DDownload - Pegasus Helicopters

BUSINESS PLAN OVERVIEW DATED NOVEMBER 2012 

PEGASUS HELICOPTER GROUP LIMITED & PEGASUS HELICOPTER, INC. 

INTRODUCTION 

Pegasus Helicopter Group (Pegasus) owns and holds patents for technology which is unlike any 

“conventional” helicopter flying today. 

This is the result of years of successful development and testing, and an investment to date in excess of 

$30 million at today’s US dollar value by the predecessor to Pegasus and Pegasus Helicopter Group 

Directors and Investors. It is currently backed by the rotorcraft industry’s best and brightest, including the 

engineer who co-invented the NOTAR (No Tail Rotor System) anti-torque system, seen on many “First 

Responder” helicopters. 

Pegasus uses an air pressure jet design that is fundamentally different to today’s helicopters. The 

technology has been proven over more than 200 flight hours. Most significantly, the Pegasus technology 

delivers a range of inherent advantages unlike anything the helicopter industry has ever seen before. 

Pegasus overcomes many of the fundamental weaknesses and dangers found in conventional 

helicopters, delivering vast improvements in safety, reliability, lifetime costs, and training. 

HISTORY 

Pegasus was established in 2007 in Phoenix, Arizona when a team of entrepreneurs and engineers 

acquired the rights to the air pressure jet technology; drawings, test data, and flight videos from the chief 

turbine engineer on the original program in the 1980’s. That program successfully demonstrated the 

philosophy of the technology. Pegasus Helicopter Inc. was formed in 2007 to purchase this IP, develop 

and improve it to bring it to market. In June 2008, Pegasus was listed on the Plus Market Stock 

Exchange in London as Pegasus Helicopter Group Plc. This was initiated as a means of raising capital 

on an exchange which catered to emerging businesses. Soon after however, the worldwide financial 

crisis erupted and investment proved difficult. 

An initial $2 million funding was eventually received by Pegasus Helicopter Group Plc from an overseas 

investor in August 2011. A program of two Phases was developed; Phase 1 to prove and improve the 

“Pressure-Jet” technology utilizing the $2mill investment, and Phase 2 to bring a family of Pegasus 

helicopters to market. The Company considers that Phase 1 is complete and now seeks additional 

funding to complete Phase 2 as described below. 

On completion of Phase 1, the U.K. Company converted Pegasus Helicopter Group Plc to Pegasus 

Helicopter Group Limited. In doing so the ownership of the Pegasus IP and associated patents and 

investors automatically transferred from the PLC to the new LTD company, including the ownership of its 

subsidiary Pegasus Helicopter Inc. 

1 

Registered Office: Ashford House, Grenadier Road, Exeter, Devon, EX1 3LH, United Kingdom. Registered in England and Wales 

Company No: 6480521 Website: www.pegasusheli.co.uk email: assistance@pegasusheli.co,uk

THE TECHNOLOGY 

Pegasus Helicopters offers a unique helicopter design concept using its pressure jet technology. 

The Pegasus air pressure-jet is fundamentally different to conventional helicopters on the worldwide 

helicopter market. Pegasus is so dramatically different than current helicopters that it is projected to 

create a large international market of its own due to its compelling features. 

Conventional Helicopter 

Pressure Jet Helicopter 

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Pegasus use an existing lightweight turbine engine that drives compressed air through hollow rotor 

blades and jettisons high speed air out from nozzles at the blade tips, resulting in rotor blade rotation. 

The turbine exhaust is directed over a vertical rudder at the stern of the aircraft thereby providing precise 

yaw control and automatic stability. The technology eliminates the need for primary and secondary 

mechanical drive trains and a tail rotor. The entire system is driven by air. The components that are not 

present in Pegasus helicopters are often the cause of accidents and downtime in conventional 

helicopters. 

