INTRODUCTION
Pegasus
Thruster, Inc. is a
Pegasus
Thruster offers divers and dive shops the finest diver propulsion device in its
price category. Divers, from rescue and
military professionals, to commercial divers to the physically disabled, have
tested the Pegasus Thruster and found that it enhances their ability to perform
their jobs or simply enhances their diving experience. In comparison to existing propulsion devices,
the Pegasus Thruster is the ergonomically preferred choice. The company’s founders intend to initiate the
business by leveraging their relationships with
Several competitors exist in this market space. Most competitors are also small
businesses. The product alternatives in
the market can be characterized as either tow along or diver mounted
devices. Pegasus Thruster’s air tank
mounted device was designed to minimize the weight issues associated with other
diver mounted devices while providing hands free usage that no tow along device
can offer.
UPEGASUS
THRUSTER VERSUS COMPETITIVE ALTERNATIVES
The
Pegasus Thruster is a single propeller, anodized aluminum case unit. Weighing 12 pounds on land, it has an
effective weight of negative 5 pounds in the water. The Pegasus employs a simple hand-mounted
switch to start and stop the motor. This
permits the diver effective use of both hands at all times. The unit offers 30-45 minutes of continuous
propulsion at approximately 3 knots. Under
normal use conditions, a single battery charge provides sufficient propulsion
for a two tank dive. The Pegasus is
designed to sell for $2,400, with additional battery units priced at $600
each.
In
2005, the company initiated a program of patent filings to protect its
technology. The total patent program
consists of twelve filings. Four of the more significant patent filings are
summarized as follows:
·
The drive train
consists of a high torque motor, a torque multiplying planetary style transmission
(not unlike a car’s automatic transmission), and a spring loaded, safety break
away clutch. The clutch disengages in
the event of an abrupt propeller stoppage preventing unit damage. Competitors
utilize a direct drive system subject to severe damage in such instances.
·
The Pegasus
battery can be changed underwater, even as it approaches the unit’s maximum rated
depth of 400 feet. The battery change is
a 10-20 second operation. All the
competition’s units must be dry before the battery can be changed.
·
The Pegasus design
incorporates a 7º upward propeller angle.
This slight angular shift offsets the diver’s natural tendency to lean
forward while moving. This makes it
easier for the diver to maintain a constant depth while moving.
·
The center
mounting bracket incorporates a quick release mechanism permitting rapid
assembly and disassembly of the unit even in cold or difficult conditions. The drive train housing and battery section
are electrically and physically connected via the center mounting bracket.
Several
competitors offer diver propulsion units.
The inexpensive units are tow along style. They tend to be poorly made and subject to
flooding. Comparably priced units
include both tow along and diver mounted devices. Diver mounted units, including the Pegasus
Thruster, shield the area in front of the diver from the effects of propeller wash
churning up the water. When near the
bottom, a diver mounted unit will not disturb the sand allowing for better
sample collection, picture taking, or lobster catching. Comparably priced tow along units perform
adequately. However, they require
tethering when not in use and require the use of two hands to operate. This makes tow along units a poor choice for
divers interested in filming or spear fishing. Other diver mounted units change the diver’s
center of gravity thereby creating a tendency for divers to flip or ‘turtle’
when the unit is at rest.
UMARKETING
Low
priced units are sold in dive shops, specialty sporting goods stores, and via
the Internet. Units comparably priced to
the Pegasus are sold primarily through the Internet and at industry shows. Pegasus Thruster intends to utilize two
distribution channels to begin operations.
The Internet and trade show route will be pursued as per industry standard
practice. This will be augmented by a
focused sales effort initially targeted at dive shops, cruise lines, diving
tour operators, and safety/rescue teams in the
The
company anticipates strong demand from vacationing divers wishing to rent a
Pegasus Thruster unit for the day, weekend or week. Dive tour operators, dive shops and others
will be offered a limited number of units for monthly or long term rent. Cash flow considerations will permit 15% of
the available units each month to be set aside for rentals. This will enable
tour operators to adjust their Pegasus Thruster inventory to meet seasonal
changes. The company will also initiate discussions with a leasing firm to
provide an additional financing option.
