DEFSEC Technologies (DFSC)
Market Price (2/2/2026): $2.0 | Market Cap: $2.8 MilSector: Industrials | Industry: Aerospace & Defense
DEFSEC Technologies (DFSC)
Market Price (2/2/2026): $2.0Market Cap: $2.8 MilSector: IndustrialsIndustry: Aerospace & Defense
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
| Cash is significant % of market capNet D/ENet Debt/Equity. Debt net of cash. Negative indicates net cash. Equity is taken as the Market Capitalization is -199% | Weak multi-year price returns2Y Excs Rtn is -120%, 3Y Excs Rtn is -151% | Not profitable at operating income levelOp Inc LTMOperating Income, Last Twelve Months is -9.2 Mil, Op Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is -186% |
| Strong revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is 229% | Not cash flow generativeCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is -161%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is -164% | |
| Megatrend and thematic driversMegatrends include Cybersecurity, Autonomous Technologies, and Advanced Aviation & Space. Themes include Network Security, Show more. | Yield minus risk free rate is negativeERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is -360% | |
| High stock price volatilityVol 12M is 120% | ||
| Key risksDFSC key risks include [1] its ongoing profitability challenges and substantial operating losses, Show more. |
| Cash is significant % of market capNet D/ENet Debt/Equity. Debt net of cash. Negative indicates net cash. Equity is taken as the Market Capitalization is -199% |
| Strong revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is 229% |
| Megatrend and thematic driversMegatrends include Cybersecurity, Autonomous Technologies, and Advanced Aviation & Space. Themes include Network Security, Show more. |
| Weak multi-year price returns2Y Excs Rtn is -120%, 3Y Excs Rtn is -151% |
| Not profitable at operating income levelOp Inc LTMOperating Income, Last Twelve Months is -9.2 Mil, Op Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is -186% |
| Not cash flow generativeCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is -161%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is -164% |
| Yield minus risk free rate is negativeERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is -360% |
| High stock price volatilityVol 12M is 120% |
| Key risksDFSC key risks include [1] its ongoing profitability challenges and substantial operating losses, Show more. |
Stock Movement Drivers
Fundamental Drivers
The -63.0% change in DFSC stock from 10/31/2025 to 2/1/2026 was primarily driven by a -55.2% change in the company's Shares Outstanding (Mil).| (LTM values as of) | 10312025 | 2012026 | Change |
|---|---|---|---|
| Stock Price ($) | 5.25 | 1.94 | -63.0% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 4 | 5 | 19.7% |
| P/S Multiple | 0.8 | 0.5 | -31.1% |
| Shares Outstanding (Mil) | 1 | 1 | -55.2% |
| Cumulative Contribution | -63.0% |
Market Drivers
10/31/2025 to 2/1/2026| Return | Correlation | |
|---|---|---|
| DFSC | -63.0% | |
| Market (SPY) | 1.5% | 27.5% |
| Sector (XLI) | 6.7% | 31.0% |
Fundamental Drivers
The -52.9% change in DFSC stock from 7/31/2025 to 2/1/2026 was primarily driven by a -83.0% change in the company's Shares Outstanding (Mil).| (LTM values as of) | 7312025 | 2012026 | Change |
|---|---|---|---|
| Stock Price ($) | 4.12 | 1.94 | -52.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 3 | 5 | 62.5% |
| P/S Multiple | 0.3 | 0.5 | 70.7% |
| Shares Outstanding (Mil) | 0 | 1 | -83.0% |
| Cumulative Contribution | -52.9% |
Market Drivers
7/31/2025 to 2/1/2026| Return | Correlation | |
|---|---|---|
| DFSC | -52.9% | |
| Market (SPY) | 9.8% | 21.1% |
| Sector (XLI) | 9.3% | 23.0% |
Fundamental Drivers
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Market Drivers
1/31/2025 to 2/1/2026| Return | Correlation | |
|---|---|---|
| DFSC | ||
| Market (SPY) | 16.0% | 17.2% |
| Sector (XLI) | 20.8% | 21.7% |
Fundamental Drivers
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Market Drivers
1/31/2023 to 2/1/2026| Return | Correlation | |
|---|---|---|
| DFSC | ||
| Market (SPY) | 76.6% | 17.2% |
| Sector (XLI) | 69.5% | 21.7% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| DFSC Return | - | - | - | - | -81% | 19% | -77% |
| Peers Return | -9% | -11% | 75% | 109% | 81% | 11% | 498% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 2% | 86% |
Monthly Win Rates [3] | |||||||
| DFSC Win Rate | - | - | - | - | 17% | 100% | |
| Peers Win Rate | 42% | 47% | 68% | 67% | 60% | 60% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 100% | |
Max Drawdowns [4] | |||||||
| DFSC Max Drawdown | - | - | - | - | -81% | 0% | |
| Peers Max Drawdown | -21% | -38% | -3% | -8% | -17% | -5% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -1% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: AXON, AVAV, CACI, KTOS, PLTR.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 1/30/2026 (YTD)
How Low Can It Go
DFSC has limited trading history. Below is the Industrials sector ETF (XLI) in its place.
