What changed in this filing

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Item 1. Business

2024-06-27 compared with 2023-06-28 · 204 added, 202 removed, 462 unchanged (47% of the section changed)

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.

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.

We supply uncrewed aircraft and ground robot systems, loitering munitions systems and related services primarily to organizations within or supplying the U.S.

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.

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.

In addition, we believe that some of the innovative potential products, services and technologies in our R&D pipeline will emerge as new growth platforms in the future, creating additional market opportunities.

The success of our current product and service offerings stems from our investments in R&D to invent and deliver advanced solutions, our utilization of proprietary and commercially available technologies, and our acquisitions of leading businesses that help our customers achieve their desired outcomes.

We develop and acquire these highly innovative solutions by working closely with our key customers to solve their most important challenges related to our areas of expertise.

Our core technological capabilities, developed through more than 50 years of innovation, include robotics and robotics systems autonomy;

modular open systems architecture, sensor design, development, miniaturization and integration;

modular open systems architecture;

sensor design, development, miniaturization and integration;

embedded software and firmware;

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machine vision, machine learning and autonomy;

land, maritime and air deployment of missile and aircraft systems;

land, maritime and air deployment of munitions and aircraft systems;

design and qualification for robotics in extreme terrestrial and space environments;

missile systems warhead

munitions systems warhead integration;

low SWaP (Size, Weight and Power) system design and integration;

collaborative multi-robotic manned and unmanned mission operation;

collaborative multi-robotic crewed and uncrewed mission operation;

power electronics and electric propulsion systems;

efficient electric power conversion, storage systems and high density energy packaging;

efficient electric power conversion,

storage systems and high density energy packaging;

controls and systems integration;

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human-machine interface development;

modular dismounted, networked multi-domain robotic control interfaces and analytic processing architecture;

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.

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.

Delivering these capabilities enable us to create new markets or market segments, gain share in existing markets and grow as market adoption increases.

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.

Our business focuses primarily on the design, development, production, marketing, support and operation of our innovative uncrewed systems (“UxS”) and loitering munitions systems (“LMS”) products and services 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.

As a leader in defense technology, our strategy is to grow our business by delivering innovative, safe and reliable multi-domain solutions and unique capabilities to our customers.

Delivering these capabilities enables us to create new markets or market segments, gain share in existing markets, and grow as market adoption increases.

We believe that by introducing new solutions, or acquiring differentiated solutions developed by others, we provide customers with compelling value while growing our business profitably, in both 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.

We intend to grow our business by preserving a leadership position in our core UAS, TMS and UGV markets and by creating or acquiring new solutions and capabilities that enable us to establish leadership positions in new markets.

We intend to grow our business by preserving a leadership position in our core UxS (inclusive of aircraft and ground vehicles), and LMS markets by creating or acquiring new solutions and capabilities that enable us to establish leadership positions in new markets.

Key components of this strategy include the following:

Expand the market penetration of existing products and services.

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.

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.

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.

Similarly, we expect the adoption of our UGV solutions to expand our presence in the U.S.

military market.

Our UxS business, comprised of Small Uncrewed Aircraft Systems (“SUAS”), Medium Uncrewed Aircraft Systems (“MUAS”), and Uncrewed ground vehicles (“UGV”);

our LMS business;

and our MacCready Works business (“MW”), comprised of proprietary programs, advanced research, Ingenuity Mars Helicopter and High Altitude Pseudo-Satellites (“HAPS”) businesses, have gained reputations as performance leaders and technology innovators in their respective markets.

We intend to increase the penetration of our products and services within the U.S.

military, the military of allied nations, other government agencies and non-government organizations, including commercial entities.

We believe that broad adoption of our solutions by the U.S.

military will continue to spur demand from allied nations, and that our pursuit of new applications will create opportunities beyond the early adopter military market.

Deliver innovative new solutions into existing and new markets.

Customer-focused innovation is the primary driver of our growth.

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.

We plan to continue investing in internally-funded R&D 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 while expanding their value among existing customers and markets.

In other cases, these innovations become entirely new solutions that position us to address new markets, customers and business opportunities.

We believe focused research and development investments will allow us to deliver innovative new products and services that address market needs within and outside of our current target markets and enable us to create new opportunities for growth.

We view strategic partnerships as means by which to further the reach of our innovative solutions through access to new markets, customers and complementary capabilities.