In conventional helicopter technology the mechanical linkage between the engine and the rotor blades 

creates torque, necessitating a tail rotor to counteract it. Transmissions, tail rotors, linkages, gear boxes, 

drive shafts, and disengage systems are all integral features of conventional helicopters. These features 

dictate the very high cost to build, buy, and maintain helicopters as well as the exceptional skill level to fly 

them. Lifetime costs including maintenance, downtime, overhauls and spare parts are substantially 

reduced due to the Pegasus’ significantly fewer parts. It is estimated that the industry’s major high 

overhead helicopter manufacturers must achieve three times the initial price via overhauls, maintenance 

and spare parts in order to provide a satisfactory return. 

An estimated 20% of the pilots licensed to fly fixed wing aircraft have the psycho‐motor skills required to 

fly conventional helicopters. The skill level required to fly a Pegasus is comparable to that needed to drive 

a manual shift car. Learning to fly a conventional helicopter requires a substantial amount of time and 

skill; the primary challenge being maneuvering the aircraft while fighting the counter internally created 

torque forces. Because the rotor blades are turned from the tips, rather than twisted from a central drive 

shaft, torque is virtually eliminated and with it the need for mechanical drives, extended tail boom and tail 

rotor. 

When flying a Pegasus, the action/reaction drive at the rotor blade tips virtually eliminates torque, making 

a Pegasus easier and safer to takeoff, maneuver and land. The absence of a tail rotor means added 

safety for ground personnel and all aircraft missions. 

THE BUSINESS 

PHASE 1. 

The $2 million convertible note was raised with a Middle East investor in September 2011. The note is 

convertible into 28% of the company or 100 million shares at time of issue. 

The funds were used by Pegasus to build and test, under the watchful eyes of the FAA, a two seat 

pressure-jet helicopter utilizing the developed technology. This testing was recently successfully 

completed at Brown Field in San Diego. This Middle East investor preferred to remain confidential during 

Phase 1 and the Company and its current shareholders agreed to delist from the Plus Market Exchange 

in London. There remain over 140 shareholders in the company from the days of being listed. 

3 



P1 Technology Proving Aircraft 

During June, July and August 2012, the Pegasus two seat prototype underwent flight tests to verify the 

updated pressure jet concept and identify design improvements for Phase 2. The flight tests included an 

in-ground-effect hovers, out-of-ground-effect hovers, sideways flight both left and right, forward flight, 

reverse flight, right and left maximum bank turns, forward flight climbs and auto rotations. The planned 

flight tests were accomplished successfully. 

In summary, Pegasus P1 demonstrated acceptable performance, handling qualities, controllability and 

noise signature. Significant intellectual property was demonstrated and the engineering team 

recommended that Phase 2 be started. 

PHASE 2 

The Company initially plans two models, a two-seat owner self-assembly kit and a seven-seat typecertified 

aircraft. Each will have newly-designed, more efficient blades and a recently patented single 

piece rotor hub. 

4 



The seven seat aircraft will be a fully factory assembled FAA Certified helicopter. A demonstration 

aircraft, in civilian configuration, will be designed and built in Phase 2. It will be equipped with a high 

efficiency recuperated engine (patent pending) that will make the Company’s helicopters more fuel 

efficient than conventional helicopters. Additionally, both models are expected to be safer, due to the 

advantages previously described. 

A gas turbine recuperator takes air leaving the compressor (high pressure) and heat exchanges it with the 

hot engine exhaust gases. This heated compressor air is ducted from the recuperator to the gas turbine 

combustor which now requires less fuel to create the heat level needed for the turbine inlet temperature. 

This reduced fuel consumption translates into higher efficiency. It is expected that a recuperator with light 

weight restraints will be lighter than the main gear box of a conventional helicopter and provide an engine 

efficiency at least 10 points higher. 

PHASE 2 FUNDING. 

Pegasus P3 two seat self-assembly aircraft 

There are three stages in Phase 2, as follows. The completion of these three phases will require funding 

of $15 million, including a project reserve of 10%. 

