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AERDRON S.L. Document: D1.1 Proposal: 717915

H2020-SMEINST-1-2015

DRS-17-2015-1

SME-1

Proposal: 717915 Proposal Acronym: EXTREMDRON

Presented by:

Project Feasibility Study

Document: D1.1

JULY 2016


Document Information Program: H2020

Call: H2020-SMEINST-1-2015

Topic: DRS-17-2015-1: Critical infrastructure protection topic 7,

Protection of Urban soft targets and critical infrastructures

Type of action: SME-1

Grant agreement number: 717915

Proposal acronym: EXTREMDRON

Project start/end dates: 01April2016 – 31July2016 (amended to 4 months)

Feasibility study status: Completed

Project website: http://aerdron.com/extremdron-h2020-717915/

Deliverable document number: D1.1

Work package deliverables: 1-6

Dissemination level: Confidential, (including the Commission Services)

Company: AERDRON S.L.

Authors: Marcos Fabian Alazraki (LEAR), CEO

Natalia Mejlszenkier Calvo, Operations Manager

Eduardo Castro, CFO

http://aerdron.com/extremdron-h2020-717915/


Table of Contents

1.0 PROJECT SUMMARY ...................................................................................................... 1 1.1 EXTREMDRON Development History .................................................................... 1 1.2 Problem/Issue being addressed ............................................................................. 2 1.3 Project Objectives .................................................................................................. 2

1.3.1 Operational Objectives ........................................................................... 2 1.3.2 Technological Objectives ........................................................................ 9

2.0 (TASK 1) STUDY PHYSICAL SCALE .............................................................................. 9 2.1 Extreme Security & Protection Missions ............................................................... 11

2.1.1 Product & Mission Research................................................................. 11 2.1.2 Potential Markets & Opportunities ........................................................ 11 2.1.3 EXTREMDRON Specifications ............................................................. 12

3.0 (TASK 2) DEVELOPMENT OF MATERIAL REQUIREMENTS, AND TECHNOLOGIES 12

4.0 (TASK 3) CARRY OUT STUDY OF LEGAL VIABILITY, INCLUDING IP ISSUES .......... 13 4.1 UAV Regulations .................................................................................................. 13

4.1.1 UAV Regulations, Spain ....................................................................... 13 4.1.2 UAV Regulations, Globally ................................................................... 13

4.2 Intellectual Property Protection Plans ................................................................... 14

5.0 (TASK 4) MARKET RESEARCH .................................................................................... 15 5.1 SWOT Analysis .................................................................................................... 16

6.0 (TASK 5) DETERMINE PRODUCTION FORECAST AND ESTIMATE MANUFACTURING INVESTMENT ................................................................................. 17

7.0 (TASK 6) BUSINESS PLAN............................................................................................ 18 7.1 Business Models .................................................................................................. 18 7.2 Financial Plan & Forecasts ................................................................................... 19

8.0 LESSONS LEARNED ..................................................................................................... 21 8.1 Material research ................................................................................................. 21 8.2 Aircraft Configuration and Physical Scale ............................................................. 21 8.3 Payloads - Laser Bomb Detector .......................................................................... 22 8.4 UAV Regulations .................................................................................................. 22 8.5 Patent Search ...................................................................................................... 22 8.6 Market analysis .................................................................................................... 22

9.0 CONCLUSION ................................................................................................................ 22


Figures FIGURE 1 AERDRON ED1 EXTREMDRON ........................................................................................................................... 1 FIGURE 2 RADIATION MONITORING MISSION .......................................................................................................................................... 4 FIGURE 3 NUCLEAR & RADIOACTIVE THREATS ........................................................................................................................................ 4 FIGURE 4 FIRES, HAZARDOUS SUBSTANCES MONITORING ......................................................................................................................... 5 FIGURE 5 ELECTROMAGNETIC FIELD OPERATIONS ................................................................................................................................... 6 FIGURE 6 EXPLOSIVE INDUSTRIAL ACCIDENTS, TERRORISM ........................................................................................................................ 7 FIGURE 7 BOMB DETECTION MISSION .................................................................................................................................................. 8 FIGURE 8 PUGH CHART, DETERMINING A FINAL DESIGN CONFIGURATION ................................................................................................... 10 FIGURE 9 ED2 PROJECT VERIFICATION & VALIDATION ........................................................................................................... 10 FIGURE 10 MARKET RESEARCH, AUVSI UAV TRADESHOW .................................................................................................................... 11 FIGURE 11 MATERIAL REQUIREMENTS & DEVELOPMENT ....................................................................................................................... 13 FIGURE 12 GLOBAL UAV RULES ........................................................................................................................................................ 14 FIGURE 13 COMPETITORS RADIATION DETECTING UAV .......................................................................................................................... 15 FIGURE 14 SWOT ANALYSIS ............................................................................................................................................................ 16 FIGURE 15 MARKET COMPETITOR ANALYSIS ........................................................................................................................................ 17 FIGURE 16 SALES AND MANUFACTURING ............................................................................................................................................. 18

1 AERDRON S.L. Document: D1.1 Proposal: 717915

1.0 PROJECT SUMMARY

1.1 EXTREMDRON Development History

AERDRON is an aerospace engineering company that develops niche UAV (Unmanned Aircraft Vehicle) products and technologies. During the last 2 years, the company has been developing innovative UAV platforms, composite structures, software applications, payloads, and new material technologies.

