KWESST Updates Investors on Programmatic Business Ramp-Up

Rhea-AI Summary

KWESST Micro Systems Inc. (NASDAQ: KWE) (TSXV: KWE) has provided an update on its sub-contract with Thales Canada for the Canadian Department of National Defence's Land C4ISR program. The company has deployed five full-time engineers and is staffing an additional 11 positions, with a current demand for 16 full-time technical positions. KWESST expects further staffing increases as future tasks are received.

The sub-contract has a maximum workshare of approximately CAD $48 million over the initial six-year term. Sean Homuth, KWESST's President and CEO, highlighted the urgency of the work and the trust developed with Thales. He also noted that this project drives skills development for delivering defence-grade solutions to law enforcement and first responders through KWESST Lightning™.

Positive

• Deployment of 5 full-time engineers and staffing of 11 additional positions
• Maximum workshare of CAD $48 million over six years
• Potential for increased staffing and revenue as future tasks are received
• Development of skills applicable to other defence-grade solutions

Negative

• Revenue impact dependent on timing and extent of customer task orders

Insights

Financial Analyst

The update on KWESST's sub-contract with Thales Canada indicates positive momentum in the company's defense sector business. Key points include:

• Deployment of 5 full-time engineers and staffing for 11 additional positions, totaling 16 full-time technical roles
• Potential for further staffing increases as new tasks are received
• Maximum workshare of approximately CAD $48 million over the initial 6-year term

While this ramp-up is encouraging, investors should note that future revenue impact depends on the timing and extent of customer task orders. The contract's task-based nature introduces some uncertainty in revenue projections. However, the early steep ramp in activity suggests strong demand and potential for consistent revenue streams.

The partnership with Thales and involvement in modernizing Canadian Army's C4ISR systems could position KWESST favorably for future defense contracts. Additionally, the expertise gained may enhance their KWESST Lightning™ product offerings for law enforcement and first responders, potentially opening new market opportunities.

Overall, this update signals positive business development, but investors should monitor future reports for clearer revenue impact assessments.

• A strong start to the Thales sub-contract over the first few months since award.

Ottawa, Ontario--(Newsfile Corp. - October 1, 2024) - KWESST Micro Systems Inc. (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) ("KWESST" or the "Company") today updated investors on the ramp-up of activity on its sub-contract to Thales Canada in support of the Canadian Department of National Defence Land C4ISR series of contracts to modernize the Canadian Army's capabilities through advanced land command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) systems program.

Under the task-based contract, KWESST has now deployed five full-time engineers to the program and is in various stages of staffing an additional 11 positions, totalling a current demand for 16 full-time technical positions. The Company expects this to continue to increase staffing as future taskings are received.

"The early and steep ramp in activity under this sub-contract reflects the urgency and importance of the work to Canada. Our collective ability to respond is testament to the high trust working relationship we've developed with our partners at Thales. This work has also been, and continues to be, foundational in driving the skills required to deliver defence-grade solutions to law enforcement and first responders through KWESST Lightning™", said Sean Homuth, KWESST President and CEO.

While KWESST's maximum workshare under the sub-contract is approximately CAD $48 million over the initial six-year term, the continued ramp-up of activity on the program remains dependent on the timing and extent of task orders issued by the customer. Management will continue to provide guidance on the impact of those activities to revenue in future reporting periods.

About KWESST
KWESST (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) 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 stand-alone or integrate seamlessly with OEM products and battlefield management systems, and all come integrated with TAK. The company also has a new proprietary non-lethal product line branded PARA OPSTM with application across all segments of the non-lethal market, including law enforcement. The Company is headquartered in Ottawa, Canada with operations in Guelph, Ontario Canada, and Youngsville, North Carolina, USA as well as representative offices in London, UK and Abu Dhabi, UAE. As announced May 2, 2023, KWESST is under contract to perform up to CAD $27M in software development work under the CAD $136M DSEF program over the initial five years of the contract, with five additional option years. As announced June 10, 2023, KWESST is under a task-based sub-contract to Thales with a maximum workshare of approximately CAD $48 million over the initial six-year term in support of the Canadian Department of National Defence Land C4ISR series of contracts.

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

Contact:
David Luxton, Executive Chairman: luxton@kwesst.com
Sean Homuth, President and CEO: homuth@kwesst.com
Jason Frame, Investor Relations: frame@kwesst.com 587.225.2599

Forward-Looking Information and Statements
This press release contains "forward-looking statements" and "forward-looking information" within the meaning of Canadian and United States securities laws (collectively, "forward-looking statements"), which may 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 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 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 KWESST's inability to secure contracts or fulfill staffing requirements, statements of work/taskings on the DSEF and Land C4ISR programs, and orders for its products and services in 2024 and onwards for reasons beyond its control, the renewal or extension of agreements beyond their original term, the granting of patents applied for by KWESST, inability to finance the scale up to full commercial production levels for its physical products, inability to secure key partnership agreements to facilitate the outsourcing and logistics for its Arwen and PARA OPS products, ramp-up of the DSEF Program, Land C4ISR Program, overall interest in KWESST's products being lower than anticipated or expected; 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 inability of KWESST to implement its business strategies; risks and uncertainties detailed from time to time in KWESST's filings with the Canadian Security Administrators and the United States Securities and Exchange Commission, 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 statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking 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 statements, whether as a result of new information, future events or otherwise.

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

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/225176

FAQ

What is the maximum value of KWESST's sub-contract with Thales Canada?

The maximum workshare for KWESST under the sub-contract is approximately CAD $48 million over the initial six-year term.

How many technical positions is KWESST currently staffing for the Land C4ISR program?

KWESST has deployed 5 full-time engineers and is in various stages of staffing an additional 11 positions, totaling a current demand for 16 full-time technical positions.

What is the stock symbol for KWESST Micro Systems Inc.?

KWESST Micro Systems Inc. trades under the stock symbols KWE on NASDAQ and TSXV, and KWESW on NASDAQ.

How does the Thales sub-contract benefit KWESST's other business areas?

The work on this sub-contract drives the skills required to deliver defence-grade solutions to law enforcement and first responders through KWESST Lightning™.