KWESST Micro Systems Inc. (TSXV:KWE)
KWESST Micro Systems designs and brings to market a selection of applications and devices that make a critical difference to safety and effectiveness of personnel working in the defence and security sectors. Investing in small-cap stocks rarely offers investors the chance to get into a global business solely focussed on the defence and security market. That makes KWESST a very exciting company to watch.
KWESST makes miniaturized sensor packs and tactical apps for smart devices. It’s building a portfolio of next generation offerings of proprietary technologies. This includes its signature Tactical and Situational Control System (TASCS) a superb mission critical technology that’s being warmly received by US military customers. KWESST was founded in 2017 and in recent weeks the KWESST share price has soared 38%.
Smart tactical systems remotely operating with precision
KWESST’s intelligent systems are in use on mobile smart devices, including heads-up displays and tablets allowing soldiers to orient themselves in combat and react with rapid precision.
The KWESST architecture knits together multiple, independent, geographically dispersed combatants and their systems into a holistic God’s Eye view that is dispersed back to those same combatants. This includes indirect fire platforms (mortars), heavy machine guns, grenade launchers, snipers, electronic decoys, laser defense, drone surveillance, and counter-drone missiles. The users then have unprecedented situational awareness, keeping them alert, highly lethal, and in instantaneous communications with fellow soldiers throughout the battlespace.
A good time to invest in defence
Military focused stocks have been doing well in recent years, and this trend looks set to continue. Tensions are running high throughout the world and while Covid-19 appears to have put a pause on everything, underlying conflict remains. A Biden administration is still very much focused on building America for Americans and keeping industry at home.
Meanwhile, governments everywhere are bolstering their defence and security strategies to deal with modern warfare, cybersecurity and even space wars. This all points to increased investment in the defence, technology and security sectors.
Ammo Inc (NASDAQ: POWW) is an ammunition company specialising in precision focused technology. It’s been around for over thirty years and was delighted to be listed on the NASDAQ in December 2020. It followed this up with an $18 million share offering.
The Ammo share price has risen 186% this year as political tensions were rising, and ammunition sales skyrocketed. This unexpected demand has greatly boosted orders for Ammo to over $135 million. With the company estimating record sales of $55 million or 272% increase year-on-year. Ammo is an American focused business with a strong American heritage and ensures all manufacturing and hiring stays in the US.
Axon Enterprise Inc (NASDAQ: AAXN) is a $7 billion company developing technology and weapons products for military, law enforcement and civilians. Its Taser line of products including vests are electroshock weapons. They are built on the premise of protecting life and using technology as a force for good.
It makes big claims like ‘one day the bullet will be obsolete’ and is creating a device that promises to out-perform the handgun in every situation, letting users live to tell the tale. This is a company on a controversial path to bettering the weapons of the future. Investors seem to like what they see as its share price is responding well. In the past two years the Axon share price has risen 182%.
Byrna Technologies Inc (CNSX: BYRN | OTCQB:BYRN) is a US-centric weapons company building self-defence products with personal safety in mind. These include its HD launcher and projectiles.
Unprecedented demand for its HD launchers means there’s an 8-week delay on delivery. The company was thrilled to report record sales for both Q4 & FY2020. This is reflected in the Byrna share price, which has skyrocketed 671% this year.
Wrap Technologies Inc (NASDAQ: WRAP) creates modern police defence systems such as its patented BolaWrap technology. The BolaWrap Hand-held remote allows police to restrain suspects using an 8ft Kevlar® tether, which shoots out and wraps up the subject at a range of 10-25ft, like a state-of-the-art lasso. It also makes tactical shields using its unique Wrap technology, which are cost effective, light-weight and strong.
Winning combination! Experience and success
KWESST’s management team has extensive experience in networking in military circles. Together they have a long track record of building world class leading companies in specialized areas of the defense and security space which achieved hundreds of million in sales. KWESST has the advantage of a well-connected leadership team with impressive credentials.
David Luxton, the Executive Chairman of KWESST is a recognized entrepreneur in the defence and security industry. He was formerly an infantry officer, and senior official with the Canadian and British governments before leading the global build-out of successive defence and security companies, including Simunition, a world leader in simulated munitions for close quarters combat training. He led the build-out of Allen-Vanguard, which became a world leader in Counter-IED solutions, where he remains Chairman. He is also former Chairman of United Tactical Systems, a world leader in non-lethal munitions systems.
CEO Jeff MacLeod has a military background and extensive commercial success. Meanwhile, Board member and shareholder, John McCoach was former President at TSX Venture Exchange. And Jeff Dunn who covers the US market for KWESST is an ex-Marine who has also seen commercial success, and built relationships with the special forces communities.
KWESST is aligned with the development of military programs to ensure they’re all working from the same page. The company only pursues new projects in which it sees serious profit potential. KWESST engages with military contacts to find out exactly what’s needed and seeks to address those needs. It investigates what the market is worth and will only begin development if the market space is going to be in the region of hundreds of millions of dollars.
Its portfolio is growing and includes products at varying stages of maturity to keep revenue ticking over. An example of its latest in demand product is its TASCS integrated fire module (IFM). KWESST recently announced the completion of several deliverables under a contract to support a U.S. military customer. One of the deliverables included the demonstration of the TASCS IFM systems on mortars and the augmented weapon sight (AWS). AWS is a system developed by AeroVironment Inc. (NASDAQ: AVAV) and KWESST to provide real-time situational awareness and targeting information. AWS streams full-motion video (FMV) from an overhead unmanned aerial vehicle (UAV) manufactured by AeroVironment into the TASCS architecture for the purposes of target identification, accurate first-shot hits and real-time battle damage assessment (BDA). The AWS system has been a continuing collaboration between KWESST and AeroVironment. KWESST expects further revenues from this U.S. military customer.
Getting noticed: putting shareholders first
Management of KWESST want the company to be a success and of course that means bringing riches to shareholders. That’s why KWESST is on a mission to ramp up promotion. It’s preparing to get the company noticed in all the right spaces as we head into an exciting new year. To kick start this action plan KWESST has recently hired Hybrid Financial Ltd, to oversee its investor relations and boost shareholder returns.
KWESST has also applied to trade on the OTCQB Venture Market trading platform in the US, an over-the-counter trading platform in New York. This should bring additional liquidity to the shares and open the opportunity to a wider global audience. The listing is expected to be achieved by the end of the year.
With $93 million worth of pipeline opportunities, KWESST management expects some of this will be converted to revenue this year. The products are all customer driven, and the industry is evergreen, and available all-year round.
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