PEGASUS HELICOPTER GROUP PLC - NEX Exchangelibrary.isdx.com/.../PegasusHelicopter/pegasusadmindoc2008.pdf · Pegasus Helicopter Holdings and its wholly owned Subsidiary, Pegasus Helicopter,

If you are in any doubt about the contents of this Document you should consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities. This Document has been drawn up in accordance with the requirements of the PLUS Rules for Issuers. The contents of this Document have not been approved by an authorised person for the purposes of Section 21 of the Financial Services and Markets Act 2000. The Directors of Pegasus Helicopter Group Plc, whose names appear on page 4 of this Document, accept responsibility for the information contained in this Document. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Document is in accordance with the facts and does not omit anything likely to affect the import of such information. The share capital of the Company is not presently listed or dealt in on any stock exchange. It is intended that an application will be made for all the Ordinary Shares of the Company to be traded through PLUS. It is emphasised that no application is being made for admission of these securities to the Official List of the UK Listing Authority or to trade on AIM or on the PLUS-listed Market. The Company is seeking admission to the PLUS-quoted Market (“PLUS”). PLUS is a market operated by PLUS Markets Plc (a recognised investment exchange) incorporating a primary market for the shares of small and medium companies (known as PLUS-quoted securities). PLUS-quoted securities are not listed and the market is not classified as a Regulated Market under EU financial services law. An investment in the shares of smaller companies tends to involve a higher risk than more mature companies. If you are in any doubt about the contents of this Document you should consult a person authorised by the FSA to provide investment advice.

PEGASUS HELICOPTER GROUP PLC

(Incorporated in England and Wales under the Companies Act 1985 with registration number 6480521)

ADMISSION TO TRADING ON PLUS

PLUS CORPORATE ADVISERS

Atlantic Law Llp (Regulated and Authorised by the Financial Services Authority)

Share capital immediately following Admission Authorised Issued

Number £ Number £

250,000,000 2,500,000 Ordinary shares of £0.01 each 200,000,000 2,000,000

Atlantic Law Llp which is authorised and regulated by the Financial Services Authority, is the Company’s Corporate Adviser in connection with the Admission for the purposes of the PLUS Rules. Atlantic Law Llp has not made its own enquiries except as to matters which have come to its attention and on which it considered it necessary to satisfy itself and accepts no liability whatsoever for the accuracy of any information or opinions contained in this Document, or for the omission of any material information, for which the Directors are solely responsible. The advisers named on page 4 are acting for the Company and no one else in relation to the arrangements proposed in this Document and will not be responsible to anyone other than the Company for providing the protections afforded to clients of such advisers or for providing advice to any other person on the content of this Document. The text of this Document should be read in whole. This Document is not an offer to purchase shares in the Company. An investment in Pegasus Helicopter Group Plc involves a high degree of risk and, in particular, attention is drawn to the section entitled ‘Risk Factors’ on page 18 of this Document. All statements regarding the Company’s business, financial position and prospects should be viewed in light of such Risk Factors. An investment in the Company may not be suitable for all recipients of this Document. Prospective investors should consider carefully whether an investment in the Company is suitable for them in light of their personal circumstances and the financial resources available to them.

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CONTENTS

Page

Forward Looking Statements 3

Directors, Secretary and Advisers

4

Definitions 5

Part I

Information on Pegasus Helicopter Group Plc 8

Background 8

Business Strategy 9

Industry Overview 9

Product Overview 10

Manufacturing 11

Marketing 12

Management 14

Part II

Financial Statements 17

Part III

Risk Factors 19

Part IV

Statutory and General Information 22

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FORWARD LOOKING STATEMENTS

This Document contains forward-looking statements. These statements relate to the Company’s future prospects, developments and business strategies.

Forward-looking statements are identified by their use of terms and phrases such as “believe,” “could,” “envisage,” “estimate,” “intend,” “may,” “plan,” “will” or the negative of those, variations or comparable expressions, including references to assumptions. These statements are primarily contained in Parts I and III of this Document.

The forward-looking statements in this Document are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. Certain risks to and uncertainties for the Company are specifically described in Part III of this Document headed “Risk Factors.” If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, the Company’s actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward looking statements.

These forward-looking statements are made only as at the date of this Document. Neither the Directors nor the Company undertake any obligation to update forward looking statements or Risk Factors other than as required by the law, the PLUS Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.

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DIRECTORS, SECRETARY AND ADVISERS

Directors

Robert Zummo, Chief Executive Officer Craig Wilson, B.S., CPA, Chief Financial Officer Todd Bailey, BME, Chief Operating Officer Michael Spanos, B.S., Executive Director Captain Christopher Drewitt, Chairman and Non-Executive Director Joseph Messina, Non-Executive Director Charles Vehlow, BS, MS, MBA, Non-Executive Director

Company Secretary David Venus & Company Thames House, Portsmouth Road Esher Surrey KT10 9AD

Principal Office 4122 West Venus Way, Suite A Chandler, Arizona 85226 USA Tel: 001-571-276-1067 www.pegasusheli.com

Registered Office Thames House Portsmouth Road Esher, Surrey KT10 9AD

Corporate Adviser Atlantic Law Llp One Great Cumberland Place London W1H 7AL

Auditors and Reporting Accountants

Clarkson Hyde LLP 70 Conduit Street London W15 2GE

Solicitors and Attorneys United Kingdom

United States

Maxwell Winward LLP 100 Ludgate Hill London EC4M 7RE Robert Allen Evers Law Offices, Chartered 1050 Connecticut Avenue, N.W. Suite 1000 Washington, D.C. 20036 USA

Registrars Computershare Investor Services PLC P.O. Box 82, The Pavilions Bridgwater Road Bristol BS99 7NH

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http://www.pegasusheli.com/

DEFINITIONS

In this Document, where the context permits, the expressions set out below shall have the following meanings:

“Act” the Companies Act 2006, and those provisions of the Companies Act 1985 which remain in force;

“Admission” the admission to PLUS of all of the Ordinary Shares of the Company;

“AIM” a market operated by the LSE;

“Articles” the articles of association of the Company;

“Assembled Form” the fully assembled version of the PH200 PJ Helicopter which will be assembled by a FAA certified mechanic;

“Atlantic Law ” Atlantic Law Llp;

“Board” or “the Directors” the Directors of the Company whose names appear on page 4 of this Document;

“Combined Code” the Combined Code on Corporate Governance;

“Company” Pegasus Helicopter Group Plc;

“CREST” the computerized settlement system used to facilitate the transfer of title to shares in uncertificated form operated by Euroclear UK & Ireland Limited;

“DAR” a Designated Airworthiness Representative appointed in accordance with section 183.33 of the FAR;

“Document” this Admission Document;

“EEA” Experimental Aircraft Association Inc;

“FAA” US Federal Aviation Authority;

“FAR” US Federal Aviation Regulation;

“FSA” the Financial Services Authority;

“FSMA” the Financial Services and Markets Act 2000;

“Group” or “Pegasus” the Company and its wholly owned subsidiary, Pegasus Helicopter Holdings Limited and Pegasus Helicopter Holdings Limited’s wholly owned subsidiary, Pegasus Helicopter, Inc.;

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http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgFAR.nsf/0/5D368DBB5DAAE90B86256C8B00756ECF?OpenDocument

“HSE” Health and Safety Executive;

“IPO” an initial public offering;

“Issued Share Capital” the 200,000,000 Ordinary Shares in issue upon Admission;

