KWESST Micro Systems Announces Q1 2025 Financial Results

Strong Revenue Growth of 588% with +45% Gross Margin

Ottawa, Ontario--(Newsfile Corp. - February 18, 2025) - KWESST Micro Systems Inc. (TSXV: KWE) (TSXV: KWE.WT.U) (NASDAQ: KWE) (NASDAQ: KWESW)("KWESST" or the "Company") is pleased to announce the highlights of its fiscal 2025 first quarter ("Q1 Fiscal 2025") results. This announcement is a summary only and should be read in conjunction with KWESST's unaudited condensed consolidated interim financial statements for the three months ended December 31, 2024 and 2023 and related management's discussion and analysis for the three months ended December 31, 2024, all of which have been filed on SEDAR+ and EDGAR.

"Q1 2025 was a pivotal quarter for KWESST as we executed on our commercialization strategy." said Sean Homuth, President and CEO of KWESST. "The momentum in revenue growth at very healthy margins underscores the great work our team has done to bring our solutions to market. In 2025, we continue to be focused on accelerating ramp-up across all product and service platforms," said Mr. Homuth.

Highlights for the Period:

KWESST's commitment to execution of our strategy, our strong focus on cash management and capital allocation, and the beginning of KWESST's pivot from development stage to revenue ramp-up is evidenced by the following key metrics for the period:

• Revenue for Q1 Fiscal 2025 increased by 588% over Q1 Fiscal 2024, driven by the DSEF ("Directorate Land Command Systems Program Management Software Engineering Facility") & Land C4ISR ("Land Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance") government contracts, pilot of our Lightning SaaS product with the Canadian Red Cross, and growth in our ARWEN business; and

• In Q1 Fiscal 2025, the gross profit was $0.4 million or 45.6% as compared to a gross loss of $0.1 million in Q1 Fiscal 2024. The increase in gross profit is due primarily to the ramp-up of digitization revenue from government programs, the Canadian Red Cross contract that concluded in the period as well as the ramp-up of higher margin ARWEN product sales. In Q1 Fiscal 2024, there were higher than anticipated costs on a fixed price digitization contract as well as initial ramp-up costs on one of the government programs.