OTTAWA – KWESST Micro Systems Inc. (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) (TSXV: KWE.WT.U), a developer of next-generation tactical systems, has announced the successful closure of its public offering, raising gross proceeds of approximately $1 million. The offering, which closed on Monday, involved the sale of 735,000 common shares and 803,500 pre-funded warrants, with the latter having an exercise price of $0.001.
The common shares and pre-funded warrants were priced at $0.65 and $0.649 respectively, before the underwriting discount of $0.04875 per share. After the underwriting discount and estimated offering expenses, the net proceeds will be used primarily for working capital, general corporate purposes, and to advance the company’s business objectives.
ThinkEquity acted as the sole book-running manager for the offering. In addition to the securities sold, KWESST also issued 76,925 common share purchase warrants to the underwriter as compensation, exercisable at $0.8125 per share.
The offering was conducted under an effective shelf registration statement filed with the U.S. Securities and Exchange Commission (SEC). The final prospectus supplement and accompanying prospectus are available on the SEC’s website.
KWESST specializes in the digitization of tactical forces, providing real-time situational awareness and targeting information. Its portfolio includes systems that counter electronic detection, lasers, and drones, which can either operate independently or integrate with OEM products and battlefield management systems. The company also has a proprietary non-lethal product line branded PARA OPS™, targeting the law enforcement market.
This financial move comes as KWESST continues to develop and commercialize its tactical systems for military and security forces. The company, headquartered in Ottawa, Canada, has operations in Guelph, Ontario, Canada, and Youngsville, North Carolina, USA, as well as representative offices in London, UK, and Abu Dhabi, UAE.
InvestingPro Insights
Following the recent public offering by KWESST Micro Systems Inc., a snapshot of the company’s financial health and market performance can provide investors with a clearer picture of its current standing. According to real-time data from InvestingPro:
- The company’s market capitalization stands at a modest $6.15 million.
- Revenue for the last twelve months as of Q1 2024 was reported at $0.79 million, with a slight growth of 2.43%.
- However, KWESST is facing significant challenges as evidenced by its gross profit margin of -40.43% and an operating income margin of -1139.95% over the same period.
Investors should note that KWESST holds more cash than debt on its balance sheet, which provides a degree of financial flexibility. Additionally, analysts anticipate sales growth in the current year, which could be a positive signal for the company’s future performance.
Despite these points, KWESST has been quickly burning through cash and the stock has taken a substantial hit over the last week, with a price total return of -31.56%. This volatility is reflective of a broader trend, as the stock has experienced a significant decline over the past year, with a price total return of -66.52%. The company does not pay a dividend, which may influence the investment strategy for income-focused shareholders.
For those looking for more in-depth analysis and additional insights, InvestingPro offers a range of metrics and expert tips. There are 17 more InvestingPro Tips available for KWESST, which can be accessed by visiting InvestingPro’s dedicated KWESST page. To get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24.
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