“ISD” the Investment Services Directive;

“JetA” a kerosene grade of fuel used for turbine engine aircraft;

“JP4” a grade of fuel which has a 50-50 kerosene-gasoline blend;

“Kit Form” the kit form of the PH200 PJ Helicopter which will be assembled by civilian consumers;

“Locked-In Persons” Todd Bailey, Joseph Messina, Michael Spanos, Frank Verbeke and Robert Zummo;

“LSE” the London Stock Exchange Plc;

“Official List” the Official List of the UK Listing Authority;

“Ordinary Shares” the ordinary shares of £0.01 each in the capital of the Company;

“Pegasus Helicopter Holdings” Pegasus Helicopter Holdings Limited;

“Pegasus Helicopter, Inc.” Pegasus Helicopter, Inc;

“PH200 PJ Helicopter” the two passenger pressure jet helicopter designed and manufactured by the Company;

“PLUS” the PLUS-quoted Market operated by PLUS Markets Plc;

“Recognised Investment Exchange” an investment exchange or clearing house recognised under the Financial Services and Markets Act 2000;

“Registrars” Computershare Investor Services PLC;

“RotorWay Helicopters” a range of kit helicopters manufactured by RotorWay International Inc;

“Shareholders” the persons who are registered as the holders of the Ordinary Shares;

“Subsidiaries”

as defined in section 736 of the Companies Act 1985;

“Torque” the measure of a force's tendency to produce torsion and rotation about an axis;

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http://en.wikipedia.org/wiki/Kerosene

http://en.wikipedia.org/wiki/Gasoline

“UK” the United Kingdom of Great Britain and Northern Ireland;

“UK Listing Authority” the FSA acting in its capacity as the competent authority for the purposes of Section 72 of FSMA;

“US” the United States of America;

“VTOL” vertical take-off and landing;

“$” United States dollar; and

“£” pound sterling.

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PART I

INFORMATION ON THE COMPANY

Background Pegasus Helicopter Group Plc is the holding company of a Group that plans to manufacture a two seat helicopter which employs pressure jet technology. The Group intends to market and sell its PH200 PJ Helicopter to the civilian and military markets worldwide. The PH200 PJ Helicopter is a pressure jet helicopter which will be sold in a Kit Form, whereby the consumer is responsible for the final assembly using factory supplied instructions and parts. The Company was incorporated to acquire the share capital of Pegasus Helicopter Holdings and to seek admission for trading of its Ordinary Shares on PLUS. The Company operates through Pegasus Helicopter Holdings and its wholly owned Subsidiary, Pegasus Helicopter, Inc. The PH200 PJ Helicopter will be designed and manufactured at the Group’s factory in Arizona. The Group also intends to set up a manufacturing facility in Mexico following the Company’s Admission. In the opinion of the Directors, the Group has the following strengths:

• a leading position in the market for the production of kit helicopters which employ pressure jet technology;

• a highly experienced management team who have had direct experience with the marketing, engineering, and manufacturing of high volume aerospace, automotive and turbine engine products; and

• a highly experienced marketing and technical advisory with extensive helicopter design, flight test and marketing experience.

The Group structure is as follows:

Pegasus Helicopter, Inc.

Pegasus Helicopter Holdings Limited

Pegasus Helicopter Group Plc

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Business Strategy Upon Admission, the Company plans to use its financial resources and its PLUS traded shares to develop the scale and scope of its business and in particular the PH200 PJ Helicopter. The Directors intend to bring a safe, easy-to-fly, low-cost 2-passenger pressure jet helicopter to the civilian and military markets worldwide by utilising production resources both inside and outside the US. The Directors intend to market the PH200 PJ Helicopter to the worldwide distributors of similar civilian helicopters and plan to demonstrate the Company’s prototype single seat pressure jet helicopter at the EEA AirVenture Show in Oshkosh, Wisconsin between 28 July and 3 August 2008. Once the base design and testing of the PH200 PJ Helicopter has been completed, the Directors intend to sell licensed franchises in strategic locations worldwide to complete the final assembly. Industry Overview Market Demand The Directors consider that demand for the PH200 PJ Helicopter will be driven by its safety, low unit cost, low operating costs, simplicity and ease of flying. In the opinion of the Directors, the civilian market demand for helicopters in the US can be estimated by the number of RotorWay Helicopters kits sold. Currently, the Directors estimate that RotorWay International is selling their piston helicopter kit at a rate of approximately 125 units per year. The Directors believe that offering the PH200 PJ Helicopter to consumers in a Kit Form will open the market to those who do not have the time, money, or facilities to assemble larger helicopters. The Directors are also of the opinion that the reduced operational costs of the PH200 PJ Helicopter will increase its market potential. Competitive Analysis The Directors consider that due to the unique nature of the PH200 PJ Helicopter, there is no major competition other than the two-passenger conventional helicopters which are outlined in the table below: Supplier Engine Kit/Certified Estimated Operation

Cost (hr) PH200 PJ Helicopter 250 Hp Gas Turbine Kit $ 66 RotorWay 2660cc piston Kit $ 81 Robinson R22 131 Hp piston Certified $ 104 Schweizer 333 250hp Gas Turbine Certified $ 178 In the opinion of the Directors, the PH200 PJ Helicopter will have a lower operational cost than its competition due to its simple single stage turbine, a simple pressure jet design, the need for only two rotor blades and the large reduction of mechanical parts from a conventional helicopter which reduces ongoing mechanical maintenance. As it is intended that the PH200 PJ Helicopter will have a single stage turbine, an additional advantage is that it will be able to run on most fuels.

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Product Overview The fundamental difference between the PH200 PJ Helicopter and conventional helicopters is the elimination of Torque. In the opinion of the Directors, the elimination of Torque results in a mechanically simple helicopter that is easy to fly and maintain. The PH200 PJ Helicopter will operate without the need for a tail rotor and other mechanical linkages found on conventional helicopters. On conventional helicopters, the tail rotor primarily controls the Torque created by the engine by twisting the shaft which turns the main rotor. Without the tail rotor providing anti-torque, the airframe would spin in the opposite direction of the main rotor. The PH200 PJ Helicopter will have a conventional gas turbine 250 shaft horse-power, power plant. The turbine is a bleeder type; therefore no air compressor is required. Compressed air is ducted via the hollow rotor shaft and through hollow extruded aluminum rotor blades. The air blows out the end of the blades, spinning the rotor without creating Torque.

In the opinion of the Directors the PH200 PJ Helicopter will have the following advantages over that of conventional helicopters:

• mechanical simplicity; the PH200 PJ Helicopter is less costly to build, maintain and repair;

• easier to operate, requiring lower levels of pilot skill; • the PH200 PJ Helicopter can be fuelled with gasoline, diesel, JetA and JP4; • improved safety due to fewer moving parts; the only major components are the jet

engine blowing air through the head and down hollow rotor blades; and • improved safety during emergency landings with a high inertia rotor system which is

highlighted in the diagram below.

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Manufacturing When the base design and testing of the PH200 PJ Helicopter is complete, the Directors intend to set up production of the turbine engines and other main components of the PH200 PJ Helicopter in the US and Mexico. Production of the frames, plexiglas, interior and fiberglass parts will occur in Mexico, while the production of the turbine and blades will occur in the US. The PH200 PJ Helicopter will have the blades and rear yaw controls removed in Mexico to be packed for shipping to the US where the helicopter will be assembled into the Kit Form for export or sale in the US. The Directors intend for the finished PH200 PJ Helicopter to be test flown in the US.