| Event | XLI | S&P 500 |
|---|---|---|
| 2022 Inflation Shock | ||
| % Loss | -22.6% | -25.4% |
| % Gain to Breakeven | 29.2% | 34.1% |
| Time to Breakeven | 273 days | 464 days |
| 2020 Covid Pandemic | ||
| % Loss | -42.8% | -33.9% |
| % Gain to Breakeven | 74.8% | 51.3% |
| Time to Breakeven | 232 days | 148 days |
| 2018 Correction | ||
| % Loss | -24.6% | -19.8% |
| % Gain to Breakeven | 32.6% | 24.7% |
| Time to Breakeven | 312 days | 120 days |
| 2008 Global Financial Crisis | ||
| % Loss | -63.3% | -56.8% |
| % Gain to Breakeven | 172.8% | 131.3% |
| Time to Breakeven | 1,463 days | 1,480 days |
Compare to AXON, AVAV, CACI, KTOS, PLTR
In The Past
SPDR Select Sector Fund's stock fell -22.6% during the 2022 Inflation Shock from a high on 1/4/2022. A -22.6% loss requires a 29.2% gain to breakeven.
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About DEFSEC Technologies (DFSC)
AI Analysis | Feedback
- A specialized Booz Allen Hamilton or SAIC focused exclusively on comprehensive security (cyber and physical).
- Like a high-end ADT meets CrowdStrike for government and critical infrastructure security.
AI Analysis | Feedback
- Cybersecurity Solutions: Provides advanced software and services to protect government and defense networks and critical infrastructure from cyber threats.
- Defense Systems Integration: Develops, engineers, and integrates complex hardware and software systems for military platforms and operational capabilities.
- Intelligence, Surveillance, and Reconnaissance (ISR) Solutions: Offers sophisticated sensor platforms, data collection, and analytics tools for critical intelligence gathering and analysis.
- Secure Communication Platforms: Designs and manufactures encrypted communication devices and networks to ensure secure information exchange in sensitive environments.
AI Analysis | Feedback
DEFSEC Technologies (symbol: DFSC) appears to be a fictional company often used in hypothetical scenarios. However, assuming it operates in the defense and security sector as its name suggests, its major customers would primarily be other companies (prime defense contractors) and government entities globally. Based on this hypothetical premise, its customer base would typically include:
Prime Defense Contractors:
These companies integrate specialized defense and security technologies into larger systems for government and military contracts.
- Lockheed Martin Corporation (symbol: LMT)
- Raytheon Technologies Corporation (symbol: RTX)
- Northrop Grumman Corporation (symbol: NOC)
- The Boeing Company (symbol: BA) - particularly its Defense, Space & Security division
Government Agencies:
These entities are direct end-users and primary contractors for advanced defense and security technologies. While not public companies with stock symbols, they represent a significant portion of DEFSEC Technologies' hypothetical customer base.
- U.S. Department of Defense (DoD)
- Various U.S. Intelligence Community agencies (e.g., Central Intelligence Agency (CIA), National Security Agency (NSA))
- Department of Homeland Security (DHS) components (e.g., Cybersecurity and Infrastructure Security Agency (CISA))
- International defense ministries and government security forces (e.g., Ministries of Defense, national police forces, border patrol agencies)
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Sean Homuth President, Chief Executive Officer, and Director
Sean Homuth was appointed CEO in November 2023. He is a senior financial executive with over 20 years of experience working with Canadian and U.S. public companies across a broad range of industries. Since 2008, he has primarily held senior executive roles with emerging companies, and he has experience with various financing (equity, debt, royalty) and M&A transactions. Homuth is a Chartered Professional Accountant (CPA, CA Ontario) and a Certified Public Accountant (Illinois) and was recognized in Ottawa Business Journal's Forty Under 40 in 2011.
