In FY1954, AVSA was given ¥600,000 as an annual budget and took the first step toward the construction of a high-speed shock tube and the development of a rocket telemetry system. Apart from this budget, two kinds of subsidies were granted by Japanese government, i.e., ¥400,000 to University of Tokyo by the Ministry of Education and ¥2,300,000 to Fuji Seimitsu Company (current Nissan Motor Co.) by Ministry of International Trade and Industry. Thus ¥3,300,000 in total was made good use of to produce a variety of tiny test rockets with solid propellant as well as to carry out firing tests in laboratories and factories. From these repeated tests appeared the Pencil test rocket--1.8cm in diameter, 23cm long and 200g in weight.

The solid propellant for the Pencil rocket was "double base" (smokeless gunpowder). The main ingredients of double base are nitro-glycerin and nitro-cellulose into which stabilizing and hardening agents are moderately added. This mixture is stirred and kneaded into a ball to be squeezed through an extruding machine.

After confirming internal burning pressure of 112 atm, burning duration of 63 msec, thrust force of 29 kg, etc., in the factory, the horizontal test launch of Pencil was carried out on March 11 at a gun firing pit in Kokubunji, Tokyo, followed by an open firing test on April 12 in the presence of people from government offices concerned and the press corps.

Launched horizontally from a 1.5m-long launcher, the Pencil flew through a series of thin-wired paper screens to pierce the sandpit beyond the screens. The velocity change of Pencil was estimated by measuring the time difference of wire cuttings using an oscillograph. The direction change of tail fins gave the spin rate. Supported by high-speed cameras, in addition, basic data for future flight tests were obtained, for example, velocity, acceleration and trajectory dispersion due to changes of the center of gravity and the shape of the tail fins.

This kind of horizontal flight tests lasted for 10 days, and the results of all 29 flights were satisfactory.

After the tests at Kokubunji, some variations were made, such as a 300 mm long Pencil ("Pencil 300"), a two-stage Pencil, and a tail-finless Pencil. To gain experience, more horizontal test flights were attempted at a laboratory attached to the University of Tokyo in Chiba City.

After these experiments, the next stage of rocket launchings shifted to Michikawa Beach (currently lwaki-cho), in Akita Prefecture. Michikawa continued to be a stronghold for Japanese rocket technology from August 1955 to 1962. The historical first trial at Michikawa was made on August 8 under a clear sky. A Pencil 300 was put on a 2 m-long launcher. Launch elevation was set at 70 deg. Itokawa started the countdown at 14:15. "Five, Four, Three, Two, One, Zero!" Lift off occurred at 14:18. But then someone exclaimed "Oh dear!" Just before ignition, owing to weak tail support with vinyl tape, the Pencil had dropped onto the beach. Instead of flying up into the blue sky as expected, the Pencil was crawling along the sandy beach like a pinwheel.

Of course, the tail support was strengthened with wire, and another attempt was made at 15:23. The Pencil, for the first time, took off toward the hot sky of summer, leaving a line of beautiful and thin white smoke. With a peak altitude of 600 m and a horizontal range of 700 m, the flight time of this historical first success was 23 sec.