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Marketing PH200 PJ Helicopter for civilian use The PH200 PJ Helicopter will be made of a tube steel frame, aluminum skids, fiberglass panels, a cast blade drive, extruded aluminum blades, and a simple wiring loop with off-the-shelf instruments, plexiglas windshield and doors, a turbine engine and hardware. The Kit Form will require installation of the turbine, fiberglass panels, plexiglas windshield and doors, yah controls, wiring loop, exterior and interior controls along with the final assembly of the blades. The Directors believe the estimated time for assembly of the Kit Form by a civilian consumer using the factory supplied assembly instructions will be approximately 60 - 100 hours. As the PH200 PJ Helicopter will be sold to civilian consumers in the Kit Form, it is not required to comply with any FAR requirements for aircraft or parts certification. The purchasers of the Kit Form, however, who perform the major portion of the fabrication and assembly solely for their own education or recreation will need to obtain an Experimental Certificate from the FAA. The Company will support customers who apply for an Experimental Certificate from the FAA as part of their customer support program. The Company intends to engage a DAR to perform the examination, inspection and testing services necessary for the issuance of FAA certificates. The Directors consider that due to the simplicity of operating the PH200 PJ Helicopter, an individual with the adequate skill level could learn to fly the PH200 PJ Helicopter within 5 hours of training; however the FAA pilot certification requires a minimum of 40 hours for a private pilot certificate. The Directors believe that this in combination with the low operating costs will make the PH200 PJ Helicopter a desirable civilian aircraft. PH200 PJ Helicopter for military sales The Directors have given presentations to liaison officers serving in the US Army in Iraq and Afghanistan and intend to expand and target sales of the PH200 PJ Helicopter to the military, as the Directors believe that the PH200 PJ Helicopter can be easily modified to be fitted with weapons. The Directors also consider that the PH200 PJ Helicopter’s anticipated VTOL performance will enhance its escape maneuverability. The Directors believe the PH200 PJ Helicopter could also potentially be used for border patrols, executive protections and oil pipe line surveillances. PH200 PJ Helicopter for commercial use The Directors consider that the PH200 PJ Helicopter could be used as a traffic and weather reporting vehicle. The Directors are of the opinion that the PH200 PJ Helicopter could be fitted with a remote camera that could be controlled by the pilot or an operator at a news station, making this version of the helicopter a one man mobile studio. Intellectual Property The Group’s success depends in part on obtaining, maintaining, and enforcing its intellectual property rights, and its ability to avoid infringing the intellectual property rights of others. At present, the Group does not own any patents for the PH200 PJ Helicopter. The Group intends to file at least 2 patents following Admission that will help ensure that the PH200 PJ Helicopter is protected from competitors using similar technology to produce similar products.

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Properties Pegasus Helicopter, Inc. rents factory space in Arizona which it makes available to the Group for operations. Reasons for Admission to PLUS The Directors believe that the benefits of being quoted on PLUS include:

• Raising the Company’s profile;

• The ability to raise additional funds in the future to support accelerated growth of the Company; and

• Permitting the realisation over time of equity value to the Company’s principal owners

without necessitating the sale of the business. Admission to Trading on PLUS The Company has applied for the whole of its Issued Share Capital to be admitted to trading on PLUS. The share capital of the Company is not presently listed or dealt in on any stock exchange. It is emphasised that no application is being made for the admission of these securities to AIM, the market operated by the London Stock Exchange, or the Official List of the UK Listing Authority or of the PLUS-listed market. PLUS is a market operated by PLUS Markets Plc and is not part of the London Stock Exchange. Lock-In Arrangements On the start of trading on PLUS, the Locked-in Persons will be interested in 119,000,000 Ordinary Shares. The Locked-In Persons have each undertaken that they will not dispose, pledge or borrow against any of the Ordinary Shares held by them at any time prior to the first anniversary of the Company’s admission to PLUS and in such a manner as Atlantic Law or a broker may reasonably require thereafter to maintain an orderly market; by way of an acceptance of any offer made in accordance with the City Code on Takeovers and Mergers by any third party for the whole of the ordinary share capital of the Company, which offer becomes unconditional as to acceptances; pursuant to an intervening court order; or pursuant to the appointment of a personal representative in the event of death. Financial Information Financial information on Pegasus Helicopter Group Plc and Pegasus Helicopter, Inc. is set out in Part II of this Document. The information provided comprises Pegasus Helicopter Group Plc’s audited financial statements as at 31 March 2008 and Pegasus Helicopter, Inc.’s balance sheet prepared by the Group’s auditors, Clarkson Hyde LLP, as at 31 December 2007. As far as the Directors are aware and are able to ascertain the financial information as disclosed in Part II has been prepared in accordance with the laws applicable to the Group and they accept responsibility for it. The Company's accounting reference date is 31 December.

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Dividend Policy The Directors do not intend to declare a dividend until the Company has achieved sufficient profitability and until requirements for working capital are such that it is prudent to do so. CREST An application has been made for the Ordinary Shares to be admitted to CREST upon Admission. Corporate Governance The Directors recognise the importance of sound corporate governance and intend to observe the Combined Code to the extent they consider appropriate in light of the Company's size, stage of development and resources. At present, due to the size of the Company audit and risk management issues will be addressed by the Board. As soon as practicable the Board will establish an audit and management committee and will consider developing further policies and procedures which reflect the principles of good governance and the Combined Code. Risk Factors Your attention is drawn to the Risk Factors set out on page 23 of this Document. Potential investors should consider carefully the risks described before making a decision to invest in the Company. Management The Directors have extensive senior level experience in private and publicly-held companies with a mixture of experience and expertise in the management of large corporations and the development of aerospace, defence and automotive companies. Brief biographical details of the Directors are set out below: Robert Zummo, Chief Executive Officer (aged 66) Robert Zummo has over 40 years of experience in the aerospace, defence and automotive industries. He has worked for companies such as Grumman Aerospace Corporation, Avco Aerostructures Corporation, LTV Corporation, General Defense Corporation, Insilco Corporation, and Safety Components International Corporation. He has served in various capacities, including Program and Contracts Manager, Vice President of Programs and Operations, President, Chairman and Chief Executive Officer. He is currently the owner, Chairman and CEO of Valentec Systems Inc., a US company involved in the defence manufacturing business. Craig Wilson, BS, CPA, Chief Financial Officer (aged 51) Craig Wilson graduated from West Virginia University with a Bachelors of Science in Accounting, and qualified as a Certified Public Accountant in 1985. He has over 20 years of financial accounting experience, having previously worked as the Vice President of Finance for Atlantic Financial Credit Union from 1991 to 1998, Vice President and CFO of Mid Atlantic Federal Credit Union from 1998 to 2004, and Vice President and CFO of ANECA Federal Credit Union from 2005 to 2006. He is currently the financial controller for Valentec Systems, Inc. Todd Bailey, MBE, Chief Operating Officer (aged 42) Todd Bailey graduated from the University of Colorado with a Degree in Mechanical Engineering and has over 15 years of experience in the aerospace and automotive industries working as an

