Old faces in new places - in the world of microcap companies that is not an unusual sight. Players seem to move with ease from one struggling venture to another, bringing along bold expectations and a knack for attracting shareholders and often little else. But even in this murky over-the-counter world, it is noteworthy when a trio of these peripatetic individuals who seemed to have no prior connection place their imprints on the same tiny company.
Such would appear to be the case at Axial Vector Engine Corp. (OTCBB: AXVC), where three somewhat familiar names have surfaced in recent years. Those individuals, Colonel Robert Fyn, Murray Stark, and Samuel Higgins, brought with them a wealth of experience with obscure, non-performing, over-hyped public companies.
Fyn and Stark previously were involved with a Pink Sheet company called 3 E International Inc. which captured attention in early 2002 when its shares soared from 12 ½ cents to more than $3. See, 3 E International Corp. Lighter Than Air; 3 E International Corp Falling From The Pinnacle; and 3 E International Corp. From All Pro To All That Dough. Murray Stark was 3 E's President and a director. Robert Fyn was the Company's Secretary and a director. 3 E, which filed a Form S-B with the SEC in March 2000 but made no subsequent filings claimed to be building a television distribution system in Ghana, but had no discernible business, offered no services and produced no products. The sudden stock spike was accompanied by an announcement that 3 E would merge with Corbel Holdings, Inc., a private company controlled by another troubled, regulatory-challenged, over-the-counter entity, Pinnacle Business Management, Inc. Corbel, like 3 E, had no meaningful assets. The deal collapsed, as did Pinnacle and 3 E, and Pinnacle's principals were sanctioned by the SEC for violations of the securities laws. See, Update: Pinnacle Business Management, Inc. Over and Done; and Update: Pinnacle Business Management, Inc. N/K/A Serac Holdings, Inc. Over And Out.
Higgins bears a different provenance. Samuel Higgins first came to our attention as CEO of Spectrum Oil Corporation, a non-reporting Pink Sheet company that touted, among other things, bold plans to transform arid areas of the Middle East into oases by removing salt from water through a unique laser-based desalinization technology and by extracting water from the air. See, Spectrum Oil Corporation You Can Lead Investors To Water and; Spectrum Oil CorporationThirsting For Information. Prior to peddling Spectrum's products, Higgins evidently was a director of Grand Development Corporation (GDM) which traded on the Vancouver Stock Exchange until Canadian authorities suspended the Company because of concerns relating to certain of its public disclosures. Update: Spectrum Oil Corporation) The More Things Change. Despite considerable hype, there is no indication that Spectrum ever developed or delivered any meaningful technology or other products and services.
Lately, Higgins has reemerged at Axial Vector, following in the footsteps of Stark and Fyn. As we discovered, that is not all the three penny stock nomads have in common.
Graduating from Princeton
Axial Vector was formed in Nevada in 2001 as Princeton Ventures, Inc. Although the Company's initial goal was to explore mining properties, that venture never got off the ground or under it. In May 2003, the Company changed its name and direction, entering into a reverse-merger with a privately owned entity called Aero Marine Engine Corp. As a result of the reverse-merger, control of Princeton Ventures (now called Aero Marine Engine Inc.) was transferred to the former owners of Aero Marine Engine Corp. (AMEC), a group that was comprised of Fyn, Stark, Garth Bailey and Peter Merganthaler. Merganthaler, who did not assume any position as an officer or director of Aero Marine Engine Inc., had been the subject of a cease and desist order issued by the Pennsylvania Securities Commission ordering him to halt the offer and sale of unregistered securities in Pennsylvania.
After the reverse-merger was completed, Fyn and Stark controlled over 50% of the Company's outstanding common shares. Bailey, a Canadian attorney, was named as the new CEO and sole director of the surviving public company.