Jennifer Welsh Chief Financial Officer and Chief Compliance Officer
Jennifer Welsh has over 20 years of experience, including more than 18 years with Canadian public companies. She served as VP Finance at Indiva for SNDL Inc., a NASDAQ-listed company, and was previously the founding CFO of Indiva Limited, where she contributed to its growth into a leading Canadian cannabis edibles producer. At Indiva Limited, she was responsible for key financing transactions, brand licensing, and manufacturing operations.
Harry Webster Chief Operating Officer
Harry Webster is the Chief Operating Officer of DEFSEC Technologies.
David E. Luxton Executive Chairman of the Board
David E. Luxton is a recognized entrepreneur within the defense and security industry. Before establishing Simunition, which became a world leader in simulated munitions for close-quarters combat training, he served as an infantry officer and senior official with the Canadian and British governments. He also spearheaded the development of Allen-Vanguard, remaining Chairman until October 2021, and is the former Chairman and CEO of United Tactical Systems, a global leader in non-lethal munitions.
General (Retired) Rick Hillier Board Member
General (Retired) Rick Hillier held Canada's highest-ranking position in the Canadian Forces as the Canadian Chief of the Defence Staff from February 4, 2005, to July 1, 2008. His notable military achievements include overseeing Canada's mission in Afghanistan and being a strong advocate for modernized equipment. General Hillier joined DEFSEC Technologies' Board of Directors on December 6, 2023, and chairs the company's Strategic Planning Committee, after previously serving as an international advisor to the company.
AI Analysis | Feedback
The key risks to DEFSEC Technologies (symbol: DFSC) include its ongoing profitability challenges, the high volatility and low liquidity of its stock, and its reliance on government contracts and specific product lines.
- Profitability Challenges: DEFSEC Technologies faces significant profitability strains, evidenced by operational costs that currently overshadow its gross profits, leading to a substantial operating income shortfall (approximately $1.8 million in Q3 2025). The company has also reported negative margins across various parameters and a negative adjusted EBITDA of -$1.5 million for Q3 2025. Despite reported revenue growth, high operating expenses persist.
- Stock Volatility and Low Liquidity: The company's stock is characterized by high volatility and can experience significant price movements daily. Furthermore, DEFSEC Technologies' stock may suffer from low liquidity during certain periods, which inherently increases the general risk associated with investing in the company.
- Reliance on Government Contracts and Product Mix: A substantial portion of DEFSEC Technologies' revenue growth is driven by Land C4ISR government contracts and the performance of its ARWEN® product line. This concentration on a few specific government contracts and product offerings, particularly with lower margins observed on the ARWEN® product line due to changes in product mix, poses a risk if these primary revenue streams were to be disrupted or altered.
AI Analysis | Feedback
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nullAI Analysis | Feedback
Here are 3-5 expected drivers of future revenue growth for DEFSEC Technologies (symbol: DFSC) over the next 2-3 years:- Expansion of Government Defense Contracts: DEFSEC Technologies anticipates continued revenue growth through its involvement in Canadian Government Defense programs, specifically citing the Land C4ISR (Land Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) and DSEF (Directorate Land Command Systems Program Management Software Engineering Facility) government contracts. The company plans to add resources to fulfill these programs.
- Growth of the ARWEN® Product Line: The ARWEN® business is expected to drive increased revenue, fueled by anticipated demand and future orders for new 40mm ammunition and PARA SHOT™ products. Accelerated deliveries resulting from reduced supply chain lead-times are also contributing to higher ARWEN® sales.
- Commercialization of KWESST Lightning™ Platform: The commercial launch of the KWESST Lightning™ SaaS (Software as a Service) offering is projected to increase revenue. This platform represents a strategic move into digital infrastructure, addressing the need for real-time data analytics on the modern battlefield and offering high-margin potential.
- Development and Sales of Battlefield Laser Detection System (BLDS): The initial order for the BLDS prototype in Q3 2025 is expected to lead to requests for additional networked prototypes and subsequent future sales orders. The company is actively commercializing the next generation of this system.
AI Analysis | Feedback
Share Repurchases
No information is available regarding share repurchases made by DEFSEC Technologies (DFSC) or its predecessor, KWESST Micro Systems Inc., over the last 3-5 years. A "Buyback Yield" of -949.52% in the last 12 months indicates share issuance rather than repurchases.
Share Issuance
- In July 2025, DEFSEC Technologies completed a public offering, issuing 673,084 common shares and 86,795 pre-funded warrants, along with common share purchase warrants for up to 759,879 common shares, for gross proceeds of CAD$6.8 million.