We believe focused R&D investments will allow us to deliver innovative new products and services that address market needs within and outside of our current target markets by enabling us to create new opportunities for growth.

We view strategic partnerships as a means by which to further the reach of our innovative solutions by accessing new markets, customers, and complementary capabilities.

We also consider acquisitions as a method to obtain valuable products, capabilities or technologies that can further enable our growth strategy.

Foster our entrepreneurial culture and continue to attract, develop and retain highly-skilled personnel.

Our company culture encourages innovation and entrepreneurialism, which helps to attract and retain highly-skilled professionals.

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.

Our company culture encourages innovation and entrepreneurship, which helps to attract and retain highly-skilled professionals.

This culture encourages the development of innovative, highly technical system solutions and business models that give us our competitive advantage.

Our values of “customer commitment,” “trust and teamwork,” “innovate and simplify,” and “ownership and results” serve as the foundation of our culture.

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 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.

Preserve our agility and flexibility.

We respond rapidly to evolving markets, solve complicated customer problems, and strive to deliver new products, services and capabilities quickly, efficiently and affordably relative to available alternatives.

We believe our agility and flexibility help us to strengthen our relationships with customers and partners.

We intend to maintain our agility and flexibility, which we believe to be important sources of differentiation when we compete against organizations with more extensive resources.

Our agility and flexibility are important differentiators when competing against organizations with more extensive resources.

Effectively manage our growth portfolio for long-term value creation.

Our production and development programs and services present numerous investment opportunities that we believe will deliver long-term growth by providing our customers with valuable new capabilities.

We evaluate each opportunity independently, as well as within the context of other investment opportunities, to determine its relative cost, timing and potential for generation of returns, and thereby its priority.

Our production and development programs and services present numerous investment opportunities that will deliver long-term growth by providing our customers with valuable new capabilities.

We evaluate each opportunity independently and against other investment opportunities, to determine its relative cost, timing and potential for generation of returns.

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.

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Stay intimate with our key defense customers.

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.

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.

SAG members are highly qualified former members of the U.S.

DoD, including retired General Officers and Senior Executive Service members, each with many decades of experience.

We also have a government relations team comprised of individuals with prior military, government and policy making experience who regularly meet with key decision makers within the Pentagon, Congress and other key organizations within the U.S.

Our global business development organization, that seeks to understand customer needs, responds to information requests, submits proposals, solicits feedback on the performance of our products, furnishes spares, and provides training and customer support.

Finally, our project and program managers work intimately with customers to oversee the design, development, testing, manufacturing and delivery of solutions the customers want and need.

We sell the majority of our UxS products and services to organizations within the U.S.

DoD, including the U.S.

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.

Army, Marine Corps, Special Operations Command, Air Force and Navy, to public safety agencies and to allied governments, or to companies that serve these customers.

We sell our LMS products and services to organizations within the U.S.

DoD and allied military forces.

We sell our UGV and services to U.S.

and allied government military and public safety agencies as well as to commercial entities.

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”).

We also develop HAPS systems in conjunction with SoftBank Corp (“SoftBank”) for commercial customers and maintain exclusive rights to market and sell HAPS systems for defense applications globally except for Japan, which includes the sale of select products and services to the National Aeronautics and Space Administration (“NASA”) and U.S.

During our fiscal year ended April 30, 2024, we generated approximately 11% of our revenue from the U.S.

Army pursuant to orders placed under contract by the U.S.

Army on behalf of itself as well as for several other organizations within the DoD.

Army on behalf of itself as well as for several other organizations within the U.S.

government agencies and government subcontractors accounted for 26% of our sales revenue.

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.

Sales revenue to foreign customers, inclusive of foreign military sales made through the U.S.

DoD, commercial and consumer customers accounted for the remaining 63% of sales revenue during our fiscal year ended April 30, 2024, of which Ukraine accounted for 38% of our total sales revenue.

Environmental ‌

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The innovations developed by our company and our founder include, among others:

the world’s first effective human-powered and manned solar-powered airplanes;

the world’s first effective human-powered and crewed solar-powered airplanes;

the first modern passenger electric car, the EV1 prototype for General Motors;

the world’s highest flying airplane in level flight (Helios™), a solar-powered unmanned aircraft system that reached over 96,000 feet above sea level in 2001;

Global Observer, the world’s first liquid hydrogen-fueled unmanned aircraft system;

the Nano Hummingbird™, the world’s first flapping wing unmanned aircraft system capable of precise hover and omni-directional flight;

and Blackwing™, the first submarine-launched unmanned aircraft system deployed by the U.S.

the world’s highest flying airplane in level flight (Helios™), a solar-powered uncrewed aircraft system (“UAS”) that reached over 96,000 feet above sea level in 2001;

Global Observer, the world’s first liquid hydrogen-fueled UAS;

the Nano Hummingbird™, the world’s first flapping wing UAS capable of precise hover and omni-directional flight;

and Blackwing™, the first submarine-launched UAS deployed by the U.S.

