KWESST Announces Public Offering of Units in Canada

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

KWESST Micro Systems Inc. (TSXV: KWE) ("KWESST" or "the Company") announced today that it has commenced an underwritten public offering in Canada of units for gross proceeds of approximately USD$3 million (the "Offering"). Each unit (a "Unit") is comprised of one common share in the capital of KWESST (a "Share") and a common share purchase warrant (a "Warrant"). Each Warrant entitles its holder to purchase one additional common share for a period of five years from closing. PI Financial Corp. is acting as book-runner and sole underwriter in connection with the Offering.

The Offering is expected to close concurrently with the financing announced by KWESST on August 16^th, 2022 for which ThinkEquity, a US based investment bank, will serve as sole book-running manager (the "US Financing"). Contingent on the closing of the US Financing, KWESST has applied to list its common shares on the Nasdaq Capital Market under the ticker symbol "KWE" and the warrants offered in the US Financing under the ticker symbol "KWESW".

The Offering is expected to be priced in the context of the market, with the final terms of the Offering to be determined at the time of pricing. The price of the Offering will be identical to the price of the US Financing and the Warrants will be exercisable at the same price as those issued as part of the US Financing and will have the same expiry date. The shares are expected to be listed on the TSX Venture Exchange (the "TSXV"). The Offering will be subject to the terms of an underwriting agreement to be entered into between the Company and PI Financial Corp. Closing of the Offering is subject to customary conditions as well as the successful completion of the US Financing and the listing on Nasdaq Capital Market having been approved.

The Company intends to use the net proceeds from the Offering to repay certain outstanding loans and for general corporate purposes.

The Company filed a preliminary short form base PREP prospectus (the "Preliminary Prospectus") in connection with the Offering. The Preliminary Prospectus was filed with the securities commissions in each of the provinces of Canada, except Québec.

The Preliminary Prospectus contains important detailed information about the Offering. The Preliminary Prospectus can be found under the Company's profile on SEDAR at www.sedar.com. Copies of the Preliminary Prospectus may also be obtained from PI Financial Corp. by email at: syndication@pifinancial.com. Prospective investors should read the Preliminary Prospectus and the other documents the Company has filed before making an investment decision.

This news 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 province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such province, state or jurisdiction.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of securities in the United States. The securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the "United States" or to "U.S. persons" (each as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and all applicable state securities laws or an exemption from such registration requirements is available.

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

Contact: Steve Archambault, CFO, archambault@kwesst.com or (613) 317-3941
Jason Frame, Investor Relations: frame@kwesst.com

About KWESST

KWESST develops and commercializes breakthrough next-generation tactical systems that meet the requirements of security forces and personal defense for overmatch capability against adversaries. The company's current portfolio of unique proprietary offerings include its unique non-lethal PARA OPS^TM system with application across all segments of the non-lethal market, including law enforcement and personal defence. KWESST is also engaged in the digitization of tactical forces for shared situational awareness and targeting with its signature TASCS Situational Control System) for real-time awareness and targeting information from any source (including drones) streamed directly to users' smart devices and weapons. Other KWESST products include counter-measures against threats such as drones, lasers and electronic detection. These include the autonomous GreyGhost^TM soldier-portable micro drone missile system that defends against small hostile drones including swarms using high-speed kinetic impact; a Ground Laser Defence system to counter the emerging threat of weaponized lasers against personnel and the Phantom^TM electronic battlefield decoy system to mask the electromagnetic signature of friendly forces with decoy signatures at false locations to deceive and confuse adversaries. These systems can operate stand-alone or integrate seamlessly with OEM products and battlefield management systems. The Company is headquartered in Ottawa, Canada, with operations in Stafford, VA and representative offices in London, UK and Abu Dhabi, UAE. KWESST trades on the TSX Venture Exchange under the symbol KWE.

Forward-Looking Information and Statements

This press release contains "forward-looking information" within the meaning of Canadian Securities laws, which may include, but are not limited to: KWESST's plans to consummate the Offering and US Financing, the size of the Offering and US Financing, the completion of the Offering and US Financing; the pricing and final terms of the Offering and US Financing; listing of the Unit Shares on the TSXV and the listing of KWESST's shares on NASDAQ; entering into an underwriting agreement with respect to the Offering; use of the net proceeds from the Offering; and KWESST's business, production and products. Often, but not always, forward-looking information can 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 information and 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 information and 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 risks relating to: the failure to complete the Offering; the failure to obtain TSXV approval; general economic and stock market conditions; adverse industry events; loss of markets; future legislative and regulatory developments in Canada, the United States and elsewhere; the ability of KWESST to implement its business strategies; risks and uncertainties detailed from time to time in KWESST's filings with the Canadian Securities Administrators; 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 information or statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking information or statement can be guaranteed. Except as required by applicable securities laws, forward-looking information and 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 information or statements, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/136905