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engineer for various companies. In 1998, Mr. Bailey founded Special Weapons Inc., a company which specialises in the design and manufacture of firearms for the civilian and military markets, where he works as an engineer and chief designer. Michael Spanos, BS, Executive Director (aged 41) Michael Spanos 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 Gas and Electric, Pacific Bell, Charles Schwab and DHL. In 1999, Mr. Spanos founded Rotory Engineering LLC, a full service machine shop that provides services to the aerospace, semiconductor, electronics, prosthetics, plastics and firearms industries. Captain Christopher Drewitt, Chairman and Non-Executive Director (aged 57) Captain Christopher Drewitt is a former British Master Mariner who has over 30 years of experience in international shipping, trading, logistics, the defence industry and business development. Mr. Drewitt became the Marine Manager of the UK government’s Oil and Gas company, The British National Oil Corporation (Development) Limited in 1977. In 1984 he joined Marine Offshore Management Limited as Operations Director. The company became the largest marine and underwater consultancy in the world; being sold to Lloyds Register of London and its partners in 1992. Mr. Drewitt entered the defence industry in 1999 and is currently Executive Chairman of the defence systems group, Multi-Mission Dynamics Limited. Joseph Messina, Non-Executive Director (aged 52) Joseph Messina is a principal partner of Suisse Finance (America) Inc., an international financial advisory firm providing strategic investment advisory services for US based companies on the European equity capital markets. Prior to the formation of Suisse Finance (America) Inc, Mr. Messina was Chairman and CEO of Ameristar Capital Corporation, a lease financing and asset based lender, and Ameristar Group Incorporated, an investment and financial consulting firm. From 1978 to 1992, he was President and Chief Operating officer of Vendor Funding Co., Inc., a company he co-founded. Vendor Funding Co., Inc. was acquired by First NH Bank of Manchester, New Hampshire, a subsidiary of Bank of Ireland First Holdings, Inc. Currently; Mr. Messina is a seat owner in the American Stock Exchange. Charles Vehlow BS, MS, MBA, Non-Executive Director (aged 62) Charles Vehlow is a graduate of the Army War College, Carlisle and the Navy War College in Newport and has extensive military experience. Mr. Vehlow served as an Associate Professor at the US Military Academy, where he developed and taught a helicopter design course. Mr. Vehlow has over 25 years of experience with large helicopter engineering, aerospace and manufacturing companies having held executive positions at various companies including McDonnell Douglas Corporation and the Boeing Helicopter Division. Mr. Vehlow currently serves on the Army Science Board at The Pentagon. Mr. Vehlow holds a Bachelor of Science in Engineering from West Point; a Master of Science in Aerospace Engineering from the Massachusetts Institute of Technology; and a Master of Business Administration in Management from Long Island University. Marketing and Technical Advisory Board Brief biographical details of the Marketing and Technical Advisory Board are set out below: Andrew Logan, BS, MSc Andrew Logan has over 40 of years experience in helicopter technology development, design, manufacturing and certification. Mr. Logan was the Chief Technology Officer at MD Helicopter, Inc. and was also the Vice President and General Manager of The Boeing Company and the

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McDonnell Douglas Corporation. Mr. Logan also served on the board of NASA Rotorcraft. He is the co-patent holder of the NOTAR Technology; was awarded the Howard Hughes Award for technology development; and is an honorary fellow of the American Helicopter Society. Mr. Logan holds a Bachelor of Science from the Carnegie Institute of Technology and a Master of Science from Pennsylvania State University. David Oglesbe, BA David Oglesbe has held leadership positions in the US Military, law enforcement and corporate environments. Mr. Oglesbe was responsible for the creation of the aviation unit for the Marion County Sheriff’s Office in Florida, and then led the merger of two major state law enforcement agencies into the second largest airborne law enforcement agency in the US. Mr. Oglesbe was a Sales Director at Bell Helicopter Textron Inc and was also Vice President of Sales and Marketing at MD Helicopters, Inc. Mr. Oglesbe is a FAA licensed flight instructor and commercial pilot and holds a Bachelor of Arts in aviation operations and managements from the University of Dubuque. Frank Verbeke, BSME Frank Verbeke has over 45 years of experience in the mechanical engineering sector after obtaining a Bachelor of Science in Mechanical Engineering from the University of Michigan. In 1970, Mr. Verbeke founded Verbeke and Associates, a consulting engineering firm specialising in the application of gas turbines within the industry, with a particular focus in the acoustics, aerodynamics, thermodynamics and engine emissions fields. Previously, Mr. Verbeke served as Vice President of King Knight Company, a company engaged in the custom assembly of power equipment.

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PART II

Financial Statements

The Directors accept full responsibility for the financial information disclosed in this Document. The information presented has been prepared in accordance with the laws applicable to the Group. The Directors present the audited accounts for Pegasus Helicopter Group Plc for the period ended 31 March 2008 and the balance sheet for Pegasus Helicopter, Inc. as at 31 December 2007.

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Company Registration No. 6480521 (England and Wales)


DIRECTORS' REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 MARCH 2008


COMPANY INFORMATION

Directors R A Zummo (Appointed 22 January 2008)

C Vehlow (Appointed 29 January 2008)

C Wilson (Appointed 29 January 2008)

M Spanos (Appointed 22 January 2008)

J J Messina (Appointed 22 January 2008)

T R Bailey (Appointed 22 January 2008)

Secretary SLC Registrars Limited

Company number 6480521

Registered office Thames House

Portsmouth Road

Esher

Surrey

United Kingdom

KT10 9AD

Auditors Clarkson Hyde LLP

70 Conduit Street

London

W1S 2GF


CONTENTS

Page

Directors' report 1 - 2

Independent auditors' report 3 - 4

Balance sheet 5

Notes to the financial statements 6


DIRECTORS' REPORT


- 1 -

The directors present their report and financial statements for the period ended 31 March 2008.

The company was incorporated on 22 January 2008 and is dormant and has not traded during the period.

Directors

The following directors have held office since 22 January 2008:

R A Zummo (Appointed 22 January 2008)

C Vehlow (Appointed 29 January 2008)

C Wilson (Appointed 29 January 2008)

M Spanos (Appointed 22 January 2008)

J J Messina (Appointed 22 January 2008)

T R Bailey (Appointed 22 January 2008)

SLC Corporate Services Limited (Appointed 22 January 2008 and resigned 22 January 2008)

SLC Registrars Limited (Appointed 22 January 2008 and resigned 22 January 2008)

Auditors

Clarkson Hyde LLP were appointed auditors to the company and in accordance with section 385 of the Companies Act1985, a resolution proposing that they be re-appointed will be put to the Annual General Meeting.


DIRECTORS' REPORT (CONTINUED)


- 2 -

Directors' responsibilities

The directors are responsible for preparing the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directorshave elected to prepare the financial statements in accordance with United Kingdom Generally Accepted AccountingPractice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law togive a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. Inpreparing those financial statements, the directors are required to:- select suitable accounting policies and then apply them consistently;- make judgements and estimates that are reasonable and prudent;- state whether applicable accounting standards have been followed, subject to any material departures disclosed andexplained in the financial statements;- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company willcontinue in business.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time thefinancial position of the company and enable them to ensure that the financial statements comply with the Companies Act1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.

Statement of disclosure to auditors

So far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware.Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to makethemselves aware of all relevant audit information and to establish that the company's auditors are aware of that

information.

On behalf of the board

C Wilson

Director

23 May 2008

PROFIT AND LOSS ACCOUNT


The company has not traded during the period. During this period, the company received no income and incurred noexpenditure and therefore made neither profit nor loss.


INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF PEGASUS HELICOPTER GROUP PLC

- 3 -

We have audited the financial statements of Pegasus Helicopter Group PLC for the period ended 31 March 2008 set out

on pages 5 to 6. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act1985. Our audit work has been undertaken so that we might state to the company's members those matters we arerequired to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company and the company's members as a body, for our auditwork, for this report, or for the opinions we have formed.

Respective responsibilities of the directors and auditors

The directors' responsibilities for preparing the financial statements in accordance with applicable law and United

Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statementof Directors' Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared inaccordance with the Companies Act 1985. We also report to you whether in our opinion the information given in thedirectors' report is consistent with the financial statements.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have notreceived all the information and explanations we require for our audit, or if information specified by law regardingdirectors' remuneration and other transactions is not disclosed.

We read the directors' report and consider the implications for our report if we become aware of any apparentmisstatements within it.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by theAuditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of the significant estimates and judgements madeby the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate tothe company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary

in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free frommaterial misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluatedthe overall adequacy of the presentation of information in the financial statements.


INDEPENDENT AUDITORS' REPORT (CONTINUED)

TO THE SHAREHOLDERS OF PEGASUS HELICOPTER GROUP PLC

- 4 -

Opinion

In our opinion:- the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted

Accounting Practice, of the state of the company's affairs as at 31 March 2008 and of its profit for the period thenended;

- the financial statements have been properly prepared in accordance with the Companies Act 1985; and

- the information given in the directors' report is consistent with the financial statements.

Clarkson Hyde LLP 23 May 2008

Chartered Accountants

Registered Auditors 70 Conduit Street

London

W1S 2GF


BALANCE SHEET

AS AT 31 MARCH 2008

- 5 -

2008

Notes £

Current assets

Debtors 2 1

Total assets less current liabilities 1

Capital and reserves

Called up share capital 3 1

Shareholders' funds 1

Approved by the Board and authorised for issue on 23 May 2008

R A Zummo C Vehlow

Director Director


NOTES TO THE FINANCIAL STATEMENTS


- 6 -

1 Accounting policies

1.1 Accounting convention

The financial statements are prepared under the historical cost convention.

1.2 Compliance with accounting standards

The financial statements are prepared in accordance with applicable United Kingdom Accounting Standards(United Kingdom Generally Accepted Accounting Practice), which have been applied consistently (except asotherwise stated).

2 Debtors 2008

£

Other debtors 1

3 Share capital 2008

£

Authorised

250,000,000 Ordinary shares of 1p each 2,500,000

Allotted, called up and fully paid

Ordinary shares of 1p each 1

2 subscribers' shares of 1p each were issued on 22 January 2008.

4 Post balance sheet events

On 21 April 2008, the company issued 199,999,998 Ordinary shares of 1p each. The shares were issued asconsideration for the acquisition of the entire share capital of Pegasus Helicopters Holdings Limited in accordancewith the share for share agreement dated 18 March 2008.

PART III

RISK FACTORS

In addition to the other relevant information set out in this Document, the following specific factors should be considered carefully in evaluating whether to make an investment in the Company. This list is not exhaustive, nor is it an explanation of all the risk factors involved in investing in the Company and nor are they set out in any order of priority. Any one or more of these risks could have a material adverse effect on the value of any investment in the Company and the business, financial position or operating results of the Company and should be taken into account in assessing the Company’s activities. If you are in any doubt about the action you should take, you should consult a professional adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities. Liquidity of Ordinary Shares and Volatility of their Price Prospective investors should be aware that the value of any investment in the Company may go down as well as up. Investors may therefore realise less than their original investment and could lose their entire investment. Furthermore, an investment in shares that are traded on PLUS is likely to carry a higher risk than an investment in a share quoted on the Official List or AIM. The market value of an investment in the Company may not necessarily accurately reflect its underlying value. Although the shares are listed on PLUS, this should not be taken as implying that there will be a liquid market in the Ordinary Shares. An investment in the Ordinary Shares may thus be difficult to realise. The market for shares in smaller companies is less liquid than for larger companies. The Ordinary Shares may not be suitable as a short-term investment. Consequently, the Ordinary Shares may be difficult to buy and sell and the price may be subject to greater fluctuations than in respect of the shares of larger companies. There can be no guarantee that the Company will achieve its investment objectives as anticipated or that its investments will achieve returns to justify the initial valuation, or that the Ordinary Shares will be able to achieve a higher valuation in the future, or if achieved, that such valuation will be maintained. Realisation of Investment Prospective investors should be aware that following Admission, the Ordinary Shares will be traded on the PLUS quoted market, which is regulated by PLUS Markets plc, a recognised investment exchange. The PLUS-quoted market is not, however, a regulated market under EU financial services law. As such, it may become difficult for an investor to realise his/her investment or to obtain reliable information about either the value of an investment in the Company or the extent of the risks to which an investment in the Company may be exposed. Working Capital Requirements The Directors consider that the capital raised from initial shareholders will provide adequate development and working capital to implement its current business plan for 12 months from the date of Admission to PLUS. The Company may be presented with investment opportunities which may require funds beyond those provided for in the assumptions in its present business plan. This may give rise to the need or the opportunity to raise additional capital. Any additional equity financing is likely to be dilutive to Shareholders.

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Dividends There are currently no plans to pay dividends and there is no certainty that the Company will generate sufficient distributable profits to be able to pay a dividend. Suitability An investment in the Company involves a high degree of risk and may not be suitable for all recipients of this Document. Prospective investors are advised to consult a person authorised by the Financial Services Authority before making their decision and are reminded that the price at which investors may realise their Ordinary Shares and the timing of any disposal of them may be influenced by a large number of factors, some specific to the Company and its proposed operations, and some which may affect the sector in which the Company operates and generally. These factors could include the performance of the Company’s operations, large purchases or sales of shares in the Company, liquidity or absence of liquidity in the Ordinary Shares, legislative or regulatory changes relating to the business of the Group and general economic conditions. Competition There is no certainty that the Company will be able to sustain its advantage or that competition will not develop and prevent or delay the realisation of the Company’s plans. Dependence on Key Personnel The Company's ability to be a successful and profitable company depends to a significant extent on the continued service of its personnel. The loss of service of one or more of these key employees could materially and adversely affect the Company's business and prospects. The Directors believe that the growth and future success of the Company’s business will depend in large part on the Company’s continued ability to attract, motivate and retain highly-skilled personnel. The Company may not be successful in doing so as the competition for qualified personnel in the area of the Company’s operations is intense. Risks Associated With the Business The Directors consider that the most significant risks faced by the Group are as follows: Market Expectations The Group has identified that the PH200 PJ Helicopter will be operating in a market which has a wide customer base. The global growth and approval of the PH200 PJ Helicopter in the civilian market will have to be closely monitored. The use of the PH200 PJ Helicopter will be subject to rules and regulations of aviation authorities worldwide. The Group will need to work with aviation authorities to gain approval for the use of PH200 PJ Helicopter for general commuting by air. In particular, this will include busy and built up areas, such as places of work, residential areas and even commercial flight paths. The Group will have to adapt their marketing strategy depending on the rules and approvals of various aviation authorities. Health and Safety The Group understands the general public may be nervous or lack the confidence to fly the PH200 PJ Helicopter without supervision. The Group will have to ensure the public that the PH200 PJ Helicopter has been rigorously tested.

