RMS.L Regulatory News (RMS)

Strat Aero plc / Index: AIM / TIDM: AERO / Sector: Support Services

17 February 2015

Strat Aero plc ("Strat Aero", the "Company" or the "Group")

MOU signed with established software provider to assist with delivery of contracted services to US Government

Strat Aero plc, an international aerospace services company focused on the provision of training solutions, management systems and consultancy services to the global aviation market, is pleased to announce that it has signed a Memorandum of Understanding ('MOU') with 4D Tech Solutions, Inc ('4D'), a well-established engineering services provider to the US Government. Under the terms of the MOU, Strat Aero and 4D will look to pursue and deliver contracts, on a non-exclusive basis, with the US Government and international agencies. The combination of Strat Aero's proven expertise in the aerospace sector, including the provision of Unmanned Aerial Systems ('UAS') solutions and training services, with 4D's engineering services capability, will allow each party to offer a more comprehensive level of services and as a result pursue a broader range of contracts with governmental bodies such as the Army Research Laboratory ('ARL').

Highlights:

· 4D has existing contracts with allocated funding in place with the ARL for general services in the UAV space

· Within the framework of the MOU, Strat Aero and 4D will leverage their existing contracts and relationship to pursue and grow the US$6 million UAV initiative with ARL

· Strat Aero and 4D ('the MOU Parties') will combine their capabilities and resources to deliver services to US Government and International agencies, specifically but not limited to ARL, a US Department which specialises in developing commercial applications from military hardware

· Strat Aero will provide technical expertise and specialised services in the UAS sector, which will allow access to further contracted fee and profit share development work with the ARL not currently available for drawdown by 4D

· Strat Aero is in advanced negotiations with ARL with a view to securing its own multi-year contract with both fee and profit share revenue components - the MOU with 4D does not impact the existing contract negotiations with the ARL but potentially expedites access to funding through the relationship with 4D

· The MOU Parties agree to market and promote each other's services and capabilities on a non-exclusive basis to ARL and other relevant US Government entities

· Both Strat Aero and 4D will remain independent contractors and the MOU Parties will be able to sell their respective standard products and services to third parties

· The MOU announced today is in line with Strat Aero's strategy to build a leading aviation services provider by capitalising on multiple growth opportunities identified in all three of its existing divisions: UAV Pilot Training and Services; Aviation Management and Consultancy Services; and Aviation Software, Products and Services

Capt. Russell Peck, CEO of Strat Aero, said:"The decision by 4D to sign this MOU is an endorsement of Strat Aero's credentials as a leading services provider to the aerospace industry, particularly our established position in Unmanned Aerial Vehicles ('UAVs') training and solutions which includes a fully functional and multi-faceted UAS Training Centre in Roswell, New Mexico. 4D already has multiple contracts in place with ARL and we therefore view their desire to secure access to Strat Aero's expertise in UAVs as a third party validation of the breadth of opportunities available to develop commercial applications from military UAV hardware. By leveraging 4D's software solutions and its established relationship with ARL, this MOU broadens Strat Aero's offering, increases the range of contracts we can deliver, has the potential to generate material near term revenues via our participation in 4D's existing contracts, and importantly would see us start working with ARL initially on a sub-contractor basis.

"In tandem with this we expect to finalise our own agreement with ARL in the near term, similar to the one we have in place with the National Renewable Energy Laboratory, a division of the US Department of Energy, to develop small Unmanned Aerial Systems technology for use in the commercial sector. UAVs promise to transform the way businesses from a diverse range of sectors carry out their operations and we are focused on positioning Strat Aero at the forefront of this UAV revolution, which we believe will generate significant value for our shareholders."

Enquiries:

Notes

Strat Aero plc is a multi-divisional international aerospace services company, focussed primarily on the provision of Unmanned Aerial System ('UAS') training solutions, airline management systems and consultancy services to the international aviation market. The Company has three existing divisions: UAS Pilot Training and Services which operates from the fully functional and multi-faceted UAS Training Centre in Roswell, New Mexico; Aviation Software, Products and Services which includes the Company's proprietary advanced aerospace management system, a cloud-based enterprise wide management solution for the aerospace sector and potentially, other sectors; and Aviation Management and Consultancy Services which has multiple contracts in place including project management of the establishment of a new low cost airline in the Middle East.

The UAV division is looking to capitalise on opportunities resulting from the forecasted strong growth in the airline industry and in particular, the predicted exponential growth in the emerging UAV industry over the coming decade. Civilian, law enforcement and military applications in UASs are expected to be a dynamic growth sector in the aerospace industry over the next 10 years with the UAS market forecast to grow to more than US$82.1 billion between 2015 and 2025 (AUVSI Economic Report 2013) and the global airborne Intelligence, Surveillance and Reconnaissance ('ISR') market estimated to grow to US$19.23 billion by 2023. Strat Aero already has major contracts in place with international aviation companies, government bodies and universities including and importantly, an agreement with one of the largest US defence contractors to train military pilots to fly fixed wing UAVs at its Roswell centre.