AMEC had no operations at the time of the reverse-merger. That entity had been formed to acquire the assets of Dyna-Cam Engine Corporation, which had been developing a "unique, axial cam-drive, free piston, internal combustion engine." On June 30, 2003, the Company, which had succeeded to the rights of Aero Marine Engine Corp., entered into an agreement to acquire the Dyna-Cam assets. In consideration for the assets, the Company agreed to pay $900,500 in cash and certain unidentified shareholders of the Company agreed to transfer 1,000,000 shares of common stock.
Following the acquisition, the Company asserted that its "principal product is the Dyna-Cam engine" a claim it continued to make until early 2005. According to Aero Marine, Dyna-Cam had developed a unique engine, with approximately 40% fewer moving parts than the traditional internal combustion engine and enhanced capabilities. It claimed that potential applications for the engine included marine, aircraft and automotive use.
In the two and one half years since the reverse-merger, the Company's business plan has centered on the development of a marketable internal combustion engine. The Dyna-Cam version, however, no longer is the focal point of those efforts. Disenchantment and controversy must have set in quickly; in April, 2004 the Company cancelled 860,000 shares of common stock related to the Dyna-Cam acquisition, citing non-performance. Early in 2005, the Company abandoned its plan to develop the Dyna-Cam engine after significant questions had been raised concerning its right to use Dyna-Cam's technology and its performance under the Dyna-Cam acquisition agreement.
The deal with Dyna-Cam had become the subject of a bitter dispute. Former principals of Dyna-Cam claim that the Company and AMEC breached the agreement by failing to satisfy material obligations. The Company disagrees and, in a preemptive strike, filed a federal lawsuit against former principals of Dyna-Cam (later adding Dyna-Cam as a defendant) in October 2004 seeking to establish its rights to Dyna-Cam's intellectual property. Dyna-Cam and its principals countered by charging the Company with fraud and breach of contract. The lawsuit still is pending, and consequently, the Company's right to use any of Dyna-Cam's technology or intellectual property remains in limbo. Will development of the new engine stall if the Company cannot utilize any of the technology or intellectual property it purportedly acquired from Dyna-Cam?
Dyna-Cam's engine was a key aspect of the reverse-merger that landed Fyn and Stark control of the Company. After all, without the Dyna-Cam agreement, they appeared to bring little to the table in exchange for a controlling interest in the public company. It was not long, however, before the relationship between those parties took on additional meaning. In October 2003, Perma-Tune Electronics, Inc - another OTC Bulletin Board company controlled by Fyn, Stark, Merganthaler and Bailey - agreed to extend to the Company a $1.5 million credit line to provide products and services to the Company. To trigger the line of credit, however, Aero Marine would first have to spend money. Perma-Tune had agreed to extend $1 of credit for every $2 paid by the Company to Perma-Tune.
As we will see later, this line of credit may have been largely illusory. Perma-Tune's financial condition did not suggest that it was in a position to extend credit. In any event, it is not clear what products or services the Company planned to purchase from Perma-Tune, although it would appear that Perma-Tune was about to be compensated for reviewing Aero Marine's anticipated internal combustion engine.
Perma-Tune was in the business of designing and manufacturing "high-energy electronic ignition systems for street vehicles, race cars, boats, scientific and industrial applications, space and aviation applications, as well as clean burning fuel applications." The Company said that Perma-Tune would conduct "a complete and comprehensive engineering review of the Dyna-Cam engine to determine and propose altering various components of the engine to enhance efficiencies."
The Fyn, Stark Group had only assumed command at Perma-Tune once again using a reverse-merger to accomplish that task. Trans Max Technologies, Inc, a private Florida company owned by the Fyn, Stark, Bailey, Merganthaler group, acquired control of Perma-Tune in July 2003. Merganthaler became CEO, President, and a director of Perma-Tune, and the Company soon changed its name to Trans Max Technologies (OTCBB: TMAX).
