DEFSEC Technologies (DFSC) AI Stock Analysis

• Market Cap: C$5.18M
• Dividend Yield: N/A
• Average Volume (3M): 5.11K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.45
• Revenue Growth: 166.43%
• EPS Growth: 75.12%
• Country: CA
• Employees: 43
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): -2.70
• Shares Outstanding: 1,993,626
• 10 Day Avg. Volume: 4,641
• 30 Day Avg. Volume: 5,112
• PEG Ratio: 0.75
• Price to Book (P/B): 247.54
• Price to Sales (P/S): 225.16
• P/FCF Ratio: -36.93
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 45 Neutral
• Price Target: C$5.50 ▲(124.49% Upside)

The overall stock score is primarily influenced by the company's financial performance, which is weak due to consistent losses and negative cash flows. Technical analysis provides a slightly more optimistic view with potential medium-term recovery, but valuation remains a significant concern due to negative earnings and lack of dividends. The absence of earnings call data and corporate events leaves these areas unaddressed.

Positive Factors

Revenue Growth

Strong revenue growth indicates increasing demand for DEFSEC's cybersecurity solutions, suggesting a robust market position and potential for continued expansion.

Market Position

DEFSEC's leadership in cybersecurity for defense and government sectors provides a competitive edge, ensuring stable demand and long-term contracts.

Low Debt Levels

A low debt-to-equity ratio enhances financial stability, allowing DEFSEC to invest in growth opportunities without significant financial strain.

Negative Factors

Negative Cash Flows

Persistent negative cash flows indicate challenges in generating cash from operations, potentially limiting DEFSEC's ability to fund growth internally.

Profitability Challenges

Ongoing losses and negative profit margins highlight operational inefficiencies, which could hinder DEFSEC's ability to achieve sustainable profitability.

Dependence on Financing

Dependence on external financing suggests potential vulnerability to market conditions, affecting DEFSEC's financial flexibility and resilience.

DEFSEC Technologies Business Overview & Revenue Model

Company Description

DEFSEC Technologies Inc. engages in the development and commercialization of tactical systems for security, and personal defense markets. The company offers DEFSEC Lightning, a military digitization technology; Less-Lethal Munitions Systems, including PARA SHOT, a next-generation less-lethal system and ARWEN, a 40mm munition and new marking cartridge; It also provides BMA-Ready Solutions, including TAK and ATAK, tactical digital fires, battlefield laser detection system, and phantom tactical multi-function electromagnetic spectrum operations system. DEFSEC Technologies Inc. was formerly known as KWESST Micro Systems Inc. and changed its name to DEFSEC Technologies Inc. in June 2025. DEFSEC Technologies Inc. was founded in 2017 and is headquartered in Ottawa, Canada.

How the Company Makes Money

DEFSEC Technologies generates revenue through multiple streams, including the sale of proprietary cybersecurity software and hardware products, subscription-based services for ongoing support and updates, and consulting services that help organizations assess and improve their security measures. Additionally, the company may engage in long-term contracts with government and defense agencies, which provide a steady income source. Strategic partnerships with other technology firms and defense contractors also contribute to its revenue by enabling DFSC to integrate its solutions into larger systems and reach a broader market. The company's focus on innovation and adaptability to emerging threats further enhances its earning potential in a rapidly evolving industry.

DEFSEC Technologies Financial Statement Overview

Summary

KWESST Micro Systems faces significant financial challenges with consistent operational losses and negative cash flows. While revenue shows some growth, profitability remains elusive, and liquidity is heavily dependent on financing activities. The company needs to enhance its cost management and operational efficiency to achieve financial stability.

Income Statement

KWESST Micro Systems shows a volatile revenue trajectory with a moderate increase from 2023 to TTM 2024, yet overall revenue growth is inconsistent. Gross profit margin improved in TTM 2024 but remains low, reflecting cost control challenges. The net profit margin is negative, indicating persistent losses, while EBIT and EBITDA margins are also negative, highlighting operational inefficiencies.

Balance Sheet

The company maintains a moderate equity position with an improving equity ratio from the previous year. The debt-to-equity ratio is low, suggesting manageable debt levels. However, negative net income results in a negative ROE, indicating poor returns to shareholders. Overall, the balance sheet reflects a need for improved profitability and financial stability.

Cash Flow

Operating cash flow remains negative, indicating cash outflows from operations. Free cash flow is also negative but shows a slight improvement in TTM 2024 compared to prior periods. The operating cash flow to net income ratio suggests that the company struggles to convert earnings into cash. The cash flow from financing activities reflects reliance on external funding.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.13M	1.50M	1.23M	721.52K	1.28M	861.92K
Gross Profit	1.38M	486.50K	-191.38K	184.78K	476.92K	511.41K
EBITDA	-8.09M	-5.91M	-7.63M	-9.73M	-9.06M	-3.34M
Net Income	-9.56M	-7.44M	-9.31M	-10.52M	-9.32M	-3.54M
Balance Sheet
Total Assets	10.11M	5.62M	11.76M	7.32M	8.72M	5.31M
Cash, Cash Equivalents and Short-Term Investments	2.54M	256.83K	5.41M	170.54K	2.69M	3.07M
Total Debt	2.74M	302.22K	429.52K	2.55M	361.16K	602.59K
Total Liabilities	5.52M	4.25M	7.82M	8.33M	2.59M	1.43M
Stockholders Equity	4.58M	1.37M	3.94M	-1.00M	6.12M	3.88M
Cash Flow
Free Cash Flow	-8.93M	-9.17M	-15.38M	-5.62M	-7.30M	-2.06M
Operating Cash Flow	-8.77M	-9.06M	-14.08M	-4.26M	-6.26M	-1.79M
Investing Cash Flow	-162.72K	-111.15K	-1.44M	-1.11M	-1.07M	-390.97K
Financing Cash Flow	10.29M	4.02M	20.76M	2.85M	6.94M	5.23M

DEFSEC Technologies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.45
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DFSC, the sentiment is Negative. The current price of 2.45 is below the 20-day moving average (MA) of 2.78, below the 50-day MA of 3.50, and below the 200-day MA of 6.21, indicating a bearish trend. The MACD of -0.21 indicates Negative momentum. The RSI at 40.82 is Neutral, neither overbought nor oversold. The STOCH value of 40.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:DFSC.

DEFSEC Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTG	78 Outperform	C$367.28M	27.58	17.40%	―	15.09%	31.55%
CAE	72 Outperform	C$14.03B	32.04	9.00%	―	9.12%	―
MAL	72 Outperform	C$1.19B	26.58	5.64%	0.93%	8.84%	131.58%
MDA	70 Outperform	C$4.85B	42.76	8.88%	―	57.77%	57.55%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
DPRO	52 Neutral	C$231.91M	-4.12	-48.13%	―	26.74%	53.14%
DFSC	45 Neutral	C$5.18M	-0.07	-208.62%	―	166.43%	75.12%