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Stage1 - 12 months duration 

Ø� Anticipated new funding closing costs and fees, repayment of existing debt, accrued interest and 

outstanding expenses. Total $1.25mill; 

Ø� Design and manufacturing at Rotorcraft Group Services (“RGS “) at Meacham Field in Ft. Worth, 

Texas. CAD design, build and test a two seat and seven seat demonstration models. Pegasus 

will outsource its manufacturing to RGS, a full service Helicopter MRO facility; 

Ø� CAD Engineering for the two models including blades and rotor hub. $4.4mill; 

Ø� Build the two seat and seven seat units demos (use "soft tooling" for blades and hub at this 

stage), design and test engineering, management oversight. Total $1.85mill including $0.554mill 

for components and engines. 

Ø� Overhead, T&E. Total $0.5mill. 

Total Stage One Cash Required: $8.0mill. 

Stage 2 - 6 months duration 

Ø� At RGS, design and outsource the production of hard parts, tooling and assembly tooling, KIT 

Build Manuals, Videos. 25% down and the balance on delivery. Total $4.1mill for production 

helicopters; 

Ø� Take orders from distributors for KIT units for two-seat aircraft for 3 months delivery. 25% deposit 

down. Balance on delivery; 

Ø� Price of KITs. Two Seat $400k. At this point, the seven-seater price is estimated at $650k plus 

$200k for projected amortization of Certification costs ($100million spread over 500 units) or a 

total anticipated price of $850k. Begin Certification planning; 

Ø� Engineering, Management Oversight Overhead, T&E. Total $750k. 

Total Stage Two Cash Required - $4.85mill. 

Stage 3 - 12 months duration to peak monthly production 

Ø� At RGS in Ft Worth, commence production of the two seat at 3 units per month, rising to 6 per 

month after 6 months. Sales forecast for the 2 seat KIT units are subject to availability of 

aftermarket engines, i.e. the Rolls Royce C20 for the two-seat. Since the 7 seat aircraft is 

contemplated to be FAA Type-Certified, it will use new C40 engines. Also during this stage, 

testing and refinement of the seven-seat and its Type-Certification steps will continue; 

Ø� Components total $205k for the two-seater (plus 10% or $21k paid to RGS for each unit). $349k 

for the seven-seater (with $35k paid to RGS). 

Ø� Payment terms - vendors 30 days, RGS 15 days; 

Ø� Budgeted engineering and overhead $2.15mill. 

Total Stage Three Cash Required - Net $2.15mill before achieving positive cash-flow. 

SUMMARY: TOTAL FUNDING REQUIRED FOR ALL THREE STAGES OF PHASE 2 BUDGETED for 

$15mill including a 10% reserve. 

Since the production is outsourced to RGS, this results in no meaningful requirements for 

plant and equipment expenditures. This factor, combined with 25% deposits required with 

orders (an industry practice), results in an efficient cash business model. 

6 



These estimated budgeted amounts were arrived at after discussions with management 

and are subject to final pricing from suppliers once Phase 2 funding is received and CAD 

drawings are available. 

It is assumed that $100million is raised at the beginning of year 2 for FAA Type- 

Certification either through an IPO in Asia or the U.S. or with a strategic partner. 

PATENTS: Pegasus has received a patent for a one piece rotor hub and is applying for a patent for a 

Pressure-Jet recuperated engine and also possibly for high efficiency tip nozzles. The 

recuperated engine has other markets than just aerospace. 