If nothing else, Perma-Tune/ Trans Max should have had access to the information it needed to conduct the promised review for Aero Marine. Both companies maintained their executive offices at 199 Trade Zone Drive, Ronkonkoma, New York, and subsequently moved, first to 200 Trade Zone Drive, Ronkonkoma, N.Y. and then to 2190 Smithtown Avenue, Ronkonkoma, New York, seemingly following one another in lock-step.
As we discovered, there have been other intriguing connections between the two companies including successive relationships with the Fyn, Stark group and Samuel Higgins.
But more about that later.
Goodbye Fyn, Stark. Hello Higgins
By March 2004, the relationship between Aero Marine and Dyna-Cam appeared to be on shaky ground and so was the Company's financial position. As of March 31, 2004, the Company had $33 in cash and no revenues. Despite this bleak financial picture, the Company had incurred operating expenses of more than $3.6 million in the first three months of 2004 including $3.35 million paid to "consultants." According to the Company's Form 10-Q for the quarter ended March 31, 2004, the bulk of the consulting fee consisted of 5 million shares of common stock issued for consulting services. The Form 10-Q did not identify those consultants or enumerate the services they provided.
To stay afloat, the Company was relying on the kindness of its controlling shareholders the Fyn, Stark group who had loaned operating capital. Meanwhile, change was afoot. In January 2004, Garth Bailey resigned as CEO and director and was replaced by Richard Powers, a former power boat racer. Less than six months later, Powers was out. On June 8, 2004, Powers resigned and Benjamin Langford was named President and director of Aero Marine. The following day, Donald Whitehead and Jeffrey Floyd were added to the Company's Board of Directors.
The changing faces in the executive suite signaled another shift at Aero Marine the advent of the Samuel Higgins era. It began with the appointment of Langford as President; Langford was Higgins' brother-in-law. Then, on June 15, 2004, three Bahamas corporations - Financial Investors, Inc., Eastern Business Associates, Inc., and Balboa Group, Inc. - took control of the Company. The trio offshore entities acquired almost 32 million shares 58.5% of the outstanding common stock - for $150,000. Higgins was Managing Director of all three Bahamian companies - which occupied offices at 1607 N.E. 41st Avenue, Portland, Oregon. That soon would become the address of Aero Marine as well.
Aero Marine was undergoing other changes as well. On August 6, 2004, the Company implemented a 1 for 100 reverse-split of its common shares. Any shrinkage in the outstanding shares, however, was only temporary. On August 24, 2004, International Equity Partners SA, a Mexican corporation acquired 100% of the stock of a Nevada corporation called Transporter, Inc. from two individuals identified as Craig Della Penna and Daniel H. Werner. Higgins had a hand in this deal as well. He was Managing Director of International Equity Partners.
Transporter purportedly had developed a PC-based video conferencing system. In consideration for their interest in Transporter, Della Penna and Werner were to receive $3 million, $100,000 of which was payable immediately and the balance of which was due over the ensuing twenty four months. In addition, the agreement called for Della Penna and Werner to receive a million shares of Aero Marine stock and the number of shares was slated to increase if Aero Marine's stock price dipped below $2 by the time Della Penna and Werner could legally sell their shares.
Why was Aero Marine issuing shares as part of a deal between Higgins' Mexican company and the Transporter sellers? On the same date, August 24, 2004, International Equity Partners SA assigned the Transporter agreement to Aero Marine in exchange for 25 million shares of Aero Marine common stock. As a result, Aero Marine became responsible for all payments due to Della Penna and Werner.
Why did International Equity Partners act as the "middle-man," acquiring, and then flipping Transporter? What purpose was served by this convoluted transaction other than to place 25 million Aero Marine shares in the hands of Higgins' Mexican company? The Company, which was now obligated to pay almost $3 million, offered no explanation.
The Transporter deal proved to be even more costly to the Company. In May 2005, the Company sued Transporter, Della Penna and Werner, seeking to rescind the transaction and claiming that Della Penna and Werner had misrepresented the capabilities of their technology. According to the Company, shortly after the lawsuit was filed, Della Penna and Werner placed Transporter in bankruptcy. It is unclear how they had the ability to do this since, supposedly, the Company now owned 100% of Transporter.
