We design, develop, produce, deliver and support a technologically-advanced portfolio of intelligent, multi-domain robotic systems and related services for government agencies and businesses.
−Removed: We supply unmanned aircraft systems (“UAS”), tactical missile systems (“TMS”), unmanned ground vehicles (“UGV”) and related services primarily to organizations within the U.S.
−Removed: Department of Defense (“DoD”) and to international allied governments.
+Added: We supply unmanned aircraft systems (“UAS”), tactical missile systems (“TMS”), unmanned ground vehicles (“UGV”) and related services primarily to organizations within or supplying the U.S.
+Added: Department of Defense (“DoD”), other federal agencies and to international allied governments.
We derive the majority of our revenue from these business areas, and we believe that the markets for these solutions offer the potential for significant long-term growth.
−Removed: Additionally, we believe that some of the innovative potential products, services and technologies in our research and development pipeline will emerge as new growth platforms in the future, creating additional market opportunities.
+Added: In addition, we believe that some of the innovative potential products, services and technologies in our research and development pipeline will emerge as new growth platforms in the future, creating additional market opportunities.
The success of our current product and service offering stems from our investments in research and development to invent and deliver advanced solutions, utilizing proprietary and commercially available technologies, and in acquiring leading businesses that help our customers achieve their desired outcomes.
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Our core technological capabilities, developed through more than 50 years of innovation, include robotics and robotics systems autonomy;
−Removed: sensor design, development, miniaturization and integration;
+Added: modular open systems architecture, sensor design, development, miniaturization and integration;
embedded software and firmware;
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high-altitude systems design, integration and operations;
−Removed: machine vision, machine
−Removed: learning and autonomy;
+Added: machine vision, machine learning and autonomy;
land, maritime and air deployment of missile and aircraft systems;
design and qualification for robotics in extreme terrestrial and space environments;
−Removed: miniature internal combustion engine propulsion design and integration;
−Removed: missile systems warhead integration;
+Added: missile systems warhead
low SWaP (Size, Weight and Power) system design and integration;
−Removed: manned-unmanned teaming and unmanned-unmanned teaming;
+Added: collaborative multi-robotic manned and unmanned mission operation;
power electronics and electric propulsion systems;
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controls and systems integration;
−Removed: vertical takeoff and landing flight, fixed wing flight and hybrid aircraft flight;
+Added: vertical takeoff and landing for fixed wing and hybrid aircraft and rotocraft systems;
image stabilization and target tracking;
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human-machine interface development;
−Removed: and integrated mission solutions for austere or extreme environments.
+Added: and integrated mission solutions for austere environments.
Our business focuses primarily on the design, development, production, marketing, support and operation of innovative UAS, TMS and UGV that provide situational awareness, remote sensing, multi-band communications, force protection and other information and mission effects to increase the safety and effectiveness of our customers’ operations.
−Removed: As a technology solutions provider, our strategy is to grow our business by delivering innovative, safe and reliable multi-domain solutions that provide customers with valuable capabilities.
−Removed: Delivering these capabilities will enable us to create new markets or market segments, gain share in existing markets and grow as market adoption increases.
−Removed: We believe that by introducing new solutions, or acquiring differentiated solutions developed by others, that provide customers with compelling value, we can grow our business profitably, both in new and existing markets.
+Added: As a technology solutions provider, our strategy is to grow our business by delivering innovative, safe and reliable multi-domain solutions and unique capabilities to our customers.
+Added: Delivering these capabilities enable us to create new markets or market segments, gain share in existing markets and grow as market adoption increases.
+Added: We believe that by introducing new solutions, or acquiring differentiated solutions developed by others, we provide customers with compelling value and can grow our business profitably, both in new and existing markets.
By providing differentiated solutions we believe we can compete effectively against large, incumbent competitors that may possess advantages in scope, scale, resources and relationships.
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Expand the market penetration of existing products and services.
−Removed: Our small UAS and medium UAS (“MUAS”), TMS and UGV enjoy leading positions in their respective markets.
−Removed: We intend to increase the penetration of our small UAS and MUAS and UGV products and services within the U.S.
+Added: Our small UAS (“SUAS”) and medium UAS (“MUAS”), TMS and UGV businesses have gained a reputation as performance leaders and technology innovators in their respective markets.
+Added: We intend to increase the penetration of our SUAS, MUAS and UGV products and services within the U.S.
military, the military forces of allied nations, other government agencies and non-government organizations, including commercial entities, and to increase the penetration of our TMS within the U.S.
military and within the military forces of allied nations.
−Removed: We believe that the broad adoption of our small UAS and MUAS and TMS by the U.S.
+Added: We believe that broad adoption of our SUAS, MUAS and TMS by the U.S.
military will continue to spur demand by allied nations, and that our efforts to pursue new applications are creating opportunities beyond the early adopter military market.
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Customer-focused innovation is the primary driver of our growth.
−Removed: We plan to continue investing in internally-funded research and development projects while expanding our pursuit of customer-funded research and development projects to generate revenue and develop better, more capable products, services and business models, both in response to and in anticipation of emerging customer needs.
+Added: We plan to continue investing in internally-funded research and development projects while expanding our pursuit of customer-funded R&D projects to generate revenue and develop better, more capable products, services and business models, both in response to and in anticipation of emerging customer needs.
In some cases, these innovations result in upgrades to existing offerings, expanding their value among existing customers and markets.
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We intend to preserve this culture to encourage the development of the innovative, highly technical system solutions and business models that give us our competitive advantage.
−Removed: Our values of “customer commitment,”
−Removed: “trust and teamwork,” “innovate and simplify,” and “ownership and results” serve as the foundation of our culture.
−Removed: We believe that our values help to guide the behavior of our team members and serve to maintain a positive work environment that inspires loyalty among our personnel and customers.
+Added: Our values of “customer commitment,” “trust and teamwork,” “innovate and simplify,” and “ownership and results” serve as the foundation of our culture.
+Added: believe that our values help to guide the behavior of our team members and serve to maintain a positive work environment that inspires loyalty among our personnel and customers.
We also believe that our values facilitate the integration of new team members who join us as a result of acquisitions.
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This process helps us to make informed decisions regarding potential growth capital requirements and supports our allocation of resources based on relative risks and returns to maximize long-term value creation, which is the key objective of our growth strategy.
−Removed: We also review our portfolio on a regular basis to determine if and when to narrow our focus on the highest potential growth opportunities.
+Added: We also review our portfolio on a regular basis to determine if and when to narrow our focus on the highest potential growth opportunities and exit unattractive or non-core product lines.
+Added: Stay intimate with our key defense customers.
+Added: We receive support from members within AeroVironment’s Strategic Advisory Group (“SAG”), which provides executive level advice to AeroVironment’s senior leaders on all matters relating to the Department of Defense.
+Added: SAG members are highly qualified former members of the US Department of Defense, including retired General Officers and Senior Executive Service members, each with many decades of experience.
We sell the majority of our UAS and services to organizations within the U.S.
DoD, including the U.S.
−Removed: Army, Marine Corps, Special Operations Command, Air Force and Navy, and to allied governments.
+Added: Army, Marine Corps, Special Operations Command, Air Force and Navy, and to allied governments, or to companies that serve these customers.
We sell our TMS and services to organizations within the U.S.
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and allied government military and public safety agencies as well as to commercial entities.
−Removed: We also develop High Altitude Pseudo-Satellite (“HAPS”) systems in conjunction with SoftBank Corp (“SoftBank”).
+Added: We also develop High Altitude Pseudo-Satellite (“HAPS”) systems in conjunction with SoftBank Corp (“SoftBank”) and sell select products to the National Aeronautics and Space Administration (“NASA”).
During our fiscal year ended April 30, 2023, we generated approximately 6% of our revenue from the U.S.
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Army on behalf of itself as well as for several other organizations within the DoD.
−Removed: government agencies and government subcontractors accounted for 37% of our sales revenue, and HAPSMobile Inc.
−Removed: (“HAPSMobile”) and SoftBank together accounted for 10% of our sales revenue.
−Removed: Sales revenue to foreign customers other than HAPSMobile and Softbank, inclusive of foreign military sales made through the DoD, commercial and consumer customers accounted for the remaining 32% of sales revenue during our fiscal year ended April 30, 2022.
+Added: government agencies and government subcontractors accounted for 40% of our sales revenue.
+Added: Sales revenue to foreign customers, inclusive of foreign military sales made through the DoD, commercial and consumer customers accounted for the remaining 54% of sales revenue during our fiscal year ended April 30, 2023.
Environmental
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These costs often are allowable costs under our contracts with the U.S.
−Removed: While environmental protection regulations have not had a significant adverse effect on our overall operations, it is reasonably possible that costs incurred to ensure continued environmental compliance in the future could have a material impact on our results of operations, financial condition or cash flows if additional work requirements or more stringent clean-up standards are imposed by regulators, new areas of soil, air and groundwater contamination are discovered and/or expansions of work scope are prompted by the results of investigations.
