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AET Special Meeting Jul 23 2010
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REPORT OF THE DECEMBER 15, 2009 ADVANCED ENGINE TECHNOLOGIES, INC. ANNUAL SHAREHOLDER MEETING
Carroll Shelby Enterprises, Inc., 19021 S. Figueroa St., Gardena, California 90248 (310) 538-2914
Advanced Engineering Technologies, Inc. held its annual shareholder meeting at 11:00 am on Tuesday, December 15, 2009 at Carroll Shelby Enterprises which houses OX2 engine development facilities. The meeting was attended by John Luft, Chief Operating Officer; Neil Cummings, Secretary and Legal Counsel; Mike Edwards, Chief Engineer; a representative from AET's accounting firm, Gilderman & Associates; and just 2 AET shareholders.
Only 13,730,000 shares or 41% out of 33,860,000 AENG outstanding shares were voted, and the 51% vote requirement for a quorum was not met. Hence the current Board of Directors remains in place. Early in 2009 a fourth Director, Jim Jeffs, an officer from Whittier Trust Company which manages the Petersen Trust Fund, was added to the Board of Directors at the request of Whittier Trust. The current Board of Directors now consists of Carroll Shelby, President; Noel Holmes; Alexandria Phillips, Treasurer; and Jim Jeffs.
In discussing why a quorum was not achieved, the issue of Steven Manthey declining to vote his shares was raised. This brought up the subject of Manthey Redmond Corporation, a company Manthey has formed to develop and commercialize a so-called "Eco-Engine" for which an Australian patent application, 2009903136, has yet to be published. John Luft and Neil Cummings are closely watching Manthey Redmond and are aware of and have read the prospectus and amended prospectus filed with the SEC on August 28, 2009 and November 11, 2009. There is nothing Luft and Cummings can act on until the patent application has been published and reviewed. If the patent application infringes on OX2 patents, AET will file an opposition.
Following the brief voting business, John Luft shifted the discussion to focusing on AET's financial status. The $10 million grant provided by the Petersen Trust Fund has been exhausted. The unexpected need and cost to develop new power electronics for the OX2 genset when power electronics provided by Danotek proved inadequate, failed, and are no longer available is largely responsible for AET's need to seek additional funding. AET required about $1 million more to complete OX2 engine and genset development. Previously, in better economic times, AET had applied for a California State grant supporting new energy technologies. The first application was rejected due to a technicality, but the State encouraged AET to reapply. AET reapplied, but by then, the economic downturn caused the program to be discontinued.
AET sought additional funding from the Petersen Trust at the end of 2008. After a lengthy delay and despite the addition of Jim Jeffs to the AET Board of Directors, Whittier Trust declined in early 2009 to provide AET with additional funding from the Petersen Trust in response to AET's proposal and request for funding. The poor economy dried up most options and possibilities for outside funding or loans. A press release announcing AET was seeking funding brought in no genuine response. The Board of Directors sat down to decide what to do. Funds would run out in the 2nd Quarter of 2009, and operations would be forced to cease. To raise funds, Carroll Shelby, Noel Holmes, and Alexandria Phillips all agreed to exercise their stock options to buy a total of 2,750,000 AENG shares at a market average of $.10 to raise $275,000. (The Petersen Trust declined to exercise its 4 million AENG share options.) In addition, Alexandria Phillips made a private equity stock purchase of 5 million AENG shares to raise another $500,000, raising a total of $775,000. Finally, Carroll Shelby agreed to forgo AET's $15,000 monthly rent in exchange for AENG stock options. When the stock transfer is complete, AENG shares will be diluted to 41,610,000 shares outstanding out of a 50 million cap. With the Board of Director members voting their newly acquired shares, a quorum of 51% is now attainable at the next annual meeting without proxy materials reaching all shareholders.
Additionally, AET has cut operating costs and reduced its overall budget by 41%. Staff has been laid off. Wages and benefits have been cut. Accounting and legal firm fee caps have been reduced. AET now has only one full time engineer, one full time machinist, and one 1/2 time mechanic. John Luft works 30% for AET. Unnecessary expenses not related to engine and genset development are out. That includes costs for press releases, website development, and the cost to do a full and proper broker search for mailing proxy materials. (A full broker search will be done if a critical issue requiring a quorum vote comes up.) Monthly operating expenses which averaged just over $100,000 a month are now down to just over $49,000 a month.
The funds which AET now has are expected to cover operating expenses from July 2009 through June 2010. During this time, the focus of OX2 engineering and development is to assemble a complete, compactly enclosed and fully functional, propane powered OX2 30 kw variable speed generator ready for demonstration in June 2010. Plans are to have a big OX2 rollout and promotional press event in June 2010, probably at Carroll Shelby Enterprises with Carroll Shelby up front and center. At that point, AET must bring in more funds through marketing to complete any unfinished OX2 and product development. The Board of Directors has been and continues to be active and meet frequently, about twice a month, to make plans for marketing and rolling out the OX2. Noel Holmes calls in regularly from Australia to join the discussion. However, Jim Jeffs, the new Whittier Trust representative, is seldom present.
The meeting moved on to Chief Engineer Mike Edwards to discuss the progress of OX2, electronic throttle control, and genset development. Two Level 3 OX2 engines remain under test and development. The first of three Level 3 engines built was retired earlier. OX2 Engine 3 runs on Dynamometer 1 and is used to test new components such as low compression pistons, labyrinth seals, and an oil scavenge system. The big interest, however, is in OX2 Engine 2 which is now being run and tested in a vertical test stand configuration. In November 2009, Engine 2, fitted with high compression pistons, was converted to run on propane, the first time an OX2 engine has not been run on gasoline. Propane is desirable as a non-greenhouse gas that burns clean enough to run engines safely in enclosed areas and warehouses. Engine 2 now runs as a self-contained, stand-alone unit. It runs with the Danotek generator attached, but currently no load or power is produced because new power electronics for the generator, due in January 2010, have not yet been delivered.
