Mr. Sean Homuth reports

KWESST ANNOUNCES US$5.6 MILLION PRIVATE PLACEMENT IN THE UNITED STATES

Kwesst Micro Systems Inc. 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 $5.6-million (U.S.) (approximately $7.3-million (Canadian)).

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 $2.26 (U.S.) ($2.98 (Canadian)) per common share and prefinanced warrants at a price of $2.259 (U.S.) ($2.979 (Canadian)) per prefinanced warrant, totalling approximately 2,474,700 common shares (or common share equivalents). Each common share and prefinanced warrant will be bundled with one common share purchase warrant of the company. Each prefinanced warrant will entitle the holder to acquire one common share at an exercise price of 0.1 U.S. cent 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 $2.66 (U.S.) ($3.50 (Canadian)) for a period of 60 months following the closing of the offering. Although the common shares and prefinanced 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, subject to customary closing conditions, including the 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 equal to 8.5 per cent 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 per cent of the common shares sold in the offering 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 $2.66 (U.S.) ($3.50 (Canadian)) per common share.

About Kwesst Micro Systems Inc.

Kwesst develops and commercializes breakthrough, next-generation tactical systems for military and security forces. The company's current portfolio of offerings includes digitization of tactical forces for real-time shared situational awareness and targeting information from any source (including drones) streamed directly to users' smart devices and weapons. Other Kwesst products include countermeasures against threats such as electronic detection, lasers and drones. These systems can operate as stand-alone or integrate seamlessly with OEM (original equipment manufacturer) products and battlefield management systems, and all come integrated with TAK. The company also has a new proprietary non-lethal product line, branded Para Ops, with application across all segments of the non-lethal market, including law enforcement. The company is headquartered in Ottawa, Canada, with operations in Stafford, Va., and representative offices in London, United Kingdom, and Abu Dhabi, United Arab Emirates.

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