+Added: While environmental protection regulations have not had a significant adverse effect on our overall operations, it is possible that costs incurred to ensure continued environmental compliance in the future could have a material impact on our results of operations, financial condition or cash flows if additional work requirements or more stringent clean-up standards are imposed by regulators, new areas of soil, air and groundwater contamination are discovered and/or expansion of work scope are prompted as a result of investigations.
Technology, Research and Development
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Our company was founded by the late Dr.
−Removed: MacCready, the former Chairman of our board of directors and an internationally renowned innovator who was instrumental in establishing our entrepreneurial and creative culture.
−Removed: This culture has consistently enabled us to attract and retain highly-motivated, talented employees and has established our reputation as an innovative leader in the industries in which we compete.
+Added: MacCready, Jr., formerly chairman of our board of directors and an internationally renowned innovator who was instrumental in establishing our entrepreneurial and creative culture.
+Added: This culture has consistently enabled us to attract and retain highly-motivated, talented employees and helped to establish our reputation as an innovative leader in the industries in which we compete.
The innovations developed by our company and our founder include, among others:
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and Blackwing™, the first submarine-launched unmanned aircraft system deployed by the U.S.
−Removed: Navy and a considerable portion of JPL/NASA’s Mars Ingenuity Helicopter, the first aircraft to perform a powered flight on another planet.
+Added: and a considerable portion of JPL/NASA’s Mars Ingenuity Helicopter, the first aircraft to perform a powered flight on another planet (Mars).
The Smithsonian Institution possesses seven vehicles developed by our company or our founder in its permanent collection.
−Removed: Our history of innovation excellence is the result of our talented, creative and skilled employees whom we encourage to invent and develop innovative new solutions.
+Added: Our history of innovation excellence is the result of our talented, creative and skilled employees whom we encourage to invent and develop unique, new solutions to address the challenges of today and tomorrow.
A component of our ongoing innovation is a screening process that helps our business managers identify early market needs, which assists us in making timely investments into critical technologies necessary to develop solutions to address these needs.
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Strongly linking our technology and business development activities to customer needs in attractive growth markets constitutes an important element of this process.
−Removed: Through this process we revisit our customer requirement assumptions to evaluate continued investment and to seek to ensure that our products and services deliver high value.
+Added: We constantly revisit our customer requirement assumptions to evaluate continued investment and to seek to ensure that our products and services deliver high value and, conversely, high returns.
As of April 30, 2023, we had issued and retained 278 U.S.
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government has licenses to some of our intellectual property that was specifically developed in performance of government contracts and may use or authorize others to use this intellectual property.
−Removed: In some cases, we fund the development of certain intellectual property to maximize its value and limit its use by potential competitors.
+Added: In some cases, we
+Added: fund the development of certain intellectual property to maximize its value and limit its use by potential competitors.
While we consider the development and protection of our intellectual property to be integral to the future success of our business, at this time we do not believe that a loss or limitation of rights to any particular piece of our intellectual property would have a material adverse effect on our overall business.
−Removed: Research, Development and Commercialization Projects
−Removed: A core component of our business strategy is the focused development and commercialization of innovative solutions that we believe can become new products or services that enable us to create large new markets or accelerate the growth of our current markets.
+Added: Research, Development and Commercialization of Projects
+Added: A core component of our business strategy is the focused development and commercialization of innovative solutions that we believe can become new products or services that enable us to create large new markets or accelerate growth within our existing markets.
We invest in an active pipeline of these commercialization projects that range in maturity from technology validation to early market adoption.
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Sales and Marketing
−Removed: Our marketing strategy is based on establishing leadership positions in new markets that we create through the introduction or acquisition of innovation solutions that improve customer operational effectiveness and efficiency.
−Removed: Our ability to operate in an agile, flexible manner helps us achieve first mover advantage and work closely with early
−Removed: customers to achieve the successful adoption of our solutions.
+Added: Our marketing strategy is based on establishing leadership positions in new markets that we create or expand through the introduction or acquisition of innovation solutions that improve customer operational effectiveness and efficiency.
+Added: Our ability to operate in an agile, flexible manner helps us achieve first mover advantage and work closely with early customers to achieve successful adoption of our solutions.
Once we establish a market position, we work to maintain our leadership, while seeking to grow our revenue by expanding sales and through continuous innovation and customer support.
−Removed: Our reputation for innovation is a key component of our brand and has been acknowledged through a variety of awards and recognized in numerous articles in domestic and international publications.
+Added: Our reputation for innovation is a key component of our brand, acknowledged through a variety of awards and recognized in numerous articles in domestic and international publications.
We have many U.S.
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International Sales
−Removed: We contract with international sales representatives and team with domestic organizations in a number of foreign markets and believe that these markets represent growth opportunities for our business.
+Added: We contract with international sales representatives and team with domestic organizations across a number of foreign markets which we believe represent growth opportunities for our business.
Our international sales, inclusive of foreign military sales, accounted for approximately 53%, 41% and 39%, of our revenue for the fiscal years ended April 30, 2023, 2022 and 2021, respectively.
We believe that the principal competitive factors in the markets for our products and services include product performance;
+Added: innovative features;
acquisition cost;
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and brand and reputation.
+Added: Several companies across the globe (primarily in the U.S.) attempt to compete in our markets to some degree, although we believe none match the breadth and depth of our product line nor our expertise in core capabilities.
Manufacturing and Operations
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We incorporate this input into product designs in an effort to maximize the efficiency and quality of our products while minimizing time to market.
−Removed: As a result, we believe that we significantly reduce the time required to move a product from its design phase to full rate production, while achieving high reliability, quality and yields.
−Removed: We outsource certain production activities, such as the fabrication of certain aerostructures, the manufacture and assembly of electronic printed circuit boards, and payload components to qualified suppliers, with many of whom we have long-term relationships.
+Added: As a result, we believe that we significantly reduce the time required to move a product from its design phase to full rate production while not sacrificing high reliability, quality and durability.
+Added: We outsource certain production activities, such as the fabrication of certain aerostructures, the manufacture and assembly of electronic printed circuit boards, and payload components to qualified suppliers, with many of whom
+Added: we have long-term relationships.
This outsourcing enables us to focus on our core expertise of final assembly, system integration and test processes for our products, ensuring high levels of quality and reliability.
−Removed: We forge strong relationships with key suppliers based on their ability to grow with our production needs and support our growth plans.
−Removed: We continue to expand upon our suppliers’ expertise to improve our existing products and develop new solutions.
−Removed: We rely on both single and multiple suppliers for certain components and subassemblies.
−Removed: (See Part 1A, “Risk Factors—If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business.” for more information.) A majority of our production systems operate in accordance with our AS9100D registered Quality Management System, which focuses on continuous improvement in order to increase acceptance rates, reduce lead times and lower cost.
−Removed: Customer Funded Research and Development
−Removed: We actively pursue externally funded projects that help us to strengthen our technological capabilities.
−Removed: We submit bids to large research customers, such as the Defense Advanced Research Projects Agency, the U.S.
+Added: We forge strong relationships with key suppliers based on their ability to grow along with our production requirements and support our growth.
+Added: We leverage our suppliers’ expertise to improve our existing products and develop new solutions.
+Added: We rely on both single and multiple suppliers for certain components and subassemblies (see Part 1A, “Risk Factors—If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business,” for more information).
+Added: A majority of our production systems operate in accordance with our AS9100D registered Quality Management System, which focuses on continuous improvement in order to increase acceptance rates, reduce lead times and lower cost.
+Added: Customer-Funded R&D
+Added: We actively pursue externally funded projects that help us strengthen our technological capabilities.
+Added: We submit bids to large research customers, such as the Defense Advanced Research Projects Agency (“DARPA”), the U.S.
Air Force, the U.S.
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Providing these services contributes to the development and enhancement of our technical competencies.
−Removed: We carefully manage the volume of customer funded research and development projects based on projects’ available resources and expect to expand our team to support growth in this area of our business.
+Added: We carefully manage the volume of customer-funded R&D projects based on projects’ available resources, and we expect to expand our team to support growth in this area of our business.
No material portion of our business is considered to be seasonal.
−Removed: Historically, our revenue in the second half of our fiscal years has exceeded our revenue in the first half of our fiscal years.
+Added: Historically, revenue in the second half of our fiscal years has exceeded revenue in the first half.
The factors that affect our revenue recognition between accounting periods include the timing of new contract awards, the availability of U.S.
−Removed: government and international government funding, lead time to manufacture our family of systems to customer specification, customer acceptance and other regulatory requirements.
+Added: government and international government funding, lead time to manufacture our systems to customer specification, customer acceptance and other regulatory requirements.
Raw Materials and Suppliers
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We seek to manage materials supply risk through long term non-binding contracts with certain key suppliers that establish pricing, minimize lead times and, to some degree, mitigate risk.
−Removed: We have recently experienced supply chain challenges including shortages of certain electronic and other components, increased lead times, increased costs for components, and increased shipping, warehousing and inventory costs.