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Early stage of development The Company is at an early stage of development. The Company’s trading performance may initially be more volatile than would be expected in a revenue generating and more established business; however its management team has extensive experience and track records in the sectors which the Company will be operating in. Intellectual Property The Group’s success depends in part on obtaining, maintaining, and enforcing its intellectual property rights, and its ability to avoid infringing the intellectual property rights of others. At present, the Group does not own any patents for the PH200 PJ Helicopter. Competition Competition in the civilian market for helicopters is considerable. The Group’s competitors include well established helicopter companies, which have substantial financial resources, large research and development capabilities and established distribution networks. Adaptability The Group will have to demonstrate how the PH200 PJ Helicopter can be adapted for military or commercial use. In addition, the maintenance requirements for the PH200 PJ Helicopter will differ depending on how the PH200 PJ Helicopter is modified.

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STATUTORY AND GENERAL INFORMATION

1. Responsibility

The Directors of the Company (whose names appear on page 4 herein) accept responsibility, both individually and collectively, for the information contained in this Document, and for compliance with the PLUS Rules. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Document is in accordance with the facts and there are no other facts which, if omitted, would affect the import of such information.

2. Incorporation and Status of the Company

2.1 The Company’s name is Pegasus Helicopter Group Plc. The Company was incorporated on 22 January 2008 in England and Wales under the Companies Acts 1985, under company number 6480251. The Company operates under the laws of England and Wales.

2.2 The principal place of business of the Company is 4122 W. Venus Way, Suite A,

Chandler, Arizona 85226.

2.3 The registered address of the Company is Thames House, Portsmouth Road, Esher, Surrey KT10 9AD.

2.4 The Company’s accounting reference date is 31 December.

2.5 The Company’s principal activity is that of a general commercial company. 2.6 The Company owns 100% of the issued share capital of Pegasus Helicopter

Holding Limited.

2.7 The Company was incorporated to act as the holding company of Pegasus Helicopter Holding Limited and to seek admission for trading of its Ordinary Shares on PLUS.

3. Pegasus Helicopter Group Plc Subsidiary

3.1 Pegasus Helicopter Holding Limited 3.1.1 Private company incorporated in England and Wales under company

number 6481210 3.1.2 Principal activity: general commercial company 3.1.3 Ownership: wholly owned by Pegasus Helicopter Group Plc

4 Pegasus Helicopter Holding Limited Subsidiary 4.1 Pegasus Helicopter, Inc.

4.1.1 Incorporated in the state of Arizona under company number 1376679-4 4.1.2 Principal activity: design and development of helicopters 4.1.3 Ownership: wholly owned by Pegasus Helicopter Holding Limited

5. Share Capital

5.1 At the date of incorporation the Company had an authorised share capital of £2,500,000 divided into 250,000,000 Ordinary Shares of £0.01 each.

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5.2 The Company was incorporated with Articles of Association appropriate for a public limited company.

5.3 The Ordinary Shares will rank pari passu in all respects including the right to

receive all dividends and other distributions declared, made or paid on the Ordinary Shares from the date of this Document.

5.4 The authorised and Issued Share Capital of the Company following Admission is

as follows:

£ No. of Ordinary Shares Authorised Share Capital

0.01 250,000,000

Issued and fully paid up share capital

0.01 200,000,000

5.5 A special resolution was passed on 27 March 2008 stating that the directors are unconditionally authorised, pursuant to Section 80(1) of the Companies Act 1985, to allot all or any of the unissued shares in the authorised share capital of the Company at any time until the date of the first annual general meeting or on 22 July 2009, whichever is earlier.

5.6 A special resolution was passed on 27 March 2008 stating that pursuant to

Section 95 of the Companies Act 1985 the provisions of Section 89(1) of the Act do not apply to the allotment of any shares to the date of the first annual general meeting or on 22 July 2009, whichever is earlier.

5.7 Convertible Securities:

Name Number of Options Exercise Price Exercise Period From the Date Granted

Todd Bailey Option to subscribe for shares up to an aggregate amount of £200,000

50% of the Admission price

3 years from the date of Admission

Christopher John McDonald-Drewitt

Option to subscribe for shares up to an aggregate amount of £200,000



Joseph Messina Option to subscribe for shares up to an aggregate amount of £200,000



Michael Spanos Option to subscribe for shares up to an aggregate amount of £200,000



22

Charles Vehlow Option to subscribe for shares up to an aggregate amount of £200,000



Craig Wilson Option to subscribe for shares up to an aggregate amount of £200,000



Robert Zummo Option to subscribe for shares up to an aggregate amount of £200,000



6. Memorandum and Articles of Association

6.1 The Memorandum of Association of the Company provides that the object of the Company is to carry on such other business or trade as the Directors of the Company may from time to time consider can be conveniently carried on by the Company. The objects of the Company are set out in full in clause 4 of the Memorandum of Association.

6.2 The Articles contain, inter alia, provisions to the following effect: 6.2.1 Voting rights

Subject to any special terms as to voting upon which any shares may be issued or may for the time being be held (as to which there are none at present), on a show of hands every holder of an Ordinary Share present in person or by proxy (if an individual) or duly authorised representative (if a corporation) shall have one vote, and on a poll every holder of an Ordinary Share shall have one vote for each Ordinary Share of which he is the holder.

6.2.2 Dividends

Subject to the provisions of the Act, no dividend or interim dividend shall be paid otherwise than in accordance with the provisions of Part VIII of the Act which apply to the Company.

6.2.3 Return of capital

If the Company shall be wound up, the liquidator may, with the authority of a special resolution (and any other sanction required by the Act), divide among the members the whole or any part of the assets of the Company and may determine how such division shall be carried out between the members or different classes of members.

6.2.4 Restrictions on transferability of shares

There are no rights of pre-emption in respect of transfers of issued Ordinary Shares. In order to transfer Ordinary Shares, all transfers must be in any usual form or in such other form which the Directors may

23

approve. The instrument of transfer must be signed by or on behalf of the transferor and, if the shares being transferred are not fully paid, by or on behalf of the transferee. The Directors may refuse to register the transfer of a share which is not fully paid to a person of whom they do not approve and they may refuse to register the transfer of a share on which the company has a lien.

6.2.5 Changes in share capital

The Company may by ordinary resolution increase its share capital, cancel any unissued shares, consolidate all or any of its share capital into shares of larger amount and, subject to the provisions of the Act, subdivide its shares into shares of smaller amounts. Subject to the provisions of the Act, the Company may by special resolution reduce its share capital, any capital redemption reserve and any share premium account in any way.

6.2.6 Purchase by the Company of its own shares

Subject to Chapter VII of the Act and any regulations of the Company, the Company may purchase its own shares (including redeemable shares) out of distributable profits or the proceeds of a fresh issue of shares.

6.2.7 Borrowing powers

The Directors may exercise all the powers of the Company to borrow money, whether in excess of the nominal amount of the share capital of the Company for the time being issued or not, and to mortgage or charge its undertaking, property and uncalled capital or any part thereof, and to issue debentures, debenture stock or any other securities whether outright or as security for an debt, liability or obligation of the Company or any third party.

5.2.8 Directors

Unless otherwise determined by ordinary resolution, the number of Directors shall not be less than two.

7. Directors' and Other Interests

7.1 The interests of the Directors and the persons connected with them (as defined under the PLUS Rules) in the Issued Share Capital of the Company as expected immediately following Admission are as follows: Name Number of Ordinary

Shares Beneficially Owned

Shareholding (%)

Todd Bailey 39,000,000 19.50%

* Joseph Messina 2,000,000 1.00%

Michael Spanos 39,000,000 19.50%

Robert Zummo 39,000,000 19.50%

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*Joseph Messina has a beneficial interest in 50% of Suisse Finance (America), Inc., which holds 4,000,000 Ordinary Shares in the Company.

