MARTIN AIRCRAFT COMPANY LIMITED
P R E - I P O I n v e s t or s I n f or m a t io n
FEBRUARY 2014
STRICTLY CONFIDENTIAL
IMPORTANT INFORMATION
This document has been prepared solely for information purposes by the management of Martin
Aircraft Company, in order to assist recipients to make their own evaluation of an opportunity to
invest in the Company and does not contain all of the information that a purchaser may require.
In all cases, recipients should conduct their own investigations and analyses of the opportunity
and any further information they may require.
This Investors Information has been distributed on the understanding that the proposed
issue of shares in the Company does not constitute an offer to the public that would
require a Prospectus and, in particular, that each recipient is:
A/ New Zealand Investor who is an “eligible person” as defined in section 5(2CC) of the Securities Act 1978, or a person who falls within one or more of the categories
set out in subparagraphs (i) to (iii) of section 3(2)(a) of the Securities Act 1978, or
B/ An Australian investor who is a “sophisticated investor”, “experienced investor” or “professional investor” for the purposes of the Australian Corporations Act 2001.
C/ A US investor who qualifies as an ‘accredited investor’ as defined in Rule 501
of Regulation D of the US Securities Act, or
D/ An investor from another country for whom a Prospectus is not required under their securities law.
Accordingly this Investors Information must be kept confidential and is not to be passed on to any
other person without the prior written consent of the Company. The Company will not be liable
for any loss or damage suffered by any person who, despite the previous sentence, receives this
Investors Information or acts on any information contained in this Investors Information.
The information in this Investors Information has not been independently verified. The
management makes no representation or warranty as to the accuracy or completeness of
the information in this Investors Information, and the management will not be liable for any
statement, opinion, information or matters arising out of, or contained in, or any omissions from,
or failure to correct any information in, this Investors Information, or for any other written or oral
communications transmitted to a recipient in relation to this matter.
This Investors Information also contains certain statements, estimates forecasts and projections
with respect to anticipated future performance, which may or may not prove correct. No express
or implied representations or warranties are made by the management as to the accuracy or
completeness of these statements, estimates, forecasts or projections. Nor is any representation
made by the management that there has been no change in the affairs of the Company or its
prospects or performance or operations, since the date of information provided in this Investors
Information. It is a condition of distribution of this Investors Information that the recipient accepts
it on the above terms. Any recipient who does not do so should immediately return this Investors
Information to the Company.
2
Martin Jetpack / IMPORTANT INFORMATION
CONTENT
PAGE
SECTION
1.0
2.0
3.0
5.0
6.0
7.0
8.0
2
KEY INVESTMENT HIGHLIGHTS
6
SUMMARY OF THE INVESTMENT OPPORTUNITY
1.1Introduction
1.2
Investment Opportunity
1.3Shareholding Structure
1.4
Uses of Funds Raised
INTRODUCTION TO THE BUSINESS
2.1
History and Key Milestones
2.2The Martin Jetpack Today
2.3The Plan Now
DESCRIPTION OF THE MARTIN JETPACK
3.1Martin Jetpack Technology
3.2Safety
3.3
Intellectual Property Protection
3.4
How it works
3.5 Global Interest
4.0
IMPORTANT INFORMATION
MARKETING AND SALES
4.1
Product Markets and Applications
4.2Specific Commercial Opportunities
4.3Market Size
4.4
Revenue Potential
4.5Sales Strategy
4.6Advertising, Promotion and Publicity
DEVELOPMENT PLAN
5.1
Key Milestones and Timeframe
5.2
Product Development Plans
5.3Competitors
MANAGEMENT AND GOVERNANCE
6.1
Board of Directors
6.2Management and Engineering Team
6.3
Other Advisors
6.4 Exit Strategy
FINANCIAL INFORMATION
7.1
Historical Financial Performance
7.2
Historical Financial Position
APPLICATION PROCESS
8.1
Details of the Pre-IPO Capital Raising
8.2
How to Apply
8.3The Company’s Rights
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14
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STRICTLY CONFIDENTIAL
Martin Jetpack P12 demonstrating manned flight
4
Martin Jetpack / IMPORTANT INFORMATION
STRICTLY CONFIDENTIAL
KEY INVESTMENT
HIGHLIGHTS
Martin Aircraft Company has developed the world’s first practical commercial jetpack
The Martin Jetpack is easy to fly, and can be used for all kinds of requirements
- from Search & Rescue to promotions, both manned and un-manned
It is being designed with safety in mind - including a reliable engine, an active ballistic parachute,
an impact absorbing undercarriage, and the design of the frame around the pilot
In 2014, the company plans to release its first Jetpack for sale. This will be for a Governmental
market - for uses in a First Responder environment such as Fire service, Police, Search &
Rescue, based on the current Prototype 12
The company also plans to launch a flight demo business at the same time to promote the
Martin Jetpack while making money from flying at shows and sporting events
Over 40 orders have been placed, representing in excess of $6m NZD revenue upon
commercialization. This has been achieved prior to any marketing taking place
Further serious interest representing up to $20m NZD is in the sales pipeline
The company is to raise up to $5M (NZD) in Pre-IPO capital to fund the company through to
the delivery of the commercial products
An IPO on a suitable exchange is being considered by the Board for late 2014
6
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
SECTION
1.0
8
SUMMARY OF
THE INVESTMENT OPPORTUNITY
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
SECTION
SUMMARY OF
1.0
THE INVESTMENT OPPORTUNITY
1.1INTRODUCTION
1.
Martin Aircraft Company Limited (“Martin” or the “Company”) is developing the world’s first practical jetpack
(the “Martin Jetpack”).