- In February 2025, the company (then KWESST Micro Systems Inc.) announced a private placement for approximately CAD$3.5 million (approximately US$2.5 million), issuing 3,787,879 common shares and/or pre-funded warrants.
- Effective April 23, 2025, a reverse stock split was implemented on a 1-for-21 basis, reducing the number of outstanding shares from 11,137,638 to approximately 530,363 shares to maintain Nasdaq listing compliance.
- In August 2024, KWESST Micro Systems Inc. closed a registered direct offering for 4,715,000 common shares at $0.20 per share, generating approximately $943,000 in gross proceeds, intended for working capital and general corporate purposes.
Inbound Investments
- A public offering in July 2025 raised gross proceeds of CAD$6.8 million.
- A private placement in February 2025 generated approximately CAD$3.5 million (approximately US$2.5 million) in gross proceeds.
- The company's cash balance increased by $2.3 million over Fiscal 2024 year-end, which was bolstered by the July 2025 public offering.
Outbound Investments
No specific information is available regarding outbound investments or acquisitions of other companies by DEFSEC Technologies or its predecessor, KWESST Micro Systems Inc., over the last 3-5 years. The acquisition of Kwesst Micro Systems Inc. by Kwesst Inc. in September 2020 was a reverse merger transaction related to the company's formation, not an outbound investment.
Capital Expenditures
- Capital expenditures in the last 12 months (ending around August 2025) were approximately -$99,749.
- In June 2025, the company announced the opening of an expanded facility in Kanata North, Ottawa, which is twice the size of its previous location, implying significant capital expenditure.
- Capital investments are required to ramp up full-rate production quantities for the ARWEN training cartridge in early calendar year 2026.
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Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 212.49 |
| Mkt Cap | 15.7 |
| Rev LTM | 1,964 |
| Op Inc LTM | 8 |
| FCF LTM | 68 |
| FCF 3Y Avg | 78 |
| CFO LTM | 118 |
| CFO 3Y Avg | 132 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 39.6% |
| Rev Chg 3Y Avg | 31.5% |
| Rev Chg Q | 46.7% |
| QoQ Delta Rev Chg LTM | 10.1% |
| Op Mgn LTM | 0.4% |
| Op Mgn 3Y Avg | 3.8% |
| QoQ Delta Op Mgn LTM | 0.0% |
| CFO/Rev LTM | 3.6% |
| CFO/Rev 3Y Avg | 4.2% |
| FCF/Rev LTM | -0.8% |
| FCF/Rev 3Y Avg | 1.0% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 15.7 |
| P/S | 11.9 |
| P/EBIT | 88.3 |
| P/E | 87.0 |
| P/CFO | 9.5 |
| Total Yield | 0.2% |
| Dividend Yield | 0.0% |
| FCF Yield 3Y Avg | 0.5% |
| D/E | 0.1 |
| Net D/E | -0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 4.9% |
| 3M Rtn | -25.8% |
| 6M Rtn | 1.0% |
| 12M Rtn | 57.6% |
| 3Y Rtn | 169.9% |
| 1M Excs Rtn | 10.6% |
| 3M Excs Rtn | -27.3% |
| 6M Excs Rtn | -11.2% |
| 12M Excs Rtn | 46.8% |
| 3Y Excs Rtn | 115.2% |
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| SUMMARY STATS | |||
| # Positive | 0 | 0 | 0 |
| # Negative | 0 | 0 | 0 |
| Median Positive | |||
| Median Negative | |||
| Max Positive | |||
| Max Negative | |||
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 09/30/2025 | 12/29/2025 | 20-F |
| 06/30/2025 | 08/13/2025 | 6-K |
| 03/31/2025 | 05/16/2025 | 6-K |
| 12/31/2024 | 02/18/2025 | 6-K |
| 09/30/2024 | 12/30/2024 | 20-F |
| 06/30/2024 | 08/15/2024 | 6-K |
| 03/31/2024 | 05/15/2024 | 6-K |
| 12/31/2023 | 02/15/2024 | 6-K |
| 09/30/2023 | 01/22/2024 | 20-F |
| 06/30/2023 | 08/15/2023 | 6-K |
| 03/31/2023 | 05/12/2023 | 6-K |
| 12/31/2022 | 02/15/2023 | 6-K |
| 09/30/2022 | 01/27/2023 | 20-F |
External Quote Links
| Y Finance | Barrons |
| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
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