−Removed: We believe all of these raw materials and components are available to meet our needs from various suppliers;
−Removed: however, we expect inflationary and supply chain constraint trends to continue throughout our fiscal year 2023, which could cause delays in production and development programs and negatively impact our operating results.
−Removed: (See Part 1A, “Risk Factors—If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business.” for more information.)
+Added: In recent years, we have experienced supply chain challenges including shortages of certain electronic and other components, increased lead times, increased costs for components, and increased shipping, warehousing and inventory costs.
+Added: We believe all such raw materials and components are available to meet our needs from various suppliers;
+Added: however, we expect some degree of inflationary and supply chain constraint trends to continue into our fiscal year 2024, which could cause delays in production and development programs and negatively impact our operating results (see Part 1A, “Risk Factors—If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business,” for more information).
The table below shows our revenue for the periods indicated by segment:
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For this reason, we aspire to be an employer that is known for cultivating a positive and welcoming work environment – one that fosters growth, provides a safe place to work, supports diversity and embraces inclusion.
−Removed: We believe that this kind of corporate culture results in employees who are happier, more creative, and more productive,
−Removed: supporting our ongoing innovation.
−Removed: We work to make our employees’ experience a priority, and we take tremendous pride in being certified by Great Place to Work Institute, Inc.
+Added: We believe that this kind of corporate culture results in employees who are happier, more creative, and more productive, supporting our ongoing innovation.
+Added: We work to make our employees’ experience a priority, and we take tremendous pride in being certified by the Great Place to Work Institute, Inc.
as a “Great Place to Work”.
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Talent Acquisition, Retention and Development
−Removed: Our ability to attract, develop and retain top talent, particularly those with technical and engineering backgrounds or experience, is critical for us to execute our strategy and grow our businesses.
+Added: Our ability to attract, develop and retain top talent, particularly those with technical and engineering backgrounds or experience, is critical for us to execute our strategy and grow the business.
We continuously monitor the hiring, retention and management of our employees.
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We regularly conduct confidential surveys to seek feedback from our employees and use those results to improve our workplace.
−Removed: We attract and reward our employees by providing market competitive compensation and benefits, including incentives and recognition plans that extend to all levels in our organization.
+Added: We attract and reward our employees by providing market competitive compensation and benefits, including incentives and recognition plans that extend to all levels of our organization.
We invest in our workforce through education, training and development programs and offer tuition assistance programs for continuing education or industry certifications.
−Removed: Additionally, we regularly conduct succession planning for management to ensure that we continue to cultivate the leadership pipeline of talent needed to execute our strategy.
+Added: In addition, we regularly conduct succession planning for management to ensure that we continue to cultivate the leadership pipeline of talent needed to execute our strategy.
Diversity and Inclusion
At AeroVironment, creating a culture of diversity and inclusion is something we work on every day.
−Removed: We believe that a diverse workforce and an inclusive workplace is a major catalyst for driving innovation.
+Added: We believe that a diverse workforce and an inclusive one is a major catalyst for driving innovation.
We have focused our diversity and inclusion initiatives on employee recruitment, including investments in minority-serving institutions and outreach, employee training and development, such as efforts focused on expanding the diverse talent pipeline, and employee engagement, including through participation in employee focus groups on various topics related to diversity and inclusion.
Employee Safety and Health
−Removed: Our safety and health program seeks to optimize our operations through targeted safety, health and wellness opportunities designed to ensure safe work conditions, create a healthy work environment, promote workforce resiliency and enhance business value.
−Removed: We monitor employee health and safety measures, including monthly and yearly targets for employee injury and illness incidents, incidents that result in work days lost, and the number of work days lost due to workplace injuries and illness.
+Added: Our safety and health program seeks to optimize our operations through targeted safety, health and wellness opportunities designed to ensure safe work conditions, create a healthy work environment, promote workforce resiliency and strengthen the overall value of our business.
+Added: We monitor employee health and safety measures, including monthly and yearly targets for employee injury and illness incidents, which result in work days lost, and the impact to productivity caused by workplace injuries and illness.
We also provide our employees with health and wellness benefits.
−Removed: We took and continue to take various measures to protect our workforce in response to the ongoing COVID-19 pandemic.
−Removed: We implemented and continue to maintain extensive safety protocols to support our employees working onsite, such as enhanced cleaning of common areas.
−Removed: Additionally, in mid-March 2020, a significant portion of our workforce began teleworking in accordance with the implementation of government orders and guidance affecting our facilities.
−Removed: We have implemented a COVID-19 reporting mechanism for illness or exposure and positive COVID-19 tests.
−Removed: As part of that reporting process, we have a robust contact tracing program to identify employees who were in close contact with the ill employee in the workplace.
−Removed: In addition, we implemented a COVID-19 vaccination requirement for our employees, allowing for exceptions as required under applicable law and regulations, and continue to monitor potential vaccine mandates.
−Removed: We provide several channels for all employees to speak up, ask for guidance, and report concerns related ethics or safety concerns, including identifying areas for improvement.
−Removed: We address employee concerns and take appropriate actions that uphold our AeroVironment values.
−Removed: We have also implemented a flexible work location policy to allow employees who can meet our customer commitments while working remotely to continue to work remotely.
−Removed: We continue to ensure that employees working remotely have the technology, office equipment and other services needed to enable them to work effectively.
Consistent with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we define backlog as remaining unsatisfied performance obligations under firm orders for which work has not been performed.
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We expect that approximately 92% of our backlog will be recognized as revenue during our fiscal year ending April 30, 2024.
−Removed: In addition to our funded backlog, we also had unfunded backlog of $358.1 million and $143.2 million as of April 30, 2022 and 2021, respectively.
−Removed: Unfunded backlog does not meet the definition of a performance obligation under ASC Topic 606.
+Added: In addition to funded backlog, we also had unfunded backlog of $220.9 million and $358.1 million as of April 30, 2023 and 2022, respectively.
+Added: Unfunded backlog does not meet the definition of a performance obligation under ASC 606.
We define unfunded backlog as the total remaining potential order amounts under cost reimbursable and fixed price contracts with (i) multiple one-year options and indefinite delivery, indefinite quantity (“IDIQ”) contracts, or (ii) incremental funding.
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Unfunded backlog does not include the remaining potential value associated with a U.S.
−Removed: Army IDIQ-type contract for small UAS because values for each of the other domains within the contract have not been disclosed by the customer, and we cannot be certain that we will secure all task orders issued against the contract.
−Removed: Additionally, unfunded backlog on the SOCOM MEUAS contract reflects only those sites which have been awarded to Arcturus UAV, Inc.
−Removed: (“Arcturus”) and does not include the remaining potential value associated with the entire SOCOM MEUAV III/IV contract.
+Added: Army IDIQ-type contract for SUAS because values for each of the other domains within the contract have not been disclosed by the customer, and we cannot be certain that we will secure all task orders issued against the contract.
Because of possible future changes in delivery schedules and/or cancellations of orders, backlog at any particular date is not necessarily representative of actual sales to be expected for any succeeding period, and actual sales for the year may not meet or exceed the backlog represented.
−Removed: Our backlog is typically subject to large variations from quarter to quarter as existing contracts expire or are renewed or new contracts are awarded.
−Removed: A majority of our contracts, specifically our IDIQ contracts, do not currently obligate the U.S.
+Added: Our backlog is typically subject to large variations from quarter to quarter as existing contracts expire, are renewed or new contracts awarded.
+Added: A majority of our contracts, specifically IDIQ ones, do not currently obligate the U.S.
government to purchase any goods or services.
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The recent shift of U.S.
−Removed: and allied defense planning toward countering peer and near-peer adversaries requires a portfolio of capabilities that can operate effectively in areas where the battlespace, including the air, radio frequency
−Removed: spectrum and Global Positioning Satellite (“GPS”) signals, may be contested, driving the need for more intelligent robotic systems capable of autonomous operation.
+Added: and allied defense planning toward countering peer and near-peer adversaries requires a portfolio of capabilities that can operate effectively in areas where the battlespace, including the air, radio frequency (“RF”) spectrum and Global Positioning Satellite (“GPS”) signals, may be contested, driving the need for more intelligent robotic systems capable of autonomous operation.
Industry Background
−Removed: Small UAS and MUAS
−Removed: The defense market for small UAS and MUAS has grown significantly since the early 2000s, driven largely by the demands associated with the global threat environment and resulting procurement by military customers, the early adopters for this technology.
−Removed: Small UAS and MUAS now represent accepted and enduring capabilities for military forces around the world.
−Removed: military’s transformation into a smaller, more agile force that operates via a network of observation, communication and precision targeting technologies accelerated following the terrorist attacks of September 11, 2001, as it required improved, distributed observation and targeting of enemy combatants who operate in small groups, often embedded in dense population centers or dispersed in remote locations, to operate effectively in a counterinsurgency threat environment.