AERDRON has been actively developing a professional aerial monitoring solution called the EXTREMDRON which operates in extreme environmental conditions like very high temperatures (fires), nuclear radiation, industrial chemical fires/spills, and strong electromagnetic fields. These types of extreme conditions would keep other UAVs grounded during critical security (terrorism) and emergency situations.

Our first model, the ED1 EXTREMDRON was an important step in AERDRON strategic roadmap for developing high tech and industrialized UAVs for professional monitoring applications. The ED1 is equipped with a proprietary developed ROS (Robot Operating System) that configures sensors and cameras (Plug & Play), and encrypts communications thru an onboard microcomputer. Our software system has been compared by our users as the Windows® operating system for UAVs; it gives users the ability to plug a device into the platform and have the computer recognize that the device is there and configure it. The ED1 model was fully designed, engineered, and manufactured in house per our company’s commitment to home grown innovation.

The ED1 EXTREMDRON reached a TRL6 (Technical Readiness Level 6: technology demonstrated in relevant environment) in its development, and flight testing campaign. It was apparent the ED1 would need to be upgraded if were to operate in extreme environments (fires, nuclear radiation, electromagnetic fields).

During the Phase I feasibility study, AERDRON investigated the technology upgrades (materials, aerodynamics, structures, support systems) that are required to operate in more extreme environments.

Figure 1 AERDRON ED1 EXTREMDRON


1.2 Problem/Issue being addressed

The commercial UAVs available on the market today, do not have the capability nor the technologies developed to operate in extreme environments. The limitations of these commercially available UAV products are the following:

• The materials used are not suited for high temperature operating environments. These UAVs have structural temperature limitations (<70C) that are not suited for operations in close proximity to fires.

• The aircraft structures are not designed with an electromagnetic or radiation shielding barrier to protect the onboard electronic systems.

• The aircrafts flight regime is not designed to fly in high temperature and low density air masses. Multirotor (helicopter type) and other high power to weight ratio aircraft platforms cannot operate in these conditions due the lower power that is generated in these extreme environments.

• The aircrafts are not designed to incorporate an onboard cooling system so that the electronics and payloads do not exceed the operating temperature limits.

The UAV products available have been designed for either the hobby market, or professional applications that do not require flight operations in extreme conditions. The EXTREMDRON project will address these technology voids, and will adapt our current EXTREMDRON so that it can be validated during the Phase II engineering activities.

The EXTREMDRON provides an aerial monitoring platform for security agencies to analyze data, identify threats, and measure dangerous airborne substances in areas which may be rendered hazardous or inhabitable. The EXTREMDRON provides a means to identify and quantify these dynamic threats by rapidly deploying an UAV aircraft to areas under distress.

1.3 Project Objectives

1.3.1 Operational Objectives

The ED2 (2nd model variant) EXTREMDRON main project objective during Phase II is to modify the ED1 EXTREMDRON so that can operate in extreme conditions to provide critical real time data to save lives, and protect soft/critical infrastructures. The secondary objectives are to develop new materials, aircraft structures, and the support systems that are needed to operate in these extreme environments.

1.3.1.1 Nuclear & Radiation Threats

The vulnerability of nuclear plants to terrorist attacks are of great concern to authorities. Critical targets such as nuclear power facilities, civilian research reactors, industrial processing plants, military fuel facilities, uranium enrichment plants, and even uranium mines are vulnerable to attacks which could lead to widespread radioactive contamination.

During the Phase I feasibility study, AERDRON hired an aerospace composite consulting company (Sonic Composites) to advise on existing material options, new designs, and manufacturing techniques to fabricate high temperature radiation shielding (hybrid) panels for the ED2 EXTREMDRON. Sonic Composites confirmed the EXTREMDRON project would need to develop new material solutions to achieve the operational objectives since none of the commercial products available would protect the


structure and electronics against radiation damages. Radiation exposure can weaken the structures and cause electronic failures that would cause the loss of an aircraft. Radiation shielding is based on the principle of attenuation. Attenuation is a method of dissipating, or reducing radiation waves harmful effects by blocking or bouncing particles through a barrier material. X-ray and gamma radiation are attenuated through scattering, photoemission, or pair production. Neutrons can be made less harmful through a combination of elastic and inelastic scattering. The majority of neutron barriers are designed with materials that create a scattering effect. High density materials are more effective than low-density materials for blocking or reducing the intensity of radiation. However, low-density materials can be compensated by increasing panel thickness to get the same attenuation effectiveness. During the Phase I, we realized we would need to perform a tradeoff study and engineering tests during Phase II to determine optimal barrier efficiency/weight ratio since weight is an important factor for aircrafts. In Phase I, AERDRON also investigated the feasibility of using lead powders that are infused with high temperature resins and paints to create a radiation barrier that is fused with the composite structure. AERDRON believes this design solution has a high probability of success. Lead is commonly used for lessening the effect of gamma rays and x-rays due to its high atomic number. For example, lead vests are commonly used to protect patients during medical examinations when utilizing an x-ray machines for this reason. Sonic Composites also stated that thin metal foils can be molded into strategic areas of the composite structure to protect the onboard electronics and payload. The last major nuclear meltdown incident at Fukishima showed how vulnerable our nuclear energy plants are to natural and manmade (accidents, terrorism) disasters. Inspecting nuclear power plants and adjacent areas after an accident is vital to protect populations, water supplies, agricultural areas and infrastructures. The ED2 EXTREMDRON will be a useful detection and data collection tool for energy companies and government agencies worldwide. The ED2 EXTREMDRON would also be a highly valuable tool for collecting data for the European Community Urgent Radiological Information Exchange (ECURIE). The ED2 will be equipped with radiation detectors to detect X-ray and gamma particles to map the radiation and contamination levels in a defined area. The data from the ED2 would help emergency response teams predict exposure levels and to calculate the spread of radioactivity more accurately per environmental factors like: wind, rain, cloud seeding, seasonal effects, etc. The ED2 will have the flight endurance to be safely deployed at a minimum of 50 km away from any hazardous area.