Although it appears that the Transporter transaction failed, and the Company has alleged that it was misled, there is no indication that Della Penna, Werner or International Equity Partners returned any of the shares issued by the Company.
August 2004 was a busy month for the Company. A second agreement, also entered into on August 24, 2004, was premised on the viability of the engine being developed by Aero Marine. The Company entered into a joint venture agreement with Tactronics, a company which was in the business of developing and selling technology to the military. (The Company's public filing state that the agreement was with a subsidiary of Tactronics called Adaptive Propulsion Systems LLC, although the agreement was signed by Aero Marine and Tactronics). Under the agreement, Tactronics would have the right to sell the Company's engine to the military in the U.S. and NATO countries. A subsequent amendment extended that right to include the military of the United Arab Emirates. Aero Marine would receive a 20% royalty on all military orders for its engine while Tactronics would receive 5% of all commercial non-military sales.
According to the Company, Adaptive has been making technological improvements to the engine and field tests are expected to commence in the first quarter of 2006. The Company has projected that manufacture of the product will begin by June 30, 2006. In any event, until all tests are concluded, and any necessary modifications are made, it will be difficult to determine whether manufacture is practical or the Company has a viable product.
In January 2005, the Company entered into a second contract with Adaptive. This time Adaptive agreed to develop a series of generators. The Company claims that the first of these generators should be delivered by mid- 2006.
The Company continued to issue shares. On August 25, 2004, Aero Marine hired Carlyle Financial Consulting Group, to provide consulting services for investment banking services and all of the Company's prospective acquisitions in Europe and the Arabian Gulf. Aero Marine did not appear to have any European or Gulf operations at the time. Indeed, there was no indication that the Company had developed any marketable products. On the other hand, vague Gulf associations had been at the center of the hype surrounding Higgins' former company, Spectrum Oil,
In consideration for these services, Carlyle Financial received 1.4 million shares of common stock all of which were registered on a From S-8 filed by the Company on September 3, 2004. Consequently, Carlyle Financial was free to sell its shares long before it had rendered services to the Company.
Fyn, Stark, Merganthaler and Bailey had disappeared without fanfare. On June 30, 2003, the four men owned 78% of Aero Marine's outstanding stock. One year later they had ceased to be controlling shareholders supplanted by the Higgins companies. The Company offered no explanation for their exit.
A Form 10-K filed by the Company for the year ended June 30, 2004, no longer listed Fyn, Stark, Bailey and Merganthaler as significant shareholders. Nor did it list any of the offshore entities managed or controlled by Higgins as the holders of 5% or more of the Company's outstanding shares. Instead, the Form 10-K stated that three offshore Financial Investors, Inc.; Eastern Business Associates, Inc.; and Balboa Group, Inc., acquired their shares on July 1, 2004 even though the Forms 13D filed by each of those companies declared June 15th as the date of the transaction.
Transitions and Trans Max
Control of the Company had shifted once again - but the financial picture remained bleak. As of December 31, 2004, Aero Marine had $2,418 in the bank and still no revenues.
There were more changes on the horizon. On January 6, 2005, Benjamin Langford resigned as President and Donald Whitehead and Jeffrey Floyd resigned as officers and directors of the Company without explanation. In their stead, Aero Marine appointed Dr. Raymond Brouzes as President and CEO and Samuel Higgins as Secretary and Treasurer. Brouzes, Higgins and Langford were named as directors. On May 13, 2005, Higgins became Secretary and Treasurer of Trans Max.
The team was new, but their connections and experience seemed familiar. If there was no evident connection between the Fyn, Stark group and the Higgins team, there certainly was an unusual confluence of relationships. In particular, each of these individuals had a bond with Trans Max Technologies. Brouzes had been President of Trans Max since May 2004. Higgins was a director of Trans Max.
