Description: The need for a small, lightweight, remotely-operable transponder for UAVs is identified. This would allow integration of UAVs into the national airspace while providing an equivalent level of safety during operations as manned aircraft. A network-centric, integrated transponder and altitude encoder is proposed to meet this need. Phase I includes device design and bench top testing of system components. Phase II includes design refinement, prototype fabrication, and comprehensive flight testing of the device in KalScott's UAV.