Figure 2 Radiation monitoring mission

For anti-terrorism missions, the ED2 EXTREMDRON can be equipped with highly sensitive radiation sensors to scan potential targets or urban areas or critical infrastructures. Under a high terror alert situation, the ED2 could perform flights over roadways, ports of entry, transit systems (rail, train stations, waterways, pedestrian lanes) to identify an incoming threat with an onboard radiation sensor. The radiation sensors can be integrated into the ED2 utilizing the existing Plug & Play software system on the ED1. The high flight endurance of the ED2 will permit surveillance during the duration of public events, or several aircraft can be used simultaneously so that nonstop surveillance can be realized.

Figure 3 Nuclear & Radioactive Threats


AERDRON is currently in discussions with a Spanish company (TECNATOM) that is a world leader in providing structural integrity services, inspection, and training of operating personnel of nuclear power stations. The feedback received thus far has been positive, and they expressed interest in beta testing the EXTREMDRON project. TECNATOM would be a strategic partner for AERDRON during Phase II since they could help with field testing, have a large customer base in the nuclear industry, and could help commercialize the ED2 EXTREMDRON through their sales network.

1.3.1.2 Fires, Protection and Monitoring Hazardous Substances During Phase I, we learned the ED2 EXTREMDRON needs to operate at very high temperatures >140C to fly in the proximity of large forest or industrial fires. The ED2 structure will utilize high temperature proprietary formulated hybrid composite materials to maintain structural integrity and reflect radiation. Currently, there are no UAVs designed specifically to operate in extreme high temperature environments. AERDRON needs to modify our existing ED1 aircraft platform during Phase II to include new materials, and heat dissipation systems. AERDRON hired Sonic Composites for the Phase I feasibility study to advise and research the use of high temperature materials like Phenolic resins, Polyphenylene Sulfide (PPS), Bismaleimide (BMI), quartz fiber fabrics, and other high tech materials to fabricate the ED2 EXTREMDRON. The conclusion was there are several material options and known processes that could be used with some modifications to withstand the high temperature environments, but a detailed design and testing study would be required during Phase II so that requirements are met for each of the extreme mission environments. In a high temperature environment, maintaining the required flight performance will be a challenge in terms of the aerodynamic design and the power required. This is due to the lower air density that is produced by the high temperatures. For example, some commercial passenger planes are not able to takeoff at airports (ex: Phoenix, Dubai) when the outside high temperatures create a reduction in thrust performance. During the Phase I study, it was decided that a multirotor design (helicopter) would not be suitable choice due to the direct power requirements. The Phase II design efforts will focus on a fixed wing design (airplane). AERDRON believes these extreme environmental challenges can be mitigated by properly defining the design requirements, and bounding the operating limitations of the ED2.

Figure 4 Fires, Hazardous Substances Monitoring

AERDRON has received a letter of interest for the EXTREMDRON project from Spain’s largest and most creditable fire protection company COMERCIAL DE PROTECCIÓN CONTRA INCENDIOS, S.A. (C.P.I).


C.PI. has previously investigated the use of UAVs for fire monitoring missions, but they deemed this option not to be feasible due the operating limitations of the products on the market. C.P.I. stated “the products we reviewed were at a hobby level quality, and were not designed specifically for firefighting applications.” C.P.I. has committed to evaluate the EXTREMDRON, and most importantly provide safety support during the fire testing activities. C.P.I. also expressed interest in commercializing the EXTREMDRON to its clients. C.P.I. has 25 years of relationships with petrochemical companies (Repsol), and large industrial manufacturing clients. AERDRON believe C.P.I. can be a strategic partner to validate, certify, and market the EXTREMDRON. The letter of interest is included in the Appendix section.

1.3.1.3 Electromagnetic Field/Radio (EMF/EMR) Operations An ED2 EXTREMDRON model variant (ED2-EM) will be prototyped during Phase II activities so that it can operate in a high electromagnetic field/radio (EMF/EMR) environments to address additional market applications. For this application, the use of high temperature materials and radiation shielding is not a design requirement. EMF/EMR transmissions create interference issues with GPS receivers, autopilot systems, and wireless data modems. These interference issues have been responsible for the loss and crashes of many UAVs attempting to fly in these type of environments. The EXTREMDRON design objective is to shield the onboard electronics for security monitoring missions near power stations, communication stations, dams, power distribution centers, and power lines. These infrastructures are critical to provide power and communications to municipalities. The ED2 can also be deployed for infrastructure inspections, surveillance monitoring, and security missions. The ED2 would enhance the security, protection, and monitoring capabilities for clients like power utility companies, government and law enforcement agencies, and maintenance service companies.