2.
3.
The Martin Jetpack has been flying unmanned at 50 kph with good control. It has also flown manned. The
company completed Prototype 12 in late 2012. This new prototype will be the basis for the first commercial
release of a jetpack in 2014, suitable for a Governmental market under the banner of First Responder.
Amongst other things the Company also plans to launch its own demonstrations business with
this Jetpack in 2014.
The company has several other commercial initiatives underway, including discussions in China and a number
of Request for Quotations to customers.
The Company requires $5M to get to commercialization in 2014. The Company is also considering an IPO in
the near future. A recent funding round raised almost $2 million. This next part of the fund raising seeks the
money to reach the commercialization point.
The Directors of the Company are planning an initial public offering (“IPO”) and listing on a suitable exchange in
the near future. The formal decision to proceed with this and timing has not yet been taken.
The Company currently has ordinary and convertible preference shares on issue.
Table 1 assumes that the preference shares are converted to ordinary shares under the terms in the Company’s Constitution.
They will be converted before an IPO.
The Company has a share option scheme under which options are issued to directors, employees
and key advisors.
The Company under the Constitution is allowed, through the Board, to offer 10% of additional shares without recourse to the
Shareholders in a 12 month period.
1.4
USES OF FUNDS RAISED
Use of funds from the current NZD $5M raising is described in Table 2 below. The main objective is to reach
the commercilisation point where the company can become revenue positive. At this point we expect that the
demand for the Jetpack will significantly increase.
Table 2 /
Estimated Uses if Funds from $ 5m Raising
R&D
FUTURE CAPITAL RAISING
MkII/III/IV Engine
Simulator Upgrade
p12.2
1.2
INVESTMENT OPPORTUNITY
Parachute Integration
The Company is seeking $5M of new investment in this Capital Raising via a placement of new ordinary shares.
Avionics Upgrade
Noise Reduction
1.3
SHAREHOLDING STRUCTURE
Flight Testing
Table 1 below sets out a summary of the current shareholding structure of the Company and the position
following the most recent fundraising round.
Management
SUB TOTAL
$ 2,106,000
SUB TOTAL
$ 1,200,525
OVERHEADS
Table 1 /
In order to scale up production to
meet demand, the company is planning
to raise a further $15m via an IPO on a
suitable exchange. These funds will also
be used to further develop the jetpack
and related products based on the
Company’s proprietary technology
taking into consideration emerging
customer requirements. It will
also expand and strengthen the
management team, and develop
global sales distribution channels.
Salaries
Shareholding structure at 31 January 2014
Board Fees + Expenses
SHAREHOLDER
CURRENT SHAREHOLDING
PERCENTAGE (%)
No. 8 Ventures Nominees Ltd
5,130,573
32 %
Glenn Martin
4,520,600
28 %
Paul Matthews
1,401,978
9%
D Hunter Super Fund
1,204,612
8%
92 other shareholders
3,072,749
20 %
15,330,512
100 %
TOTAL SHARES
Options & Warrants
Shares Issued
10
366,960
15,697,472
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
General
IPO
MARKETING
Bidding & Proposal Costs
Public Displays
SUB TOTAL
$ 701,500
PRODUCTION
Simulator
Production Preparation
5 x Pre Production Jetpacks
SUB TOTAL
$ 985,000
TOTAL
$ 4,993,025
STRICTLY CONFIDENTIAL
SECTION
2.0
12
INTRODUCTION TO
THE BUSINESS
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
SECTION
INTRODUCTION TO
2.0
THE BUSINESS
2.1
HISTORY AND KEY MILESTONES
2.2
THE MARTIN JETPACK TODAY
The Company was founded in 1998 by Glenn Martin following extensive research and development of the
Martin Jetpack. The Company secured support from venture capital fund No 8 Ventures in 2004, and since
then has made significant advancements in the development of the world’s first practical jetpack.
Prototype 12 is performing very well in initial manned and unmanned flight testing. The Jetpack is on track to
be ready for a public manned flight demonstration in 2014.The new P12 Jetpack looks quite different from the
previous versions as components have been re-design to increase efficiency, safety and maneuverability
Key milestones in the history of the Company include:
2.2
2007 /June
First manned, unassisted flight
2008 / JUNE
Martin Jetpack introduced at Oshkosh Airventures
THE PLAN NOW
The Company has many enquiries for purchase of both the manned and an unmanned jetpack. It has decided to
focus first on getting the manned jetpack to market.
Focus for 2014:
Air Show, Wisconsin, United States to a huge reception
Publically demonstrate manned flight of the new Martin Jetpack in 2014
2009 / APRIL
Martin Jetpack is computer-stabilised
Continue testing and development of Prototype 12 with the expectation that this will be the first
commercial release of the Martin Jetpack in late 2014 - the First Responder Jetpack
2009 / AUGUST
First five minute manned flight completed
Expand the Company’s commercial and marketing teams
Seek initial Government customers for this first Jetpack
2009 / OCTOBER
2010 / MAY
Novice pilot receives jetpack training and achieves
flight on the same day
Start Martin Aircraft Company’s own promotions business - flying at public events or for sponsors to
gain revenue and publicity for the Martin Jetpack
First flight of the unmanned Martin Jetpack
Commence pre-production of the First Responder Jetpack during 2014.
(“Martin Skyhook” or “Unmanned Aerial Vehicle” or“UAV”)
2011
/ APRIL
Martin Skyhook flown to 1500m and deployment
of ballistic parachute demonstrated
2012 / OCTOBER
14
Completion of Prototype 12, which is expected
Production of up to 10 units per month can be carried out at the company’s current premises.