AIR PRESSURE JET TECHNOLOGY: COMPETITIVE ADVANTAGES 

SAFETY 

Ø� Reduced demands on the pilot. The elimination of torque and related operational instability 

reduces the needed degree of pilot skill and attention. The high inertia rotor of the Pegasus 

allows easier, safer power-off descents from any altitude and virtually eliminates the “dead man’s 

curve”. In the simplest explanation, the Dead Man’s Curve is a diagram of speed and altitude 

where the average pilot may be unable to complete an autoration landing without significant 

damage or loss of life. Pegasus has virtually no unsafe areas of operation because the rotor 

system has very high inertia rotor blades. This means that, even with an engine failure or high 

pressure high altitude failure, the blades will continue to rotate at operating RPM for sufficient 

time to complete an autorotation landing; 

Ø� Elimination of drive train failure. Absence of the entire mechanical drive train including 

transmissions, gear boxes, drive shafts, clutch and disengage systems, eliminates all accidents 

caused by failure of any of these components; 

Ø� Elimination of tail rotor accidents; 

Ø� True VTOL capability. The high inertia rotor unit with a wide RPM operating range allows faster, 

true vertical takeoffs and landings. 

7 



MECHANICAL SIMPLICITY 

Ø� Less than half the moving parts of a conventional helicopter. 

STABILITY 

Ø� Inherently gyroscopic; 

Ø� No torque stresses on rotor hub or airframe; 

Ø� Less vibration; 

Ø� No unstable attempt at torque balancing. 

EASE OF MAINTENANCE 

Ø� Less down time; 

Ø� Fewer critical parts to maintain, repair, overhaul or replace; 

Ø� Reduced expertise needed by ground personnel. 

EASE OF OPERATION 

Ø� Less pilot skill required; 

Ø� Wider permissible rotor speed range; 

Ø� High inertia rotor allows slower, safer power-off descent; 

Ø� Simple yaw control by deflection of engine exhaust by vertical rear stabilizer; 

Ø� Longer allowable pilot reaction time; 

Ø� Safe auto rotational descent. 

8 



INCREASED FLIGHT CAPABILITIES 

Ø� Steep approaches, rapid vertical climb, and jump takeoffs; 

Ø� Quick stops from vertical flights; 

Ø� True VTOL operational capabilities over a wider density-altitude range; 

Ø� Slower power off descent. 

NOISE REDUCTION 

Ø� Noise signature significantly reduced; 

Ø� Blade “slapping” non-existent during powered flight. 

SALES THROUGH DISTRIBUTORS 

Discussions are under way with helicopter distributors in China, Brazil, Taiwan, Russia, Mexico, Malaysia 

and the Philippines. There is considerable interest from two companies in China. China is expected to 

become a very large market as the air space restrictions for general aviation are being relaxed. 

TARGET MARKETS 

It is expected that Pegasus will create a substantial new market for helicopters. It is estimated that 10% of 

the population has the skill levels to fly conventional helicopters whereas 90% of the population has the 

skill to fly Pegasus pressure jets. Anticipated markets include civil, law enforcement, safety and security, 

emergency and medical, commuters, island hoppers, pleasure seekers, police and traffic control, 

surveillance, border patrol and med-vac are just a few of the buyers Pegasus anticipates. Pegasus is 

flexible in that it can operate on different fuels, namely, diesel, auto gas and jet fuel. 

BARRIERS TO ENTRY 

If someone wanted to start today to develop pressure jet technology through successful flight testing, our 

estimate is it would take $50 to $75 million in costs and 3 to 5 years to be successful. This would be 

equivalent to having to complete what was accomplished by Pegasus’ predecessor and Phase 1 Pegasus 

development. 

For a new startup business, this development probably could not be funded today. For one of the major 

helicopter companies it would take the same lead time, but the concept of a simple, inexpensive aircraft is 

contrary to their business models. They build complex and expensive machines, resulting in a future 

stream of revenues equal to a multiple of the base sales price in terms of spares, maintenance and 

overhauls. Such conventional industry helicopters are also subject to high downtime. 

Pegasus’s patent protection should also prove to be a barrier. 