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.

The Smithsonian Institution possesses eight vehicles developed by our company or our founder in its permanent collection.

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.

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patent applications;

17 active Patent Cooperation Treaty applications;

an active Patent Cooperation Treaty application;

and numerous foreign patents and pending applications.

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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.

In some cases, we

fund the development of certain intellectual property to maximize its value and limit its use by potential competitors.

In some cases, we 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.

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Sales and Marketing

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.

Our marketing strategy is based on establishing leadership positions in new markets that we create or by expanding through the introduction or acquisition of innovation solutions that improve customer operational effectiveness and efficiency.

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.

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We have many U.S.

registered trademarks including those for AeroVironment, AV, Switchblade, Raven, Wasp, Quantix, VAPOR, Arcturus UAV, Crysalis and Jump and have several pending applications for trademark registration.

registered trademarks including those for AeroVironment, AV, Switchblade, Raven, Wasp, Quantix, VAPOR, Arcturus UAV, Crysalis, Jump, Tomahawk Robotics, and Kinesis, and have several pending applications for trademark registration.

International Sales

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Special Operations Command, for projects that we believe have the potential for future procurement.

In some cases, commercial enterprises may fund our research and development activities, as with our HAPS UAS development program.

In some cases, commercial enterprises may fund our R&D activities, as with our HAPS UAS development program.

Providing these services contributes to the development and enhancement of our technical competencies.

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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.

We believe all such raw materials and components are available to meet our needs from various suppliers;

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).

Although, we believe all such raw materials and components are available to meet our needs from various suppliers, we expect some supply chain constraint trends to continue into our fiscal year 2025, 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.

Prior period segment information has been recast to align with the new segment structure:

Fiscal Year Ended

The table below shows our revenue for the periods indicated by contract type, including both government and commercial sales:

The table below shows our revenue for the periods indicated by contract type:

Fiscal Year Ended

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Human Capital Resources

We acknowledge that our employees are the company’s most valuable asset and the driving force behind our success.

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.

We believe that this kind of corporate culture results in employees who are happier, more creative, and more productive, supporting our ongoing innovation.

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”.

We recognize our employees as the most invaluable asset of our company, serving as the cornerstone of our accomplishments.

With this in mind, we endeavor to establish ourselves as an employer renowned for fostering a positive and inclusive work environment that encourages personal development, ensures workplace safety, promotes diversity, and embraces inclusion.

We firmly believe that such a corporate culture not only enhances employee satisfaction but also nurtures creativity and productivity, thereby driving our continuous innovation efforts.

Central to our ethos is prioritizing the employee experience, a commitment underscored by our esteemed certification from the Great Place to Work Institute, Inc., designating us as a “Great Place to Work” each year since 2019.

Workforce Demographics

As of April 30, 2023, we had 1,259 full time employees and 20 part time employees, of whom 408 were in research and development and engineering, 68 were in sales and marketing, 548 were in operations and 255 were general and administrative personnel.

As of April 30, 2024, we had 1,403 full time employees and 25 part time employees, of whom 534 were in R&D and engineering, 74 were in sales and marketing, 490 were in operations and 330 were general and administrative personnel.

Talent Acquisition, Retention and Development

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.

An integral part of our people strategy is early career hiring through college and intern pipelines, particularly in technical fields.

We regularly conduct confidential surveys to seek feedback from our employees and use those results to improve our workplace.

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.

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.

Our ability to attract, cultivate, and retain highly skilled individuals, particularly those with technical and engineering expertise, is paramount for the successful execution of our strategic objectives and the expansion of our enterprise.

We maintain a vigilant oversight of recruitment, employee retention, and management practices.

A pivotal component of our People and Culture strategy involves the recruitment of early-career professionals through collegiate programs and internships, with a specific focus on technical disciplines.

Furthermore, we engage in regular confidential surveys to gather insights from our workforce, utilizing the feedback to enhance our organizational environment.