Brouzes' experience also stirred echoes of Spectrum Oil, and its apparently aborted desalinization plan. Before joining Trans Max, Brouzes had been President of Ultrasound Fluid Technologies LLC, a start-up company that had been exploring methods of removing salt from seawater to produce potable water.
Trans Max seemed to be moving on a parallel track to Aero Marine. On May 24, 2004, Financial Investors, Inc., Balboa Group, Inc., one of the Bahamian companies controlled by Higgins, acquired 129,007,050 shares of Trans Max 58.2% of the outstanding stock for $150,000. Four days later, the Higgins companies removed Peter Merganthaler, claiming he had misused the Company's funds and stock accounts. Ray Brouzes became President and director of Trans-Max. Higgins' sister, Francis Langford, joined Brouzes on the Board of Directors.
August 24th and 25th 2004 proved to be busy days for Trans Max, as they had for Aero Marine. Indeed, Trans Max entered into a series of agreements which mirrored the deals entered into by Aero Marine on those same dates.
First up was a convoluted arrangement that involved an offshore company controlled by Higgins - reminiscent of the agreement between Aero Marine and Transporter. On August 23, 2004, Groupo Aquinas, an Argentinean company associated with Higgins, acquired certain assets from an individual named Victor Vartovy and his Ukrainian-based company. Vartovy's assets included certain technology and intellectual property relating to a Water Air Machine that purportedly would enable the production of drinkable water from air at a low cost. The concept should sound familiar to those familiar with promotions that emanated from Higgins' former company, Spectrum Oil.
The agreement provided that Groupo Aquinas would assign the rights to this technology to an unnamed public company which turned out to be Trans-Max. In consideration for the assets, Vartovy would receive $1.5 million and 10% of all net profits of the public company.
On August 24, 2004, Groupo Aquinas assigned all rights to the Vartovy assets to Trans-Max in exchange for 50 million shares of common stock. Sound familiar? It should, since the Aero Marine-Transporter deal followed a similar course. Here again, investors might ask why it was necessary for Higgins' offshore company to act as a "middleman" other than the opportunity to accumulate shares. Trans Max, which now was obligated to pay $1.5 million plus 10% of its net profits to Vartovy, offered no explanation.
Trans Max continued to follow Aero Marine's lead with its next transaction. On August 24, 2004, Trans Max entered into an agreement with Adaptive Propulsion Systems LLC, which it identified as a subsidiary of Tactronics, Aero Marine's new business partner. In this instance, Adaptive Propulsion agreed to provide necessary funding to develop Trans Max's Water Air Machines for military use. Trans Max would receive a 20% royalty on all orders of the Water Air Machines by NATO countries while Adaptive would receive a 5% royalty on all other civilian and military sales of the system tracking the structure and terms of the arrangement between Aero Marine and Tactronics.
Finally, on August 25, 2004, Trans Max retained Nino Investment Trust, to provide consulting services and coordinate acquisitions in consideration for 2.4 million shares of common stock. Trans Max agreed to register those shares on a Form S-8 just as Aero Marine had agreed to do for Carlyle Financial Consulting that same day. On September 24, 2004, Trans Max filed a Form S-8 Registration Statement for the shares issued to Nino.
Under the Higgins team, Trans Max, like Aero Marine, was off to a slow start. As of December 31, 2004, the Company had current assets of $69, current liabilities of almost $2.4 million, and zero revenues. There is no sign that the Company's grand plan to pull drinkable water from air at a reasonable cost proved any more viable than the aborted dreams of Spectrum Oil. By June 30, 2005, the Company had current assets of $837. Its liabilities continued to hover at $2.4 million.
On September 8, 2005, Trans Max threw in the towel and filed a voluntary petition under Chapter 11 of the Bankruptcy Act.
