KWESST Secures Contract Valued at up to $48M for Software Development Services with Thales Canada to Support Canadian Army Digital Modernization

Rhea-AI Summary

KWESST Micro Systems (KWE) has secured a sub-contract with Thales Canada valued at up to CAD $48 million. This contract will provide specialized software services to assist the Canadian Army's digital modernization efforts, specifically through the Land C4ISR system, which focuses on command, control, communications, computers, intelligence, surveillance, and reconnaissance. The contract was signed on June 7, 2024, and spans an initial six-year term. KWESST's revenue from this contract will depend on the timing and extent of task orders.

Positive

• Secured a CAD $48 million contract with Thales Canada.
• Supports Canadian Army's digital modernization through advanced C4ISR systems.
• Strengthens KWESST's position in defense and public safety markets.
• Potential for significant revenue over a six-year term.
• Enhances collaboration with Thales Canada.

Negative

• Revenue is dependent on the timing and extent of task orders.
• Uncertainty in revenue projections until tasks are authorized.

Insights

Financial Analyst

The award of a contract valued at up to CAD $48 million over six years is a significant event for KWESST Micro Systems Inc. This deal provides a substantial revenue stream and reinforces the company's strategic direction in the defence and public safety markets. It's important to understand that this contract is task-based, meaning the CAD $48 million is not guaranteed but dependent on the issuance of task orders. Investors should note this variable nature of the revenue. In the short term, this contract can boost investor confidence and stock price due to the strong association with Thales Canada and the Canadian Army. However, the actual financial impact will unfold as tasks are assigned and completed. Long-term benefits include reinforced market positioning and potential for future contracts in related fields.

Market Research Analyst

The significance of this contract extends beyond immediate financials. It places KWESST at the center of a critical modernization effort within the Canadian Army, offering an opportunity to solidify its standing in the C4ISR market. By collaborating with Thales Canada, KWESST can leverage Thales' extensive market presence and technological infrastructure, potentially opening doors to additional projects and partnerships. For investors, it's important to recognize that the defense market entails long product cycles and high barriers to entry, making successful contract awards valuable endorsements of a company's capabilities. However, the variable revenue model means that careful monitoring of task orders and project milestones will be important to gauge future performance.

Ottawa, Ontario--(Newsfile Corp. - June 10, 2024) - KWESST Micro Systems Inc. (TSXV: KWE) (TSXV: KWE.WT.U) (NASDAQ: KWE) (NASDAQ: KWESW); ("KWESST" or the "Company") today reported that it has been awarded a sub-contract by Thales Canada. Under the sub-contract, KWESST will deliver specialized software services for work under 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. The contract was signed at close of business on June 7, 2024.

"This award is further validation of our strategy to execute on programmatic digitization work that is foundational to the technology that underlies all of our products in both the Defence and Public Safety markets. This includes KWESST Lightning and our goal to bring these same situational awareness capabilities to law enforcement and first responders," said Sean Homuth, KWESST CEO. " We look forward to further strengthening our close working relationship with Thales Canada as we collaborate to deliver these critical capabilities to Canada's men and women in uniform."

"We are thrilled to collaborate with KWESST, their innovative and agile capabilities will enable the team to collectively deliver world class C4ISR solutions, supporting Canadian Army digitization," said Ian Krepps, VP Growth at Thales Canada.

The award is a task-based contract with a maximum workshare of approximately CAD $48 million over the initial six-year term. KWESST's expected revenue under this contract is largely driven by the timing and extent of task orders issued by the customer. As work tasks are authorized and communicated to the Company and work gets underway, Management will provide guidance on the impact of those activities to revenue.

About KWESST
KWESST (NASDAQ: KWE) (NASDAQ: KWESW) (TSXV: KWE) (FSE: 62UA) 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 OPS^TM with application across all segments of the non-lethal market, including law enforcement. The Company is headquartered in Ottawa, Canada with representative offices in London, UK and Abu Dhabi, UAE.

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

Contact:
David Luxton, Executive Chairman: luxton@kwesst.com
Sean Homuth, President and CEO: homuth@kwesst.com
Harry Webster, Chief Operating Officer: webster@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", "foresees", "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, but not limited to, KWESST's inability to secure task orders under the aforementioned contract, or the timing thereof, KWESST's ability to attract and retain the necessary skills and resources to meet the demands of the task orders received under the aforementioned contract, the renewal or extension of agreements beyond their original term, the granting of patents applied for by KWESST; 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/212271

FAQ

What is the value of the contract KWESST secured with Thales Canada?

The contract is valued at up to CAD $48 million.

What does the KWESST contract with Thales Canada involve?

The contract involves providing specialized software services for the Canadian Army's Land C4ISR system.

When was the KWESST contract with Thales Canada signed?

The contract was signed on June 7, 2024.

How long is the KWESST contract with Thales Canada for?

The contract spans an initial six-year term.

How will KWESST's revenue from the Thales Canada contract be determined?

Revenue will depend on the timing and extent of task orders issued by the customer.