SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2006
SONEX RESEARCH, INC.
(Exact name of registrant as specified in Charter)
Maryland 000-14465 52-1188993
(State or other (Commision file (IRS employer
jurisdiction of number) identification no.)
incorporation)
23 Hudson Street, Annapolis, MD 21401
(Address of principal executive offices)
(410) 266-5556
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 - OTHER EVENTS
On November 7, 2006, the Registrant Sonex Research, Inc. ("Sonex") issued a news
release announcing the signing of an Exclusive License Agreement (the "License")
and a Collaboration Agreement with Insitu, Inc. (Bingen, WA, www.insitu.com), a
pioneer developer of long-range, unmanned, autonomous aircraft. The registrant
also posted the following announcement regarding the signing of the agreements
with Insitu to its website www.sonexresearch.com:
SONEX SIGNS LICENSE AND COLLABORATION
AGREEMENTS FOR ITS UAS
HEAVY FUEL ENGINE TECHNOLOGY
ANNAPOLIS, MARYLAND, November 7, 2006 - SONEX RESEARCH, INC. (OTC SONX), a
leader in the field of combustion technology, announced that it has licensed a
part of the patented Sonex Combustion System (SCS) heavy fuel engine (HFE)
technology to Insitu, Inc. (Bingen, WA), a pioneer developer of long-range,
unmanned, autonomous aircraft. Insitu is best known for its long endurance, low
cost unmanned aerial systems (UAS) including the Insight(TM), the ScanEagle(R)
UAS, developed in partnership with Boeing [NYSE: BA], and the GeoRanger(TM),
UAS, developed in partnership with Fugro Airborne Surveys. Sonex and Insitu have
also entered into a Collaboration Agreement under which the parties will consult
and cooperate to identify potential new projects including the continued
development and commercial application of the SCS HFE(TM) technology.
Pursuant to an Exclusive License Agreement signed this week with Insitu, over
the next sixty days Sonex will receive cash payments for non-refundable advance
royalties and an exclusivity fee totaling $450,000. In June 2006 upon signing a
letter of intent with Insitu, Sonex received a $50,000 advance payment in
anticipation of execution of the License. The license is exclusive to Insitu for
UAS engines up to a certain engine size. Sonex will also receive per unit
royalties from Insitu for each engine produced. The amount of the royalty is
dependent on engine size and is subject to adjustment depending on engine
volumes and the emergence of competitive HFEs.
Under the Collaboration Agreement, the parties will consult and cooperate to
identify potential new projects including the continued development and
commercial application of the SCS HFETM technology. The Collaboration Agreement
provides for minimum consulting fees to Sonex of $240,000 over the next two
years, with such amounts subject to adjustment under certain conditions
including specified changes in Sonex personnel. The Collaboration Agreement also
grants Insitu the right to solicit the employment of Sonex personnel, including
consultants.
Further details of the two agreements remain confidential to maintain the
competitive positions of both companies.
The Department of Defense (DoD) now desires engines used in UASs and other
military applications for which gasoline storage and use are undesirable, to
operate on less volatile, heavy fuels to reduce the hazard associated with
gasoline. Sonex has established a viable HFE technology baseline by applying its
patented SCS modified combustion chamber design and proprietary starting system
to the conversion of lightweight, spark-ignited (SI), two-stroke gasoline
engines for use in military applications such as UASs to start and operate with
reduced fuel consumption and low smoke on kerosene-based heavy fuels JP-5, JP-8
and D-2 diesel (with lubricant additive) while retaining the ignition precision
of the SI process. The SCS process for two-stroke engines achieves in-cylinder
control of ignition and combustion through the chemical/turbulent enhancement of
combustion via combustion chamber modifications that change the chemical
characteristics and fuel disbursement characteristics within the combustion
chamber.
Sonex has previously announced two development and testing agreements with an
unnamed customer, now identified as Insitu. The first in October 2005 was for
the development of a combustion system to convert the small, two-stroke, SI
gasoline engine used in the ScanEagle to heavy fuel operation. Following the
successful demonstration in February 2006 of a "Proof of Concept" laboratory SCS
HFE prototype operating on JP-5 heavy fuel, the Company announced the award in
March 2006 of a follow-on Phase 2 project to develop, fabricate and qualify
pre-production, flight ready SCS HFEs. A significant accomplishment of Phase 2
has been the ability to reliably start the SCS HFE at cold temperatures.
Dr. Steven M. Sliwa, President and CEO of Insitu said, "Our primary focus in
this effort has been to deliver a heavy fuel engine solution to our customer and
today's announcement demonstrates the progress we've made with Sonex's
technology. It is a testament to the skill and combined talents of our
respective teams that we've been able to meet our goal so successfully." Sliwa
continued, "All of our customers have indicated the high desire for this
capability, and we plan to start flying the solution in the coming weeks."
Dr. Andrew A. Pouring, Sonex Chairman of the Board, CEO and President, said
"Sonex is pleased to be working with the highly professional and technically
knowledgeable members of the Insitu team who understand the significance of
achieving low temperature starting and operation of diesel type fuels in SI
carbureted engines in their UASs, in particular the improved safety impact on
our Armed Forces. The license agreement with Insitu is a significant milestone
in the history of this company. We are excited with the prospect of production
HFEs incorporating the SCS technology, which would serve as validation of
Sonex's patented small HFE technology."
