Counter UAS Market Overview: Defense Strategies and Technologies

1. Counter UAS Market Overview

2. About Me • Aerospace and drone industry expert • 21+ years of military flight experience • 7+ years of aerospace and defense industry research and consulting • Graduate of the United States Air Force Academy • Advanced degrees in Aerospace Operations and Financial Management Mike Blades VP of Consulting and Research Aerospace, Defense & Security Americas Region Frost & Sullivan Follow me on: https://www.linkedin.com/mikeblades @MikeSBlades

3. CoUNTER UAS Market

4. Counter-UAS “Kill Chain” Identify Locate Track Detect Mitigate Once detected, it must be determined if the drone is a threat. This can be accomplished by several means including evaluating radar, acoustic, or RF signatures as well as video analysis. This step is becoming increasingly automated. After a drone is identified, it needs to be located in three dimensional space. Many RF systems can also locate drone operators when there is an active C2 link. Once a precise location is obtained, a countered drone system uses a sensor or combination of sensors to track the position of the drone, or drones, until the decision whether and how to mitigate can be made. The first step in the kill chain is always detection. This can be accomplished via a single sensor, an array of sensors, or the human eye. There are a range of ongoing research and test initiatives that seek to reduce the number of false positives. There are many ways, both kinetic and non-kinetic to, mitigate drones. RF jammers can “”soft kill” while directed energy weapons like lasers, kamikaze drones, and microwaves can destroy, or “hard kill” threatening drones. Source: Frost & Sullivan Note: There is another step in the process where captured drones can be forensically examined, but these examinations are mostly conducted separate from the C-UAS itself

5. Counter UAS Market Players Defense-Focused Commercial-Focused/Start-ups 76 companies 65 companies (3 Thales, 2 Rostec) 90 total systems 75 total systems 31 multi-sensor systems 38 multi-sensor systems 11 RF only systems 38 RF only systems Handhelds/Wearables Drone-based 46 companies* 19 companies 61 total systems 20 total systems *6 of these companies also manufacture commercial-focused systems and 1 company makes a defense-focused system Source: Frost & Sullivan

6. Counter UAS in the 2020 PB Global Military C-UAS Funding Estimates • Does not include C-RAM, SHORAD, GBAD (MADIS/L-MADIS), or G/ATOR • Does not include CLASSIFIED • There is also cyber security spending for IoT (not included) • Obviously all funding is not “addressable” especially in RDT&E • FY20 includes $30M in C-UAS funding SOCOM did not put in the PB request • Some C-UAS funding will come through C-IED and C-RAM • $1.8B on C-UAS for JUON CC-0558 since 2016 (E-LIDS/M-LIDS) Source: Frost & Sullivan

7. C-UAS Global Sales Estimate • Notes: • 2019 includes $108M SRC contract (not obligated) • There is also a separate FBO request for 100 E-LIDS in 2019 • Includes $191M in 2019 for KuRFS UON radars for C-UAS (Raytheon) • Open source only • Estimate that this is the 75% solution Source: Frost & Sullivan

8. Select Commercial UAS Supplier ActivityThe majority of supplier activity has centered around defense companies delivering systems to global militaries, especially in the US Won a contract worth up to $108M to supply the US Army with mobile C-UAS and another for 100 E-LIDS The company fulfilled its 5th contract for the US version of the AUDS* counter drone system in 2018 Has delivered 60 systems so far, some stand alone and some in integrated systems like X-MADIS. SRC ..... ..... Ascent Vision Liteye Systems installed in 24 prisons in Pennsylvania Reportedly installed 100+ systems worldwide in 2018 (and over 300 ordered) Aaronia Dedrone Acronyms: AUDS – anti-UAV defense system, E-LIDS – Expeditionary Low, Slow, Small Unmanned Aircraft System (UAS) Integrated Defeat System, UAV – unmanned aerial vehicle. Source: Frost & Sullivan Counter UAS Market

9. Executive Summary – Key Predictions Key Predictions Rapid Market Consolidation Momentum Will Stay with Defense Primes The C-UAS Arms Race is Only Beginning C-UAS “Rules of Engagement” Most Militaries Will Follow US Lead While C-UAS are still being developed and evaluated, efforts by bad actors will focus on countering the counter. There will be a long period of “cat and mouse” where the weaknesses of both C-UAS and small drones will be exploited. Developing rules for allowing law enforcement and other non-federal agencies to mitigate small UAS in the US will take longer than expected. Many other countries will wait to see how the US proceeds before allowing mitigation on a wide scale. Large defense primes like Northrop Grumman, CACI, Raytheon, and SRC continue to receive large contracts for developing, testing, and manufacturing multi-sensor systems. Many will integrate sensors from both defense and commercial suppliers. Large militaries in the US, China, Russia, and Europe will continue developing C-UAS. However, most medium-sized and small militaries around the world will let large countries conduct all the R&D and wait for off-the-shelf systems to be made available for export. Several competitors like DroneHunter (Germany) and Alsok (Japan) have decided to discontinue their pursuits of offering C-UAS solutions. Expect more consolidation, especially in the defense area, through M&A. Source: Frost & Sullivan

