KWESST hits the mark by creating “timely technology” for the global defense and homeland security market

KWESST CEO Jeff MacLeod said the company has a scalable business model, diversified products and more than $90 million in pipeline opportunities

KWESST - KWESST hits the mark by creating “timely technology” for the global defence and homeland security market
There is distinct investor excitement around KWESST which will start trading on the TSX Venture Exchange on September 17

There is distinct investor excitement around KWESST Micro Systems Inc (CVE:KWE) hailed by the media as a “freakishly smart” military technology company. The Ottawa-based company debuted on the TSX Venture Exchange on Tuesday and will list on the US OTC Markets later this year. 

The company's stock recently traded nearly 46% higher to $0.89 a share in afternoon trading.

KWESST has a diversified product line, springing from a single core technology — its proprietary Micro Integrated Sensor Systems Technology (MISST) — which involves ultra-miniaturization and integration of sensors, software, optics, ballistics, machine learning and artificial intelligence that boosts mission capability.

The company’s signature Tactical and Situational Control System (TASCS), which streams real-time awareness and targeting information from any source (including drones) directly to a soldier’s smart device and weapon, is being favorably evaluated by the US military among others. The company says it is advancing the "modern networked capability" of soldiers and first responders as the TASCS system allows them to get an accurate read on targets even when they are behind cover.

KWESST is also building drone missiles with sophisticated micro cameras, software and artificial intelligence onboard, so that it can “track, hunt and kill” drones with high-speed kinetic impact autonomously.

The military technology specialist views operating factories as a way of burning through cash. Therefore, KWESST is laser-focused on developing the technology, while using a ready network of vendors who supply it with the hardware bits and pieces.

The Ottawa-headquartered company has representative offices in Washington, London, UK and Abu Dhabi. In July, KWESST completed a brokered private placement with PI Financial with participation by Beacon Securities to raise more than $3 million to fund its business development.

Proactive sat down with KWEST founder and CEO Jeff MacLeod to learn more about the company’s high-growth global defence business, diversified products and more than $90 million in pipeline opportunities.

Why has homeland security become more concerned about the threat posed by drones, and how is KWESST a part of the solution in quelling hostile drones that operate alone or in a swarm?

The use of small drones for hostile or criminal purposes is proliferating with attempted assassinations by drones, delivery of weapons and contraband to prisons, unauthorized overflight of critical facilities and security-sensitive infrastructure. In many countries, small drones have also been weaponized with explosives and been turned into flying improvised explosive devices. Electronic counter-measures to disrupt and stop drones are becoming less effective as bad actors create unjammable drones, leaving no option but to take them down kinetically.

In a homeland security setting it is not safe to do this by shooting weapons. KWESST’s micro drone missile can instead be used against single or multiple drones to autonomously track, intersect and neutralize them with high-speed impact.

How does KWESST’s technology make weapons smarter, while enhancing the safety and operational capabilities of soldiers?

KWESST’s TASCS system, for one, feeds situational awareness information directly to soldiers’ networked smart devices and their weapons systems, which allows them to be further back from adversaries and behind cover when engaging. They’re safer for that reason and the TASCS fire module for their weapons system also makes them much more accurate, increasing their operational effectiveness.

Since the company is eyeing the Global Soldier Systems market how big is the opportunity?

Independent market studies have pegged the Soldier Systems market at more than $14 billion by 2025.

Can you talk about some of your products like the electronic decoys and defense systems aimed at countering the threat of ground laser weapons?

Products like the electronic decoy is another example of a micro system to keep soldiers safer in the field and buy time for mission success. A deployed military unit in a remote location is easy for adversaries to locate by listening to their electromagnetic emissions. KWESST’s electronic decoys mimic this electromagnetic traffic and can be deployed by soldiers or drones at “phantom” locations in the area of operation to fool adversaries into believing there are operations where there are none, thus masking the real location of friendly forces.

KWESST’s laser defence system counters the emerging threat of ground-based laser weapons used by bad actors to blind personnel and fry their optical devices like scopes and binoculars. KWESST’s laser defence system warns everyone on the ground of the presence of laser weapons and can also pinpoint the location of the laser weapons on the TASCS situational awareness and control system.

How do you keep your operations lean and boost the economics of your business model?

KWESST outsources its production to a secure supply chain of North American vendors, so it doesn’t have to invest in production plant and equipment. This makes the business scalable and creates operating leverage with higher profitability as revenues grow.

Has your signature Tactical Awareness and Situational Control System (TASCS) been favorably evaluated by the US military?

There were demonstrations and evaluations to the US military over the past two years leading up to contracts now underway to incorporate TASCS into military exercises of key US customers, which is an important milestone in achieving introduction into service.

What is the investment case for a military tech company like KWESST and could you share your outlook in terms of pipeline opportunities?

The investment case is, very simply: a timely technology play led by proven industry experts in a high-growth segment of the global defence and homeland security market, with a scalable business model and a de-risked strategy of diversified products and customers and low capital expense (CAPEX).

In terms of outlook, the company had more than $90 million in pipeline opportunities as of August 2020.

Contact the author Uttara Choudhury at uttara@proactiveinvestors.com

Follow her on Twitter: @UttaraProactive


Quick facts: KWESST

Price: 1.57 CAD

Market: TSX-V
Market Cap: $64.97 m

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