−Removed: We believe that UAS, which range from large systems, such as Northrop Grumman’s Global Hawk and General Atomics’ Predator, Sky Warrior, Reaper and Gray Eagle, to medium systems such as our Puma LE, T-20 and JUMP 20, Boeing’s ScanEagle and Integrator and Textron’s Shadow, to small systems, such as our Raven, Wasp AE, Puma AE, and VAPOR, serve as integral components of today’s military force.
−Removed: These systems provide critical observation and communications capabilities serving the increasing demand for actionable intelligence, while reducing risk to individual “warfighters.” Small UAS and MUAS can provide real-time observation and communication capabilities to commanders and directly to the small units who control them.
+Added: SUAS and MUAS
+Added: The defense market for SUAS and MUAS has grown significantly since the early 2000s, driven largely by the demands associated with the global threat environment and resulting procurement by military customers, the early adopters for this technology.
+Added: SUAS and MUAS now represent accepted and enduring capabilities for military forces around the world.
+Added: military’s transformation into a smaller, more agile force that operates via a network of observation, communication and precision targeting technologies accelerated following the terrorist attacks of September 11, 2001, as the DoD required improved, distributed observation and targeting of enemy combatants who operate in small groups, often embedded in dense population centers or dispersed in remote locations, to operate effectively in a counterinsurgency threat environment.
+Added: We believe that UAS, which range from large systems to medium systems such as our Puma LE, T-20 and JUMP 20 to small systems, such as our Raven, Wasp AE, Puma AE, and VAPOR, serve as integral components of today’s military force.
+Added: These systems provide critical observation and communications capabilities serving the increasing demand for actionable intelligence, while reducing risk to individual warfighters.
+Added: SUAS and MUAS can provide real-time observation and communication capabilities to commanders and directly to the units who control them.
As airspace regulations in the U.S.
−Removed: and other nations evolve to accommodate the commercial use of small UAS, significant growth in the number of entities developing small UAS solutions is taking place.
+Added: and other nations evolve to accommodate the commercial use of SUAS, significant growth in the number of entities developing them is taking place.
Tactical Missile Systems
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Unmanned Ground Vehicles
−Removed: In situations where improvised explosive devices, caustic chemicals, nuclear, radiological or biological hazards or violent individuals represent significant danger to humans, UGVs can help responders remove, contain or neutralize these hazards without putting people in harm’s way.
+Added: In situations where improvised explosive devices, caustic chemicals, nuclear, radiological or biological hazards or violent individuals represent significant danger to humans, UGVs can help responders remove, contain or neutralize
+Added: these hazards without putting people in harm’s way.
We believe that as enabling technologies continue to advance, UGVs will become more autonomous, more capable and more effective in dealing with hazardous threats, expanding the market potential for this set of applications to include non-defense applications such as facility security, infrastructure inspection, delivery of goods and many others.
−Removed: High-Altitude Pseudo-Satellite (“HAPS”) UAS
−Removed: We believe a market opportunity exists for HAPS UAS that can fly for months at a time to provide continuous remote sensing and communications in an affordable manner over great distances.
−Removed: Existing solutions such as terrestrial cellular towers, communications satellites and manned and unmanned aircraft address some of the emerging demand for this capability but do so at relatively high financial and resource costs.
−Removed: Next generation mobile telephony, referred to as 5G, can use higher frequencies than those currently employed by existing 4G and LTE networks.
−Removed: These higher frequencies are not capable of traveling long distances as compared to the frequencies associated with existing networks.
−Removed: As a result, 5G deployment requires the installation of a large number of base stations and cellular towers to complement
−Removed: existing infrastructure, resulting in a significant investment of time, resources and capital.
+Added: We believe a market opportunity exists for HAPS UAS that can fly for months at a time to provide continuous remote sensing and telecommunications services in an affordable manner over large coverage areas for both commercial and defense applications.
+Added: Existing solutions such as terrestrial cellular towers and communications satellites address some of the current and emerging demand for this capability but each has trade-offs.
+Added: Terrestrial based infrastructure is ideal for dense population centers but expensive and underutilized for large area applications.
Geosynchronous satellites provide fixed, continuous communications capabilities to large portions of the globe, but because they operate more than 20,000 miles from the surface of the earth, the bandwidth they can provide is limited, introducing latency in communications signals and requiring relatively larger, higher power ground stations.
−Removed: Remote sensing satellites typically operate at lower altitudes, but are unable to maintain geosynchronous positions, meaning they are moving with respect to the surface of the earth, resulting in a limited presence over specific areas of interest and significant periods of time during which they are not present over those areas.
−Removed: A new category of constellations consisting of a large number of very small and low earth orbiting satellites is proposed to provide a lower cost alternative with more ubiquitous coverage for reconnaissance and communication but is only beginning to be deployed in meaningful quantities and may not be capable of providing the uninterrupted service and quality required by commercial mobile carriers.
−Removed: All satellites require special ground based receiving hardware that may further limit their telecommunication applications.
−Removed: High-altitude balloons carrying communication payloads are subject to wind direction and speed and, therefore, may not be able to deliver the continuous, uninterrupted service and connection quality required by commercial mobile carriers but may be suitable for other applications.
−Removed: UAS that are capable of operating in an affordable manner for extended periods of time over an area of interest while communicating directly with available handheld mobile devices without gaps in availability and carrying a communications or observation payload could help to satisfy this need.
+Added: Smaller low earth orbit satellites are lower cost alternatives to geosynchronous satellites and typically operate at lower altitudes with reduced latencies, but are unable to maintain geosynchronous positions, meaning they are moving with respect to the surface of the earth, resulting in a limited presence over specific areas of interest and significant periods of down time during which they are not present over those areas.
+Added: All satellites require special ground based receiving hardware that may further limit their telecommunication applications, and changes in communications technologies often require expensive new satellite constellations be deployed.
+Added: UAS that are capable of maintaining geosynchronous orbits for extended periods of time, operating over large areas of interest, while providing low latency communications directly to available handheld mobile devices provide a critical bridge between terrestrial infrastructure and satellites.
+Added: Further, these HAPS platforms can carry a wide array of communications and sensing payloads that can be readily installed, upgraded and swapped based on evolving customer and mission needs.
Advanced Artificial Intelligence and Autonomy
−Removed: Robotic systems designed to operate in complex environments, such as contested battlespaces or urban locations, will require advanced artificial intelligence capabilities to enable non-GPS navigation and higher levels of autonomy.
−Removed: For defense applications, this could require other navigation methods to ensure location accuracy and incorporating computer vision capabilities to respond to changes on the ground or in the air.
−Removed: Such higher levels of autonomy will become increasingly more valuable in enabling the effective use of robotic systems.
+Added: Robotic systems designed to perform complex missions in complex environments, such as contested battlespaces across multiple domains will require advanced artificial intelligence and autonomy.
+Added: For defense applications, this contributes to alternative methods of precision navigation, active perception of the operational environment, independence of command and control, and collaborative dynamic mission operations.
+Added: Such higher levels of autonomy will become increasingly more valuable in enabling the effective use of robotic systems and mission capability.
Our Solutions
−Removed: We supply our UAS, TMS and UGV products and services to multiple customers within and outside of the United States, as well as supply our TMS products and services to defense related organizations within the U.S.
+Added: We supply our UAS and UGV products and services to multiple customers within and outside of the United States, as well as supply our TMS products and services to defense related organizations within the U.S.
government and allied nations.
−Removed: Small UAS Products
−Removed: Our small UAS, including Raven, Wasp AE, Puma AE, Puma LE, and VAPOR are designed to operate reliably at very low altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information.
−Removed: Military forces employ our small UAS to deliver ISR and communications, including real-time tactical reconnaissance, tracking, combat assessment and geographic data, directly to the small tactical unit or individual operator, thereby increasing flexibility in mission planning and execution.
−Removed: Our small UAS wirelessly transmit critical live video and other information generated by their payload of electro-optical, infrared or other sensors directly to a hand-held ground control unit, enabling the operator to view and capture images, during the day or at night, on the control unit.
−Removed: Our ground control systems allow the operator to control the aircraft by programming it for GPS-based autonomous navigation using operator-designated way-points, or by manual flight operation.
−Removed: The ground control systems are designed for durability and ease of use in harsh environments and incorporate a user-friendly, intuitive user interface.
−Removed: All of our fixed wing small UAS currently in production for military customers operate from our Crysalis common ground control system.
−Removed: Our VAPOR helicopter UAS currently employs a distinct portable ground control system.
−Removed: We designed our small UAS to be transportable by a single person, assembled in minutes and launched and operated by one or two people, with limited training required.
−Removed: The efficient and reliable electric motors used in all of our small UAS are powered by modular battery packs that can be replaced quickly, enabling rapid return to flight.
−Removed: We designed all of our small UAS to be reusable for hundreds of flights under normal operating circumstances and to be recovered through an autonomous landing feature that enables a controlled descent to a designated location.
−Removed: In military applications, our small UAS provide forward aerial observation capabilities that enable tactical commanders to observe, for example, around the next corner, to the next intersection or past a ridgeline in real-time.