Figure 5 Electromagnetic Field Operations

The ED2 EXTREMDRON will be modified to incorporate EMF shielding into the structure by including barriers made of conductive or magnetic materials. The EMF shield protects the onboard electronics by isolating them from the outside world. A conductive enclosure which blocks electrostatic fields is also known as a Faraday cage. The EMF/EMR shielding reduces with the coupling of radio waves, electromagnetic and static fields. The shielding effectiveness depends on the materials used, thickness, volume, field orientation, and the design of apertures. During Phase I, AERDRON and Sonic Composites researched the use of several electromagnetic shielding materials like: metal foils, expanded copper mesh, and metal foam. Copper is typically used for radio frequency (RF) shielding because it absorbs radio and magnetic waves. Any holes in the shield or mesh must be significantly smaller than the wavelength of the radiation that is being kept out. The


EXTREMDRON project will also further investigate during Phase II coatings like metallic inks or similar conductive paints for electromagnetic field/radio (EMF/EMR) protection.

1.3.1.4 Industrial Chemical Accidents, Terrorism

Europe and the world face increasing security threats against its civilians and critical/soft infrastructure targets, and new technologies must be developed in the coming years to create a counterforce multiplier. A counterforce multiplier can be defined as a technology or device that increases the law enforcement agencies ability to monitor, or perform a specific task which would require several additional personnel. Security and police force teams are stretched to their maximum manpower capacities; the ED2 EXTREMDRON would provide additional security capabilities for extreme situations and environments in which manned surveillance can pose risk or death.

The ED2 EXTREMDRON will be equipped with a wide array of sensors to monitor air quality levels and to detect hazardous compounds. Identifying the presence of these dangerous materials and categorizing the HAZMAT levels over large urban areas in a timely manner is critical to protect civilian populations. The ED2 would support emergency response and law enforcement teams to determine the HAZMAT classification of an accident or attack. While this task would normally take ground crews hours to assess the situation, the ED2 would be able to perform this task over many square kilometers in minutes. These capabilities will provide the ED2 with a distinct advantage over other UAV products on the market.

Figure 6 Explosive Industrial Accidents, Terrorism

1.3.1.5 Bomb Detection Missions

An ED2 EXTREMDRON model variant (ED2-EXP) can be deployed for bomb detection missions to pinpoint the location of explosives in urban and critical infrastructure locations. The ED2 will be equipped


with a compact explosive detecting device that can detect explosive compounds from hundreds of meters away.

During the Phase I feasibility study, AERDRON learned that university researchers have already developed an advanced bomb detection technique that uses lasers no more powerful than your typical presentation pointer to detect and identify bombs like IEDs (improvised explosive device) up to hundreds of meters away. Researchers at Michigan State University have been developing this technology so that it could be applied for hand held field applications. The detection method uses a single-beam coherent anti-Stokes Raman scattering technique. The laser beam combines short and long pulses of light to identify individual molecules with a high degree of precision from safe distances. The lasers vibrate molecules and explosive compounds creating a unique vibrational frequency fingerprint. Explosive compounds can be identified by comparing the frequencies of known substances. During the Phase II design activities, the EXTREMDRON project aims to investigate and adapt these new and disruptive technologies, and create collaborations with universities and private companies to develop a prototype for aerial use. AERDRON believes the EXTREMDRON UAV would be a perfect aerial platform for researchers to test and validate the detection capabilities in a real world application.

Figure 7 Bomb Detection Mission


1.3.2 Technological Objectives

The EXTREMDRON project is not solely focused on upgrading our existing ED1 EXTREMDRON UAV aircraft platform, but rather aims to introduce new material and technologies. AERDRON recognized during the Phase I feasibility study that in order to achieve additional operational mission objectives described previously, the technological challenges need to be solved during the Phase II activities. AERDRON will focus on adapting newly developed composite hybrid materials during Phase II to protect against extreme temperatures, radiation, and electromagnetic fields. During Phase II, AERDRON will apply its aerospace knowledge and consult with top industry consultants in the aerospace sector to upgrade our EXTREMDRON series of UAVs.

AERDRON plans to develop the following technologies which can be IP protected: Composite hybrid panels formulated to withstand very high temperatures, nuclear radiation, and

strong electromagnetic field radiation EMF/EMR. Miniaturizing a prototype laser sensor bomb detection system for an aerial platform. UAV passive cooling system for motors, electronics, and energy storage devices. A Cloud based software architecture for command, navigation, and data applications.