Meanwhile, Back at Aero Marine, uh Axial Vector
Trans Max surrendered to the reality of its financial condition never having demonstrated the viability or marketability of its "product." Is Axial Vector headed in the same direction? Soon after Brouzes ascended to the presidency, the Company abandoned plans to develop the Dyna-Cam engine, claiming that it was instead focusing its efforts on an engine with even more advanced performance characteristics which was designed using concepts of "the original Axial Vector engine." As a practical matter, the Company had no choice in light of the claims exchanged in the Dyna-Cam litigation.
On May 20, 2005, the Company signaled its dedication to the latest plan, changing its name to Axial Vector Corporation. The Company indicated that the name change better reflected its new direction but has Axial Vector really created a unique product, separate and apart from the Dyna-Cam engine? The Axial Vector website suggests that the Company may be continuing to rely on aspects of the Dyna-Cam technology, even in the face of litigation that raises questions concerning its rights to that product. Here is what the Company says:
On June 30, 2003, we acquired the assets of the company that had originally manufactured the engine, as well as a number of interesting prototypes. The acquisition included all of the intellectual property, know-how, trade secrets, tooling and several engines. Though the engine could have carved itself an interesting market niche, we decided to redesign an entirely modern engine building upon its original core strengths and bringing to bear modern material sciences, computers and electronic technologies.
Did Axial Vector acquire rights to that property in 2003? Dyna-Cam suggests otherwise. If the Company did not acquire the right to use any of the Dyna-Cam assets, how will its "new" engine be affected? The resolution of those issues could have considerable bearing on the Company's plans. In any event, the Company's prospects cannot be reasonably assessed until its latest project is completed and independently validated. Until then, the Axial Vector engine remains a work in progress.
Meanwhile, shares continue to flow out of the Company's treasury - though revenues have yet to flow in. In April 2005, the Company entered into three transactions in quick succession:
On April 17, 2005, the Company issued 1,465,000 shares to Arube Holdings Inc. under a five year consulting agreement. The Company said that Arube would provide "administrative and marketing services" and agreed to file a Registration Statement for the shares at the request of Arube. On May 6, 2005, the Company filed a Form S-8 registering the shares,
Axial Vector did not say who owned and controlled Arube or where that entity was located and incorporated. An individual named Albert Davis executed the agreement on behalf of Arube, signing as "Director."
On April 20, 2005, the Company sold 1.8 million Units to a single investor for $900,000. The Company did not identify the investor.
The Company sold those shares under Regulation S, which permits a public company to sell unregistered shares to purchasers who are located outside of the United States. The buyers may not resell the shares in the U.S. for one year, although they may resell them overseas immediately. A vibrant market for U.S. over-the-counter stocks has evolved in Europe and the Far East, much of it fueled by aggressive boiler-room operations peddling shares of obscure companies to foreign investors with little knowledge of U.S. markets.
Each Unit consisted of one share of common stock and one warrant to purchase a share of common stock for $3 for $900,000. On the date of the transaction, Axial Vector stock was selling at approximately $2.50 a share (by April 25th, the shares reached $6.70). Based upon the April 20th stock price, the shares issued to the unnamed offshore investor had a market value of $4.5 million a tidy profit for a $900,000 investment.
On April 25, 2005, the Company completed another Regulation S offering, entering into a $4 million financing agreement with Alliance Capital Management. Under this agreement, the Company would receive $400,000 a month for ten months, beginning in May 2005. The first payment was scheduled to be converted into 200,000 shares of Axial Vector stock, reflecting a price of $2.00 per share. Future advances would be converted into shares at a 25% discount to the market price. In May 2005, the price of Axial Vector shares ranged from $2.60 to $3.80 significantly above the initial purchase price.
The Company did not indicate who owned and controlled Alliance Capital or where it was located and incorporated.
The Company was not finished issuing shares. On May 6, 2005, Axial Vector filed a Form S-8 registering 4,244,874 shares to be issued to employees and directors under a stock option plan.