−Removed: This information facilitates faster, safer movement through urban, rural, riverine and mountainous environments and can enable troops to be proactive based on field intelligence rather than reactive to attack.
+Added: SUAS Products
+Added: Our SUAS products, including Raven, Wasp AE, Puma AE, Puma LE, and VAPOR MX are designed to operate reliably at low altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information to end users.
+Added: These reusable systems are easy to transport, assemble and operate and are relatively quiet when flying at operational altitudes, as a result of our efficient electric propulsion systems.
+Added: Furthermore, their small size makes them difficult to see from the ground in daytime environments using no optical enhancing tools.
+Added: More recently, our SUAS have been upgraded to be more resilient against more sophisticated adversaries by introducing technologies which allow for safe operation, and mission continuation, of SUAS in contested environments such as loss of GPS or RF contested environments.
+Added: In military applications, our SUAS provide forward aerial observation capabilities that enable tactical commanders to observe, for example, around the next corner, to the next intersection or past a ridgeline in real time.
+Added: information facilitates faster, safer movement through urban, rural, riverine and mountainous environments.
+Added: These systems also provide greater situational awareness on the battlefield and enable troops to proactively identify, track, and prosecute targets of interest rather than being reactive to attack.
Moreover, by providing this information, our systems reduce the risk to warfighters and to the surrounding population by providing the ability to tailor the military response to the threat.
−Removed: military personnel regularly use our small UAS, such as Raven, for missions such as force protection, combat observation and damage assessment.
−Removed: These reusable systems are easy to transport, assemble and operate and are relatively quiet when flying at typical altitudes of 300 to 500 feet above ground level, as a result of our efficient electric propulsion systems.
−Removed: Furthermore, their small size makes them difficult to see from the ground.
−Removed: In addition, the low cost of our small UAS relative to larger systems and alternatives makes it practical for customers to deploy these assets in large quantities, directly to warfighters.
−Removed: In emerging commercial applications, our small UAS enable enterprises to manage valuable assets such as crops, powerlines and railroad infrastructure, more effectively and safely than previously possible.
−Removed: Our VAPOR helicopter systems are designed to provide more accurate and timely information to individuals or organizations for more informed decision-making.
−Removed: Better and more timely information can translate into more efficient activities that facilitate more efficient use of resources such as maintenance operations.
−Removed: Our small UAS offering also includes spare equipment, alternative payload modules, batteries, chargers, repair services and customer support.
−Removed: We provide training by our highly-skilled instructors, who typically possess extensive military experience, and continuous refurbishment and repair services for our products.
−Removed: By maintaining close contact with our customers and users in the field, we gather critical feedback on our products and incorporate that information into ongoing product development and research and development efforts.
−Removed: This approach enables us to improve our solutions in response to, and in anticipation of, evolving customer needs.
−Removed: Certain systems within our small UAS portfolio include multiple aircraft, our common and interoperable hand-held Crysalis ground control system and an array of spare parts and accessories.
−Removed: Other systems, namely, Puma LE, and VAPOR, consist of a single air vehicle, as well as a ground control system, spare parts and accessories.
−Removed: Our current small UAS portfolio for defense applications consists of the following aircraft:
+Added: Certain systems within our SUAS portfolio utilize our common and interoperable handheld Crysalis ground control system and an array of spare parts and accessories.
+Added: The ground control system serves as the primary interface between the operator and our SUAS and allows the operator of each system to control the direction, speed and altitude of the aircraft as well as the orientation of the sensors to view the visual information they produce through real time, streaming video and metadata.
+Added: The Crysalis system provides a refreshed user experience and allows our SUAS to interoperate with other customer assets to further enhance the warfighters ability to counter threats.
+Added: Our current SUAS portfolio for defense applications consists of the following aircraft:
Rotor Diameter
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Mechanical pan, tilt, zoom and digital zoom electro-optical and infrared
+Added: Vertical take-off and landing
+Added: Mechanical pan, tilt, zoom and digital zoom electro-optical and infrared
Hand launch and vertical autonomous landing capable
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Ability to integrate multiple third party payloads
−Removed: Quantix Recon
−Removed: Vertical take-off and landing
−Removed: Dual 18 megapixel high-resolution RGB and multispectral
(1) Represents point-to-point minimum customer-mandated specifications for all operating conditions.
In optimal conditions, the performance of our products may significantly exceed these specifications.
−Removed: Our digital data links (“DDL”) relay can enable operational modes that can extend range significantly.
−Removed: The ground control system serves as the primary interface between the operator and our small UAS and allows the operator of each system to control the direction, speed and altitude of the aircraft as well as the orientation of the sensors to view the visual information they produce through real-time, streaming video and metadata.
−Removed: Our common ground control system interfaces with each of our fixed wing air vehicles, providing a common user experience.
−Removed: In addition to the thousands of air vehicles delivered to our customers, thousands of ground control systems are also in our customers’ hands.
−Removed: Our line of miniature gimbaled sensor payloads provides small UAS operators with enhanced observation and target tracking functionality.
−Removed: Our DDL is integrated into Puma LE, Puma AE, Raven and Wasp AE systems, enhancing their capabilities, and ultimately, the utility of our small UAS by enabling more efficient radio spectrum utilization and communications security.
−Removed: Small UAS incorporating our DDL are optimized for the low-power, low-latency, and streaming bandwidth efficiency required for UAS.
−Removed: Additionally, our DDL enables each air vehicle to operate as an Internet-Protocol addressable hub capable of routing and relaying video, voice and data to and from multiple other nodes
−Removed: on this ad hoc network.
−Removed: This capability enables beyond line-of-sight operation of our small UAS, further enhancing their value proposition to our customers.
+Added: Our digital data links relay can enable operational modes that can extend range significantly.
+Added: Our Digital Data Link (“DDL”) radio module is integrated into Puma LE, Puma AE, Raven and Wasp AE systems, enhancing their capabilities, and ultimately, the utility of our SUAS by enabling more efficient radio spectrum utilization and communications security.
+Added: SUAS incorporating our DDL are optimized for low-power, low-latency, and streaming bandwidth efficiency required for UAS.
+Added: In addition, our DDL enables each air vehicle to operate as an Internet Protocol addressable hub capable of routing and relaying video, voice and data to and from multiple other nodes on this ad hoc network.
+Added: These features provide a benefit to the warfighter by pushing valuable information (video) to other warfighters in the network, thus enhancing battlefield situational awareness.
MUAS Products
−Removed: Providing similar capabilities to our small UAS, our field-deployable MUAS, including T-20 and JUMP 20, deliver extended endurance and expanded payload capacity to support a broader set of missions that benefit from aerial surveillance and the use of specialized payloads.
−Removed: The internal combustion-powered T-20 and JUMP 20 offer significantly greater endurance and payload capacity than our small UAS, with larger airframes that can also accommodate a wider variety of payloads.
−Removed: The JUMP 20 launches and lands vertically as a result of its vertical take-off and landing (“VTOL”) rotors, minimizing the amount of space required for its operation.
+Added: Providing similar capabilities to our SUAS, our field-deployable MUAS, including T-20 and JUMP 20, deliver extended endurance and expanded payload capacity to support a broader set of missions that benefit from aerial surveillance and the use of specialized payloads.
+Added: The internal combustion engine powered T-20 and JUMP 20 offer significantly greater endurance and payload capacity than our SUAS, with larger airframes that can also accommodate a wider variety of payloads.
+Added: The JUMP 20 launches and lands vertically as a result of its vertical take-off and landing (“VTOL”) rotors, minimizing the amount of space required for its operation and eliminating the need for a runway.
The T-20 launches from a catapult, lands on a short runway and provides more than 24 hours of endurance.
+Added: In the past, we operated our MUAS, such as Jump 20 in overseas locations to support U.S.
+Added: military operations under ISR services contracts under a contractor-owned, contractor-operated (“COCO”) arrangement.
+Added: Under these services contracts, we operated our MUAS in specific locations and delivered the information our MUAS produce on an hourly basis to our customers, who then used that information to support their missions.
+Added: During the year ended April 30, 2023, all of our MUAS COCO sites have been closed.
T-20 and JUMP 20 operate from their own portable common ground control system.
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Tactical Missile Systems Products
−Removed: Our TMS consist of tube-launched aircraft that deploy with the push of a button, fly at higher speeds than our small UAS, and perform either effects delivery or reconnaissance missions.
+Added: Our TMS consist of tube-launched aircraft that deploy with the push of a button, fly at higher speeds than our SUAS, and perform either effects delivery or reconnaissance missions.
Switchblade 300, the first of our TMS products, can be transported in its launch tube, within a backpack, and deployed within minutes to defend against lethal threats such as snipers and mortar launchers.
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Not disclosed
−Removed: We currently operate our MUAS, such as JUMP 20, in overseas locations to support U.S.
−Removed: military operations under ISR services contracts.
−Removed: Under these services contracts we deliver the information our MUAS produce to our customers, who use that information to support their missions.
−Removed: These contracts specify a location and number of hours per month of services to perform.