2.0 (TASK 1) STUDY PHYSICAL SCALE The physical scale of ED2 EXTREMDRON will be studied during the Phase II engineering activities to determine the optimum platform size, configuration, material requirements, payload equipment, and support systems needed for the various security monitoring mission profiles. AERDRON learned during the Phase I feasibility study that our current ED1 EXTREMDRON physical scale is not aligned with the additional extreme security monitoring missions we have envisioned, nor with the performance requirements for the protection of soft and critical infrastructure targets. AERDRON will utilize the lessons learnt during the Phase I feasibility study to: employ new materials per our consultant’s recommendations, modify the aircraft configuration to operate at very high temperatures, and include new manufacturing techniques to develop a next generation ED2 EXTREMDRON prototype. The preliminary sizing calculations will be based on: Performance: mission operating profiles of each extreme environment (flight time, altitude, payload) Design: extreme operating requirements (fire, nuclear radiation, electromagnetic field radiation) Customer: tailoring the aircrafts characteristics per VOC (Voice of Customer) requirements

(performance, transportation, user interface) Competitive Advantage: designing beyond the metrics of competing products on the market. Local/Global UAV Regulations: aircraft gross weight, size, and required onboard equipment. This feasibility study will describe the methodology that will be used to determine the physical scale of the platform. Determining the final product scale of the ED2 is outside the work scope of the Phase I feasibility study activities and will require a full engineering project effort. The preliminary performance requirements and platform architecture will be engineered during the engineering phases after the Phase II project funding is awarded. To define these parameters, AERDRON will adhere to classic engineering design methodologies and will utilize 6 SIGMA analysis tools to: Derive specifications Rank aircraft platform configurations Down select configurations Identify and score design risks prior to starting any detail design activities. AERDRON has successfully used 6 SIGMA design tools on prior engineering projects to successfully down select a set of design concepts and identify the optimal final configuration. Figure 8 shows an


example of a Pugh chart which AERDRON created to down select and rank the various aircraft configurations on a previous project. The final design concept was identified using this methodology.

Figure 8 Pugh Chart, determining a final design configuration

An overview of the design process roadmap is shown in the Verification and Validation figure below. The scope of the Phase I feasibility study is to focus on the methodologies that will be used for the Phase II product definition phases. Describing the entire design process will exceed the content limitations and scope of the Phase I feasibility study.

Figure 9 ED2 Project Verification & Validation


2.1 Extreme Security & Protection Missions

2.1.1 Product & Mission Research ED2 EXTREMDRON will be designed for a set of primary mission requirements based on security monitoring, sensing, and protection of soft/critical infrastructures. After performing extensive market research during the feasibility study, AERDRON has identified several niche commercial applications for the ED2 EXTREMDRON in which no other competitor’s UAV platform would match the ED2 capabilities. In May 2016, AERDRON was recognized by CDTI & ICEX (Center of Technology Development & Spanish Commerce Dept.) as an innovative aerospace startup, and was invited as part of the Spanish delegation to attend the largest annual UAV industry show, AUVSI Exponential (New Orleans, USA). The goal of the Spanish commerce mission was to expand our global business footprint and view the latest technology trends. AERDRON interviewed many UAV companies and collected information on the aircrafts currently on the market, but none were specifically designed for the extreme mission profiles the ED2 will operate in. Also, none of the companies have identified the market niches. Given this product void in the market place, AERDRON believes it has a significant commercial advantage to be first to market with a real solution and create IP protection barriers to ensure our sales forecasts.

Figure 10 Market research, AUVSI UAV Tradeshow

AERDRON is currently in discussions with potential clients and end users in the commercial and government sectors. The feedback thus far, have been very positive. C.P.I (Comercial de Protección Contra Incendios) has expressed interest in beta testing the EXTREMDRON project and stated that an UAV which could operate in extreme fire environments would be an important tool in improving the fire fighters capabilities, ground crew security, protection of residential housing, forests, and critical infrastructures. C.P.I. has provided a signed letter of interest in the project in the Appendix below.

2.1.2 Potential Markets & Opportunities The ED2 EXTREMDRON is targeting the following markets:

Nuclear: Monitoring of radiation leaks during inspections, industrial accidents, and terrorism acts.

Energy: Electrical power stations, power line inspection, switching stations, and dams.

Fire: Air quality monitoring, firefighting, container ship fires, and ground coordination.

Marine: Monitoring air quality/hazardous exhaust levels from ships prior to port of entry.

Terrorism: Aerial surveillance platform for locating explosives with sniffing sensors.

Infrastructure Protection: Dams, bridges, seaports, transportation hubs, communication centers,

water reservoirs, pipelines, and train stations.


2.1.3 EXTREMDRON Specifications

The following list of primary requirements will be used to drive the ED2 platform design: Flight duration: 4-6 hours Maximum operating temperature: 210+ C Operating range: 50 km minimum Payload capacity: 4-6 kg MTOW (Max Takeoff Weight): < 25kg Electromagnetic field exposure: < 100 kV/m Cloud based command, navigation, and data management applications Multi-role mission capabilities, plug & play payload systems

The EXTREMDRON will need to be modified and upgraded during Phase II to address the extreme missions previously described, and adapted to customer requirements. Our current ED1 EXTREMDRON will need to be modified from a multirotor (helicopter type) design to a fixed wing aircraft. During the Phase I feasibility study, we learned that a multirotor design will not have the required flight duration, payload capacity, stability, nor the performance required at high ambient temperatures to provide sufficient thrust to sustain flight. A fixed wing aircraft with a high lift to drag ratio could sustain flight with a fraction of the power required when compared to a multirotor. The multirotor must have a thrust/weight ratio > 1.0 to sustain flight; this means the power required for a given payload weight will always be greater than a fixed wing aircraft. Power required, payload weight, flight duration, and the energy storage capacity will have direct influence on the efficiency of the platform and sizing requirements. The detail design of the ED2 will be conducted during the Phase II engineering phases.