By the end of September 2005, Axial Vector had issued more than 32,162,762 shares. Compare that to the 541,349 shares that had been outstanding as of June 30, 2004 - right before the Higgins group seized the reins and opened the treasury. That increase is even more dramatic in light of the fact that the Company implemented a 1 for 100 reverse stock split on August 9, 2004. In retrospect that would have reduced the June 30, 2004 figure to 54,134 shares.
Despite this outpouring of shares, and the introduction of consultants and financiers, as of June 30, 2005, the Company still had no revenues and just $7,360 in the bank. Public shareholders had been diluted dramatically, while Regulation S buyers and S-8 recipients had been blessed with discounted shares that they could dispose of quickly. Since May 18, 2005, International Equity Partners, one of the Higgins companies, has loaned $1,246,000, to the Company to help keep it afloat.
As of September 2005, the date of its most recent Form 10-Q financial report, Axial Vector had $149,015 in cash. While that is considerably more than $7,360, the Company's cash position seems low considering the $1,246,000 loan from International Equity Partners and $1.6 million advanced by Alliance Capital. The bulk of the International Equity Partners loan, plus $1.2 million received by the Company during the quarter as the result of the Alliance Capital financing, seems to have been consumed by operating expenses that exceeded $1 million between July 1st and September 30th. As of September 30, 2005, the Company had a working capital deficit of $2,098,911 which it conceded left insufficient funds to implement its business plan.
Lack of funds did not stop Axial Vector from making further arrangements for the sale and distribution of its as-yet unproven engine. On September 10, 2005, the Company entered into a Memorandum of Understanding with Kirloskar Oil Engines Limited (KOEL), an Indian-based corporation which would grant KOEL the exclusive right to use Axial Vector's technology for non-automotive applications, such as tractors and other farm vehicles. That agreement will not become final until the parties have completed mutual due diligence.
And, apparently, Higgins was still clinging to those dreams of the Arabian Gulf that characterized his failed efforts at Spectrum. On January 3, 2006, Axial Vector announced plans to establish a joint venture in Abu Dhabi, United Arab Emirates with an entity identified only as Emirates Advance Investment. According to a Form 8-K filed by the Company on January 9, 2006, the joint venture initially would have a license to distribute the Company's products to commercial non-military markets in Saudi Arabia, Kuwait, Bahrain, Qatar, the UAR and Oman. That license would eventually be expanded to include Algeria, Comoros, Djibouti, Egypt, Iraq, Jordan, Lebanon, Libya, Mauritania, Morocco, Palestine, Somalia, Sudan, Syria, Tunisia, and Yemen.
The proposed joint venture would be controlled by Emirates Advance, which would own 51% of the newly formed UAR entity. The Company would own the remaining 49%. The joint venture would not pay any licensing fee to Axial Vector. Instead, the joint venturers would split the revenues from sales in accordance with their 51%-49% ownership interests.
This understanding, like that with KOEL, is subject to the negotiation and execution of a final agreement. But Emirates Advance stands to profit even if the agreement is not finalized. The Company has granted Emirates Advance a 30 day option to buy 1,000,000 shares of common stock.
The Company has expressed optimism that both of these agreements would be finalized in January 2006. So far, there has been no indication that either deal has been completed.
The Company's prospects and each of these agreements hinge on the viability and marketability of an engine which, as of this date, remains in development. Axial Vector still must demonstrate that its technology works, is marketable, can compete with existing engines, and can be marketed at a reasonable price. And, assuming the engine operates as promised, the Company ultimately may have to resolve allegations surrounding the Dyna-Cam acquisition and its rights to utilize that technology in the development of its own product.
It seems like a steep slope, maybe even a slippery one. So far, Axial Vector has been distinguished only by its penchant for issuing shares and the players who have passed through its doors. Considering the fate of Spectrum 3 E International and Trans Max, is there any reason for investors to be encouraged this time around?
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