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SDI Announces Closing of USD$2.080 Million Financing

Wakefield, Massachusetts--(Newsfile Corp. - May 22, 2019) - Security Devices International Inc. (CSE: SDZ) (OTCQB: SDEV) ("SDI" or the "Company") has entered into a Security Purchase Agreement ("the "Agreement" ) with several accredited investors (the "Purchasers") and Northeast Industrial Partners, LLC as collateral agent for the Purchasers (the"Collateral Agent") to sell USD $2,080,264.61 of units (the "Units"), with each $1,000 of Units consisting of (i) a USD$1,000 unsecured convertible promissory note (collectively the "Notes"), convertible into the Company's Common Stock par value USD$.001 per share (the "Common Stock", and (ii) four thousand (4,000) warrants (the "Warrants"), each exercisable for one share of Common Stock at an exercise price of USD$0.25 per common share. The Notes and Warrants were issued in a non-brokered private placement pursuant to Regulation D under the U.S. Securities Act of 1933 (the "Securities Act"). The sale of the Units was closed in two tranches, with the first tranche closing on April 22, 2019, in respect of an issuance of USD $1,715,265.71 and the second tranche, in respect of USD $364,999.90 closing on May 20, 2019. The net proceeds from the sale of the Units will be used to repay at maturity the Company's Series B Convertible Secured Debentures and for general corporate purposes and working capital.

The outstanding principal amount of the Notes accrue interest at a rate of 10% per annum, provided that, in the event of default on the Notes, the interest rate will be 15% per annum during the period of default. The maturity date of the notes is April 15, 2020, which date is subject to optional extension by each Purchaser if a change of control of the Company is announced prior to such dates. Interest on the Notes is payable semi-annually in arrears on while the Notes are outstanding. The Company has the option to redeem the Notes by paying the Purchasers the Optional Redemption Price as described in the Notes.

Each Note is convertible into Common Stock, at the option of the Purchaser. Upon such optional conversion, the outstanding principal amount of the Note converts into shares of Common Stock at a conversion price of USD$0.15 per share, subject to adjustment as set forth in the Notes (the "Note Conversion Price"). The Company is not required to convert any portion of a Note if doing so results in the Purchaser beneficially owning more than 4.99% of the outstanding Common Stock after giving effect to such conversion, provided that on sixty-one (61) days' prior written notice from the Purchaser to the Company, that percentage may increase to 19.99%.

Upon a Change of Control (as defined in the Note), a Purchaser may require the Company to redeem all or a portion of a Note, in which case the Company will pay in cash an amount equal to the greater of (a) the sum of (x) the aggregate consideration that the Purchaser would be entitled to receive in connection with the Change of Control if the Purchaser were to fully convert (without giving effect to any limitations on conversion) the outstanding principal of the Note into Common Stock immediately prior to the consummation of such Change in Control, plus (y) any accrued and unpaid interest thereon through but excluding the effective date of the Change of Control and any accrued and unpaid late charges, or (b) an amount equal to the sum of (x) the outstanding principal of the Note, plus (y) any accrued and unpaid interest thereon through but excluding the effective date of the Change of Control and any accrued and unpaid late charges plus, (z) an amount equal to 100% of the interest that would have been earned on the Note from the effective date of the Change of Control through the maturity date of the Note. Notwithstanding any other provision of the Agreement or the Note, the effective interest rate may not exceed 25% per annum.

The Notes contain restrictive covenants which, among other things, restrict the Company's ability to incur additional indebtedness, grant security interests on its assets or make distributions on or repurchase its common stock.

Although the Notes are unsecured, pursuant to the Agreement, the Purchasers appointed Collateral Agent to act as collateral agent for the Purchasers. Upon the Springing Lien Date (as defined in the Agreement), the Company will grant to Collateral Agent a security interest in substantially all of its assets, as security for the Company's obligations under the Notes and the documents executed in connection with the Agreement.

Each Warrant is exercisable for one share of Common Stock at an exercise price of USD $0.25 per share, on or prior to the close of business on October 22, 2023. If the average closing price of the Common Stock is over USD $0.35 per share for a period of 20 consecutive trading days ending after the two year anniversary of the issuance, the Company may give notice to the registered holders of the Warrants accelerating the expiry date to a date not less than 30 days following the date of such notice.

The Notes, the Warrants, and the Common Stock issuable upon conversion of the Notes and/or exercise of the Warrants have not been, and will not be, registered under the Securities Act, and may not be sold, transferred or assigned (i) in the absence of an opinion in a generally acceptable for of counsel, which counsel shall be selected by the holder and be reasonably acceptable to the Company, that registration is not required under the Securities Act or (ii) unless sold pursuant to Rule 144 of the Securities Act.

The foregoing summary of the Agreement, the Notes, the Warrants, and related agreements is qualified in its entirety by the terms of the Agreement and the exhibits thereto (including the form of Unsecured Convertible Note and form of Warrant).

The Company issued USD $170,588.14 of the Notes to subscribers who are related parties of SDI under Multilateral Instrument 61-101 ("MI 61-101"). SDI is exempt from the formal valuation requirement and shareholder approval requirement of MI 61-101, as described in more detail in the material change report to be filed in connection with this private placement.

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This news release does not constitute an offer to sell or the solicitation of any offer to buy nor will 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 registration or qualification under the securities laws of any such province, state or jurisdiction.

In addition to the foregoing issuances, on May 22, 2019 the Company has made a share issuance of 300,000 shares of restricted common stock to MZHCI, LLC ("MZ") pursuant to the terms of its October 22, 2018 consulting agreement for investor relations services. Pursuant to that consulting agreement the shares were to be issued as part of MZ's compensation for completion of Phase I of the investor relations services. The shares are subject to a four (4) month and one day hold.

On May 21, 2019, the Company also issued 120,000 stock options priced at CAD$0.19 per share to its controller, Pamela Barron, pursuant to her employment contract.


Certain statements in this news release constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 with respect to the Agreement, including benefits of the transaction and intended use of proceeds. These forward-looking statements generally are identified by the words "believe", "project", "expect", "anticipate", "estimate", "future", "strategy", "opportunity", "plan", "may", "should", "will", "would", "will be", "will continue", "will likely result", and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document including, but not limited to, the Company's ability to comply with all terms and provisions in the Agreement and the documents executed in connection therewith, and general economic conditions. In addition please refer to the documents that the Company files with the SEC on Forms 10K and 10Q, and management's discussion and analysis filed with the CSE and on SEDAR. These filings identify and address other important risks and uncertainties that could cause events and results to differ materially from those contained in the forward-looking statements set forth in this document. Forward -looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward -looking statements the Company assumes no obligation and does not intend to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

About Security Devices International Inc.

SDI is a technology company specializing in the areas of Personal Security Devices, Military, Law Enforcement, Corrections, and Private Security. The Company develops and manufactures innovative, less lethal equipment and munitions.

Security Devices International Inc.
Bryan Ganz, CEO
Tel. 978-868-5011

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