7.2 The following shareholders will each have a beneficial interest in more than 3% of the Issued Share Capital of the Company on Admission:

Name Number of Ordinary

Shares Beneficially Owned

Shareholding (%)

Todd Bailey 39,000,000 19.50%

* BioSecurity Technologies, Inc. 20,000,000 10.00%

Michael Spanos 39,000,000 19.50%

** Suisse Finance Holding SA

12,000,000 6.00%

Frank Verbeke 39,000,000 19.50%

Robert Zummo 39,000,000 19.50%

* BioSecurity Technologies, Inc. presently has 403 shareholders, none of which hold a majority of voting rights ** David Laing is the beneficial owner of Suisse Finance Holding SA

7.3 Save as disclosed in paragraph 7.1 and 7.2 above, as at the date of this Document, none of the Directors are aware of any interest which will immediately following Admission represent 3 per cent or more of the Issued Share Capital of the Company or which directly or indirectly, jointly or severally, exercises or could exercise control of the Company.

7.4 There are no outstanding loans granted or guarantees provided by the Company

to or for the benefit of any of the Directors.

7.5 Save as disclosed in this Document, no Director has any interest, whether direct or indirect, in any transaction which is or was unusual in its name or conditions or significant to the business of the Company taken as a whole and which was effected by the Company during the current or immediately preceding financial year, or during any earlier financial year and which remains in any respect outstanding or unperformed.

8. Service Agreements/Letters of Appointment

The following Directors have entered into letters of appointment or service agreements with the Company:

8.1 The Company has entered into a service agreement with Todd Bailey dated 28

March 2008. The initial period of the agreement runs from 28 March 2008 to 27 March 2009 and is terminable thereafter by six months’ notice on either side. The remuneration is set at £12,000 per annum, the payment of which is to be deferred by 13 months from Admission, with an option to subscribe for shares up

25

to an aggregate amount of £200,000 in the Company at 50% of the Admission price for a period of three years from Admission. There is no entitlement to benefits upon termination of this agreement.

8.2 The Company has entered into a letter of appointment with Christopher Drewitt

dated 10 March 2008 under the terms of which Mr. Drewitt has agreed to act as Chairman and Non-Executive Director of the Company. The agreement runs from 10 March 2008 and is terminable thereafter by 3 months’ notice on either side. The remuneration is set at £12,000 per annum, the payment of which is to be deferred by 13 months from Admission, with an option to subscribe for shares up to an aggregate amount of £200,000 in the Company at 50% of the Admission price for a period of three years from Admission. There is no entitlement to benefits upon termination of this agreement.

8.3 The Company has entered into a letter of appointment with Joseph Messina

dated 10 March 2008 under the terms of which Mr. Messina has agreed to act as Non-Executive Director of the Company. The agreement runs from 10 March 2008 and is terminable thereafter by 3 months’ notice on either side. The remuneration is set at £12,000 per annum, the payment of which is to be deferred by 13 months from Admission, with an option to subscribe for shares up to an aggregate amount of £200,000 in the Company at 50% of the Admission price for a period of three years from Admission. There is no entitlement to benefits upon termination of this agreement.

8.4 The Company has entered into a service agreement with Mike Spanos dated 28

March 2008 under the terms of which Mr. Spanos has agreed to act as an Executive Director of the Company. The initial period of the agreement runs from 28 March 2008 to 27 March 2009 and is terminable thereafter by six months’ notice on either side. The remuneration is set at £12,000 per annum, the payment of which is to be deferred by 13 months from Admission, with an option to subscribe for shares up to an aggregate amount of £200,000 in the Company at 50% of the Admission price for a period of three years from Admission. There is no entitlement to benefits upon termination of this agreement.

8.5 The Company has entered into a letter of appointment with Charles Vehlow

dated 10 March 2008 under the terms of which Mr. Vehlow has agreed to act as Non-Executive Director of the Company. The agreement runs from 10 March 2008 and is terminable thereafter by 3 months’ notice on either side. The remuneration is set at £12,000 per annum, the payment of which is to be deferred by 13 months from Admission, with an option to subscribe for shares up to an aggregate amount of £200,000 in the Company at 50% of the Admission price for a period of three years from Admission. There is no entitlement to benefits upon termination of this agreement.

8.6 The Company has entered into a service agreement with Craig Wilson dated 28

March 2008. The initial period of the agreement runs from 28 March 2008 to 27 March 2009 and is terminable thereafter by six months’ notice on either side. The remuneration is set at £12,000 per annum, the payment of which is to be deferred by 13 months from Admission, with an option to subscribe for shares up to an aggregate amount of £200,000 in the Company at 50% of the Admission price for a period of three years from Admission. There is no entitlement to benefits upon termination of this agreement.

8.7 The Company has entered into a service agreement with Robert Zummo dated

28 March 2008. The initial period of the agreement runs from 28 March 2008 to 27 March 2009 and is terminable thereafter by six months’ notice on either side.

26

The remuneration is set at £12,000 per annum, the payment of which is to be deferred by 13 months from Admission, with an option to subscribe for shares up to an aggregate amount of £200,000 in the Company at 50% of the Admission price for a period of three years from Admission. There is no entitlement to benefits upon termination of this agreement.

9. Additional Information on the Board

9.1 In addition to directorships of the Company the Directors hold or have held the following directorships (including directorships of companies registered outside England and Wales) within the five years prior to the date of this Document:

Director Directorships

Todd Bailey Current Directorships N/A Previous Directorships Special Weapons, Inc. Christopher Drewitt Current Directorships Camouflage Technology Ltd Multi-Mission Dynamics Ltd Maritime Offshore Management Limited Previous Directorships Aquatic and Marine Associates Limited Joseph Messina Current Directorships Suisse Finance (America), Inc. Biosecurity Technologies, Inc. Stratfield Corporation American Stock Exchange Domus Realty Previous Directorships N/A Michael Spanos

Current Directorships N/A Previous Directorships Rotory Engineering LLC Charles Vehlow Current Directorships US Army Science Board Geco, Inc. Previous Directorships Metal Storm Ltd Craig Wilson Current Directorships N/A Previous Directorships N/A Robert Zummo Current Directorships Valentec International Limited Valentec Systems, Inc. Previous Directorships Valentec Defense Limited Valentec International Corporation Limited

9.2 The following Director has been a director of a company which was placed in

receivership, compulsory liquidation, administration, been subject to a voluntary arrangement or any composition or arrangement with its creditors generally or

27

any class of its creditors whilst he was a director of that company or within the 12 months after he ceased to be a director of' that company. Robert A. Zummo Safety Components International, Inc. underwent a prearranged Chapter 11 bankruptcy on 12 June 2000.