Embark on an IPO as soon as practicably possible
Subject to securing specific demand/partners and funding, the Company will pursue
two additional activities:
to become the first commercial release
Complete development of the Jetpack Experience - a tourist venture, where individuals
can experience a jetpack ride where they take control within defined limits
2013 / APRIL
Appointment of CEO
Complete development of the unmanned Martin Skyhook UAV
2013 / JUNE
First manned test flight of P12
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
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3.0
16
DESCRIPTION OF
MARTIN JETPACK
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
SECTION
DESCRIPTION OF
3.0
MARTIN JETPACK
3.1 MARTIN JETPACK TECHNOLOGY
3.3
The Martin Jetpack is more than something you simply attach to your back and power up to fly around. It is a
practical jetpack that:
Key technology and intellectual property developed through research and development of the Martin Jetpack
has been protected under registered patents:
INTELLECTUAL PROPERTY PROTECTION
•
Patent roll-out across key aviation markets
•
Four layers of patents
•
Logo and name registration
•
Advised by leading US IP law firm Christie Parker Hale LLP
•
Computers in the design office are isolated from the internet
•
High level encryption and other physical security measures
Is lightweight, easy to transport, store and display
Flies for a considerable amount of time – up to 30 mins
Can travel at up to 74km/h
Is easy to use and able to be used by many people, not just pilots
Is designed to a high level of safety
Is affordable – about the cost of a luxury sports vehicle
Is easy to maintain and runs on regular gasoline
Has been designed to fit within existing United States, New Zealand
and similar aviation regulations around the world.
Further information in relation to the Martin Jetpack and a video showing it in flight is available on the
Company’s website:
www.martinjetpack.com
Patented technology includes:
•
High efficiency zero torque ducted fans
•
Fan free radiator cooling using Venturi Effect
•
Flight control via control surfaces in thrust airstream
•
Flight training using computer-constrained flight envelopes
(key component of what makes it very easy to fly
Success in the development of a practical jetpack opens the opportunity for sales of the aircraft, and the
potential development of a large and successful business.
The vertical thrust and other technologies within the Martin Jetpack can potentially be used for further
applications in the future that may have commercial value. The Martin Skyhook UAV is the first and most
obvious example of the complementary application of this core technology.
3.2 SAFETY
The Martin Jetpack has been designed from the beginning with safety in mind. Specific features include:
Pilot protective structure
Hard landing protection undercarriage
Simple drive system for reliability
Pilot alarms
Hands free auto-height hold
Fast opening active ballistic parachute
18
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
The Martin Jetpack firing the ballistic parachute at 5,000 feet
20
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
3.4 MARTIN JETPACK P12
HOW IT WORKS
22
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
3.5 MARTIN JETPACK
GLOBAL INTEREST
The Martin Jetpack presented at EAA AirVenture Oshkosh, Wisconsin USA in 2008 and was described as
“The hottest launch at the Airshow
in over a decade…”
Although the flight demonstration was brief, the interest and global media coverage was very significant:
670 broadcasts stories across the US including three of the five national US networks and 7 of the top
20 markets. Both CNN and NBC Today show carried multiple live and Web based segments featuring
reporters flying the device.
Front page coverage in the NY Times and articles within Times of London and the London Telegraph led
to wire stories appearing in national outlets in Russia, Italy, Germany, Brazil, Portugal, India, Australia,
China, and Japan.
Total media value is conservatively estimated in excess of $15,000,000+.
Invited to appear with both Late Night with David Letterman and The Tonight show as well as with
outlets in New Zealand and the US.
Martin Aircraft is planning a fully manned flight demonstration of the P12 and its array of flight capabilities
to the public, media and industry in 2014. Like the 2008 demonstration, we anticipate that this will lead to
significant global media coverage resulting in further sales and investment enquiries.
MARTIN JETPACK HAS ALREADY WON INTERNATIONAL ACCLAIM::
24
Named by Time Magazine as one of the best 50 inventions of 2010
Invited to open the Burj Khalifa in Dubai (worlds tallest building)
Invited to open the Indian premier league and Rugby World Cup 2011
Invited to the Cannes film festival
Enquiries from many corporate events
Invited to present at Airshows around the world
Enquiries from many films & documentaries
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
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4.0
26
MARKETING
& SALES
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
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MARKETING
& SALES
4.0
4.1 PRODUCT MARKETS AND APPLICATIONS
In addition to the sale of aircraft, the business will benefit from the ongoing sale of parts and services and plans
to launch the following businesses using the Jetpack:
The Martin Jetpack is suitable for use in military, government agencies, commercial and recreational aviation
markets. Key points to note in relation to potential market applications for the technology include:
From a commercial perspective, the price and operating cost of a Martin Jetpack are expected to
amount to only 30-40% of that of the world’s most widely sold small helicopter produced by Robinson
Helicopters (which sells over 800 helicopters per year and has a turnover of approximately $400
million). It is much easier to fly and maintain, and can fly in more confined locations.
The size of the commercial market is substantial – in the United States, there are currently about
230,000 small aircraft and over 3,700 flight schools (Source: Bureau of Transportation Statistics,
PilotOutlook.com).
The Martin Jetpack is also a high-end recreational vehicle. The size of the market for personal
watercraft (jet skis) or snowmobiles is substantial and demonstrates the potential for the Martin
Jetpack if it could secure just a small percentage of this recreational spend.
In the United States alone, approximately 50,000 snowmobiles are sold each year, and there are
1.5 million personal watercraft registered (Source: Bureau of Transportation Statistics, International
Snowmobile Manufacturers Association).