3.0 (TASK 2) DEVELOPMENT OF MATERIAL REQUIREMENTS, AND TECHNOLOGIES

During Phase II, the EXTREMDRON project aims to develop innovative new materials, radiation barriers, thermal coatings, cooling systems, and hybrid composite panel designs. The material development efforts are manageable and are a vital part ED2 EXTREMDRON project. The ED2 will be exposed to extreme environments that will require materials to perform at levels beyond what is currently used for UAV applications. The ED2 will be the first commercial UAV to utilize advanced aerospace materials specifically designed for extreme heat, nuclear radiation, and electromagnetic shielding applications. AERDRON will perform extensive material engineering, fabrication of test samples, and conduct an extensive testing program during Phase II to validate the material designs. During the Phase I feasibility study, AERDRON contracted Sonic Composites to investigate how to adapt materials like Phenolic resins, Polyphenylene Sulfide (PPS), Bismaleimide (BMI), quartz fiber fabrics, and other high tech materials to create our own proprietary formulated “hybrid” materials that will withstand high heat, radiation, and provide electromagnetic shielding. Our consultant concluded that our material design objectives are possible to achieve with further investigation, and testing. AERDRON plans to perform material testing during Phase II at a local aerospace certified laboratory to adhere to standard testing, and reporting practices. AERDRON CEO has experience with fire certification testing on commercial aircraft and the aerospace certification testing standards (ISO2685, AC20-135). During the Phase I feasibility research, AERDRON performed a freedom to operate study (patent search) and the preliminary analysis showed there was no IP (intellectual property) conflicts. During Phase II, a more advanced patent search will be performed to protect the derived IP material products that produced. AERDRON intellectual property (IP) protection strategy will included filing for patent protection for any derived materials and manufacturing processes yielded from the EXTREMDRON project. AERDRON


believes the materials, inventions, and the processes developed can be applied to other non-UAV applications and could have significant commercial value in terms of licensing opportunities.

Figure 11 Material Requirements & Development

4.0 (TASK 3) CARRY OUT STUDY OF LEGAL VIABILITY, INCLUDING IP ISSUES

4.1 UAV Regulations

4.1.1 UAV Regulations, Spain The primary regulations and rules are listed below for UAV <25 kg: Every civil remotely piloted aircraft must have a fixed identification plate on their structure. May only operate in areas outside buildings, populated areas, inhabited cities, towns, and

uncontrolled airspace. Maximum height above the ground of 120m. For the pilots, these are some of the main requirements established: Minimum 18 years of age. UAVs with less than 2kg VLOS (Visual Line of Sight): Basic UAV Certificate. UAVs with less than 25kg VLOS: Advanced UAV Certificate. Pilots operating aircraft with less than 25kg of weight must hold a LPAL category medical certificate,

according to the MED Section of EU Regulation 1178/2011.

4.1.2 UAV Regulations, Globally

The UAV operating regulations currently vary from country to country and have not been standardized yet by an international aeronautical regulating authority like IACO (International Civil Aviation Organization). UAV operator regulations are currently in the process of being synchronized and should be standardized in the next few years. During the Phase II activities, AERDRON will contract an UAV regulations and legal consultant to help understand the applicable regulations in each of our targeted markets. During Phase I, AERDRON has identified several consulting companies which specialize in this field.

There are still some technological hurdles that need to be addressed for full autonomous operations. The majority of the countries have classified the UAV regulations according to MTOW (maximum takeoff weight). UAVs under 25 kg have less stringent regulations for the aircraft and operator due to their lower


mass inertia (weight) and risk analysis. The illustration below shows an overview of the global UAV regulations.

Figure 12 Global UAV Rules

Currently, the rules differ across Europe. EASA, the European Aviation Safety Agency, was tasked by the European Commission to develop a set of common European safety rules for operating drones regardless of their weight. On December 18th, 2015, the EASA published a formal Technical Opinion which contains 27 proposals or a regulatory framework for both commercial and non-commercial UAVs activities and introduces three categories of operations based on the risk the operation is posing to third parties. The objective is to allow European industry to become a global leader in this emerging technology. The EXTREMDRON will be designed to comply with the normative in USA and Europe.

4.2 Intellectual Property Protection Plans

AERDRON foresees the creation of several new Utility and Design Patents yielded during the Phase II engineering activities of the ED2 EXTREMDRON related to material designs, manufacturing techniques, and aircraft support systems. During Phase II, the EXTREMDRON perform an intensive freedom to operate analysis to protect the inventions which were validated during testing, and fabrications. The protection of our IP (intellectual property) is vital to the commercialization of the EXTREMDRON.

The market potential for the ED2 is expected to be great, and caution needs to be taken against imitators. AERDRON will first focus on protecting the materials and manufacturing processes. The heart of the ED2 innovation will be in developing advanced materials, compact cooling systems, and radiation reflective barrier designs. AERDRON has performed a preliminary patent search for similar claims, but none were identified.