The company anticipates that retail rentals will range in the $60 to $75
per day range. Based on a purchase price
of approximately $2,400, company plans indicate a monthly rental rate of $175
to $195 month, an annual rate of $140-155 per month and a two year capital
lease in the range of $125/month. The
company will provide a 12 month warrantee with each unit. The legal ramifications concerning the
offering of extended warrantees and service contracts are being investigated.
The
Pegasus line of products is expected to not only capture market share from
competitors, but also grow the diver propulsion device market. Existing propulsion devices offer increased
diver mobility, though most have their drawbacks. The Pegasus Thruster is believed to be the
first product suitable for a wide range of divers, from the military and police
to the handicapped seeking to experience the freedom and ability to move
unaided by others. Pegasus management has
worked with both the police and the nation’s largest handicapped diver organization
to design a unit that is durable, easy to use, and powerful enough to propel a
diver against a normal current. Amateur
divers, who may not be in top diving form, will find that renting a Thruster
reduces exertion thereby making a tank of air last longer.
The
company’s comparative advantages in the marketplace result from the company’s
patents, superior product design and performance characteristics, product durability,
relationships with local and national dive organizations, and numerous
sale/lease/rental options. The company
anticipates that these comparative advantages will provide the basis upon which
to carve out a substantial share of the diver propulsion market. Rentals are expected to introduce the Pegasus
line of products to many upper income divers on vacation. No other company targets this market creating
a void that Pegasus intends to fill.
Future
Pegasus products under consideration include the Hammerhead, a super duty twin
prop design capable of 5 to 6 knots, and the Dolphin, a less expensive version
of the Pegasus positioned to compete on price when and if necessary.
UFINANCIALS
/ OPERATIONSU
Company
management has evaluated several financing alternatives, including a venture
capital offer and an offer to go public.
Upon consideration of the pros and cons of each option, the decision has
been made to commence operations using the management team’s savings and other
personal equity sources. Cash flow projections
indicate that $80,000 will be required to fund the business
commercialization. Management has opted
to begin producing 20 units per month and grow output by 5 to 10 units each
succeeding month. This option allows the
company time to establish procedures, quality controls, and general management
expertise. It also permits the company
to fund growth with internally generated funds.
By focusing initially on the local markets and selling in limited
quantities, the company can respond aggressively and in person to any product,
technical, or marketing deficiency that may not have been addressed in the
development phase.
The
company anticipates operating out of a garage for the first 6 to 9 months of
operations. Operations will begin with
the three partners working on a part time basis for minimal pay. As production ramps to the 50 to 70 per month
level, equivalent to $1.5 to $2 million in annual sales, the company intends to
relocate to more permanent facilities.
The company expects to reevaluate its financing options at that time.
Each
Pegasus Thruster is expected to cost between $1,050 and $1,100 to build. This includes approximately 2 hours for
assembly and an additional hour for testing and packing. The lead time on component ordering is approximately
5 to 6 weeks. As finances permit, the
company will investigate the proper economic order quantities for each part to
minimize overall cost of goods sold.
UMANAGEMENT
Dean
Vitale serves as the company president.
He is currently employed as a contract commercial aviation project
manager. He directs the conversion of
passenger jets into freight carriers and the heavy maintenance refurbishment of
older wide body jet planes. Dean’s
position requires him to manage up to 250 contractors on any single
assignment. His has received extensive
training from Boeing on airframes and GE on engines. His major area of airframe expertise is
avionics and electrical systems. Dean is an experienced diver certified in the
use of advanced nitrox for technical dives.
He holds a US Coast Guard certified 25 Ton Master Captain’s license.
Steve
Williams is the VP of Operations and R&D.
He is also employed as a contract commercial aviation project manager
dealing with conversion and refurbishment projects very similar to those
described for Mr. Vitale. His technical
training is similar to that received by Mr. Vitale. Steve’s technical area of
expertise concerns manufacturing processes and the physics of aviation. Steve is an accomplished machinist with years
of hands on training and experience in the manufacture and remanufacture of
aircraft components.
Howard
Sorkin is the firm’s Chief Marketing Officer.
He has 20 years experience in specialty real estate sales and
marketing. He is a frequent speaker at seminars
concerning product sales and various service packages available to absentee
property owners. Howard holds an active
life and health insurance license. He
also holds other professional licenses governed by the State of