9.3 Save as otherwised disclosed none of the above Directors has:

9.3.1 any unspent convictions in relation to indictable offences;

9.3.2 had any bankruptcy order made against him or entered into any voluntary arrangements;

9.3.3 been a director of a company which has been placed in receivership,

compulsory liquidation, administration, been subject to a voluntary arrangement or any composition or arrangement with its creditors generally or any class of its creditors while he was a director of that company or within the 12 months after he ceased to be a director of that company;

9.3.4 been a partner in any partnership which has been placed in compulsory

liquidation, administration or been the subject of a partnership voluntary arrangement while he was a partner in that partnership or within the 12 months after he ceased to be a partner in that partnership;

9.3.5 been the owner of any assets or a partner in any partnership which has

been placed in receivership while he was a partner in that partnership or within the 12 months after he ceased to be a partner in that partnership;

9.3.6 been the subject of any official public incrimination or sanction by

statutory or Regulatory authority (including recognised professional bodies); and

9.3.7 been disqualified by a court from acting as a director of any company or

from acting in the management or conduct of the affairs of a company. 10. Related Party Transactions The Group has the following related third party transactions which are disclosed under

the accounting standards applicable to the Group, to which the Group was a party during the period of twelve months preceding Admission.

10.1 Service agreement dated 29 November 2007 between Pegasus Helicopter, Inc.

and Suisse Finance (America), Inc., pursuant to which Suisse Finance (America), Inc has been appointed as a corporate financial advisor. Pegasus Helicopter, Inc. has paid $25,000 to Suisse Finance (America), Inc., and a further $25,000 is payable upon Admission. Pegasus Helicopter, Inc. has agreed to pay Suisse Finance (America), Inc a monthly retainer fee of $5,000 following Admission. Joseph Messina is a director of Suisse Finance (America), Inc. and a director of the Company.

10.2 Loan Agreement dated 20 December 2007 between the Group and BioSecurity

Technologies, Inc., whereby BioSecurity Technologies agreed to loan the Group £150,000. Joseph Messina is a director of BioSecurity Technologies, Inc. and a director of the Company.

28

10.3 Purchase agreement between Pegasus Helicopter, Inc. and Multi-Mission Dynamics Ltd whereby Multi-Mission Dynamics Ltd has agreed to purchase 25 PH200 PJ Helicopters for $150,000 each, subject to the Group successfully demonstrating certain flight capabilities for the PH200 PJ Helicopter on or before 31 August 2008. Christopher Drewitt is a director of Multi-Mission Dynamics Ltd. and is a director of the Company.

10.4 Loan Agreement dated 27 March 2008 between the Company and Robert

Zummo, whereby Robert Zummo agreed to loan the Company $500,000. Robert Zummo is a director of the Company.

11. Legal and arbitration proceedings 11.1 The Group is not involved in any legal or arbitration proceedings which may have

or have had since incorporation a significant effect on the Group’s financial position and, so far as the Directors are aware, there are no such proceedings pending or threatened against the Group.

12. Significant change in financial or trading position 12.1 There has been no significant change in the Group’s financial or trading position

since the date of the Financial Information presented in Part II of this Document. 13. Working Capital 13.1 In the opinion of the Directors having made due and careful enquiry, the working

capital available to the issuer and its Group will be sufficient for the period of at least 12 months following Admission.

14. Material Contracts

The following contracts, not being contracts entered into in the ordinary course of business, have been entered into by the Group within the two years immediately preceding the date of this Document and are, or may be, material:

14.1 An engagement letter dated 30 November 2007 between the Company and

Atlantic Law, pursuant to which the Company has appointed Atlantic Law to act as its PLUS Corporate Adviser. The Company has paid £15,000 and a further £20,000 is payable on Admission together with all reasonable expenses. A further £25,000 plus VAT per annum is due following Admission for retaining Atlantic Law’s services as PLUS Corporate Adviser.

14.2 An engagement letter dated 21 January 2008 between the Company and

Maxwell Winward LLP for the provision of legal advice and services in connection with the Admission. Under the terms of the engagement letter the Company will be charged on an hourly rate.

14.3 An engagement letter dated 21 January 2008 between the Company and

Clarkson Hyde LLP, pursuant to which the Company has appointed Clarkson Hyde LLP to review and report on the profit projections and working capital requirements of the Group. Under the terms of the engagement letter, the Company will be charged an estimated fee of £7,000 plus VAT and disbursements.

14.4 An engagement letter dated 14 January 2008 between the Company and David

29

Venus & Company for the provision of company secretarial services for a fee of £1,310 plus VAT per annum.

14.5 An engagement letter dated 03 March 2008 between the Company and

Computershare for the provision of registrar and transfer agent services for an annual minimum fee of £2,750.

14.6 Lock-in Agreements dated 28 March 2008 between the Company and all Locked-

In Persons, under which, save in limited circumstances, each of the Locked-in Persons has undertaken not to dispose of any Ordinary Shares or rights over Ordinary Shares for a period of 12 months from the date of Admission.

14.7 A loan agreement dated 20 December 2007 between the Group and BioSecurity

Technologies, Inc., whereby BioSecurity Technologies agreed to loan the Group £150,000 on a draw-down basis for the purpose of covering the cost of Admission. Interest is payable by the Group in respect of the amount outstanding on the loan from time to time at a rate of 10% per annum. The loan is repayable on the earliest of a minimum capital raise by the Group of £500,000 or 20 December 2008.

14.8 A loan facility agreement dated 27 March 2008 between the Company and

Robert Zummo, whereby Robert Zummo agreed to loan the Company $500,000 on a drawdown basis. Interest is payable by the Company in respect of the amount outstanding on the loan from time to time at a rate of 5% per annum. The loan is repayable on 9 April 2010 or at a later date to be agreed by the parties.

14.9 A share exchange agreement dated 08 March 2008 between Pegasus

Helicopter, Inc. and Pegasus Helicopter Holdings Limited, whereby the shareholders of Pegasus Helicopter, Inc. exchanged 100% of the issued share capital of Pegasus Helicopter, Inc. for 100% of the issued share capital of Pegasus Helicopter Holdings Limited.

14.10 A share exchange agreement dated 18 March 2008 between Pegasus Helicopter

Holdings Limited and Pegasus Helicopter Holdings Group, whereby the shareholders of Pegasus Helicopter Holdings Limited exchanged 100% of the issued share capital of Pegasus Helicopter Holdings Limited for 100% of the issued share capital of Pegasus Helicopter Group.

15. General

15.1 Except as disclosed in this Document and for the advisers named on page 4 of this Document no person has received, directly or indirectly, from the Company during the twelve months preceding the date of this Document or has entered into a contractual arrangement to receive, directly or indirectly, from the Company on or after the start of the trading on PLUS, fees totaling more than £10,000 or more or securities in the Company with a value of £10,000 or more or any other benefit to a value of £10,000 or more.

15.2 Except as disclosed in this Document, there are no significant investments in

progress by the Company.

15.3 Except as disclosed in this Document, no exceptional factors have influenced the Company's activities.

15.4 None of the Directors, or any members of their families, has a related financial

product referenced to the Ordinary Shares.

30

15.5 The Group occupies premises at 4122 W. Venus Way, Chandler, AZ 85226 under a rental agreement dated 07 February 2008. The term is for two years from 01 April 2008 to 31 March 2010 and the monthly rent is $7,000.

15.6 Copies of the following documents will be available for inspection during usual business hours on any weekday (public holidays excepted) for the period of one month from the date of Admission at the offices of Atlantic Law Llp, One Great Cumberland Place, London W1H 7AL: • Admission Document; • Memorandum and Articles of Association of the Company; • Financial Information reproduced in Part II of this Document; and • Material contracts referred to in paragraph 14 above.

Dated: 29 May 2008

Documents

PEGASUS HELICOPTER GROUP PLC - NEX Exchangelibrary.isdx.com/.../PegasusHelicopter/pegasusadmindoc2008.pdf · Pegasus Helicopter Holdings and its wholly owned Subsidiary, Pegasus Helicopter,