Our commitment to our employees is demonstrated through competitive compensation packages, inclusive of performance incentives and recognition schemes that encompass all levels within our company.

We prioritize the development of our workforce through educational initiatives, training programs, and support for further education and professional certifications.

Moreover, we conduct meticulous succession planning for leadership roles to ensure the sustained cultivation of a talented management cadre essential for the realization of our strategic vision.

Diversity and Inclusion

At AeroVironment, creating a culture of diversity and inclusion is something we work on every day.

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.

At AeroVironment, the cultivation of a culture rooted in diversity and inclusion is a daily commitment.

We firmly uphold the belief that a workforce rich in diversity and inclusivity serves as a pivotal force in fostering innovation.

Our diversity and inclusion endeavors are primarily concentrated on multiple facets, encompassing employee recruitment strategies that involve supporting minority-serving institutions and conducting outreach programs.

Moreover, we prioritize employee training and development initiatives aimed at broadening the spectrum of diverse talents.

Additionally, our dedication to employee engagement is evident through active participation in various employee focus groups addressing pertinent topics related to diversity and inclusion.

Employee Safety and Health

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.

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.

Our safety and health program aims to enhance operational efficiency by offering tailored safety, health, and wellness initiatives.

These endeavors are crafted to establish secure working conditions, foster a positive work atmosphere, enhance employee resilience, and bolster the company's overall value.

We diligently track employee health and safety metrics, setting monthly and annual goals to minimize work-related injuries and illnesses, thereby reducing the number of lost workdays and mitigating productivity setbacks resulting from such incidents.

Furthermore, we extend health and wellness benefits to our employees for their well-being.

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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Management believes that unfunded backlog does not provide a reliable measure of future estimated revenue under our contracts.

Unfunded backlog does not include the remaining potential value associated with a U.S.

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.

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It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report.

We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements for our annual stockholders’ meetings, as well as any amendments to those reports, available free of charge through our website as soon as reasonably practical after we electronically file that material with, or furnish it to, the Securities and Exchange Commission (“SEC”).

charge through our website as soon as reasonably practical after we electronically file that material with, or furnish it to, the Securities and Exchange Commission (“SEC”).

You can learn more about us by reviewing our SEC filings.

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The SEC also maintains a web site at www.sec.gov that contains our reports, proxy statements and other information regarding us.

Our business addresses the increasing value of intelligent, multi-domain robotic systems providing distributed, network-centric intelligence, surveillance and reconnaissance (“ISR”), communications, remote sensing, effects delivery and remote materials handling with innovative UAS, TMS and UGV solutions.

With respect to the defense applications for these technologies, nearly 20 years of counterinsurgency operations in regions where U.S.

and allied forces benefit from air and technical superiority have driven the demand for a variety of unmanned systems in the air and on the ground.

With respect to the defense applications for these technologies, over 20 years of counterinsurgency operations in regions where U.S.

and allied forces benefit from air and technical superiority have driven the demand for a variety of uncrewed systems in the air and on the ground.

The recent shift of U.S.

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Industry Background

SUAS and MUAS

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.

UnCrewed Systems

The defense market for UxS 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.

SUAS and MUAS now represent accepted and enduring capabilities for military forces around the world.

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.

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.

We believe that UxS, 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.

These systems provide critical observation and communications capabilities serving the increasing demand for actionable intelligence, while reducing risk to individual warfighters.

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.

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

The development of weapons capable of rapid deployment and precision strike that also minimize the risk to surrounding civilians, property and operators has accelerated due to advances in enabling technologies.

These capabilities are increasingly enabled by next generation open standard communications and common control technologies.

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.

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.

Loitering Munitions Systems

The development of weapons capable of rapid deployment and precision strikes that also minimize the risk to surrounding civilians, property and operators has accelerated due to advances in the enabling technologies.

Weapons such as laser-guided missiles, “smart” bombs and GPS-guided artillery shells have dramatically improved the accuracy of strikes against hostile targets.

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We believe that embedding a precision lethal payload into a remotely controlled, portable delivery system provides warfighters with a valuable and more cost-effective alternative to existing munition and missile systems.

Unmanned Ground Vehicles

these hazards without putting people in harm’s way.

MacCready Works:

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.

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.

Existing solutions such as terrestrial cellular towers and communications satellites address some of the current and emerging demand for this capability but each have trade-offs.