The vertical configuration for the OX2 was implemented to address problems with oil distribution and excessive exhaust gas blow-by existing in the horizontal configuration. The vertical configuration also has the commercial advantage of greatly reducing the footprint of an OX2 generator system saving floorspace. The vertical configuration completely eliminates the blow-by problem and oil distribution is much improved although some new issues have been created. Mike Edwards has plans for a new oil distribution design and is confident that all problems can be taken care of in both the vertical and horizontal configurations.
The OX2 runs very well on propane, even though Engine 2 is currently using fuel injectors and engine control designed for a gasoline engine. Engine 2, a 1.1 liter engine, has not yet been dyno tested on propane, so torque and horsepower have not yet been measured. On gasoline, it had a torque of 316 ft-lbs at 780 rpm (320 ft-lbs peak) producing about 47 horsepower, more than sufficient to power a 30 kw generator. Future dyno testing of Engine 2 on propane will test propane fuel injectors and optimize engine control.
At the previous annual meeting (see AET Annual Meeting Dec. 18, 2008) the need for an Electronic Throttle Control system (ETC) and new Power Electronics to control the variable speed 30 kw generator was discussed. Weant Engineering was contracted to design and create the ETC. ECE, Electronic Concepts and Engineering, Inc., was contracted to design and furnish the power electronics. Prototype ETC and power electronics systems are due to be delivered to AET in January 2010. These prototype units have only the features necessary for managing a demonstration OX2 30 kw variable speed generator to be in operation by June 2010. Production design ETC and power electronics will include more features. For example, the production power electronics will be able to synchronize multiple stacked generators together to create a 60 kw generator. The ETC is to also be designed as a commercial stand alone product which can be sold to retrofit older conventional automobile throttle systems with electronic throttle control at an affordable price.
The meeting moved outdoors to the parking lot of Carroll Shelby Enterprises where OX2 Engine 2 was set up in a stand-alone propane powered configuration. The engine was started and run for just under 3 minutes. This is the first time one is able to hear the OX2 engine with a muffler and without the noise contributed by the dynamometer transmission. Alone, the engine runs much quieter. Click here to hear it. (That's John Luft in the background saying, "Look at that. We can actually carry on a conversation.") The engine runs a bit unsteady and shakes a little because it is running freely at low rpm, about 368 rpm, without any load and with simple, non-optimized engine controls. With a load, the engine will run steady and stable and the piston plates will ride firmly pressed against the cam, eliminating rocker clinking noises. Rubber mountings will help make it even quieter.
This test configuration has many external parts which will all go away or disappear when the unit is repackaged into a neat, compact vertical generator housing ready for demonstration by June 2010. The alternator will go away and be replaced by output from the power electronics. Oil and water pumps will be built-in and direct driven rather than belt driven. The heat exchanger will go under the engine, the radiator and muffler will go on top, and much of the external plumbing will disappear.
There has yet to be a 100 hour OX2 endurance test. However, cummulatively, most of the engine parts on the existing OX2 Level 3 engines have seen more than 100 hours of operation. Test runs are typically about 15 minutes to an hour long. There has only been one main engine bearing failure to date. Most real applications of the OX2 probably will not involve continuous long runs. Generators and pumps are more likely to operate intermittantly or for only a few hours at a time.
Despite AET's low finances, AET is well positioned to make an impressive showing in a big June 2010 rollout event. We shareholders should see for the first time the publicity and press releases we've been craving for the past ten years, and Carroll Shelby will be visible behind the OX2. AET will most likely seek licensing agreements to generate revenue, but all options, including manufacturing, are open. John Luft and Neil Cummings have years of experience negotiating licensing agreements through their work with Carroll Shelby Licensing. The fact that the Board of Directors, especially Alexandria Phillips, believes in the OX2 enough to put up their own money to see AET and the OX2 through to the end shows confidence that there is a market for AET's products: the OX2 engine, the OX2 genset, the generator itself, and the electronic throttle control system.
John Luft, left; a shareholder, center; and Mike Edwards, right, discuss the propane powered OX2 engine.
The propane tank is in the background. The oil cooler/reservoir hangs below the engine in the foreground. A
rubber hose runs gas from the top of the engine to the top of a plexiglass tube with a sliding piston above the left
side of the oil reservoir to monitor blow-by gas. The plexiglass tube on the right side collects the oil, seen as the
dark liquid, and any blow-by gas foam or bubbles in the oil are released and monitored. One stage of a 2-stage
oil pump sends oil to the cooler/reservoir, and the second stage sends oil from the reservoir through the engine.
This view shows the control panel, the 2-stage oil pump and water pump, the heat exchanger which
provides hot water to the manifold of the 1st stage propane gas regulator to preheat the propane, and
the alternator which will be replaced by output from the power electronics later. The water pump turns
on the same shaft with and below the oil pump.
The engine is running in this photo, and the churning oil is visible through the
plexiglass window as the engine block rotates.
This photo gives a good view of the intake manifold and propane regulators as well
as the oil and water pumps.
John Luft is talking to Kirk, the shop manager, in the background.
The Danotek generator and starter motor are clearly shown here below the
OX2 engine.
That's the muffler hanging below on the left side.
Below the radiator are the MoTeC Engine Management and Capacitor Discharge
Ignition Systems.Make a Free Website with Yola.Best matches for Manthey Redmond Corp.This brought up the subject of Manthey Redmond Corporation, a company Manthey has formed to develop and commercialize a so-called... Jump to text »
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