−Removed: This contractor-owned, contractor-operated (“COCO”) arrangement represents a new
−Removed: business model for the company as a result of the acquisition of Arcturus and provides access to alternative customer funding sources, while also providing a way for customers who may not wish to own and operate their UAS to benefit from their differentiated capabilities.
−Removed: This COCO business model may expand to include other AeroVironment solutions in the future.
Unmanned Ground Vehicle Products
Our UGV support a variety of missions and applications, ranging from explosive ordnance disposal to hazardous materials handling and law enforcement operations.
−Removed: All of our UGVs feature secure communications, multi-axis manipulators and automatic tool exchange, which eliminates the need for the UGV to return to its operator to switch the tool attached to its manipulator arm.
+Added: All our UGVs feature secure communications, multi-axis manipulators and automatic tool exchange, which eliminates the need for the UGV to return to its operator to switch the tool attached to its manipulator arm.
We also offer fully equipped service vehicles for the transport, service and operation of our UGV solutions.
−Removed: All of our UGVs feature the intuitive and operationally simplified Robo Command Ground control stations with multi-touch screen, pre-programmed motion sequences and ergonomically designed hand controllers for precision control of the robot, manipulator and accessories.
+Added: Our UGVs feature the intuitive and operationally simplified Robo Command Ground control stations with multi-touch screen, pre-programmed motion sequences and ergonomically designed hand controllers for precision control of the robot, manipulator and accessories.
Select Unmanned
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4-track running gear with individually adjustable flippers and optional wheels
−Removed: MacCready Works Advanced Solutions
−Removed: We created MacCready Works Advanced Solutions, named for our founder, Dr.
−Removed: MacCready, Jr., to ensure that creativity and long-term thinking remain at the core of our culture.
+Added: MacCready Works
+Added: MacCready Works, named for our founder, Dr.
+Added: MacCready, Jr., ensures that creativity and long-term thinking remain at the core of our culture.
With a focus on the future, this group of select, visionary scientists and engineers partners with our diverse customer base to explore innovative breakthrough solutions to difficult challenges.
−Removed: Primarily focused on customer funded research and development in the areas of robotics, sensors, software analytics and connectivity, this segment seeks to identify new products, services and businesses for the company.
−Removed: While the revenue generated from these customer funded projects sustain this segment, there is potential that new businesses incubated here could significantly contribute to the growth of the company.
+Added: Primarily focused on customer-funded R&D in the areas of robotics, sensors, software analytics and connectivity, this segment seeks to identify new products, services and businesses for the company.
+Added: While the revenue generated from these customer-funded projects sustain this unit, it is likely that new businesses incubated here could significantly contribute to the growth of the company.
Support Services
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We provide spare parts as well as repair, refurbishment and replacement services in a manner that seeks to minimize supply chain delays and support our customers whenever and wherever needed.
−Removed: Our facilities in Simi Valley, CA also serve as primary depots for small UAS and Puma LE repairs and spare parts, while we support our MUAS from our Petaluma, CA facilities and our UGV solutions from our Erie, PA and Stuttgart, Germany facilities.
−Removed: We provide comprehensive training services to support all of our small UAS and TMS for defense applications.
+Added: Our facilities in Simi Valley, CA also serve as primary depots for SUAS and Puma LE repairs and spare parts, while we support our MUAS from our Petaluma, CA facilities and our UGV solutions from our Erie, PA and Stuttgart, Germany facilities.
+Added: We provide comprehensive training services to support all our SUAS and TMS for defense applications.
Our highly-skilled instructors typically have extensive military experience.
We deploy training teams throughout the continental United States and overseas to support our customers’ training needs on both production and development-stage systems.
−Removed: Customer Funded Research and Development
−Removed: We provide specialized services in support of customer-funded research and development projects, delivering new value-added technology solutions to our customers.
+Added: Customer-Funded R&D
+Added: We provide specialized services in support of customer-funded R&D projects, delivering new value-added technology solutions to our customers.
These types of projects typically involve developing new system solutions and technology or new capabilities for existing solutions that we introduce as retrofits or upgrades.
−Removed: We recognize the majority of customer-funded research and development projects as revenue.
+Added: We recognize the majority of customer-funded R&D projects as revenue.
Technology, Research and Development
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● robotics and robotics systems autonomy technologies;
+Added: ● modular open systems architectures;
● sensor design, development, miniaturization and integration;
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● miniature, low power, secure wireless digital communications and networks;
−Removed: ● lightweight, low speed aerostructures and aerodynamic design;
+Added: ● lightweight, advanced aerostructures and aerodynamic design;
● high-altitude long-endurance systems design, integration and flight operations;
−Removed: ● machine vision, machine learning, advanced auto flight control, auto target recognition, autonomous mission planning and teaming;
+Added: ● machine vision, machine learning, active perception, advanced auto flight control, auto target recognition, autonomous mission planning and teaming;
● land, maritime and air deployment of missile and aircraft systems;
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● low SWaP (Size, Weight and Power) system design and integration;
−Removed: ● manned-unmanned teaming and unmanned-unmanned teaming;
+Added: ● collaborative multi-robotic mission operation, manned and unmanned;
● power electronics and electric propulsion systems;
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● controls and systems integration;
−Removed: ● vertical takeoff and landing flight, fixed-wing flight and hybrid flight unmanned aircraft systems;
+Added: ● vertical takeoff and landing flight, fixed-wing flight and hybrid flight unmanned aircraft and rotocraft systems;
● image stabilization and target tracking;
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Another variant, Switchblade 600, is a larger version that delivers longer endurance, greater range, a larger payload and more significant mission effects.
+Added: We are also partnered with Northrop Grumman to develop a rocket powered variant under the US Army’s Long Range Precision Munitions (“LRPM”) Program.
We believe these new variants have the potential to expand our TMS opportunities significantly.
HAPS Unmanned Aircraft Systems.
−Removed: Building on our decades of groundbreaking development and demonstration of high altitude solar-powered UAS, in fiscal year 2018 we established a joint venture, HAPSMobile, Inc (“HAPSMobile”).
−Removed: with SoftBank to create a global broadband and telecommunications company to demonstrate and deploy HAPS UAS around the world.
+Added: Building on our decades of groundbreaking development and demonstration of high altitude solar-powered UAS, in fiscal year 2018 we established a joint venture, HAPSMobile, Inc.
+Added: (“HAPSMobile”), with SoftBank to create a global broadband and telecommunications company to demonstrate and deploy HAPS UAS around the world.
In October 2020, we completed a fifth successful test flight of the HAPS UAS, which included a broadband mobile communication demonstration on consumer smart phones from the stratosphere.
As part of a restructuring of the HAPS development program in May 2021, we and SoftBank entered into a Master Design and Development Agreement (“MDDA”) to continue the development of HAPS UAS and agreed to cooperate with each other to explore restructuring and financing options for HAPSMobile.
−Removed: In furtherance of this restructuring, we sold our 7% share of HAPSMobile to SoftBank, which already owned a majority 93% share of the joint venture, on March 18, 2022.
+Added: In furtherance of this restructuring, we sold our 7% share of HAPSMobile to SoftBank,
+Added: which already owned a majority 93% share of the joint venture, on March 18, 2022.
Despite the sale of shares in HAPSMobile, the HAPS UAV development relationship continues, with SoftBank now directly funding the development and demonstration of solar-powered HAPS UAS.
−Removed: During the term of the MDDA, AeroVironment possesses exclusive rights from SoftBank for future design and manufacturing work for the Solar HAPS UAS and future variants thereof, subject to meeting contractual performance criteria.
+Added: During the term of the MDDA, AeroVironment possesses exclusive rights from SoftBank for future design and manufacturing work for the Solar HAPS UAS and future variants thereof, subject to meeting contractual performance criteria and maintains exclusive rights to market and sell Solar HAPS for defense applications globally except for Japan.
Sales and Marketing
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We organize our U.S.
−Removed: business development team members by target market and customer, and we locate team members in close proximity to the customers they support when possible.
−Removed: We organize our program managers by product and focus on designing optimal solutions and contract fulfillment, as well as internalizing feedback from customers and users.
−Removed: By maintaining assigned points of contact with our customers, we believe that we are able to maintain our relationships, service existing contracts effectively and gain vital feedback to improve our responsiveness and product offerings.
+Added: business development team members by product line, target market and customer, and we locate team members in close proximity to the customers they support when possible.
+Added: We organize our program managers by product and focus on designing optimal solutions and improving contract fulfillment, incorporating feedback from customers and users.
+Added: By maintaining assigned points of contact with our customers, we believe that we are able to maintain and strengthen our relationships, service existing contracts effectively and gain vital feedback to improve our responsiveness and product offerings.
Manufacturing and Operations
−Removed: Continued investment in infrastructure has established our manufacturing capability to meet demand with scalable capacity.
−Removed: We have the manufacturing infrastructure to produce products at rates higher than our historical volumes, support initial low rate production for new UAS development programs and TMS and execute initial low-rate production of large UAS.