Core customer markets for the Martin Jetpack technology, and the unmanned version of the aircraft (the
Martin Skyhook), can be broadly categorized as military, government agencies, First Responder, and
recreation. Examples of the potential applications for the Martin Jetpack within each of these categories
are set out in Table 4.
APPLICATIONS
Table 4 /
Applications for the Martin Jetpack and the Martin Skyhook UAV
MILLITARY
/ AGENCY
FIRST
RESPONDER
RECREATION
Surveillance
Emergency response
Flight schools
Rapid insertion
Security
Individuals
UAV forward supply
Border patrol
Tourist experience
Heavy lift UAV
Search & rescue
Counter terrorism
Life Saving
Remote operations
Police
Source: Company Management.
Flying promotions at major events or for sponsors. This business is planned to start in the second half of 2014. It will bring in early revenue, and have the additional benefit of increasing awareness of the Martin Jetpack
The Martin Jetpack Experience - a tourist ride for people who wish to experience a jetpack flight. Adventure tourism experiences, such as a bungy jump, typically cost $250 - and the Martin Jet pack ride will be even more spectacular. The Company is seeking a partner to develop such a tourist ride.
Other potential commercial applications include:
Private commercial use, such as pylon, building and bridge inspection;
Training and hire of jetpacks from flight schools.
4.2 SPECIFIC COMMERCIAL OPPORTUNITIES
To date, the Company has not been actively marketing the Martin Jetpack and has not sought commercial
orders. However, based on publicity the Company has regularly received since the launch of the Martin Jetpack
in July 2008, Martin has been approached by many individuals and organisations in respect of each of the
potential applications listed in Table 4 above. Four Request for Quotations have been submitted
to other countries.
Priority Queue for Personal Jetpack
The Company has a priority queue for personal jetpacks of about 150 people who have paid deposits or
invested in the company to get in early for a recreational jetpack. Investors into this funding round will be
automatically entered into the priority queue to purchase a personal jet pack.
Other opportunities which are less advanced but which nonetheless provide strong indicators of market
demand are as follows:
The company has had a number of enquiries from fire service, search and rescue, customs and border
patrol, homeland security, and policing authorities. Most of these agencies have expressed a desire to
obtain a jetpack to trial. Such customers are sophisticated, understand aviation safety, and will train
pilots, maintain the aircraft, and have appropriate controls of when it is flown. The Company plans to
seek initial customers for the first release Jetpack in these types of uses to get the flying hours up with
a trusted partner. If necessary, the Company will work with these entities to develop an application or
customer specific versions of the jetpack.
A memorandum of understanding is being re-negotiated with an Indian corporate which has evaluated
interest in the Martin jetpack for the Indian sub-continent.
A plan is being developed for the Jetpack Experience to be co-developed with a potential
business partner.
A plan is being developed for the Company’s own promotions business - flying at sporting and
other events. This business is expected to break even and to provide enormous publicity for
the Martin Jetpack.
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Martin Jetpack / PRE-IPO INVESTORS INFORMATION
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MARKETING
& SALES
4.0
The company has received several serious enquiries as outlined below.
As the Jetpack nears commercialization, we intend to secure as many of these orders as possible.
The Company has divided the market into two broad categories:
POTENTIAL SALES PIPELINE as at FEB 2014
COUNTRY
E gypt
Thailand
CUSTOMER
REQUIREMENT
Non civil
6 Jetpacks, 1 simulator
plus training and initial
support. Follow on
potential 36 Jetpacks
per year for 3 years
ESTIMATED VALUE
Recreational users of the Martin Jetpack.
$2.2M with follow on
potential of $39.6M
Military, Uniformed Services and First Responder Market
The military, uniformed services, and other related commercial markets are very large. For example:
Non Civil
14 Jetpacks, 2 simulators
Qatar
Non Civil
4 Jetpacks, 2 simulators,
3 months support
USA
Sub Contractor to
US Coast Guard
1 Jetpack, simulator
Kuwait
Medical
10 Jetpacks, One
Simulator and support
Canada
Private
One Simulator
$0.15M
Russia
Commercial Security
One Jetpack for testing
$0.39M
Brazil
Fire Dept
4 Jetpacks and Simulator
South Africa
Government agency Search & Rescue
1 Jetpack, 1 simulator
USA
Private
1 simulator
JORDAN
Private Company Serach & Rescue
two Jetpacks and one
simulator for trial
$8.86M
$2.35M plus potential
follow on $7.8M
Total
Estimated Value
4.3
Governments, military, other uniformed services, and commercial organisations who will buy (or lease)
Martin Jetpacks (or the remotely flown unmanned Skyhook version) for use in emergency response,
anti- terrorism, border patrol, policing, search and rescue, remote site access and other similar
applications; and
$0.39M
$5.2M
$1.5M
The global military spend on helicopters is over US$15.0 billion per annum
(Source: Visiongain, 2009).
In the United States, there are over 1.4 million police, fire fighters and paramedics in active service
(Source: US Department of Labor). The Company has experienced strong interest from each of these
sectors - representing a potential of over 3,000 Jetpacks.
Recreational Users
Martin Aircraft Company has received 100,000 enquiries about the Martin Jetpack. Over 10,000 of these
people have registered for updates on the Jetpack, and 2,500 have indicated they would like to buy a Martin
Jetpack. The company plans to sell first into the commercial market to get the flying hours up with a trusted user
who will train and maintain appropriately.
When it starts selling to recreational users
the price will reduce as processing and
market scale increases. The Jetpack will
still be more expensive than jetskis and
snowmobiles, but a similar market spend is
possible.