9 



UNIT SALES AND P&L FORECAST (Dollars in thousands) 

Unit Sales 

- 2 Seater 

- 7 Seater 

Revenues 

- 2 Seater 

- 7 Seater 

Total Revenues 

Cost of Sales 

- Components 

- 10% of Comp-RGS 

Total Cost of Sales 

Gross Profit 

- $ 

- % of Revenues 

SG&A 

- Distributor commiss. 10% 

- Sales/commissions 5% 

- Advertising/air shows/PR 

- Engineering 

- Management/G&A 

- Supplies & Packaging 5% 

- Professional services 

- Telephone 

- T&E 

- Insurance 

- Misc 

Total Operating Expenses 

EBITDA 

Amortization (over 500 units) 

- CAD 

- Tooling 

- Manuals/Videos 

- Certification 

Earnings before taxes 

- $ 

- % 

Year 1 Year 2 Year 3 Year 4 Year 5 

54 

- 

21,600 

- 

21,600 

11,070 

1,107 

12,177 

9,423 

44 

2,160 

1,080 

1,050 

1,750 

640 

1,080 

250 

100 

250 

350 

50 

8,760 

663 

259) 

) 

) 

404 

2 

10 


Company No: 6480521 Website: www.pegasusheli.co.uk email: assistance@pegasusheli.co,uk 

250 

- 

100,000 

- 

100,000 

51,250 

5,125 

56,375 

43,625 

44 

10,000 

5,000 

2,100 

3,500 

740 

5,000 

350 

150 

350 

450 

100 

27,740 

15,885 

1,200) 

) 

) 

14,685 

15 

275 

- 

110,000 

- 

110,000 

56,375 

5,637 

62,012 

47,988 

44 

11,000 

5,500 

3,250 

3,550 

840 

5,500 

375 

175 

400 

500 

125 

31,215 

16,773 

1,319) 

) 

) 

15,454 

14 

300 

- 

120,000 

- 

120,000 

61,500 

6,150 

67,650 

52,350 

44 

12,000 

6,000 

4,000 

3,650 

940 

6,000 

400 

200 

450 

550 

150 

34,340 

18,010 

1,440) 

) 

) 

16,570 

14 

325 

200 

130,000 

170,000 

300,000 

136,425 

13,642 

150,067 

149,933 

50 

30,000 

15,000 

5,000 

4,500 

1,040 

15,000 

500 

300 

750 

1,000 

250 

73,340 

76,593 

3,980) 

) 

) 

40,000 

32,613 

11

COMPETITION 

The following is a comparison of the specifications between the 5 Seat Robinson and the proposed 7 

Seat Pegasus. Robinson have been quite successful with their FAA Type-Certified helicopter at a selling 

price of $850k which is being produced at 10 per week or some 500 per year. This is a competitive price 

for a type-certified unit. In addition to the Pegasus advantages in the table below, the Pegasus unit is 

anticipated to enjoy better fuel efficiency at some 18 gallons per hour compared to 20 gallons per hour. 

HELICOPTER COMPARISON 

ROBINSON R66 PJ 600 

ENGINE TYPE DE-‐RATED ROLLS ROYCE RR 300 RECUPERATED RR250 C40 

MAX GROSS WEIGHT 2,700 LB (1,225 KG) 4,000 LB (1,814 KG) 

APROX EMPTY WEIGHT 1,280 LB (581 KG) 1,700 LB (771 KG) 

FUEL CAPACITY 493 LB (224 KG) 628 LB (285 KG) 

PASSANGERS AND BAGGAGE W/MAX FUEL 927 LB (420 KG) 1,672 LB (758 KG) 

CRUISE SPEED UP TO 125 KTS UP TO 140 KTS (4000FT) 

MAX RANGE (NO RESERVE) APROX 325 NM (375 SM) 440 NM (SL) 

HOVER CEILING IGE (MAX GROSS WEIGHT) OVER 10,000 FT OVER 10,000 FT 

HOVER CEILING OGE (MAX GROSS WEIGHT) OVER 10,000 FT OVER 10,000 FT 

RATE OF CLIMB OVER 1,000 FT/MIN OVER 1,300 FT/MIN 

MAXIMUM OPERATING ALTITUDE 14,000 FT 14,000 FT 

INDUSTRY FORECAST 

An industry forecast for 2012 to 2016 reflects sales of 4,700-5,200 helicopters worldwide compared to 

4,300 for the period 2007 to 2011. Five year demand by region reflects Asia 20%, Europe 26%, North 

America 26%, Latin America 22% and Middle East/Africa 6%. 

