On December 7, 2021 Kwesst Micro Systems (KWE.V) announced that it has agreed to acquire 100% of Police Ordnance Company (POC) located in Bowmanville, Ontario, with ancillary operations in Florida.
KWE has a diversified product line, much of it based on a single core technology, called Micro Integrated Sensor Systems Technology (MISST), which involves miniaturized sensors, optics, ballistics and software.
Its products include:
- Non-lethal cartridges and firing platforms
- Tactical Awareness and Situational Control System
- Electronic Decoys
- Drone Threat & Counter Solution
- Tactical Laser Defeat System
“POC owns all of the patents and trademarks to the ARWEN product line of less-lethal launchers, and a proprietary line of 37 mm less-lethal cartridges designed for riot control and tactical teams,” stated KWE, “The company has law enforcement customers across Canada, the U.S. and abroad.”
Significance of the transaction
“ARWEN is a highly respected brand in the industry, with under-exploited potential for global expansion under KWESST ownership,” stated Jeff MacLeod, Founder, President and CEO of KWESST.
“The ARWEN product line can benefit from a 37mm version of our Low Energy Cartridge (LEC) and KWESST can fast-track entry to the law enforcement market for its LEC products through POC’s selling relationships and channels.”
“We believe the current ARWEN product as is can add up to C$1M in revenue in 2022, with outlier margin contribution and scope for significant future growth,” added MacLeod.
Lethally shooting civilians is never a desirable outcome. But in a country with more guns than people avoiding lethal outcomes isn’t easy.
There is an acute need for better less-lethal weapons in the U.S.
An astonishing 44% of Americans say they personally know someone who has been shot, either accidentally or intentionally.
Funding for police departments depends on the support of the public. When a police officer shoots a civilian, the personal tragedy is often compounded by public backlash.
There is money and lives at stake.
“The trend of fatal police shootings in the United States seems to only be increasing, with a total 999 civilians having been shot, 226 of whom were Black, in 2020,” reported Statista, “The rate of fatal police shootings among Black Americans was much higher than that for any other ethnicity, standing at 34 fatal shootings per million of the population as of December 2020”.
“In recent years, particularly since the fatal shooting of Michael Brown in Ferguson, Missouri in 2014, police brutality has become a hot button issue in the United States,” added Statista.
Kwesst’s technology portfolio is right on trend.
Greg Sullivan, a director and shareholder of POC and incoming Director of Law Enforcement for KWESST’s global law enforcement business unit, added that, “The extensive, combined knowledge of POC and KWESST in the industry of less-lethal systems, combined with the synergies of the ARWEN product line and KWESST’s LEC technology, constitutes a significant advantage in this high-growth market, and we look forward to exploiting its full potential to add significant value to the KWESST enterprise.”
Terms of the transaction
KWESST will issue to the vendors 277,575 common shares, for an aggregate purchase price of $458,000, along with the issuance of 200,000 common share purchase of warrants of KWESST to the shareholders of POC.
Each Warrant shall entitle the holders to acquire one common share of KWESST for a period of 36 months at an exercise price of $1.72 per common share.
Upon fulfilment of certain financial milestones, KWESST may issue an additional 62,500 common shares for maximum additional consideration of $100,000.
About ARWEN and POC
ARWEN is an acronym for “Anti Riot Weapon ENfield” and was originally developed by Royal Ordnance in the U.K before being eventually acquired by POC. ARWEN products are used by law enforcement across North America and internationally.
ARWEN is a 37mm less lethal system which is based off two firing platforms, a multi-shot launcher and a single shot launcher, both with multiple versions.
ARWEN’s full line of munitions cover the range from impact to chemical rounds and has proven highly effective in any dynamic situation to bring a safe conclusion to a potentially violent incident.
Ten days ago, Kwesst provided a corporate update:
- Phantom selected by U.S. military for key technology demonstration
- Additional teaming agreements in progress with top global defense contractors
- Potential acquisition and teaming deals in progress to accelerate LEC ramp-up
- KWESST has submitted initial application to list on NASDAQ
“The kind of fatalities that have led to widespread protests in the U.S. are just one example of the need for more advanced solutions that enable law enforcement to engage with more benign devices from a safer stand-off distance and ensure that everyone goes home alive,” stated Jeff MacLeod, Kwesst Founder and CEO.
- Lukas Kane
Full Disclosure: Kwesst is an Equity Guru marketing client.
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