$0.39M
0.15M
$0.85M
Table 5 and Table 6 show that a significant
amount of money is spent every year in
the United States and Canada alone on
recreational aircraft and on other recreational
vehicles (such as snowmobiles and
personal watercraft).
$20.54M
MARKET SIZE
The Martin Jetpack represents new technology and is in effect creating new markets. It will change the
face of small aircraft aviation. The Martin Jetpack has received huge worldwide publicity. This has led to over
100,000 enquiries for Jetpacks, and the company has a register of over 10,000 people who want to be kept
updated on the Martin Jetpack. The initial constraint is expected to be the company’s capacity to deliver rather
than end customer demand.
Variations of the Jetpack include remotely operated versions
which can carry a payload of up to 100kgs
The company has also had a considerable number of conversations with potential commercial
or Governmental customers.
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Table 5 /
4.0
Registered Recreational Aircraft
AIRCRAFT TYPE
Table 7 /
USA/CANADA
Certified Light Aircraft
WORLD TOTAL
172,000
350,000
Registered Homebuilt
25,000
75,000
Ultralight / Microlight
28,000
122,000
672,000
1,047,000
Pilot Licences
Source: Experimental Aviation Association.
Table 6 /
Potential Revenue by Annual Unit Sales
Annual Units Sold
500
750
1,000
Potential Revenue (US$M)
$75.0
$112.0
$150.0
Source: Company Management.
4.5
SALES STRATEGY
To date, the Company has concentrated on the development of functional prototypes of the Martin Jetpack
and has not been actively focused on sales of the product. Now that an operational Jetpack has been developed
and as further research and development required to complete a commercial version progresses, the
Company is seeking initial customers for the First Responder Jetpack to be released in mid-2014.
Other Recreational Vehicles (North America)
VEHICLE TYPE
YEAR
UNITS
SOLD/YEAR
VALUE NZ $M
Snowmobiles
2010
85,000
1,125
Personal Watercraft
2009
50,,000
550
Source: International Snowmobile Manufacturers Association (ISMA) and Personal Watercraft Industry Association (PWIA)
Only a small level of market penetration is required to generate a meaningful level of sales for Martin.
For example:
If demand for the Martin Jetpack reached just 1% of the North American recreational aviation market,
this would amount to sales of more than
2,000 jetpacks; and
Capturing 1% of the North American recreational vehicle (snowmobiles and personal watercraft)
market would equate to sales of over 1,300 jetpacks
per annum.
The Company will initially target supply of multiple Jetpacks to military and government organisations. The CEO
is spear-heading the development of these sales and will soon build a sales and marketing team.
The development of sales channels for a recreational version of the jetpack will focus on using the Jetpack
Experience business, and establishing relationships with flight schools and aero clubs which may provide initial
training and maintenance services for pilots.
4.6
ADVERSTISING, PROMOTION AND PUBLICITY
The launch in Oshkosh July 2008 of Prototype 11 received enormous publicity around the world - with every
major newspaper and 600 TV channels covering it in the following 24 hours. It was on the front page of the
New York Times. Following this fantastic publicity, the company has spent very little on marketing but continues
to receive great interest from media and the general public as evidenced by:
Widespread television and print media coverage
High numbers of hits on the Company’s website and YouTube channel (over 3 million views to date)
4.4
REVENUE POTENTIAL
Annual sales of 500 Martin Jetpack units would generate total revenue of approximately US$75 million, based
on an eventual target wholesale price of US$150,000 per unit for commercial customers and US$250,000
for a military specification Jetpack. To put this sales volume in context, the opportunity presented to the
Company in China alone offers indicative volume of 500 units per annum.
Thus, based solely on the sales potential of China, the Company has the potential to establish a large and
profitable business. When the global opportunity across military, civil and recreational markets is also
considered, there is the potential for the Company to derive significant revenues and levels of profitability.
A large number of unsolicited enquiries regarding the availability of the jetpack for purchase
by commercial and recreational users.
Inclusion in Time magazine 50 Best Inventions of 2010 (“Most Anticipated Invention”)
and Pop Sci 2013.
The Martin Jetpack appeared on the cover of the December 2012 Wired magazine
A recent press release of the introduction of P12 attracted worldwide interest and resulted in live
interviews on radio and television including the BBC World Service with 40 million listeners.
Table 7 sets out potential revenue by annual unit sales, again assuming a target wholesales price of
US$150,000 per unit. At these volumes, the Company expects to achieve production efficiencies that will
generate very attractive gross margins.
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5.0
34
DEVELOPMENT
PLAN
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
DEVELOPMENT
PLAN
5.1
SECTION
5.0
KEY MILESTONES AND TIMEFRAME
Following the raising of this round of capital funds, the key development streams that the Company will focus on
are as follows:
Complete the first commercial version of the jetpack for release in 2014
Develop the personal recreational version of the Jetpack,
targeted for release in 2015
Develop the Martin Skyhook
Entry into the Governmental/commercial market in 2014 with
the First Responder Jetpack
Build a demonstrations business that earns revenue from Jetpack flights at major
events or for product promotions, at the same time as promoting the Martin
Jetpack. This business is to start in late 2014
Establish production capacity, initially in New Zealand
Enlarge the commercial and marketing team to establish global distribution
and supply chains, as well as drive and manage growth
A Jetpack Flight Simulator is being developed for recreational and training purposes
Establish the first Jetpack Experience business once a suitable partner
has been identified
5.2
PRODUCT DEVELOPMENT PLANS
The current focus of the Company is to produce a jetpack suitable for manned public demonstrations during
the first part of 2014. The new prototype, P12, has been built for this purpose.