AERDRON CEO/CTO (Marcos Fabian Alazraki) has successfully been granted several aerospace patents throughout his professional career. AERDRON has experience in patent writing, searches, and the declaration of claims. AERDRON will file for patent protection for the EXTREMDRON in Europe, and the USA. In Phase II, AERDRON will also contract a Patent Attorney. USA Patents US 2013/0306796 A1 (2013) US9315276 (2016)

EU Patents EP 2 653 376 A1 (2013) EP 2 746 150 A1 (2014)

5.0 (TASK 4) MARKET RESEARCH

The EXTREMDRON was originally conceived by AERDRON shortly after the Fukishima disaster. The need for an aerial monitoring platform with the capabilities described above is starting to be recognized by our competitors as well. After AERDRON was awarded Phase I funding for the feasibility study, we learned (June 18, 2016) of a US company that is also working on a similar UAV to detect nuclear radiation, but their aircraft is not specifically designed for the high temperatures, radiation, or magnetic field protection for close proximity sensing applications like the ED2 EXTREMDRON. This project is called Sandstorm and uses an existing aircraft design, with the addition of radiation sensors. AERDRON does not consider this project as a threat, but rather as a confirmation of our technology trend foresights, and it illustrates a real market demand for UAVs with these capabilities. This US company recently sold (2) of these UAVs for 190.000 USD each. These sales metrics are important since it shows how much customers are willing to invest in a superior product like the EXTREMDRON. It also establishes a price baseline for our business model projections. AERDRON will have an important advantage in selling the ED2 in Europe and abroad because ITAR (International Traffic in Arms Regulations) are not applicable for EU products. USA regulates technology exports on products which are defense related. The ED2 UAV aircraft, onboard electronics, software, and materials will be fabricated in the EU. The ED2 will also have more mission capabilities that will make it more marketable for additional security applications. AERDRON believes the ED2 has strategic defense capabilities and the platform needs to be developed within the EU to support the EU long term defense and security initiatives.

Figure 13 Competitors radiation detecting UAV


The UAV industry is a fast moving sector in which companies need to have the capabilities to drive innovation projections quickly, and to create new disruptive technologies to stay competitive. Spain/Europe have a large number of UAV/drone companies, but the vast majority of them are founded by radio control aircraft enthusiasts, or recent engineering graduates with no practical industry experience. AERDRON believes it has distinct market advantage over our competitors since its founders have over 25 years of aerospace industry experience working with top tier companies in the US/Europe and have successfully managed many high profile projects to completion.

5.1 SWOT Analysis

AERDRON performed a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to provide a top level overview of the reward/risk profile of the EXTREMDRON. The risk to reward profile is favorably tilted towards positive. AERDRON believes the EXTREMDRON has huge commercial market potential due to addressing a unique market niche, and feedback from potential customers.

Figure 14 SWOT Analysis

AERDRON conducted a competitor product analysis against the performance characteristics of the EXTREMDRON vs. the offerings of commercially available UAVs. The EXTREMDRON has a distinct market advantage in terms of performance characteristics.


Figure 15 Market Competitor Analysis

6.0 (TASK 5) DETERMINE PRODUCTION FORECAST AND ESTIMATE MANUFACTURING INVESTMENT

AERDRON has defined (3) distinct phases for the production and investment phases of the EXREMDRON project. These phases are:

NRE (Non Reoccurring Engineering) Recovery: The phase is estimated to last 6 months after the

sales of (4) EXTREMDRONs. During this period manufacturing issues will be identified and corrected as needed on the prototype tooling sets. At the end of this period when sales targets are realized, the NRE costs will be fully recovered. The EXTREMDRON will be marketed globally during this phase to customers. AERDRON will perform flight demos, attend tradeshows, and collect deposits from customers. Production Rate #1 will start shortly after this milestone.

Production Rate #1 – The production tooling will be designed for lower volumes to adjust for small

design and manufacturing changes. This is typical with new production launches. During this phase, the manufacturing processes and quality control systems will be monitored to identify any improvements. This phase is estimated to last 18 months. AERDRON believes the sales ramp up will be significant during this phase since the EXTREMDRON will be delivered to the first customers and the capabilities will be validated during actual security missions. During this phase, the sales and marketing activities will be increased to prepare for a higher production rate.


Production Rate #2: Once the manufacturing quality of the EXTREMDRON is stabilized and repeatable, the production rate will be increased to meet market demands. Duplicate production tooling will be manufactured and an additional production line will be added.

Figure 16 Sales and manufacturing

The manufacturing investment was conservatively estimated by using metrics from previous projects, and comparing competing product sales. The actual manufacturing estimate will be derived after the Phase II detail design phases have been completed. For the purposes of the sales and manufacturing estimates, the unit price of the EXTREMDRON was estimated to be in the range of 165.000 – 190.000 Euros depending on mission variant and options selected.

7.0 (TASK 6) BUSINESS PLAN

7.1 Business Models

During the Phase I feasibility study, AERDRON contracted a financial consultant to develop a preliminary business plan. The consultant identified four possible business models for the EXTREMDRON (shown in the table below). Each of the business models will be studied and defined in much greater detail during the Phase II project activities. The consultant focused on the direct customer sales option to estimate the financial forecasts.

AERDRON plans to focus on the direct customer sales option for the first two years of sales to recover the NRE (Non Reoccurring Costs) and to work with customers directly to fine tune the platform. The direct customer sales model would target selling the EXTREMDRON directly to customers. The customers would buy the EXTREMDRON and receive the training and licensing needed to operate per local regulations. The leasing option would charge customers a monthly fee to operate the EXTREMDRON.


The contracting option would sell the EXTREMDRON to a service company to perform flight operations for its clients. The royalty option would allow for the licensing of EXTREMDRON technologies to other partner UAV companies.