Terrestrial based infrastructure is ideal for dense population centers but expensive and underutilized for large area applications.

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Our Solutions

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.

We supply our uncrewed products and services to multiple customers, primarily with defense related applications both domestically and internationally, as well as supply our loitering munitions and related services to defense related organizations within the U.S.

government and allied nations.

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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.

Furthermore, their small size makes them difficult to see from the ground in daytime environments using no optical enhancing tools.

Furthermore, their small size makes them difficult to see from the ground in daytime environments without optical enhancing tools.

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.

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.

information facilitates faster, safer movement through urban, rural, riverine and mountainous environments.

This information facilitates faster, safer movement through urban, rural, riverine and mountainous environments.

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.

Certain systems within our SUAS portfolio utilize our common and interoperable handheld Crysalis ground control system and an array of spare parts and accessories.

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.

Systems within our SUAS portfolio utilize our common and interoperable handheld ground control systems and an array of spare parts and accessories.

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.

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.

We have begun integrating our SUAS with the Kinesis common control application, acquired with our acquisition of Tomahawk Robotics, and expect to complete integration in fiscal year 2025.

Kinesis provides enhanced interoperability between AV and third-party products in a Modular Open System Architecture (MOSA) environment.

Our current SUAS portfolio for defense applications consists of the following aircraft:

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MUAS Products

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.

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.

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.

Providing expanded capabilities compared to our SUAS, our field-deployable MUAS, including T-20 and JUMP 20, deliver extended endurance and increased payload capacity to unlock a broader set of uncrewed missions.

The internal combustion engine powered T-20 and JUMP 20 offers significantly greater endurance and payload capacity than our SUAS, with larger airframes that can also accommodate a wider variety of payloads, including small cargo.

The JUMP 20 launches and lands vertically because 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.

In the past, we operated our MUAS, such as Jump 20, in overseas locations to support U.S.

military operations under ISR services contracts under a contractor-owned, contractor-operated (“COCO”) arrangement.

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.

During the year ended April 30, 2023, all of our MUAS COCO sites have been closed.

military ISR operations under a contractor-owned, contractor-operated (“COCO”) arrangement.

Under these services contracts, we operated our MUAS in specific locations and provided valuable intelligence on an hourly basis to our customers, who then used that information to support their missions.

T-20 and JUMP 20 operate from their own portable common ground control system.

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Multiple EO, IR and other payloads available based on mission requirements

Tactical Missile Systems Products

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.

With a high level of precision, including a customized warhead, patented wave-off, loiter and re-engagement capabilities, Switchblade 300 can neutralize a target rapidly and accurately without causing collateral damage.

Furthermore, because it streams live electro-optical and thermal video to its operator, Switchblade 300 can be called off in the final moments prior to a strike should the situation require, potentially eliminating damage to non-combatants.

Switchblade 600 is a larger version of Switchblade 300 that can fly for a longer period of time and over a longer distance while carrying a larger, more powerful, anti-armor warhead.

Blackwing, a variant of Switchblade 300, launches from a submerged submarine and carries extra batteries instead of a warhead, providing longer flight time for extended maritime reconnaissance operations.

Missile System

Differentiators

Launch and Recovery

Switchblade 300

Patented wave-off and recommit

Direct fire weapon with 10km range

5.5 (includes munition, payload, launcher and transport bag)

Single or multi-pack tube launch, single use loitering munition

Dual front and side look EO cameras and IR nose camera with stabilized electronic pan-tilt-zoom

Switchblade 600

Patented wave-off and recommit;

anti-armor warhead

Direct fire weapon with 40km range

68 (includes launcher, munition)

Single or multi-pack tube launch, single use loitering munition

2-axis, 4-sensor gimbal (Dual EO and IR) integrated sensor suite

Deployed from submerged submarine

Underwater-to-surface delivery canister;

launch tube, single use

EO/IR sensor suite

Not disclosed

Unmanned Ground Vehicle Products

Uncrewed 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.

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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

Select Uncrewed

Ground Vehicle

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4-track running gear with individually adjustable flippers and optional wheels

Loitering Munitions Systems Products

Our LMS 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 LMS 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.

With a high level of precision, including a customized warhead and patented wave-off, loiter and re-engagement capabilities, Switchblade 300 can neutralize a target rapidly and accurately without causing collateral damage.

