RMS.L Regulatory News (RMS)

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

19 February 2015

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

Option to acquire leading US industrial and energy consultant to provide UAV solutions to the commercial sector

Strat Aero plc, an international aerospace services company is pleased to announce it has, via its 100% owned subsidiary Strat Aero International Inc. signed an Option Agreement ('OA') to acquire 70% of the issued share capital of New Amsterdam Global Solutions LLC ('New Amsterdam'), an independent marketing and sales company. In addition the Company has signed a Marketing and Sales Agreement ('MSA') with New Amsterdam to immediately engage the sales and marketing team. These agreements are in line with Strat Aero's strategy to become a leading provider of Unmanned Aerial Vehicle ('UAV') solutions to the commercial sector, capitalising on its established position in UAV training and services.

· New Amsterdam is an independent industrial and energy sales and marketing group whose team have worked with and have access to clients including, TD Westinghouse, General Electric, Dewind and T. Boone Pickens.

· Under the terms of the OA, Strat Aero has a 6 month option to acquire a 70% stake in New Amsterdam - exercisable by the Company at any time.

· The consideration payable for acquiring 70% of New Amsterdam is US$325,000 and will be settled via $325,000 in cash, $150,000 of which will be invested via subscription in new shares in Strat-Aero - up to US$75,000 of the monthly retainer paid to New Amsterdam under the MSA will be offset against the acquisition consideration.

· Under the terms of the MSA, New Amsterdam has been set a US$2m sales target for 2015.

· New Amsterdam to leverage into its existing industrial and energy client base for Strat Aero to provide UAV solutions offering significant cost savings, performance benefits and enhanced operational capability to the commercial sector.

· New Amsterdam will be in particular targeting large scale maintenance & surveillance contracts for wind energy providers who are expressing interest in applying UAV based solutions.

· The OA & MSA seek to accelerate & build on Strat Aero's established position as a provider of UAV training and solutions which includes:

o co-operation agreement signed with a leading US defence major to train US military pilots at the fully functional and multi-faceted UAS Training Centre in Roswell, New Mexico

o agreement 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 such as wind-farms and oil and gas fields

o working with the Dutch Government to establish an UAV Training Centre in the Netherlands, which when operational would be the first in Northern Europe.

· The agreements with New Amsterdam are 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:"New Amsterdam's blue chip client base and extensive network of contacts in the US industrial and energy sectors have the potential to fast track Strat Aero's entry into the rapidly emerging commercial UAV space. The widespread adoption of UAVs is set to revolutionise the way companies operating in a diverse range of sectors complete countless tasks, particularly those that are time consuming, potentially dangerous and costly. Within the industrial and energy sectors these include the regular monitoring of wind turbines, power transmission lines and oil and gas fields. Thanks to our first class knowledge of the global UAV sector, our proven ability to navigate the dynamic regulatory roadmap, and our established relationships with the US military, UAV OEMs and government research organisations, Strat Aero is ideally placed to be at the forefront of the UAV revolution. UAVs will transform the way the private sector goes about its business just as they have done in the military in recent years and with this in mind, we are focused on ensuring Strat Aero plays a leading role in setting the agenda, and in the process becomes the go-to provider of customised UAV training and solutions."

Greg Wortham, CEO of New Amsterdam LLC said: "Our team has worked on transactions and development projects with some of the largest industrial companies in North America. We believe there is a significant opportunity to work with a number of these entities to apply UAV technologies. Specifically our network of clients in renewable energy, oil and gas and infrastructure have immediate need for the application of UAV technologies. We are very pleased to be partnering with Strat Aero who bring significant experience and expertise in delivering UAV based technical solutions. "

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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.