Direct Customer Sales • Private companies • Government Organizations • 3rd Party Service Companies

Leasing • Private Companies • Government Organizations • 3rd Party Service Companies

Contracting • Contracting agreement with an authorized

company to perform flight services. • Sales agreements to distribute and sell.

Royalties License and receive royalty payments for the material technologies or aircraft plans.

7.2 Financial Plan & Forecasts The preliminary financial forecast estimates were generated by our consultant during the Phase I

feasibility study. The estimates were based on a 2 year Phase II development programs, and a 1 year

manufacturing ramp up. The full financial project plans can be found on the project website:





8.0 LESSONS LEARNED

8.1 Material research During Phase I, we learned that we needed to upgrade the technologies on our existing ED1 EXTREMDRON so that it can operate at very high temperatures >140C to fly in the proximity of fires. The EXTREMDRON structure will require the addition of high temperature proprietary formulated hybrid composite materials to maintain structural integrity and protect the onboard electronics and payloads against fire and radiation damages. During the Phase I feasibility study, AERDRON contracted Sonic Composites to investigate feasibility of adapting materials like Phenolic resins, Polyphenylene Sulfide (PPS), Bismaleimide (BMI), quartz fiber fabrics, and other high tech materials to create proprietary formulated hybrid composite materials that can withstand high heat, radiation and provide electromagnetic shielding. AERDRON concluded that developing these hybrid materials is manageable and feasible per the feedback received from Sonic Composites. A detailed design and testing program would be required during Phase II so that requirements are validated for each of the extreme mission environments.

8.2 Aircraft Configuration and Physical Scale During the Phase I feasibility study, we learned through some preliminary sizing calculations that our current ED1 EXTREMDRON will need to be modified from a multirotor (helicopter type) design to a fixed wing aircraft. A multirotor design will not have the required flight duration, payload capacity, stability, nor the performance required at high ambient temperatures to provide sufficient thrust to sustain flight. A fixed wing aircraft with a high lift to drag ratio could sustain flight with a fraction of the power required when compared to a multirotor. The detail design modifications of the ED2 EXTREMDRON will be conducted during the Phase II engineering phases. AERDRON believes these design modifications will ensure the project’s success and are feasible.


8.3 Payloads - Laser Bomb Detector AERDRON researched the latest explosive sensor technologies during the Phase I feasibility study. We learned that university researchers have developed an advanced bomb detection technique that uses lasers capable of detecting chemicals used in explosives. AERDRON plans to work with the university (Michigan State), and to miniaturize the sensors so they can fit aboard a payload bay. In phase I, we concluded that the EXTREMDRON UAV would be a perfect aerial platform for researchers to test and validate the detection capabilities in a real world application. In phase II, we plan to adapt this new sensor technology to fit aboard our ED2 EXTREMDRON.

8.4 UAV Regulations During phase I, we learned about updates to U.S. and local regulations, which are a major milestones to confirm the market is opening and adapting to the usage of commercial UAVs and new applications. AERDRON believes the EXTREMDRON project will not face any regulatory, or certification blockages due to the size, and classification of the of the aircraft platform. During Phase II, AERDRON will hire an UAV regulatory consultant to advice on legal and marketing issues for each country. AERDRON concluded that local/global UAV regulations will not pose any road blocks to the operations or commercialization of the EXTREMDRON.

8.5 Patent Search During the Phase I feasibility research, AERDRON performed a freedom to operate study (patent search) and the preliminary analysis showed there were no IP (intellectual property) conflicts on claims. During Phase II, a more advanced patent search will be performed to protect each of the invention claims (materials, manufacturing methods). AERDRON intellectual property (IP) protection strategy will include filing for patent protection for any derived inventions yielded from the EXTREMDRON project in Europe and USA. AERDRON will consult with a patent attorney to ensure maximum IP protection and that we are not infringing on any known patents. AERDRON concluded that the EXTREMDRON project has a high chance of being awarded several patents.

8.6 Market analysis Funding for the Phase I feasibility study allowed us to attend Xponential 2016, the largest unmanned systems show in the world. The event took place from May 2nd - 5th in New Orleans and it showcased more than 600 exhibitors and attracted over 8.000 industry leaders and professionals from more than 55 countries. During the show, we studied the key trends and identified industry opportunities to formulate our market analysis. We conducted a competitor product analysis against the performance characteristics of the EXTREMDRON and we concluded that the EXTREMDRON has a distinct market advantage in terms of performance characteristics, materials, and sensor technologies. AERDRON believes these technology advantages will have a distinct market advantage over our competitors and ensure the successful commercialization of the EXTREMDRON.

9.0 CONCLUSION After conducting the Phase I feasibility study for the EXTREMDRON, AERDRON believes there is a great business opportunity and market demand for the project proposed. The EXTREMDRON is innovative in that it will develop advanced materials, structures, and payloads to operate in extreme conditions for security and defense applications. A real market demand has been validated by the sales of a competitor’s product that has less mission capabilities of the EXTREMDRON. Potential customers that have been interviewed have provided positive feedback and are willing to evaluate the EXTREMDRON during a flight demonstration. AERDRON believes the market has not been exploited yet for an UAV with the capabilities of the EXTREMDRON. The EXTREMDRON has the advantage of being first to market in the EU. AERDRON believes the EXTREMDRON UAV will have a significant market impact and will provide enhanced security capabilities to European Union citizens, and soft/critical infrastructures.


APPENDIX

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