Sky-Watch: The EIC Accelerator Fuel Cell Drone That Never Flew

Small electric drones are cheap, quiet and easy to carry, but their batteries run flat within a few hours. In January 2019 the European Commission selected Sky-Watch, a drone maker from Støvring in northern Denmark, and its German partner kraftwerk TUBES for an EU grant to fix that with a miniature fuel cell. The project, UAVEndure II, promised small fixed-wing drones with "10x more flight range than LiPo battery", according to its CORDIS fact sheet. It ended in May 2022 without a fuel cell ever being fitted into a drone, the project's final report states.

Sky-Watch itself had a very different outcome. It was sold to the US group AIRO Group Holdings on 28 March 2022, according to AIRO's annual report for 2025 filed with the US Securities and Exchange Commission and the Danish ownership record summarised by North Data. Its battery-powered RQ-35 Heidrun reconnaissance drone then became a staple of military aid to Ukraine. Revenue went from DKK 0.8 million in 2021 to DKK 522.6 million in 2025, according to the company's accounts at the Danish Business Authority.

Where Sky-Watch Stands Now

Sky-Watch is a wholly owned subsidiary of AIRO Group Holdings, a defence and aerospace group from McLean, Virginia, whose shares began trading on the Nasdaq on 13 June 2025, according to its 10-K. AIRO bought six companies between February and April 2022 and sells its military drones under the Sky-Watch brand, which it calls "a key supplier to European NATO countries". At the end of 2025 AIRO's Drones segment, which also includes its US subsidiary AIRO Drone, had 153 of the group's 223 employees and earned $79.08 million of the group's $90.91 million revenue.

Danish industry body DI reported in June 2025 that Sky-Watch's workforce had quadrupled since 2022 to 129 people and quoted marketing director Thomas Jensen: "As it stands now we export nearly 100 percent of our drones to other European countries, with Ukraine being the dominant recipient." The filed accounts show an average of 81 employees in 2024 and 118 in 2025. The accounts report annual averages, not a headcount on a given date, so the two figures cannot be reconciled.

Deliveries are continuing. In July 2026 the Dutch Ministry of Defence contracted Sky-Watch to supply RQ-35 Heidrun systems through 2026 with a seven-year support agreement, The Defense Post reported; the company's newsroom lists the Dutch selection alongside the June 2026 launch of a longer-range drone, the RQ-70 Dainn. Its maker says the Dainn flies for up to 8 hours, with full production due to start in January 2027, according to a company release. Neither source says what powers it.

The Technology: A Fuel Cell Small Enough for a Hand-Launched Drone

Small military and survey drones run on lithium batteries. Sky-Watch's own specification sheet for the RQ-35 Heidrun lists a 3.07 kg aircraft, a 0.92 kg battery of 14.4 V and 19.6 Ah, and a maximum flight time of 180 minutes "dependent on actual environment". Larger drones get longer endurance from combustion engines, at higher cost and with more noise and logistics.

UAVEndure II tried to sit between the two. kraftwerk TUBES, a Dresden fuel cell developer first registered in 2016 as eZelleron tubes UG, co-developed the system with Sky-Watch; the plan was to bundle individual cells into 10 stacks and combine them into a system with an output "in the range of 250W" inside an insulated "hotbox" light enough for a small fixed-wing drone, the CORDIS report says. The partners called the system ELJUN. The idea had been tested on paper first: a €50,000 SME Instrument Phase 1 study by the same two companies in 2018, UAVEndure I, aimed at electric fixed-wing drones under 3 kg able to fly for 24 hours.

What UAVEndure II Promised, and What CORDIS Shows

The European Commission's list of winners for the 9 January 2019 cut-off of the EIC SME Instrument Phase 2, the Horizon 2020 predecessor of today's EIC Accelerator, gives both partners their own row for UAVEndure II: SKY-WATCH A/S in Denmark and KRAFTWERK TUBES GMBH in Germany. The grant agreement was signed on 25 October 2019. The project ran from 1 December 2019 to 31 May 2022 at a total cost of €3,551,250, with an EU contribution of €2,485,875, of which €1,318,893.10 went to Sky-Watch as coordinator and €1,166,981.90 to kraftwerk TUBES, according to CORDIS.

The project ended on its scheduled date. The final report, covering October 2021 to May 2022, is unusually blunt about the result:

The report credits the work on choosing a host aircraft and on defining the mechanical, hardware and software interfaces, and says both partners hired: Sky-Watch was recruiting a mechanical, two hardware and an embedded engineer, and kraftwerk TUBES had "employed 15 new people" since the project began. It still argued that "there is still a large market potential" for fuel-cell-powered small fixed-wing drones. Since then, neither partner has announced a fuel cell drone, a flight test or a sale of ELJUN, and Sky-Watch's current specification sheet lists only battery power for the RQ-35.

