Mr. Sean Homuth reports

DEFSEC RECEIVES FAVORABLE ATF CLASSIFICATION FOR ARWEN MICRO NON-LETHAL IRRITANT LAUNCHER, CLEARING PATH TO U.S. CIVILIAN MARKET

Defsec Technologies Inc. has received a determination from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) that the single-shot Arwen Micro (Pro-1) is not a "destructive device" under U.S. federal firearms law. The Pro-1 is based on the company's patented low-energy cartridge (LEC) technology, and remains classified as an "any other weapon" (AOW).

The ATF determination removes a significant barrier to selling U.S.-manufactured Pro-1 units to civilian buyers. "Destructive devices" are subject to substantial regulatory and cost burdens. Further, as of Oct. 9, 2026, an open letter from the ATF indicated that it will not enforce the tax stamp requirements associated with AOWs and will not require federal approval or registration for the manufacturing or purchase of AOWs. This results in a federal process that is similar to that of a pistol or handgun. State and local laws continue to apply.

Pro-1:

• A compact single-shot non-lethal device firing 0.67-cal pepper-powder projectiles that burst on impact; built-in light and laser sight; 60-foot effective range;
• Cartridge based, not air powered: no CO2 (carbon dioxide), compressed air or gunpowder for high cartridge reliability with no gas to leak, no seals or O-rings to fail and no cold-weather pressure loss -- always ready to fire reliably and consistently;
• Inert rounds will also be sold for practice enabling users to become familiar and proficient with the product.

These present a significant advantage over third party legacy products in the market.

"This ATF determination opens the U.S. civilian personal-safety market. With almost 83 million gun owners in the United States, this is a significant opportunity for Defsec. With tooling already in place and the product proven through initial production in Canada, we are well positioned to move quickly to U.S. production and launch," said Sean Homuth, president and chief executive officer of Defsec. "The Pro-1 was developed to be a non-lethal alternative for personal protection (and public safety), enabling safe conclusions to incidents without the use of lethal force."

Production and market readiness

Design and functional evaluation of the Pro-1 are largely complete. Defsec has completed initial low-rate initial production at its Canadian manufacturing operations in preparation for markets outside the United States. The majority of tooling for full-scale production of Pro-1 ammunition is complete at Defsec's U.S. contract manufacturer for the U.S. market.

The company is now planning U.S. production of the launcher and is preparing its U.S. market introduction plan, including any regulatory permits and authorizations for the production, sale and distribution of the products, and the selection of U.S.-based sources of supply for various components. Defsec expects to begin selling Pro-1 to the U.S. civilian market as early as Q2 of calendar 2027.

About Defsec Technologies Inc.

Defsec Technologies 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 a TAK (team awareness kit). The company also has a new proprietary less-lethal product line with applications across all segments of the less-lethal market, including law enforcement. The company is headquartered in Ottawa, Canada.

We seek Safe Harbor.