- Develops technology to boost combat soldiers’ safety and effectiveness
- Technology employs ultra-miniaturization, integration of sensors, and AI
- Engaged Retired General Rick Hillier, ex-Canadian Chief of Defence Staff
What KWESST Micro Systems does:
KWESST Micro Systems Inc (CVE:KWE) (OTCQB:KWEMF) is a soldier’s best friend.
The Ottawa-based company is a leader in advancing the modern networked capability of soldiers and responders, including the networked Soldier Systems mission of NATO and its allies, with niche applications that make a critical difference for safety and effectiveness.
KWESST has a diversified product line stemming 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 (AI) that boosts mission capability.
The company also offers its 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 -- providing for a safer and more effective engagement of the enemy.
TASCS includes the variant IFM (Integrated Fires Module) system that integrates TASCS’ real-time awareness/targeting capabilities into many short-range and long-range weapons systems, including grenade launchers, mortars, sniper rifles, drones, laser defense, electronic decoys, and more.
Under the TASCS system, KWESST also offers its Augmented Weapons Sight (AWS), a system developed by AeroVironment Inc and KWESST (TSX-V:KWE, OTCQB:KWEMF) to provide real-time situational awareness and targeting information via AeroVironment’s drones to the TASCS display on soldiers' smart devices and weapons systems.
How is it doing:
KWESST (TSX-V:KWE, OTCQB:KWEMF) kicked off 2021 with several notable advancements designed to position the company for further growth.
In February, its shares began trading on the OTCQB Venture Market in New York, a premier marketplace for entrepreneurial and development-stage US and international companies. The company, which also still trades on the TSX Venture Exchange in Canada, now has exposure to a much larger potential investor base in the US.
In addition, the company recently hired retired Canadian General Rick Hillier to lead KWESST (TSX-V:KWE, OTCQB:KWEMF)’s new International Advisory Council, which will provide guidance on the company’s strategic build-out on a global scale.
General Hillier served as Canada's Chief of Defence Staff from February 2005 to July 2008. He is noted for "getting stuff done" and was instrumental in securing additional funding and modernized equipment for the Canadian military in support of Canada's mission in Afghanistan.
In April, the company announced two other crucial management appointments.
Rick Bowes was named to the new position of vice president of operations to oversee and accelerate the market introduction of the company's products and services for its Digitization and Tactical Products (DTP) division, which comprises the bulk of the company's current products and services. Bowes had served with various military units such as Lord Strathcona's Horse (Royal Canadians) and the Canadian Airborne Regiment Battle Group.
In conjunction with Bowes’ appointment, the company also announced that Steve Archambault, who has been serving as a part-time chief financial officer since the company's listing in September 2020, had now assumed the role on a full-time basis.
And KWESST said it had appointed international business and trade lawyer Elisabeth Preston to the board of directors and as its corporate secretary. Preston was chief legal counsel for a top-tier international defence company with widespread global operations before coming on board.
The appointments came as the company established a wholly-owned US subsidiary and operating facility in Stafford, Virginia - near Washington, DC, the Pentagon, and thousands of military contractors - where KWESST systems can be assembled and showcased for US customers.
As for those customers, the company recently struck a follow-on order worth about C$1.1 million with a key US military customer to expand the use of its TASCS IFM system on an 81mm (millimeter) mortar platform.
KWESST said the 81mm mortar alone could ultimately be worth up to C$120 million in the US and another C$400 million worldwide, given the large installed base of 81mm mortars in service with so many NATO and allied forces. The company also said the system can work on 60mm mortars and other armaments.
The company also integrated the TASCS IFM system/81mm mortar platform into the Android Tactical Assault Kit (ATAK) -- the pre-eminent battlefield management system for NATO countries. As a result, KWESST is now proceeding to the next phase of that contract, involving live-fire trials at various US military bases.
In addition, the company has established an ATAK Center of Excellence in Ottawa, which will facilitate customer requirements for ATAK’s integration. ATAK is a geospatial and situational awareness system that provides users with a drop-down menu of approved operational applications for shared situational awareness.
Meanwhile, the company plans to bring to market in 2021 the Phantom electronic decoy for battlefields to deceive adversaries on the location of NATO friendly forces. NATO is highly interested in such technology that can be ultra-miniaturized for expedient deployment by ground personnel or drones. There is deep concern that without an effective decoy system, forces can be located easily and destroyed at scale.
KWESST pegs the addressable market for the Phantom electronic decoy at C$500 million in the US alone, and potentially the same for other NATO countries and their allies. The company recently won a US patent for the decoy, which has been selected in defence and innovation programs for evaluation, including a US Special Operations Command program.
The company has also gained exclusive rights to another drone technology for US and Canadian militaries. The product, which is based on the licensed technology marketed under the name GreyGhost, is an autonomous soldier-portable micro drone missile system that defends against small hostile drones including swarms using high-speed kinetic impact. These small drones can provide NATO adversaries with a low-cost means of conducting intelligence, surveillance, and reconnaissance missions or direct attacks on NATO forces.
The company is also expanding its business model by getting into non-lethal technology designed for crowd control, military and law enforcement training, personal defence, and even high-action gaming.
To give it a foothold, KWESST recently acquired Low Energy Cartridge (LEC) technology from privately held DEFSEC Corporation, a company owned by KWESST executive chairman David Luxton.
The company also recently raised $4 million which will be used to close the acquisition of the Low Energy Cartridge and begin the commercialization of the product as well as accelerate work on the GreyGhost micro-drone missile.
Inflection points:
- Bring Phantom decoy to market in 2021
- Pursue global markets for TASCS IFM system
- Achieve first overseas orders
What the boss says:
"We have a strong concentration of business with military customers in the US, so it makes sense to be listed there,” KWESST executive chairman David Luxton commented when the company joined the OTCQB in New York and on the launch of its Northern Virginia subsidiary.
“As well, there is obviously a much larger potential investor base in the US with an appetite for exposure to our kind of business. We expect this will expand our shareholder base and the liquidity of the stock to the benefit of all shareholders."
Contact the author: patrick@proactiveinvestors.com
Follow him on Twitter @PatrickMGraham