This slightly larger Jetpack is planned to become the first commercial release in 2014, suitable for the First
Responder including Search & Rescue, Police and other similar users. This version will also be able to be used
for the Company’s own promotions business and for the Jetpack Experience.
Work on downsizing the Jetpack for a Personal Jetpack will commence as soon as funds and technical
resources allow. That is, priority will be given to completing the first commercial product. When sufficient funds
are raised the modification to the personal use Martin Jetpack will commence.
Much of the future development work is in ongoing flight performance and testing. There will also be engine
improvement to increase the time between services, work on the active ballistic parachute and other safety
enhancements, work on flight control redundancy and full documentation.
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Martin Jetpack / PRE-IPO INVESTORS INFORMATION
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5.3 COMPETITORS
Jetpacks were first developed by the US military in the 1950’s. There have been many attempts at developing
a practical jetpack over the years, mostly by private individuals or small companies. Currently there are several
Jetpacks available to purchase. All are powered by a combination of hydrogen peroxide and compressed
nitrogen. These jetpacks have several limitations including:
Short flight time: Between 30 and 75 seconds of flight time only
Expensive fuel: Around $1,500 per 30 second flight. Its also not readily available
Dangerous: Propellant is expelled from jetpack at over 700 deg c. Due to low altitude attainable in
30 second flight window, no ability to deploy a parachute should the engine fail. Extremely difficult to
control – significant training required
Because of these limitations, these jetpacks have only been used for demonstrations and entertainment
purposes. Below is a list of companies that produce a Jetpack and the cost.
COMPANY
FLIGHT TIME
COST
Jet Pack International
30 sec flight time
USD $150,000
T¬ecnologia Aeroespacial Mexicana
30 sec flight time
USD $125,000
Thunderbolt Aerosystems
75 sec flight time
USD $125,000
(no longer for sale)
TAM Rocket Pack
The Thunderbolt Aerosystems
Rocket Pack
Jetpack International Rocket Pack
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6.0
40
MANAGEMENT
& GOVERNANCE
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
SECTION
MANAGEMENT
& GOVERNANCE
6.1
6.2
BOARD OF DIRECTORS
NAME
Glenn
Martin
Jenny
Morel
Richard
Lauder
Dennis
Chapman
POSITION
Founder
Director
Chairman
Nonexecutive
Director
Nonexecutive
Director
6.0
BACKGROUND
MANAGEMENT & SENIOR ENGINEERING TEAM
NAME
POSITION
BACKGROUND
CEO
Peter Coker joined Martin Aircraft Company as CEO in April 2013.
A former senior officer in the Royal Air Force, he has amassed
over 5,000 flying hours and was a qualified flying and weapons
instructor with substantial policy and procurement experience.
He commanded both a squadron and station. More recently,
Peter was General Manager of Lockheed Martin (NZ) and
Business Development Director for Asia Pacific for a Lockheed
Martin Business Unit. Peter has served as a Director on Boards
and is a member of the Institute of Directors. He is also a Fellow
of the New Zealand Institute of Management, Fellow of the Royal
Aeronautical Society and Upper Freeman of the Guild of
Air Pilots and Navigators
James
West
CFO
James is a qualified Chartered Accountant and brings an
immense amount of experience to the Company have worked as
financial controller and operations manager through to CEO/CFO
at many companies
Ulrich
Bergler
Director of
Engineering
Ulrich has a BE from Germany and has been actively involved in a
wide range of manufacturing and technology industries. He has
extensive experience in both the testing environment and bringing
products to market. He also has a Masters in Applied Psychology.
Head Design
Engineer
Bill has a broad range of experience in engineering including
industrial design and project management, practical engineering
and theoretical skills, with specialist skills in fabrication,
machining, welding and software design programmes
Programme
Manager
Nigel is a very experienced programme manager with a Bachelors
Degree in Mechanical Engineering. Scrum Master 1 qualified
Nigel has programme managed a large number of projects in the
technical and mechanical environment.
Glenn did all the initial research for the Martin Jetpack, came up
with the key breakthrough technology, assembled the initial team
of experts to validate his work and led the team to the development
of advanced prototypes. Glenn now assists the Company with
commercial agreements, and promoting the Company.
Managing Partner, No 8 Ventures, a venture capital fund that
invests in building technology companies from New Zealand. For No
8 Ventures, Jenny is also Chairman of Surveylab Limited and Rex
Bionics Limited and a director of Open Cloud Ltd. Jenny also founded
and runs Morgo, an annual gathering of entrepreneurs building
high growth companies from New Zealand. Jenny was made a
Companion of the NZ Order of Merit for services to business.
Richard was an early supporter of Glenn and the Martin Jetpack.
He was a foundation investor in the company in 1998. Richard
is currently CEO of Real Journeys, a Queenstown based tourism
business. Richard is an engineer by training and a previous CEO of
Martin Aircraft Company and of two $100m+ revenue businesses
before that.
Founder and key technology developer of Switchtec Power Systems,
which he founded in 1985 and which was sold for $100 million in
1998. Co-founder of Enatel in which he is currently active and a
director of a number of NZ technology companies.
David
Hunter
Nonexecutive
Director
Previous Global CEO/COO Accenture and BearingPoint, both global
multi-billion dollar listed companies. Australian-based experienced
director of listed and unlisted companies.
Steve
Bayliss
Nonexecutive
Director
Head of Marketing for Foodstuffs Ltd. Previously head of marketing
for Air New Zealand which is wherehe met the Martin Aircraft
Company. Steve has given the Company an enormous amount of
free assistance with marketing.