Switchblade 600 is a larger version of Switchblade 300 that can fly for a longer period of time and over a longer distance while carrying a larger, more powerful, anti-armor warhead.

variant of Switchblade 300, launches from a submerged submarine and carries extra batteries instead of a warhead, providing longer flight time for extended maritime reconnaissance operations.

Munitions System

Differentiators

Launch and Recovery

Switchblade 300

Patented wave-off and recommit

Direct fire weapon with 30km range

5.5 (includes munition, payload, launcher and transport bag)

Single or multi-pack tube launch, single use loitering munition

Day (EO) and night (IR) cameras with stabilized electronic pan-tilt-zoom

Switchblade 600

Patented wave-off and recommit;

anti-armor warhead

Direct fire weapon with 40km range

68 (includes launcher, munition)

Single or multi-pack tube launch, single use loitering munition

2-axis, 4-sensor gimbal (Dual EO and IR) integrated sensor suite

Deployed from submerged submarine

Underwater-to-surface delivery canister;

launch tube, single use

EO/IR sensor suite

Not disclosed

MacCready Works

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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.

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.

While this segment’s revenue is currently largely driven by these customer-funded projects, it is likely that new businesses incubated here could significantly contribute to the growth of the company.

Support Services

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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.

We provide comprehensive training services to support all our SUAS and TMS for defense applications.

We provide comprehensive training services to support all our SUAS and LMS for defense applications.

Our highly-skilled instructors typically have extensive military experience.

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● 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;

● land, maritime and air deployment of munitions and aircraft systems;

● design and qualification for robotics in extreme terrestrial and space environments;

● missile systems warhead integration;

● munitions systems warhead integration;

● low SWaP (Size, Weight and Power) system design and integration;

● collaborative multi-robotic mission operation, manned and unmanned;

● collaborative multi-robotic mission operation, crewed and uncrewed ;

● power electronics and electric propulsion systems;

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● controls and systems integration;

● vertical takeoff and landing flight, fixed-wing flight and hybrid flight unmanned aircraft and rotocraft systems;

● vertical takeoff and landing flight, fixed-wing flight and hybrid flight uncrewed aircraft and rotocraft systems;

● image stabilization and target tracking;

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● human-machine interface development;

● modular dismounted, networked multi-domain robotic control interfaces and analytic processing architecture;

● integrated mission solutions for austere environments .

Two of our UAS and TMS development initiatives are described below:

Tactical Missile System Variants.

We pioneered our first rapidly deployable, high-precision TMS, named Switchblade, for use by defense ground forces.

Switchblade 300 is now deployed by the U.S.

military to provide force protection to its troops overseas in combat operations.

During numerous demonstrations over the course of several years, multiple potential customers requested modifications to Switchblade 300 to accommodate their specific mission requirements.

We performed a number of successful demonstrations and are now developing several variants of Switchblade 300 for new customers and applications, including deployment from sea and air vehicles.

Blackwing, a submarine-launched reconnaissance system, represents one of the variants that has now generated meaningful procurement demand.

Another variant, Switchblade 600, is a larger version that delivers longer endurance, greater range, a larger payload and more significant mission effects.

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.

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”), 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.

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.

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.

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.

One of our UAS development initiatives is described below:

HAPS Uncrewed Aircraft Systems.

We continue to develop HAPS UAS, building on our decades of groundbreaking development and demonstration of high altitude solar-powered UAS.

Softbank, who has been our partner since 2018, is directly funding the development and demonstration of solar-powered HAPS UAS under a Master Design and Development Agreement (“MDDA”) signed in May 2021.

During the term of the MDDA, we possess 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 maintain exclusive rights to market and sell Solar HAPS for defense applications globally except for Japan.

We have separately received increasing interest and some funding to pursue a HAPS UAS development for the U.S.

Both the defense and commercial development efforts are proceeding in parallel.

Sales and Marketing

Our Product Line Management organization translates customer and market requirements into multi-year product roadmaps that guide our development, engineering and manufacturing plans.

We organize our U.S.

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.

Our product line management personnel translate customer and market requirements into multi-year product roadmaps that guide our development, engineering and manufacturing plans.

We organize our business development team members by geographic area, target market and customer and product line, and we locate team members in close proximity to the customers they support when possible.

We organize our program managers by product and focus on designing optimal solutions and improving contract fulfillment, incorporating feedback from customers and users.

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We are regularly audited and certified to be compliant by a third party, accredited registrar.

Accreditation of SAI Global, our third party registrar, is by the ANSI National Accreditation Board.

