Mr. David Luxton reports

DEFSEC TECHNOLOGIES ANNOUNCES SIGNIFICANT MOMENTUM IN REVENUE GROWTH DUE TO INCREASED ANNUALIZED BILLINGS FOR GOVERNMENT SERVICES ON A GO-FORWARD BASIS TO APPROXIMATELY CAD$8.3M COMMENCING FEBRUARY 2026

Defsec Technologies Inc. is growing significant momentum in its government services business as it expects to add an additional 15 roles to the 24 roles previously disclosed in the company's news release dated Oct. 29, 2025, for a total of 39 roles staffed commencing in February, 2026.

• 62.5-per-cent increase in revenue generating headcount from previously announced 24 on Oct. 29, 2025;
• Approximately 704-per-cent increase in annualized program billings on government services over fiscal 2024 billings of $1-million;
• Approximately 845-per-cent increase in annualized gross margin contribution from government services of approximately $2.3-million over fiscal 2024 gross margin of $200,000.

All roles have been staffed with a large part of the increase due to an expansion of work scope with the Directorate Land Command Systems Program Management Software Engineering Facility (DSEF) contract for digital modernization of the Canadian Armed Forces.

Defsec has arranged to fast track the fulfilment of this new work scope requirement by subcontracting 13 of the additional 15 roles from ADGA Group Consultants Inc. Commencement of work in February, 2026, is subject to customary administrative onboarding procedures. The company has already received DSEF's statement of work and expects to complete onboarding procedures over the next several weeks in time for the February start.

The cumulative impact of the additional resources means that, effective February, 2026, when work commences, the company's go-forward annualized program billings are expected to increase to approximately $8.3-million, compared with the $5.1-million as reported in company's news release dated Oct. 29, 2025. Additionally, annualized gross margins on a go-forward basis on programmatic work are expected to increase commensurately to approximately $2.3-million (with approximately $500,000 of the increase in gross margin associated with the roles added since Oct. 29, 2025). This moves the company significantly further toward its goal of achieving a cash flow positive operation on the commercialization of its technology and resources.

"It's very gratifying to see the continued momentum in our programmatic work on digital modernization of the Canadian Armed Forces with our industry partners," said Sean Homuth, Defsec president and chief executive officer. Lieutenant General Jean-Marc Lanthier (retired), president and chief executive officer of ADGA, commented that: "ADGA brings experienced software development experts who have supported DND for many years. We look forward to continuing to deploy this operationally critical talent in collaboration with Defsec so the customer benefits from teams ready to deliver without delay."

"The announcement today means that Defsec's annualized go-forward revenue run rate of approximately $8.3-million at the beginning in February, 2026, are expected to be approximately 704-per-cent higher than our actual fiscal 2024 programmatic revenue of $1.0-million," added Mr. Homuth. "Additionally, partnering with ADGA will have the effect of an immediate impact on revenue and margin when this additional, ongoing work commences in February, 2026."

Mr. Homuth concluded by noting that: "This collaboration with ADGA is a great example of two Canadian defence companies working together to quickly deliver upgraded capability to our Canadian Armed Forces. We continue to be well positioned for further momentum and growth as the Canadian government works to increase defence spending on critical capabilities within our sphere of expertise."

The company noted that these updated go-forward revenue run rate and margin contribution numbers announced today exclude its product business, principally ARWEN sales, which are projected to increase significantly in fiscal 2025 over fiscal 2024. The company expects further revenue growth as the Canadian government continues to put action to their planned defence spending and increased margins as the company continues to scale its programmatic services.

While the company expects to file its year-end filings shortly, they will largely be in line with the Q3 growth trajectory and will present a strong financial position owing to the financing completed in Q4.

About Defsec Technologies Inc.

Defsec 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 Defsec products include countermeasures against threats such as electronic detection, lasers and drones. These systems can operate stand-alone or integrate seamlessly with OEM (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 Shot with applications across all segments of the non-lethal market, including law enforcement. The company is headquartered in Ottawa, Canada, with a representative office in London, United Kingdom.

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