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Armin Strobel, president and CEO of AS Works, has developed a surveillance drone that takes off from a docking station that can be mounted on military vehicles and used to scout enemy movements.
A severe downturn in the oil industry scuttled a major contract with a corporate client in February, just after COVID-19 entered Canada, dashing AS Works’ hopes of expanding its workforce and going into commercial production in the first half of the year.
Using National Research Council money earmarked for tech companies, AS Works was able to push ahead, pay the salary of its founder and seek out military contracts. It is now poised to clinch a defence deal in the coming months.
The contracts were ready. There was a verbal agreement in place with a company in the oil sector. The only thing missing was the signatures affixed to the documents. With them, St. John’s, N.L., tech startup AS Works would be able to hire more staff and go into commercial production for its aerial surveillance drones in February.
Then the bottom fell out of the oil industry.
The price for oil from the Canadian tar sands, Western Canada Select, plummeted from US$36.82 per barrel in January to US$3.50 per barrel in April. Since then, Canadian oil prices have firmed up but the price differential between oil from the tar sands and West Texas Intermediate, some of the highest-quality oil, had narrowed to a paltry US$4.34 by June, barely one-fifth the US$20.86 spread in January.
It was more than enough to leave the Canadian oil industry gasping for breath.
Then the pandemic that had started to make its way into Canada by February made it even more difficult for AS Works to work on its drones.
“A lot of our suppliers from China actually stopped shipping to Canada because Canada Post couldn’t process all the stuff,” says Armin Strobel, president and CEO of AS Works.
“The supply chain was interrupted.”
Small parts needed for drone construction suddenly became harder to find.
The company’s oil-sector deal died on the table, and so did the company’s hopes of more than doubling its workforce by hiring three more people.
Prototype ready, profitability grounded
After years of research and development, AS Works has a working prototype. It can leave its docking station, automatically patrol areas and come back to recharge after flying up to five kilometres. It can be mounted on a vehicle, launched and manually operated from a joystick inside the cab, and then come back to its docking station even if that vehicle has moved.
In the next two weeks, AS Works will mount a drone and docking station on an SUV. A laptop will be hooked up to the touchscreen on the dashboard. A joystick will be added through a USB port, giving the operator the capability of launching the drone, controlling it manually or letting it fly on a pre-programed path, and then letting it automatically land back on its docking station.
“You don’t have to babysit this drone,” says Strobel.
“You don’t even have to be there. If you want to protect a compound, it will automatically patrol the area and, if it finds something, it will let someone know.”
The drone’s flight paths can also be altered to add an element of unpredictability and prevent enemy scouts from being able to determine when and where it will be.
With the loss of the oil industry contract, any immediate hopes for a solid revenue stream evaporated, leaving Strobel as the company’s sole employee. But he persevered.
In mid-April, Ottawa injected $250 million in funding for the National Research Council’s Industrial Research Assistance Program to help small and medium-sized Canadian businesses. AS Works applied and got a roughly $10,000 shot in the arm. Under the same program, AS Works is getting help to cover its payroll. That agreement started this month and runs through to the end of this year.
“It’s covering the tech salaries and since I’m the founder and doing all of it, it covers that,” says Strobel.
That’s bought AS Works time. Later this year, the company based in the St. John’s Genesis innovation hub will be holding demonstrations of the drone’s capabilities for Newfoundland and Labrador companies. As it gears up for that, Strobel is trying to clinch a deal in the works with an undisclosed military contractor or government.
His breadbox-sized drone has already tested its mettle with Canada’s Department of National Defence. In October, Strobel took the drone to Suffield, Alta., where the government has a military base, and put it through its paces.
“They wanted to be able to use it to knock other drones out of the sky,” says Strobel.
“In Afghanistan, and this is not widely known, but people who want to do bad things put explosives on conventional drones to attack military bases.”
The tech entrepreneur would not divulge any details of the pending deal, saying only that it could close within the next few months. If it does, it would allow AS Works to begin commercial production.
“We have molds so we can actually ramp up production quite fast and can manufacture limited quantities at a time,” says Strobel.
Atlantic Canadian investors have so far been holding back in backing AS Works because the defence sector is new to many of them and they have been waiting to see a commercial product and sales contracts, says Strobel.
A deal with a military contractor could go a long way in attracting investors to AS Works and help launch commercial production.
The Pivot is a regular business feature showcasing an Atlantic Canadian company adapting to new market realities with innovative products, services or strategies. To suggest a business, email Pivot@SaltWire.com.