Accreditation of Systems Certification Board, our third-party registrar, is by the ANSI National Accreditation Board.

These audits performed as part of certification evaluate the effectiveness of companies’ quality management systems and their compliance with ISO standards.

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Some of these contractors have significantly greater financial and other resources than we possess.

Our current principal SUAS competitors include Elbit Systems Ltd., Quantum Systems, Edge Autonomy, Teledyne Technologies, Inc.

and Lockheed Martin Corporation.

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.

defense market for MUAS has been addressed primarily by The Boeing Company’s ScanEagle and Textron, Inc.’s Shadow UAS .

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 .

Our current principal SUAS competitors include Elbit Systems Ltd., Quantum-Systems, Inc., Edge Autonomy, Teledyne Technologies, Inc., Sierra Nevada Corporation and Lockheed Martin Corporation.

defense market for MUAS has been addressed primarily by The Boeing Company and Textron, Inc.

However, our MUAS competitors also include Shield AI, Inc.

and Northrop Grumman Corporation, Sierra Nevada Corporation, Griffon Aerospace, Inc.

and L3Harris Technologies, Inc.

International MUAS competitors include Elbit Systems Ltd.

and Israeli Aircraft Industries.

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.

We do not view large UAS producers such as Northrop Grumman Corporation or General Atomics, Inc.

as direct competitors to our SUAS or 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.

The market for TMS is now rapidly evolving and poised for continued growth.

Competitors in this market include Textron Inc., Raytheon Technologies, Lockheed Martin Corporation, Anduril Industries, Aevex and UVision Air Ltd.

The market for LMS is now rapidly evolving and poised for continued growth.

Competitors in this market include Textron Inc., RTX Corporation, Lockheed Martin Corporation, Anduril Industries, Inc., Aevex Holdings, LLC and UVision Air Ltd.

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.

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DoD has grown with recent U.S.

Army procurement awards and a pending U.S.

Air Force program.

Army procurement awards.

Competitors in the U.S.

UGV market include L3Harris Technologies, Inc., Teledyne Technologies, Inc., QinetiQ North America, Inc., Peraton/Remotec, ICOR Technology and Boston Dynamics.

UGV market include L3Harris Technologies, Inc., Teledyne Technologies, Inc., QinetiQ North America, Inc., Peraton Remotec, ICOR Technology, Inc., Ghost Robotics, Inc., and Boston Dynamics, Inc.

Initial adoption of UGVs for law enforcement and other government agencies is also progressing in the U.S.

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An existing contractor that claims to provide high altitude long endurance UAS is Northrop Grumman Corporation with its Global Hawk.

Several aerospace and defense contractors have pursued this market opportunity with proposed very long duration UAS, including The Boeing Company, Airbus, Lockheed Martin Corporation and Northrop Grumman Corporation.

Several aerospace and defense contractors have pursued this market opportunity with proposed very long duration UAS, including The Boeing Company, Airbus SE, Lockheed Martin Corporation and Northrop Grumman Corporation.

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.

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.

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.

Companies pursuing Low Earth Orbit (“LEO”), micro or cubesat satellite constellations for global communication and remote sensing include Amazon, Planet Labs PBC, OneWeb, Space Exploration Technologies Corporation (known as SpaceX) and The Boeing Company.

Companies owning and operating terrestrial cellular tower networks include American Tower Corporation, Crown Castle International Corp.

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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.

Such potential competitors include Skydio, Inc.

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;

We believe that the principal competitive factors in the markets for our UxS and LMS products and services include product performance;

acquisition cost;

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integration with existing equipment and processes;

customer support, brand and reputation.

customer support;

brand awareness and reputation.

Due to the fact that we contract with the DoD and other agencies of the U.S.

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Remote identification, which provides for a UAS in flight to provide identification that can be received by other parties, is designed to enhance safety and security by allowing the FAA and other agencies to identify a UAS that appears to be flying unsafely or in an area in which flight is not permitted.

The public comment period for the proposed rules expired on March 2, 2020.

On April 21, 2021, the final rule for remote identification of UAS went into effect.

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.

The final rule also makes changes to the recurrent testing framework and expands the list of persons who may request the presentation of a remote pilot certificate.

The final rule for remote identification of UAS was published in the Federal Register on January 15, 2021 with the effective date for compliance of September 16, 2023.

On April 21, 2021, the final rule for operation of SUAS over people went into effect.