10. C-UAS Drivers and Restraints Drivers Restraints Making Weapons for Commercial Supplies ITAR Restrictions SUAS Proliferation in Daily Life SUAS Proliferation in Warzones Uncertainty Regulations • The proliferation of small drones for recreation and commercial operations is increasing the aerial threat profile to a wide range of government and commercial operations. • The low cost and ubiquity of small drones is providing bad actors with an asymmetric capability to conduct attacks on military targets as well as soft targets New and/or misunderstood technologies are often relegated the USML first There is a general lack of understanding about the threat, the capabilities of different C-UAS, and the correct methods for testing C-UAS efficacy • The growing trend of manufacturing bomblets from materials obtained via commercial supply lines is increasing the adoption small UAS as asymmetric weapons. • Global regulatory agencies, especially in the West, are having trouble developing rules of engagement that will allow law enforcement to mitigate small drone threats. Source: Frost & Sullivan

11. Top Trends for the Global Counter UAS Market Many companies are creating C-UAS that are portable containerize systems that set up “shields” where any drone detected will be automatically jammed and either forced to land or sent back to where it took off from. Many of these systems also provide for “white listing” which allows user to identify friendly drones that can fly through the shielded area. 1 No fly zones Integration of AI to automate detection There is a concerted effort to enable C-UAS with software that can automatically detect and identify drone threats (and a further effort to automate mitigation). 2 Companies like TRD Consultancy (Singapore), MyDefence (Denmark), and WhiteFox Defense (UAS) are participating a in this trend, but wearable C-UAS products are constrained by power which causes these types of systems to have very limited range and capabilities. Threat profiles could limit the utility of these systems. 3 Wearable C-UAS The most comprehensive system offerings are using multiple advanced sensor technologies and utilizing algorithms to fuse the data from those sensors for more precise detection, tracking, and identification. The goal is to minimize false positives and maximize analytics. Sensor/data fusion 4 Man portable becoming less popular While a slew of companies have developed handheld or should-fired drone C-UAS, the military (especially the Marines) have found that these systems add weight and battery requirements that do not mesh with current push to reduce the loads of ground troops. 5 Source: Frost & Sullivan 11

12. Conclusions/Takeaways For US DoD, expect PORs to be in the next PB. Many global militaries will wait until the US tests & validates C-UAS technologies then purchase capabilities through FMS, or DOC for commercial (non-ITAR) systems. 1 Expect consolidation to accelerate throughout 2020 and 2021. Defense primes will acquire or partner with best in class sensor system OEMs and analytics providers. 2 • Autonomy, AI, and advanced sensors will drive the market. • Regulatory changes, or “rules of engagement,” will continue to have the most power to accelerate or stifle growth C-UAS growth for commercial uses. • The ubiquity of COTS drones and evolving capabilities/tactics to turn them into ABIEDs drives the defense-focused market. Expanding swarm capabilities will also drive development/growth • The C-UAS market will see consistent growth even though is still no “silver bullet” (mostly defense). Commercial market growth will be tied to “events” and when mitigation rules of engagement are enacted. • Customers want robust systems at low cost (automated detection, alert, and mitigation) • There are only about 20-30 viable competitors in a very crowded market 3 4 Source: Frost & Sullivan

13. Questions? • Recent and Upcoming Report Titles (ADS) • Global Commercial UAS Market (2015 and 2017) • Commercial Drone Market Competitive Intelligence, Drone-In-A-Box Companies • Commercial Drone Market Competitive Intelligence, AI Companies • Commercial Drone Market Competitive Intelligence, Drone Services Providers • Global Counter UAS Market, Forecast to 2024 • Recent and Upcoming Report Titles (Energy and Environment) • Aerospace Innovations in Oil & Gas (August) • Disruptive Technologies in the Energy Sector • Global Offshore Wind Market • Global Onshore Wind Market • Global Solar Power Market Michael.Blades@frost.com / 210-247-3833 / www.frost.com/ADS