Power and energy are fundamental to all vehicles, and there are problems with todays propulsion systems: batteries have low energy density relative to fuel, and todays combustion engines are not reliable, efficient or quiet, and Diesel engines are particularly heavy. In order to create a more practical and dependable heavy-fueled propulsion system for Group 2 and Group 3 UAS, which address these issues, LiquidPiston, Inc. (LPI) proposes the application of their revolutionary Hybrid-Electric X Engine (HEXE) in a VTOL UAS system. The X engine is a revolutionary new type of rotary engine that has just two moving parts and operates on an advanced thermodynamic cycle. In Phase I of this program, LPI will demonstrate feasibility through conceptual design and partial hardware demonstration of a HEXE propulsion system. Specifically, the propulsion system will enable the UAS to takeoff vertically using electrical power; combines electrical power and engine power to rapidly climb; and when in cruise, the engine smartly recharges the batteries. A unique capability of the HEXE system is capability to turn the engine off mid-flight, cruise in Quiet mode with electrical-only power, and then switch the engine back on.