Counter UAS Market Overview About Me Mike Blades

Counter UAS Market Overview

About Me Mike Blades • 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 VP of Consulting and Research Aerospace, Defense & Security Americas Region Frost & Sullivan Follow me on: @Mike. SBlades https: //www. linkedin. com/mikeblades 2

COUNTER UAS MARKET

Counter-UAS “Kill Chain” Detect Identify Locate Track Mitigate The first step in the Once detected, it After a drone is Once a precise There are many kill chain is always must be determined if identified, it needs to location is obtained, a ways, both kinetic and detection. This can be the drone is a threat. be located in three countered drone non-kinetic to, accomplished via a This can be dimensional space. system uses a sensor mitigate drones. RF single sensor, an accomplished by Many RF systems or combination of jammers can “”soft array of sensors, or several means can also locate drone sensors to track the kill” while directed the human eye. There including evaluating operators when there position of the drone, energy weapons like are a range of radar, acoustic, or RF is an active C 2 link. or drones, until the lasers, kamikaze ongoing research and signatures as well as decision whether and drones, and test initiatives that video analysis. This how to mitigate can microwaves can seek to reduce the step is becoming be made. destroy, or “hard kill” number of false increasingly threatening drones. positives. automated. Source: Frost & Sullivan Note: There is another step in the process where captured drones can be forensically examined, but 4 these examinations are mostly conducted separate from the C-UAS itself

Counter UAS Market Players Defense-Focused Commercial-Focused/Start-ups 65 companies (3 Thales, 2 Rostec) 76 companies 75 total systems 90 total systems 38 multi-sensor systems 31 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 5

Counter UAS in the 2020 PB Global Military C-UAS Funding Estimates Service FY 2018 FY 2019 FY 2020 Air Force 142. 9 5. 0 107. 8 Army 725. 7 434. 6 20. 0 1, 000. 0 Navy/Marines 38. 3 96. 3 39. 2 800. 0 SOCOM 0. 4 14. 3 41. 9 600. 0 ROW 907. 3 550. 2 208. 9 400. 0 US Grand Total • Does not include C-RAM, SHORAD, GBAD (MADIS/L-MADIS), or G/ATOR • Does not include CLASSIFIED • There is also cyber security spending for Io. T (not included) • Obviously all funding is not “addressable” especially in RDT&E • FY 20 includes $30 M 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. 8 B on C-UAS for JUON CC-0558 since 2016 (E-LIDS/M-LIDS) 1, 200. 0 FY 18 FY 19 FY 20 Source: Frost & Sullivan 6

Revenue ($ Million) C-UAS Global Sales Estimate 800. 0 700. 0 600. 0 500. 0 400. 0 300. 0 200. 0 100. 0 Known sales Notes: Estimated C-UAS Sales, Global, 2016– 2019 • 2019 includes $108 M SRC contract (not obligated) Through 30 May • There is also a separate FBO request for 100 E-LIDS in 2019 • Includes $191 M in 2019 for Ku. RFS UON radars for C-UAS (Raytheon) • Open source only 2016 36. 5 2017 233. 6 2018 698. 3 2019 409. 4 • Estimate that this is the 75% solution Source: Frost & Sullivan 7

Select Commercial UAS Supplier Activity The majority of supplier activity has centered around defense companies delivering systems to global militaries, especially in the US Won a contract worth up to $108 M to supply the US Army with mobile C-UAS and another for 100 E -LIDS The company fulfilled its 5 th contract for the US version of the AUDS* counter drone system in 2018 SRC Has delivered 60 systems so far, some stand alone and some in integrated systems like XMADIS. Systems installed in 24 prisons in Pennsylvania . . Ascent Vision Liteye Aaronia Dedrone Reportedly installed 100+ systems worldwide in 2018 (and over 300 ordered) Counter UAS Market 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 8

Executive Summary – Key Predictions The C-UAS Arms Race is Only Beginning C-UAS “Rules of Engagement” While C-UAS are still being Developing rules for allowing developed and evaluated, law enforcement and other non efforts by bad actors will -federal agencies to mitigate focus on countering the small UAS in the US will take counter. There will be a longer than expected. Many period of “cat and mouse” other countries will wait to see where the weaknesses of how the US proceeds before both C-UAS and small allowing mitigation on a wide drones will be exploited. scale. Momentum Will Stay with Defense Primes 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. Rapid Market Consolidation Most Militaries Will Follow US Lead Large militaries in the US, China, Russia, and Europe will continue developing CUAS. 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 Drone. Hunter (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 9

C-UAS Drivers and Restraints Drivers Restraints SUAS Proliferation in Warzones Regulations 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 Global regulatory agencies, especially in the West, are having trouble developing rules of engagement that will allow law enforcement to mitigate small drone threats. ITAR Restrictions SUAS Proliferation in Daily Life 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. New and/or misunderstood technologies are often relegated the USML first Making Weapons for Commercial Supplies Uncertainty The growing trend of manufacturing bomblets from materials obtained via commercial supply lines is increasing the adoption small UAS as asymmetric weapons. 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 Source: Frost & Sullivan 10

Top Trends for the Global Counter UAS Market 1 No fly zones 2 Integration of AI to automate detection 3 Wearable C-UAS 4 5 Sensor/data fusion Man portable becoming less popular 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. 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). Companies like TRD Consultancy (Singapore), My. Defence (Denmark), and White. Fox 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. 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 11 identification. The goal is to minimize false positives and maximize analytics. 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. Source: Frost & Sullivan 11

Conclusions/Takeaways 1 For US Do. D, 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. 2 Expect consolidation to accelerate throughout 2020 and 2021. Defense primes will acquire or partner with best in class sensor system OEMs and analytics providers. • • 3 • • 4 • • 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 Source: Frost & Sullivan 12

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 13