The Light Single Engine Helicopter is expected to comprise some 45% of the total market. 

PHASE 3. 

FAA Certification of the seven-seat type-certified aircraft. Possible funding sources include an IPO in 

Asia or the U.S. or with a strategic partner during year 2 to raise $100 million. 

11 



ENGINEERING & MANAGEMENT TEAMS 

Robert Zummo, (Chairman & Chief Executive Officer), has approximately 40 years of experience in 

aerospace, automotive and defense having worked for Grumman Aerospace, Textron Aerostructures, 

LTV Corp., General Defense, Insilco, Safety Components and Valentec Systems. 

Michael Spanos, (Executive Director) & Director, graduated from San Francisco State University with a 

Bachelors of Science in Information Systems Design. From 1992 to 1999, Mr. Spanos worked as a 

software engineer and developer for several Fortune 500 companies including Pacific Bell, Charles 

Schwab and DHL. In 1999, Mr. Spanos founded Rotary Engineering LLC, a company which was a full 

service machine shop that provides services to the aerospace and other industries. 

Christopher McDonald-Drewitt, Previously Non-Executive Chairman of the Plc, has recently taken the 

position of Group Contracts and Purchasing Director. With over 30 years of experience in international 

project management in the shipping industry, global trading, logistics, the defense industry and Oil & Gas. 

Mr..Drewitt became the Marine Manager of the UK government’s Oil and Gas company, The British 

National Oil Corporation (Development) Limited where he was responsible for a £80mill operation. 

David White has 40+ years of gas turbine experience: Low emission combustion systems, advanced 

(hybrid) cycles; many patents, owner of Tritek Consulting, formerly Manager Advanced Turbine Systems 

Development at Solar Turbines; consultant on many government programs. 

Philip Pang, President, Pegasus Asia, is an accomplished global executive with 21 years of experience 

in automotive, manufacturing, defense, general aviation and consulting. Previous employment included 

General Motors, TRW, Autoliv, Safety Components International, Valentec Systems and Wilden Pump. 

Philip graduated from the University of Illinois at Chicago with a Bachelor's degree in Mechanical 

Engineering and an MBA from Kellogg School of Management, Northwestern University. Philip works at 

Pegasus’ Helicopter Shanghai office. 

Francis X. Suozzi, Senior Strategic & Financial Advisor, has senior financial experience at three Fortune 

500 companies and general management results in the aerospace industry. 

Andrew Logan has over 40 years’ experience in the helicopter technology development, design, 

manufacturing and certification. He was Chief Technology Officer at MD Helicopters, and VP General 

Manager of Boeing and McDonnell Douglas. He is a co patent holder of the NOTAR (no tail rotor) 

Technology and received the Howard Hughes Award for technology development. 

Charles Vehlow is a West Point Graduate, a decorated helicopter pilot in Vietnam, served as an 

associate professor at West Point where he taught helicopter design. He has held the positions of Vice 

President for McDonnell Douglas’ Apache Longbow’s development, test and production programs, Vice 

President of Boeing’s helicopter division and President of MD Helicopters. 

David Oglesbe was Director of Sales at Bell Helicopter and VP Sales and Marketing at MD Helicopters. 

He is a licensed FAA flight instructor and commercial pilot. 

Frank Verbeke has 45 years as mechanical engineer and is a turbine and mechanical design expert. In 

1970 he founded a consulting engineering program in the acoustics, aerodynamics and thermodynamics 

for turbine engines. In the 1980s, he was involved with the predecessor company to Pegasus, which 

developed the pressure jet technology, which he acquired and sold to Pegasus. 

12

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