AeroVironment Announces Joint Venture and Solar High-Altitude Long-Endurance Unmanned Aircraft System Development Program

January 3, 2018

Joint venture to fund development and production of solar-powered
high-altitude unmanned aircraft systems
AeroVironment to design and develop solar aircraft and ground control
stations for flight testing and certification
Net value of development contract is $65 million

MONROVIA, Calif.–(BUSINESS WIRE)–AeroVironment,
Inc. (NASDAQ: AVAV), a global leader in unmanned aircraft systems
(UAS) for both defense and commercial applications, today announced the
formation of a joint venture to develop solar-powered high-altitude
long-endurance, or HALE, UAS for commercial operations. This category of
UAS is also referred to as high-altitude pseudo-satellites, or HAPS. The
joint venture will fund the development program up to a net maximum
value of $65,011,481.

The joint venture, HAPSMobile, Inc., is a Japanese corporation that is
95 percent funded and owned by Japan-based telecommunications operator
SoftBank Corp. and 5 percent funded and owned by AeroVironment, Inc.
AeroVironment is committed to contribute $5 million in capital for its 5
percent ownership of the joint venture, and has an option to increase
its ownership stake in HAPSMobile up to 19 percent at the same cost
basis as its initial 5 percent purchase.

“This is a historic moment for AeroVironment. For many years, we have
fully understood the incredible value high-altitude, long-endurance
unmanned aircraft platforms could deliver to countless organizations and
millions of people around the world through remote sensing and last
mile, next generation IoT connectivity,” said Wahid Nawabi,
AeroVironment chief executive officer. “We were searching for the right
strategic partner to pursue this very large global opportunity with us.
Now we believe we are extremely well-positioned to build on the decades
of successful development we have performed to translate our solar UAS
innovations into long-term value through HAPSMobile, Inc. Our entire
team is excited, and we look forward to transforming this strategic
growth opportunity into reality.”

AeroVironment pioneered the concept of high-altitude solar-powered UAS
in the 1980s, and developed and demonstrated multiple systems for NASA’s
Environmental Research Aircraft and Sensor Technology, or ERAST program,
in the late 1990s and early 2000s. In August 2001, the AeroVironment
Helios prototype reached an altitude of 96,863 feet, setting the
world-record for sustained horizontal flight by a winged aircraft. In
2002, the AeroVironment Pathfinder Plus prototype performed the world’s
first UAS telecommunications demonstrations at 65,000 feet by providing
high-definition television (HDTV) signals, third-generation (3G) mobile
voice, video and data and high-speed internet connectivity. Multiple
United States government agencies funded the development of the
hybrid-electric Global Observer unmanned aircraft system from 2007
through 2011. Global Observer represents a solution for extended
operation over high Northern and Southern latitudes during local
winters, when the sun’s energy is insufficient to maintain continuous
solar aircraft operation at high altitude.

SoftBank Corp. and AeroVironment, Inc. have agreed to license certain
background intellectual properties to HAPSMobile, which will own the
newly developed UAS intellectual property and possess exclusive rights
for commercial applications globally, and non-commercial applications in
Japan. AeroVironment will possess exclusive rights to the resulting
intellectual property for certain non-commercial applications, except in
Japan. AeroVironment will also possess exclusive rights to design and
manufacture all such aircraft in the future for HAPSMobile, subject to
the terms of the Joint Venture Agreement.

For additional information, please see AeroVironment’s Form 8-K, filed
with the Securities and Exchange Commission on January 3, 2018.

About AeroVironment

AeroVironment (NASDAQ: AVAV) provides customers with more actionable
intelligence so they can proceed with certainty. Based in California,
AeroVironment is a global leader in unmanned aircraft systems, tactical
missile systems and electric vehicle charging and test systems, and
serves militaries, government agencies, businesses and consumers. For
more information visit www.avinc.com.

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