Mr. Rob MacIntyre reports

FERALX SMALL-ARMS OUTPUT REACHES 3,600 UNITS PER MONTH; DRONE ASSEMBLY COMMENCES

Feralx Systems Inc. has provided its first operational update since its common shares commenced trading on the TSX Venture Exchange on Oct. 19, 2026.

Small-arms production increases

Small-arms output at the company's manufacturing facility in Ontario has increased from approximately 800 to approximately 3,600 units per month.

Slides are now produced on five Makino CNC machining centres, including the two Makino a51nx four-axis horizontal machining centres announced in the company's news release dated July 17, 2026. First deliveries of final products are expected in the first quarter of 2027.

To increase frame production, Feralx has used proceeds from its recently completed financing to order an automated machining cell. The cell consists of two Brother SPEEDIO machining centres served by a CubeBOX robotic loading system. It has been set up and tested at the supplier's facility and is expected to be delivered to the company's Ontario facility in the coming weeks.

Unmanned systems

Building on its previously announced five-year production and commercialization agreement with Arcanus Aerial Systems Inc., Feralx has begun receiving and assembling intelligence, surveillance, and reconnaissance (ISR) unmanned aerial systems for Arcanus at its Ontario facility. Uncrewed aircraft systems are among the capabilities covered by initial contracts the government of Canada awarded in September, 2026.

Canada's defence procurement environment

Canada's focus is shifting from spending commitments to orders, faster procurement and domestic manufacturing capacity:

• According to a Prime Minister's Office news release dated Sept. 10, 2026, up to $50-million in initial contracts have been awarded to Canadian suppliers of uncrewed aircraft systems and uncrewed ground vehicles.
• On Oct. 6, 2026, the government of Canada tabled Bill C-40, the Strengthening Canada's Defence Sector Act, which would convert the Defence Investment Agency into a Crown corporation responsible for defence procurement.
• According to a National Research Council of Canada news release dated Oct. 14, 2026, its industrial research assistance program has invested more than $135-million in defence and dual-use technologies, and has helped 860 Canadian small and medium-sized businesses through its Defence Industry Assist initiative.

Feralx believes its Ontario manufacturing operations in armament and unmanned systems are closely aligned with these priorities.

"From the NATO Summit in Ankara this summer to Turkey last week, Prime Minister Carney has been building defence partnerships with our allies, and Canada now needs to turn those commitments into equipment that can actually be delivered," said Rob MacIntyre, chief executive officer of Feralx. "Feralx is producing small arms and assembling unmanned aerial systems in Ontario today, and we are focused on expanding that production while meeting the required quality and regulatory standards."

Company-sponsored research coverage

Feralx has entered into an agreement with Atrium Research Corp., a company-sponsored research firm, to publish research reports on Feralx. Atrium will receive cash compensation of $10,500 per quarter for a 12-month term commencing upon acceptance of the engagement by the TSX-V, which Feralx may extend on the terms set out in the agreement. The engagement remains subject to TSX-V acceptance. Research reports published by Atrium will be identified as company-sponsored research. Atrium and the company are arm's-length parties, and neither Atrium nor its insiders holds any shares or options to purchase shares of the company.

Atrium Research provides company-sponsored equity research on publicly traded North American companies.

About Feralx Systems Inc.

Feralx Systems is a Canadian-controlled defence technology company that designs and manufactures kinetic systems for government, military and law-enforcement customers: small arms, autonomous platforms and the precision components behind them. Headquartered in Ontario, Feralx connects operators, sensors and precision effects into one integrated mission ecosystem across four lines: armament, autonomy, mission support and manufacturing.

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