrossproceedsofCAD0.9 million)[47] - The company announced a public offering on November 1, 2024, raising gross proceeds of CAD4.9 million (US3.5million)byselling80,000commonsharesand3,809,000pre−fundedwarrants[51]−KWESSTexercised639,000pre−fundedwarrantsataweightedaverageexercisepriceofUS3.5 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 US0.01, recognizing a gain of CAD693,328inthechangeinfairvalueofwarrantliabilitiesbeforereclassifyingthemtoequity[54]−Thecompanyraisedgrossproceedsof693,328 in the change in fair value of warrant liabilities before reclassifying them to equity[54] - The company raised gross proceeds of 4.9 million (US3.5million)inaNovemberU.S.PublicOffering,withwarrantsexercisedresultinginadditionalproceedsof3.5 million) in a November U.S. Public Offering, with warrants exercised resulting in additional proceeds of 0.8 million (US0.6million)[105]ShareholderInformation−KWESST′sweightedaveragenumberofsharesoutstandingincreasedto3,032,168forthethreemonthsendedDecember31,2024,comparedto561,678inthesameperiodof2023[5]−AsofDecember31,2024,thetotalnumberofoutstandingcommonsharesincreasedto7,887,223,upfrom1,579,176onSeptember30,2024,reflectingasignificantissuanceforvariouspurposes[57]−Thecompanyreportedatotalof1,006,645outstandingsecuritiesasofDecember31,2024[49]−Thecompanyissued119,047commonsharesatadeemedpriceofCAD0.6 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 CAD0.84 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,comparedto718,983, 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,downfrom158,011, 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 CAD104,227infairvalueofwarrantliabilitiesduringtheyearendedSeptember30,2024[46]−AtDecember31,2024,KWESSTreportedagainofCAD104,227 in fair value of warrant liabilities during the year ended September 30, 2024[46] - At December 31, 2024, KWESST reported a gain of CAD461,340 in fair value of warrant liabilities, compared to nil in 2023[50] - The fair value of the 2024 warrants was calculated at CAD0.06perwarrant,withanexercisepriceofUS0.06 per warrant, with an exercise price of US2.50[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,with2,000,000, with 1,000,000 due beyond five years[107] - Total contractual obligations amounted to 3,447,428,with3,447,428, 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,comparedtoadecreaseof957,235, 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,comparedtoagainof113,283, compared to a gain of 91,710 in 2023[106] - The net U.S. dollar exposure was 1,158,750,withapotentialimpactof1,158,750, 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,downfrom41,699, down from 72,315 in 2023[112]