Dr. Pouring added that "Without the many hours of dedicated work and inspired
innovation of the entire Sonex staff, this advance could not have happened. In
spite of the persistent pressure of the misguided securities litigation still
being pursued against the Company which has hindered our progress by diverting
management's attention from making this business a success, the support of the
majority of our shareholders has contributed to this important event."
Sonex reports that as a condition of the execution of the License and
Collaboration Agreements with Insitu, the holders of liens on the Company's
patents were required to subordinate their security interest on the Sonex small
HFE technology patent that is the subject of the License, to the Exclusive
License Agreement. These individuals are Dr. Andrew A. Pouring, Sonex Chairman
of the Board, CEO and President, George E. Ponticas, Sonex CFO, Secretary and
director, Sonex shareholder and consultant Michael I. Keller, and Sonex
shareholder Sidney L. Gulick, 3d. Sonex executed loan and security agreements
early in 2005 granting security interests in its patents to these individuals to
secure payment of compensation being deferred, existing and new loans made to
Sonex, and personal financial guaranties by Dr. Pouring of Sonex credit card
obligations.
Sonex plans to use the proceeds from this transaction to make substantial
payments on notes payable to Mr. Gulick and Mr. Keller, unpaid compensation and
consulting fees, Sonex credit card obligations personally guaranteed by Dr.
Pouring, and other current liabilities. In addition, management plans to seek
professional advice to address the many corporate, organizational, financial and
other challenges facing Sonex.
Contact: George E. Ponticas, CFO, Sonex Research, Inc., tel: 410-266-5556,
email: george.ponticas@sonex-na.com, website: www.sonexresearch.com; Chesua
Patte, Media Relations, Insitu, tel: 509-493-8600, email:
chesua.patte@insitu.com, website: www.insitu.com.
About Insitu
Insitu, located in Bingen, Washington, develops Unmanned Aerial Systems (UASs)
for commercial and military applications. Insitu introduced the first Unmanned
Aerial Vehicle (UAV) to cross the Atlantic Ocean and has partnered with Boeing
to develop ScanEagle and Fugro Airborne Surveys to develop GeoRanger. For more
information about the company, see www.insitu.com.
About Sonex
Sonex Research, Inc., a leader in the field of combustion technology, is
developing its patented Sonex Combustion System (SCS) piston-based technology
for in-cylinder control of ignition and combustion, designed to increase fuel
mileage and reduce emissions of internal combustion engines. Sonex plans to
complete development, commercialize and market its Sonex Controlled Auto
Ignition (SCAI) combustion process to the automotive industry to improve fuel
efficiency of gasoline powered vehicles. Additionally, independent third-party
testing has confirmed the potential of the SCS application for direct-injected
diesel engines to significantly reduce harmful soot in-cylinder without
increasing fuel consumption. Other SCS designs are being used to convert
gasoline engines of various sizes to operate on safer, diesel-type "heavy fuels"
for use in military and commercial applications requiring light weight and safe
handling and storage of fuel, such as in UASs (unmanned aerial systems).
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
"Forward-looking" statements contained in this report, as well as all publicly
disseminated material about the Company, are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Act. Such statements are based
on current expectations, estimates, projections and assumptions by management
with respect to matters such as commercial acceptance of the SCS technology, the
impact of competition, and the Company's financial condition or results of
operations. Readers are cautioned that such statements are not guarantees of
future performance and involve risks and uncertainties that could cause actual
results to differ materially from those expressed in any such forward-looking
statements.
RISK FACTORS
Additional information regarding the risks faced by Sonex is provided in the
Company's periodic filings with the Securities and Exchange Commission (SEC)
under the heading "Risk Factors". Such filings are available upon request from
the Company or online in the SEC's EDGAR database at www.sec.gov. The Company,
however, is delinquent in its filings with the SEC. It has not filed Annual
Reports on Form 10-KSB for the years ended December 31, 2004 and 2005 primarily
because it lacks the financial resources to engage an independent registered
public accounting firm to conduct audits of the related financial statements,
and because it lacks the staffing to prepare the Form 10-KSB due in large part
to the amount of time management has devoted and the amount of funds the Company
has spent in responding to litigation. For the same reasons, the Company has
been unable to file its Quarterly Reports on Form 10-QSB for 2005 and 2006. The
Company is unable to predict when it will be able to make these filings and
there can be no assurance that the filings will be made at all. In addition,
there can be no assurance that a public market for the Company's Common Stock
will continue to exist.
ScanEagle(R) is a registered trademark of the Boeing Company.
Insight(TM) and SeaScan(TM) are trademarks of Insitu, Inc.
GeoRanger(TM) is a trademark of Fugro Airborne Surveys.
###
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
November 7, 2006
SONEX RESEARCH, INC.
Registrant
/s/ George E. Ponticas
----------------------
George E. Ponticas
Chief Financial Officer and Secretary