Peter
Coker
Bill
Clemence
BE Mech (Hons)
NatDip (Mech
Eng) Nat Cert
(M&D
Nigel
Hingston
Note that board composition and the chairman position will be reviewed before listing.
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MANAGEMENT
& GOVERNANCE
6.3
6.0
Other Advisors
NAME
POSITION
BACKGROUND
Peter Beck
Recovery
and safety
systems
advisor
Award winning scientist and engineer. Credited with five US
and European patents, and a provisional patent in hybrid rocket
fuel. Founded Rocket Lab in 2006 to develop the Atea series of
launch vehicles.
Stuart
Holdaway
Engine design
and analysis
advisor
25+ years experience in two stroke engines. Advisor to a
number of winning motorsport race teams Project advisor
for more than 10 years, instrumental in implementing engine
simulation and FADEC control.
Dr Joseph
Tevaarwerk
Reliability
advisor (US)
World renowned reliability expert specialising in tribology and
failure analysis. Worked with Mercury Marine, Harley Davidson,
Navman, Briggs & Stratton and more than 70
other companies.
In addition to its formal Advisory Groups, the Company is advised by a team of specialists in the design and
functional aspects of the Martin Jetpack. Key advisors are:
NAME
Milton
Bloomfield
POSITION
BACKGROUND
Composites
Expert
Milton is owner and technical director of Dynamic
Composites Ltd. He has worked with international sports
people and aerospace companies to create innovative
and record breaking composite solutions. He has a small
dedicated team of engineers and technicians which ensures
high quality and attention to detail.
Industrial
Designer
Paul is the CEO and head of product design at Jetlab Ltd.
He has extensive experience in design and branding, and
developed the look of the jetpack. He and his small team are
currently working on the look forthe latest prototype.
Engineering
advisor
Background in propulsion design with Hamilton Jet Involved
with Martin Jetpack since 1999. Provides an independent
engineering overview.
Flight handling
and VTOL
advisor
Former pilot and instructor, RAF and RNZAF Pilot expert in
the development of the Harrier GR-9 VSTOL aircraft and in
the development of elements of the UK’s Joint Strike Fighter
programme.
Engine
technology
advisor (US)
25+ years experience in engine development. Worked in
engine development for Mercury Marine and four other
major engine manufacturers.
BE Mech
Paul Binner
B Design
Dr Keith
Alexander
Squadron
Leader
Aaron Lauder
(RAF ret’d)
David W Kirk
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Martin Jetpack / PRE-IPO INVESTORS INFORMATION
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6.4 Exit
strategy
Martin Aircraft is committed to a liquidity event via IPO in a suitable exchange in 2014. This is not necessarily
an exit strategy because the IPO would be used to raise further capital to scale up production in order to meet
the expected demand.
To date they have pre-sold close to $1m in tickets to fly in the wind tunnel once it opens. Although it is being
branded as a recreational activity, a significant portion of their revenue model will be derived from the military
who will use it for training purposes.
Ultimately, once the Jetpack has proven its success as a product and commercial viability, the company may
become an acquisition target for groups such as:
These companies prove that it is possible create substantial shareholder value by being unique and innovative.
They also show that there is significant opportunity in the recreational space globally. And that their products
can be used by members of the general public as well as for commercial, military and government agencies.
Vehicle / motorcycle manufacturers (eg Yamaha – market cap US$4.4Bn)
Aircraft / helicopter manufacturers (eg Bombardier Aerospace – market cap US$7Bn)
Recreational vehicle manufacturers (such as Bombardier Recreational Products – market cap CAD
$3.3Bn)
COMPANY
Suppliers of equipment to military and govt agencies (eg Kaman Aerospace – market cap US $1Bn)
Middle East Diverse Companies
Indoor Skydive
Australia Group
VALUE
AUD $43m
Listed on ASX
DESCRIPTION
Indoor Skydive Australia Group Limited (IDZ) will
open Australia’s first vertical wind tunnel in Penrith
in 2014. The facility will allow human flight within
a safe environment and will be used by tourists,
enthusiasts and military.
Comparison Examples
Although it is difficult to draw a direct comparison to Martin Aircraft Company, there are several examples of
companies’ who produce products that are unique in their sector.
BRP or Bombardier Recreational Products (DOO:CN) is a 40 year old Canadian company that has built its
entire business model upon creating new and unique products that are unlike anything else in the market.
Their products include Seadoo, Skidoo, CanAm and many other recreational vehicles. In many cases their
products are so innovative, they have created an entirely new sub-category. Whilst the majority of their
products are recreational based, they are also sold to government agencies, search and rescue, lifeguards,
police and military.
BRP company listed on the Toronto Stock Exchange in May 2013 with a market cap of CAD $2.5Bn, raising
CAD $262 million. It was the largest IPO on the Toronto Stock Exchange of 2013. Since listing the company
has increased in value by over CAD $1Bn.
GoPro
(Woodman Labs)
BRP - Bombardier
Recreational
Products
(DOO:CD)
USD $2.25 billion
Not currently listed
CAD $3.3bn
Listed on Toronto
Stock Exchange in
2013
Maker of GoPro sports cameras. Founded in 2003.
First year of sales in 2005 was $350,000. Sales in
2013 exceeded $600m. USD $288m of investment
capital raised to date. Plans to IPO in near future.
Maker of Seadoo, Skidoo, CanAm, Johnson &
Evinrude outboards, ATV’s and Rotax engines.
Woodman Labs, who invented the GoPro sports camera, has single handedly created a new sub-category for
digital cameras. Through innovative product design, clever branding and an effective distribution model, the
company has raised over USD $288m and now has sales that exceed USD $600m per annum. Whilst the
company is yet to IPO, the valuation as its most recent capital raising was USD $2.25 billion.