This rule permits routine operations of small, uncrewed aircraft over people, moving vehicles, and at night under certain conditions.

The final rule also made changes to the recurrent testing framework and expanded the list of persons who may request the presentation of a remote pilot certificate.

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.

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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.

The comment period for the FAA’s proposed policy expired on March 4, 2020 without further update.

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.

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Government Contracting Process

We sell the significant majority of our SUAS, MUAS and TMS products and services under contracts with the U.S.

We sell the significant majority of our SUAS, MUAS and LMS products and services as well as MacCready Works products and services under contracts with the U.S.

Certain important aspects of our U.S.

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Interested contractors prepare a bid and proposal in response to the agency’s request for proposal or request for information.

A bid and proposal is usually prepared in a short time period in response to a deadline and requires the extensive involvement of numerous technical and administrative personnel.

A bid and proposal are usually prepared in a short time period in response to a deadline and require the extensive involvement of numerous technical and administrative personnel.

Following award, competitive-bid contracts may be challenged by unsuccessful bidders.

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Under this type of contract, a positive or negative incentive can be earned based on achievement against specific performance metrics.

Indefinite Delivery Indefinite Quantity Contract Form

Indefinite Delivery Indefinite Quantity (“IDIQ”) Contract Form.

government frequently uses IDIQ contracts and IDIQ-type contract forms, such as cost reimbursable and fixed price contracts with multiple one-year options, to obtain fixed-price, cost reimbursable and time-and-materials contractual commitments to provide products or services over a period of time pursuant to established general terms and conditions.

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government to purchase substantial amounts of products and services from one or more contractors.

Undefinitized Contractual Actions (“UCA”).

UCAs are generally considered “Letter Contracts”, Basic Ordering Agreements, and Provisional Item Orders, all of which allow for the contractor to immediately begin performing services and/or manufacturing products.

Under a UCA, the contract terms, specifications, or prices have not been agreed to between the government and contractor prior to performance on the contract.

During the undefinitized period the government will reimburse the contractor for costs incurred.

Definitization of the UCA typically occurs 180 days after the issuance of the award or when costs incurred is equal to more than 50% of the not-to-exceed price, whichever occurs first.

In accordance with Defense Federal Acquisition Regulation Supplement 215.404-71, the Contracting Officer will use “weighted guidelines” for determination of profit/fee.

Unpriced Change Order (“UCO”).

UCOs are categorized as unpriced contract actions that are unilateral changes within the scope of a contract where the government and contractor have not reached an agreement on terms, specifications, and prices.

This type of change order allows the project to continue without delay while the contractor and government negotiate final terms, specifications, and prices.

Interim funding or a not-to-exceed amount are established to cover the contractor’s costs incurred.

The existing contract is formally modified to include an agreed-upon price and other adjustments related to the change order.

Other Transaction Authority (“OTA”).

OTAs are legally binding instruments that are used to engage with non-traditional defense contractors and to facilitate the rapid development and deployment of innovative technologies.

Unlike traditional government contracts, OTAs are not subject to the Federal Acquisition Regulation (FAR), providing greater flexibility in terms and conditions.

International Contracting Process

We supply our UAS, TMS, and UGV products and services to international allied governments.

We supply our UxS, LMS and MW products and services to international allied governments.

Certain important aspects of our international contracts are described below.

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Following award, competitive bid contracts may be challenged by unsuccessful bidders.

evaluations than non-domestic suppliers due to stated requirements in the local regulations that promote domestic procurements.

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.

Sole source awards are direct engagements with the procuring agency.

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International customers have individualized funding processes that are generally allocated during the applicable country’s fiscal year.

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.

Funding may be broadly allocated to a governmental agency or military branch responsible for procurement, targeted for a specific purpose like uncrewed systems, or earmarked to a specific requirement for our products.

Funding allocations are typically confidential, making it challenging for us to forecast demand for our products or when/whether funding is available.

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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.

These allocations are contracted through existing multi-year support agreements which provide the customer flexibility to procure products and services when funding is available.

These allocations are contracted through existing multi-

year support agreements which provide the customer flexibility to procure products and services when funding is available.

Contract Types and Provisions

Our typical international customer contracts taken the form of fixed price contracts and time and materials contracts.

Our typical international customer contracts take the form of fixed price contracts and time and materials contracts.

Most of our international contracts are fixed-price contracts as their finite nature is desired by customers.

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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.

What changed 10-K

Item 1. Business