1. Fuel cell system of about 250 W at drone size and weightNot achievedNo fully functioning hotbox; required output not reached because of welding seam problems, per CORDIS.
2. Integration into a small fixed-wing drone and full-scale testsNot achievedThe report says the project never reached the point of integration.
3. "10x more flight range than LiPo battery"Not achievedNo flight data published; the RQ-35 still runs on a battery with up to 180 minutes of flight.
4. ELJUN on the market for drone makers and usersNot achievedNo product, customer or launch announced by either partner.
5. Interfaces, host platform and engineering know-howPartlyReported in the CORDIS summary; no separate public results or publications.

The Money: Near Collapse, Then a War-Driven Boom

When the grant was signed, Sky-Watch was losing money every year. Its net loss was DKK 19.3 million in 2018 and DKK 20.2 million in 2019, and rose to DKK 39.1 million in 2020, the first full year of the EIC project. Gross profit was negative from 2017 to 2021. By the end of 2021 equity stood at minus DKK 102.2 million, and the management review in the 2021 annual report said the company "has lost its capital", that its cash was not enough to fund operations for a year, and that these conditions "raise substantial doubt about the Company's ability to continue as a going concern". The company was then in "late-stage discussions" with AIRO.

The sale changed the balance sheet before it changed the business. On 28 March 2022, the day AIRO took over, the former majority shareholder Dangroup ApS released Sky-Watch from DKK 99.1 million of debt, which the 2022 accounts booked directly to equity. The 2022 profit of DKK 5.5 million came from recognising a DKK 13.8 million deferred tax asset; before tax the company still lost DKK 9.0 million. The same report said Russia's invasion of Ukraine had "directly and indirectly caused an increase in demand", and that confirmed orders for 2023 were strong.

They were. Revenue reached DKK 192.6 million in 2023 and DKK 515.0 million in 2024, and net profit DKK 223.3 million in 2024. Sky-Watch paid its owner dividends of DKK 62.85 million in 2023 and DKK 124.15 million in 2024, according to its cash flow statements, and paid none in 2025, when profit fell to DKK 149.4 million on revenue of DKK 522.6 million. AIRO's 10-K attributes most of the group's tax expense to "Sky-Watch generating positive pre-tax income", and says that since 2025 AIRO pays Dangroup 20% of Sky-Watch's EBITDA as an incentive for its continued involvement, an expense of $5.7 million in 2025.

The customers are mostly governments arming Ukraine. Germany's defence ministry delivered a further 30 RQ-35 Heidrun drones to Ukraine in April 2025, Army Recognition reported. The DI article says Germany alone has donated 684 Sky-Watch drones to Ukraine; that total could not be checked against a German government list.

Sky-Watch also kept taking part in EU and Danish research. CORDIS lists it as a partner in TeamPlay, a 2018 to 2021 Horizon 2020 project on energy and timing analysis of software, with drones as one use case. North Data's summary of the Danish state aid register shows Grand Solutions grants of DKK 3,166,399 in December 2024 and DKK 10.5 million for 2026 to 2028; their subject is not given there and could not be confirmed from a second source. The EIC award was grant only, and no EIC Fund investment in Sky-Watch could be found.

Why Europe Should Care

Sky-Watch builds exactly what EU defence policy now asks for. The Commission's Defence Readiness Roadmap 2030, presented on 16 October 2025, names a European Drone Defence Initiative as one of four flagship projects, according to the EEAS and the European Council on Foreign Relations. A Danish factory supplying reconnaissance drones to Ukraine and the Netherlands is part of the European supply base that roadmap wants to grow.

Ownership is the complication. The company that received the EU grant has belonged to a US group since 2022, its profits flow to a Nasdaq-listed parent, and AIRO's 10-K names "military manufacturing in the United States" among its core future initiatives. For now Sky-Watch remains registered in Støvring and leases three sites for offices and production, according to the 10-K; whether future capacity will be added in Europe or the United States is a decision for its US parent.

The Verdict

Sky-Watch, AIRO Group Holdings and kraftwerk TUBES have not been asked for comment for this article. kraftwerk TUBES' most recent accounts in the German register are for 2021, filed in January 2024, according to North Data. This article is based entirely on public records, company statements and EU project data, linked throughout.