Indoor Skydive Australia (IDZ:ASX) listed on the ASX in Jan 2013 raising $12m. It raised a further $9m in
Sept 2013 and was the best performing IPO of 2013, increasing in value by 175% from its IPO price. The
$12m raised at the IPO is being used to build the vertical wind tunnel at Penrith, which is due to open in
April 2014.
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7.0
48
FINANCIAL
INFORMATION
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
SECTION
FINANCIAL
INFORMATION
7.0
The financial statements of the Company set out in this Section have been prepared in accordance with
the Financial Reporting Act 1993 and the standards issued by the New Zealand Institute of Chartered
Accountants.
7.1
Table 11 provides a summary of the Company’s historical financial performance for the period FY2012 and
FY2013 (extracted from the annual accounts audited by PricewaterhouseCoopers for FY2012-2013).
Key matters to note in respect of the Company’s historical financial performance are as follows:
R&D expenses consist of external contractors and parts and services used in the production of the
prototype jetpacks.
Other Income is made up primarily from grants received by the Company from the New Zealand
Government to further develop the technology;
Historical Financial Performance
Year Ended 31 March ($)
FY2012
Revenue
FY2013
3,378
5,206
Other Income
25,205
27,113
Total Revenue
28,583
32,319
Lease Expense
58,696
58,000
Employment Expense
567,572
90,275
R&D Expense
489,572
842,339
78,108
19,271
641,471
786,994
1,816,218
1,796,879
Loss before Taxation
(1,787,635)
(1,764,560)
Taxation
Loss after Taxation
(1,787,635)
(1,764,560)
100,222
12,635
(1,787,635)
(1,764,560)
Legal Fees
Other
Total Expenses
Movement in Options Reserve
Total Income / (Loss)
HISTORICAL FINANCIAL POSITION
Table 12 shows the Company’s statement of financial position as at 31 March 2012 to 2013.
Table 12 /
HISTORICAL FINANCIAL PERFORMANCE
Table 11 /
7.2
Statement of Financial Position
As at 31 March ($)
FY2012
Cash and Cash Equivalents
FY2013
122,950
900,834
Grants and Other Receivables
35,782
7,804
Inventories
20,368
2,561
Current Assets
179,10
911,199
Property, Plant & Equipment
41,628
45,123
Intangible Assets
414,429
469,489
Non-Current Assets
456,057
514,612
TOTAL ASSETS
635,157
1,425,811
Trade and Other Payables
248,159
174,256
Convertible Notes
700,678
-
Total Liabilities
348,837
174,562
11,379,335
14,515,526
582,895
740,007
(12,275,910)
(14,003,978)
(313,680)
1,251,555
Contributed Equity
Share Option Reserve
Retained Earnings
Equity
Source: Company Audited Annual Accounts (FY2012 to FY2013)
Key features of the Company’s historical financial position are as follows:
Intangible assets represent the costs associated with the protection of the Company’s intellectual property over the developed technology.
The Company has been primarily equity-funded to date, with a useful contribution from Government funding such as TechNZ4grants from the Ministry of Science & Innovation.
Source: Company Audited Annual Accounts (FY2012 to FY2013)
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8.0
52
APPLICATION
PROCESS
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
STRICTLY CONFIDENTIAL
SECTION
APPLICATION
PROCESS
8.1
8.0
DETAILS OF THE PRE-IPO CAPITAL RAISING
8.2 HOW TO APPLY
Investor type
The opportunity is eligible to the following types of investors only:
In New Zealand: An investor who is “eligible person” as
defined in section 5(2CC) of the Securities Act 1978,
or a person who falls within one or more of the categories
set out in subparagraphs (i) to (iii) of section 3(2)(a) of the
Securities Act 1978
In Australia: An investor who is a defined as a “sophisticated
investor”, or “professional investor” according to the
Australian Corporations Act 2001
In the USA: An investor who qualifies as an ‘accredited
investor’ as defined in Rule 501 of Regulation D of the
US Securities Act
Other Countries: An investor from another country
for whom a Prospectus is not required under their
securities law.
Eligible investors wanting to invest in this Capital Raising are requested to contact the manager of this
funding round, Reuben Buchanan from Axstra Capital.
Investors will be provided with a Share Subscription Agreement which sets out the terms of the investment.
All enquiries should be directed to:
Axstra Capital Pty Limited
Reuben Buchanan – Director
Email: reuben@axstra.com.au
Phone: +61 422 186 686
8.2 THE COMPANY’S RIGHTS
Throughout the capital raising process, the Company reserves the right, without being required to give
any reasons, to:
Alter the capital raising process and timetable at any time.
Enter into discussion with any prospective investor at any time.
Issue securities to any investor irrespective of the aggregate amount of capital raised
under Capital Raising.
Decline to proceed with any party.
TOTAL
INVESTMENT SOUGHT
$ 5,000,000 NZD
SHARE PRICE
$ 3.00 NZD
Scale back any investment requested by a party.
Withdraw from the capital raising process.
Reject expressions of interest.
54
Review the basis upon which the capital raising is conducted.
MINIMUM
INVESTMENT PARCEL
$ 49,500 NZD / 16,500 shares
Maximum
Investment Parcel
$ 5,000,000 NZD
Martin Jetpack / PRE-IPO INVESTORS INFORMATION
Enter into a contract without giving prior notice to any party. The Company will not be
held responsible for any due diligence or other transaction related costs directly or
indirectly incurred by prospective investors throughout the capital raising process.
STRICTLY CONFIDENTIAL
STRICTLY CONFIDENTIAL