+Added: Continued investment in infrastructure has enabled us to meet demand and efficiently scale capacity as needed.
+Added: We have executed an operating plan that has enabled us to manufacture products at higher rates than our historical volumes while supporting initial low rate production for new development programs.
By drawing upon experienced personnel across various manufacturing industries including aerospace, automotive and volume commodities, we have instituted lean production systems and leverage our International Organization for Standardization (“ISO”) certification for Quality Management, integrated supply chain strategy, document control systems and process control methodologies for production.
−Removed: Presently, we perform small UAS
−Removed: manufacturing at the 85,000 square foot manufacturing facility we established in 2005.
+Added: Presently, we perform SUAS manufacturing at the 85,000 square foot manufacturing facility we established in 2005.
Our ISO 9001:2015 + AS9100D certified manufacturing facilities are designed to accommodate demand of up to 1,000 aircraft per month.
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Some companies and government agencies view ISO certification as a positive factor in supplier assessments.
−Removed: The defense market for small UAS continues to evolve in response to changing technologies, shifting customer needs and expectations and the potential introduction of new products.
−Removed: We believe that a number of established domestic and international defense contractors have developed or are developing small UAS that continue to compete, or will compete, directly with our products.
+Added: The defense market for SUAS continues to evolve in response to changing technologies, shifting customer needs and expectations and the potential introduction of new products.
+Added: We believe that a number of domestic and international defense contractors have developed or are developing SUAS that compete, or will compete, directly with our products.
Some of these contractors have significantly greater financial and other resources than we possess.
−Removed: Our current principal small UAS competitors include Elbit Systems Ltd., Teledyne Technologies, Inc., L3 Technologies, Inc., and Lockheed Martin Corporation.
−Removed: We do not view large UAS such as Northrop Grumman Corporation’s Global Hawk or General Atomics, Inc.’s Predator and its derivatives as direct competitors to our small UAS because they perform different missions, do not typically deliver their information directly to front-line ground forces and are not hand-launched and controlled.
+Added: Our current principal SUAS competitors include Elbit Systems Ltd., Quantum Systems, Edge Autonomy, Teledyne Technologies, Inc.
+Added: and Lockheed Martin Corporation.
+Added: We do not view large UAS products such as Northrop Grumman Corporation’s Global Hawk or General Atomics, Inc.’s Predator and its derivatives as direct competitors to our SUAS because they perform different missions, do not typically deliver their information directly to front-line ground forces and are not hand-launched and controlled.
However, we cannot be certain that these platforms will not become direct competitors in the future.
−Removed: Potential competition from consumer and commercially focused drone manufacturers is emerging as their capabilities increase and their prices remain low relative to existing defense solutions, which is resulting in some level of military consideration even if such drones do not meet traditional military performance or security specifications.
−Removed: Such potential competitors include Skydio, Inc.
−Removed: and Shield AI.
defense market for MUAS has been addressed primarily by The Boeing Company’s ScanEagle and Textron, Inc.’s Shadow UAS .
−Removed: Our current principal MUAS competitors include those competing with us for the U.S.
−Removed: Army’s Future Tactical UAS (FTUAS) program:
−Removed: Martin UAV and Northrop Grumman’s V-Bat, Textron’s Aerosonde and L3Harris’ FVR-90.
+Added: However, our MUAS competitors also include Shield AI and Northrop Grumman’s V-Bat , Textron, Inc.’s Aerosonde , Sierra Nevada Corporation’s Voly-T , Griffon Aerospace’s G2E and L3Harris Technologies’ FVR-90 .
International MUAS competitors include Elbit Systems Ltd.
and Israeli Aircraft Industries.
−Removed: We do not view large UAS such as Northrop Grumman Corporation’s Global Hawk or General Atomics, Inc.’s Predator and its derivatives as direct competitors to our MUAS because they perform different missions, require a larger logistical footprint and cost considerably more to procure and operate.
+Added: We do not view large UAS such as Northrop Grumman Corporation’s Global Hawk or General Atomics, Inc.’s Predator and its
+Added: derivatives as direct competitors to our MUAS because they perform different missions, require a larger logistical footprint and cost considerably more to procure and operate.
However, we cannot be certain that these platforms will not become direct competitors in the future as we expand the capabilities of our MUAS products to, potentially, impinge upon the lower end of the large UAS market segment.
−Removed: The market for TMS is in an early stage of development, but it is evolving rapidly.
−Removed: Competitors in this market include Textron Inc., Raytheon Technologies, Lockheed Martin Corporation, Anduril Industries and UVision Air Ltd.
+Added: The market for TMS is now rapidly evolving and poised for continued growth.
+Added: Competitors in this market include Textron Inc., Raytheon Technologies, Lockheed Martin Corporation, Anduril Industries, Aevex and UVision Air Ltd.
+Added: There is also a class of less expensive and less capable commercial products being retrofitted with munitions and we expect additional entrants and substitutes to emerge over the next few years as this market matures.
The market for UGV spans the global defense, first responder, security and logistics market segments.
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Competitors in the U.S.
−Removed: UGV market include L3Harris Technologies, Inc., Teledyne Technologies, Inc., QinetiQ North America, Inc., Peraton/Remotec, ICOR and Boston Dynamics.
+Added: UGV market include L3Harris Technologies, Inc., Teledyne Technologies, Inc., QinetiQ North America, Inc., Peraton/Remotec, ICOR Technology and Boston Dynamics.
Initial adoption of UGVs for law enforcement and other government agencies is also progressing in the U.S.
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Companies pursuing airships (high altitude aircraft that are kept buoyant by a body of gas that is lighter than air) as a solution for this market include Lockheed Martin Corporation and Northrop Grumman Corporation.
−Removed: A number of telecommunications, aerospace and technology companies, including the company and its former joint venture partner HAPSMobile launched the HAPS Alliance to promote the benefits of HAPS to the global population.
−Removed: Companies pursuing conventional satellites as a solution for this
−Removed: market include The Boeing Company, Lockheed Martin Corporation, General Dynamics Corporation, EADS N.V., Ball Corporation and Northrop Grumman Corporation.
+Added: A number of telecommunications, aerospace and technology companies, including us and our former joint venture partner HAPSMobile launched the HAPS Alliance to promote the benefits of HAPS to the global population.
+Added: Companies pursuing conventional satellites as a solution for this market include The Boeing Company, Lockheed Martin Corporation, General Dynamics Corporation, EADS N.V., Ball Corporation and Northrop Grumman Corporation.
Companies pursuing Low Earth Orbit (“LEO”), micro or cubesat satellite constellations for global communication and remote sensing include Amazon, Planet, OneWeb, SpaceX and The Boeing Company.
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and SBA Communications Corporation.
−Removed: The market for commercial UAS products and services is in an early stage of development, but is evolving rapidly, generating a great deal of interest as government regulations evolve to accommodate commercial UAS operations in the National Airspace System and in the airspace systems of other countries.
−Removed: Given the breadth of applications and the diversity of industries that could benefit from UAS technology, a growing number of potential competitors in this market include consumer drone manufacturers such as Dà-Jiāng Innovation, who seek to enhance their systems’ capabilities over time;
−Removed: other small UAS manufacturers, including large aerospace companies such as Lockheed Martin Corporation, and drone and aerial surveying and mapping service providers such as PrecisionHawk, Sentera and SlantRange;
−Removed: ground-based surveying and mapping service providers;
−Removed: satellite imagery providers;
−Removed: and specialty system manufacturers, software as a service and other service providers aiming to address specific market segments.
−Removed: The emerging non-military market is attracting numerous additional competitors and significant venture capital funding given perceived lower barriers to entry and a much more fragmented marketplace as compared to the military market.
−Removed: Potential additional competitors include start-up companies providing low cost solutions.
+Added: Potential competition from consumer and commercially focused drone manufacturers is emerging as their capabilities increase and their prices remain low relative to existing defense solutions, which is resulting in some level of military consideration even if such drones do not meet traditional military performance or security specifications.
+Added: Such potential competitors include Skydio, Inc.
+Added: and Shield AI.
We believe that the principal competitive factors in the markets for our UAS, TMS and UGV products and services include product performance;
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Certain of these regulations impose substantial penalties for violations, including suspension or debarment from government contracting or subcontracting for a period of time.
−Removed: We monitor all of our contracts and contractual efforts to minimize the possibility of any violation of these regulations.
+Added: We monitor all our contracts and contractual efforts to minimize the possibility of any violation of these regulations.
In addition, we are subject to industry-specific regulations due to the nature of the products and services we provide.
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Department of State that administers the International Traffic in Arms Regulations, which regulate the export of controlled technical data, defense articles and defense services.
−Removed: On June 21, 2016, the FAA released its final rules that allow routine use of certain small UAS in the U.S.
+Added: On June 21, 2016, the FAA released its final rules that allow routine use of certain SUAS in the U.S.
National Airspace System.
