Mr. David Luxton reports

KWESST REPORTS ON ARWEN GROWTH PLAN

Kwesst Micro Systems Inc. has provided an update on plans to expand its Arwen business, including the introduction of a new 40-millimetre cartridge for third party riot control launchers used when public protests turn violent.

Scalable operating model

The company reported that it continues to accumulate backorders for the Arwen 37 mm system used by law enforcement agencies during civil unrest and in high-risk arrests by police tactical teams. In order to scale supply and deliver orders in a more responsive fashion Kwesst is implementing a planned reorganization of the business to drive sales growth.

Relocation for faster ordering, shipping and sales growth

"Today, we are pleased to announce the relocation of the Arwen business to professional new facilities in Guelph, Ont., Canada, and plans for U.S. customers to soon be able to order directly from outsourced facilities in the United States for greater convenience and faster order fulfilment," said David Luxton, Kwesst executive chairman. "The company is working on securing reliable outsourcing relationships in both Canada and the United States for both ammunition and launchers. Eliminating cross-border logistics and regulatory clearances, as well as increasing capacity through outsourcing, will vastly simplify the ordering and shipping process on both sides of the border and, we believe, will facilitate sales growth in the U.S."

New 40 mm Arwen cartridge for third party launchers

"To further expand sales, we are also introducing a 40 mm baton cartridge that functions in third party 40 mm launchers," added Mr. Luxton. "While our 37 mm launcher and baton cartridge command a lot of respect in the market for their superior performance versus 40 mm systems, the fact is that the majority of the market uses 40 mm launchers."

"To leverage that installed base of 40 mm launchers we have perfected a 40 mm cartridge with all the advantages of our 37 mm baton cartridge and none of the limitations of other 40 mm baton cartridges on the market today." The company added that it plans to introduce its new 40 mm baton cartridge and begin taking orders at the 2024 SHOT Show in Las Vegas, Jan. 23 to 26.

Para Ops non-lethal systems bundled with Arwen orders

Para Ops is Kwesst's new, patented universal solution to almost every kind of non-lethal mission, including subjugation of dangerous suspects, personal protection of officers, high-risk arrests, animal control and realistic force-on-force training. It has been in limited production through the summer and early fall of 2023 to obtain selected user feedback from the law enforcement community, which has been very favourable.

As a result, the company is now planning the scale-up for full production with first sales expected in the current quarter.

To further accelerate product awareness and rollout with the law enforcement community Kwesst plans on offering incentives to Arwen customers for Para Ops products with Arwen orders.

About Kwesst Micro Systems Inc.

Kwesst 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 original equipment manufacturer 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 with application across all segments of the non-lethal market, including law enforcement. The company is headquartered in Ottawa, Canada, with operations in Stafford, Va., and representative offices in London, United Kingdom, and Abu Dhabi, United Arab Emirates.

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