−Removed: The FAA rules, which went into effect in August 2016, provide safety rules for small UAS (under 55 pounds) conducting non-recreational operations.
+Added: The FAA rules, which went into effect in August 2016, provide safety rules for SUAS (under 55 pounds) conducting non-recreational operations.
The rules limit flights to visual-line-of-sight daylight operation, unless the UAS has anti-collision lights in which case twilight operation is permitted.
−Removed: The final rule also addresses height and speed restrictions, operator certification, optional use of a visual observer, aircraft registration and marking and operational limits, including prohibiting flights over unprotected people on the ground who are not directly
−Removed: participating in the operation of the UAS.
−Removed: Current FAA regulations require drone operators to register their systems with the FAA and secure operating licenses for their drones as per the Part 107 specifications.
+Added: The final rule also addresses altitude and speed restrictions, operator certification, optional use of a visual observer, aircraft registration and marking and operational limits, including prohibiting flights over unprotected people on the ground who are not directly participating in the operation of the UAS.
+Added: Current FAA regulations require drone operators to register their systems with the FAA and secure operating licenses for their drones per Part 107 specifications.
These regulations continue to evolve to accommodate the integration of UAS into the national airspace system for commercial applications, including HAPS UAS.
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On April 21, 2021, the final rule for remote identification of UAS went into effect.
−Removed: On the same day, the final rule for operation of small UAS over people also went into effect.
+Added: On the same day, the final rule for operation of SUAS over people also went into effect.
This rule permits routine operations of small unmanned aircraft over people, moving vehicles, and at night under certain conditions.
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Additionally, in February 2020, the FAA issued a public request for comment on its proposed policy for the creation of a new type certification of certain UAS as a special class of aircraft under FAA regulations.
−Removed: Currently the Part 107 Rules (as defined below) allow for the operation of small UAS without the need for FAA airworthiness certification as long as the UAS meets certain specified criteria and certain flight rules are followed;
−Removed: larger UAS and operations of small UAS outside the scope of the Part 107 Rules (as defined below) require a waiver from the FAA.
−Removed: The FAA’s proposed policy proposes a new special class of UAS for which airworthiness certification can be obtained, however, the proposed policy only applies to the procedures for the type certification of the new class of UAS, not the criteria that will be needed for the UAS or the flight operations to be followed to operate.
+Added: Currently the Part 107 Rules (as defined below) allow for the operation of SUAS without the need for FAA airworthiness certification as long as the UAS meets certain specified criteria and certain flight rules are followed;
+Added: larger UAS and operations of SUAS outside the scope of the Part 107 Rules (as defined below) require a waiver from the FAA.
+Added: The FAA’s proposed policy proposes a new special class of UAS for which airworthiness certification can be obtained, however, the proposed policy only applies to the procedures for the type certification of the new class of UAS.
Further rulemaking by the FAA is anticipated regarding the particular criteria for the airworthiness certification standards under the new special class proposed by the new policy.
The comment period for the FAA’s proposed policy expired on March 4, 2020.
−Removed: While it is currently anticipated that the enactment of remote identification, operation of small UAS over people, and a new airworthiness certification process for a newly created special class of UAS will help formalize the process for manufacturing and obtaining airworthiness certification for UAS within the newly created class and accelerate the development of commercial UAS in the U.S., it is uncertain whether the FAA’s actions, if any, will have such effects.
+Added: While it is currently anticipated that the enactment of remote identification, increasing operation of SUAS, and a new airworthiness certification process for a newly created special class of UAS will help formalize the process for manufacturing and obtaining airworthiness certification for UAS within the newly created class and accelerate the development of commercial UAS in the U.S., it is uncertain whether the FAA’s actions, if any, will have such effects.
It is also unclear when, if at all, the FAA will create a new class of UAS and what the final rules regarding the certification of such UAS will look like.
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Government Contracting Process
−Removed: We sell the significant majority of our small UAS, MUAS and TMS products and services under contracts with the U.S.
+Added: We sell the significant majority of our SUAS, MUAS and TMS products and services under contracts with the U.S.
Certain important aspects of our U.S.
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government programs is subject to congressional appropriations.
−Removed: Although multi-year contracts may be authorized in connection with major procurements, Congress generally appropriates funds on a fiscal
−Removed: year basis, even though a program may continue for many years.
+Added: Although multi-year contracts may be authorized in connection with major procurements, Congress generally appropriates funds on a fiscal year basis, even though a program may continue for many years.
Consequently, programs are often only partially funded initially, and additional funds are committed only as Congress makes further appropriations.
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There are three primary types of government contracts in our industry, each of which involves a different payment methodology and level of risk related to the cost of performance.
−Removed: These basic types of contracts are typically referred to as fixed-price contracts, cost reimbursable contracts, including cost-plus-fixed fee, cost-plus-award fee, and cost-plus-incentive fee, and time-and-materials contracts.
+Added: These basic types of contracts are typically referred to as fixed-price contracts;
+Added: cost reimbursable contracts, including cost-plus-fixed fee, cost-plus-award fee, and cost-plus-incentive fee;
+Added: and time-and-materials contracts.
In some cases, depending on the urgency of the project and the complexity of the contract negotiation, we will enter into a “Letter Contract” prior to finalizing the terms of a definitive fixed-price, cost reimbursable or time-and-materials definitive contract.
−Removed: A Letter Contract is a written preliminary contractual instrument that provides
−Removed: limited initial funding and authorizes us to begin immediately manufacturing supplies or performing services while negotiating the definitive terms of the procurement.
+Added: A Letter Contract is a written preliminary contractual instrument that provides limited initial funding and authorizes us to begin immediately manufacturing supplies or performing services while negotiating the definitive terms of the procurement.
These contracts are not subject to adjustment by reason of costs incurred in the performance of the contract.
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Bidding Process
−Removed: Our international contracts generally result from a competitive bidding process, and to a lesser extent, sole source awards for urgent requirements or sustainment and typically begin with the receipt of a request for proposal, information or quotation from an international government procurement agency.
+Added: Our international contracts generally result from a competitive bidding process and, to a lesser extent, sole source awards for urgent requirements or sustainment, and they typically begin with the receipt of a request for proposal, information or quotation from an international government procurement agency.
Numerous of our technical and administrative personnel are involved in responding to such request.
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Following award, competitive bid contracts may be challenged by unsuccessful bidders.
−Removed: International competitive bidding processes are highly competitive and sometimes we face disadvantages in the bidding and evaluation process in comparison to local, domestic bidders that may receive priority or more favorable evaluations than non-domestic suppliers due to stated requirements in the local regulations that promote domestic procurements.
+Added: International competitive bidding processes are highly competitive and sometimes we face disadvantages in the bidding and evaluation process in comparison to local, domestic bidders that may receive priority or more favorable
+Added: evaluations than non-domestic suppliers due to stated requirements in the local regulations that promote domestic procurements.
Sole source awards are direct engagements with the procuring agency.
−Removed: Contractors receive requests for proposal or quotation and respond to such request.
+Added: Contractors receive requests for proposal or quotation and respond to such a request.
If accepted by the customer, the resulting contract is for a defined quantity of goods or services for a specific time period.
−Removed: Generally sole source awards are utilized by our existing customers to sustain or augment their fleets of our products, commonly through multi-year support agreements.
+Added: Generally sole source awards are utilized by our existing customers to sustain or augment their use of our products, commonly through multi-year support agreements.
These agreements allow for customer logistics organizations to tailor procurement and support efforts to the needs of the end users.
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Funding may be broadly allocated to a governmental agency or military branch responsible for procurement, targeted for a specific purpose like unmanned systems, or earmarked to a specific requirement for our products.
−Removed: Funding allocations are typically confidential, making it challenging for us to forecast demand for our products or whether funding is available.
−Removed: Additionally, funding may be reallocated when higher needs arise, such as what occurred in many countries during the COVID-19 pandemic when such countries shifted defense funding to measures to address the pandemic.
−Removed: Forecasted requirements are then delayed until the next fiscal year or cancelled.
+Added: Funding allocations are typically confidential, making it challenging for us to forecast demand for our products or when/whether funding is available.
+Added: In addition, funding may be reallocated when higher needs arise, such as what occurred during the COVID-19 pandemic when many countries shifted defense funding to measures addressing the pandemic.
+Added: Forecasted requirements are then delayed until the next fiscal year or are cancelled entirely.
Competitive bidding opportunities for our products and services typically have budgets and timelines which require significant investment from the customer.
Initial procurement or replacement programs for our products and services may not be considered necessities for some international customers, which makes such procurements susceptible to a reduction in available funding or a complete reallocation of funds to other government programs or initiatives.
−Removed: When funds are reduced, it is common for the reduced funds to be utilized to support the sustainment of the customer’s existing fleet of UAS, rather than for new procurements.
+Added: When funds are reduced, it is common for the reduced funds to be utilized to support the sustainment of the customer’s existing UAS, rather than for new procurements.
Many of our international customers have established fleets of our UAS, which generally allows them to seek and obtain budget for yearly incremental allocations of funding.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.