Corporate and Legal Address:
Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd.
Suite 1050
Los Angeles, CA 90064-1817
USA
Tel:
310-914-9599
Fax:
310-914-1853
Operations and Research & Development Address:
Carroll Shelby Enterprises, Inc.
19021 S. Figueroa St.
Gardena, CA 90248-4510
Tel:
310-528-2914
Fax:
310-538-1815
Website:
http://www.ox2engine.com
Contact: John Luft
310-528-2914
e-mail:
jluft@ox2engine.com
DESCRIPTION OF BUSINESS
Advanced Engine Technologies, Inc. (the "Company") was incorporated under the laws of Colorado and began operations on September 23, 1996. The Company was formed to acquire the rights to manufacture, distribute, and market an OX2 combustion engine throughout the United States, Canada, and Mexico. On October 18, 1996, the Company entered into a sublicense agreement with OX2 Engine (Distribution) LTD, a company incorporated under the laws of the Republic of Vanuatu ("OX2D"), pursuant to which the Company acquired the rights to manufacture, distribute, and market the OX2 combustion engine in the NAFTA countries. Pursuant to the terms of said sublicense agreement, the Company issued 20,000,000 shares of its common stock to OX2D and agreed to pay a 15% royalty on the gross proceeds generated from actual sales of the OX2 engine. In addition, the sublicense agreement provided that the Company would issue an additional 19,000,000 shares of common stock to OX2D upon completion of certain emission testing. In December 1998, the parties agreed to rescind the obligation of the Company to issue such additional 19,000,000 shares of common stock to OX2D.
In May 1999, pursuant to a four-party agreement among and between the Company, OX2D, OX2 Intellectual Property Inc., and Advanced Engine Technology PTY Ltd., the Company acquired the worldwide patent rights for the OX2 combustion engine for $1,500,000. This agreement superseded and terminated the October 1996 sublicense agreement. The Company has assumed responsibility for worldwide patent maintenance and enforcement, as well as engine development, manufacturing, marketing, and sales activities.
The Company’s operations consist of marketing, testing and developing the OX2 combustion engine for commercial applications and raising any necessary capital investments.
On February 17, 2005, the Company's Board of Directors RESOLVED, that AET will de-register the Company's stock with the SEC through the filing of a Form 15 with the SEC so as to suspend its reporting obligations under the Securities Exchange Act of 1934, subject to the fulfillment of conditions precedent. The Company filed the Form 15 on May 5, 2005. Delisting the Company's stock allows AET to make substantial savings to operations costs by eliminating the excessive SEC auditing and reporting costs that are incurred under the Sarbanes-Oxley Act. AET shares are now traded under the symbol, AENG, as a Pink Sheet stock.
As of June 30, 2008, there were 33,860,000 shares of AENG issued and outstanding.
During 2009, stock options totaling 2,750,000 shares executed by Board of Director members and a 5,000,000 share private equity stock purchase to raise Company operating funds increased AENG outstanding shares to 41,610,000.
Overview
Advanced Engine Technologies, Inc. ("AET" or the "Company") was formed to develop and commercialize the OX2 internal combustion engine. The Company's focus is on the development and commercial introduction of the OX2 engine and the subsequent licensing of the OX2 engine technology to approved manufacturers. Based on its design, AET believes its OX2 engine prototype will be fuel-efficient, lightweight, low-emission, multi-fueled and smaller and less expensive than conventional internal combustion engines. AET also believes that it will not have the complex manufacture/production requirements of conventional internal combustion engines.
At the present time six Level 2 or earlier prototypes and three Level 3 prototypes of the OX2 internal combustion engine, plus additional parts that can be used for engine development or for the building of additional prototypes, have been built. Currently, only two Level 3 OX2 prototypes are operational and undergoing testing. One Level 2 OX2 prototype is operational and installed in a demonstration Lincoln Welder maintained by Steven Charles Manthey (the OX2 engine inventor) in Australia. The development and testing of the prototypes is ongoing. No OX2 engines have been manufactured for production use, and no assurance can be given that the OX2 engine will be successfully developed or manufactured.
Plan of Operation
The Company plans to continue the research and development of its OX2 engine prototype. AET has had past agreements with Steven Charles Manthey, the inventor of the OX2 engine, and his companies, that provide that Mr. Manthey and his companies will provide research and development and engine maintenance products and services to the Company to advance the development of the OX2 engine for commercial application. AET has an agreement with the University of California, Riverside ("UCR"), that provides that UCR will continue to provide engine testing and related services to the Company, with particular emphasis on testing related to emissions. These services are being provided under the guidance of Dr. Joseph Norbeck (of the CE-CERT program at UCR) and Dr. Roberta Nichols, one of AET's consultants. The Company now conducts the majority of its research and development, part fabrication, and testing activities in Gardena, California at Carroll Shelby Enterprises under the direction of its lead engineer, Mike Edwards, formerly of GE Nuclear, where two dynamometer testrooms, a CNC lathe, and a VMC vertical milling machine are currently installed.
Assuming the completion of the necessary research and development required to complete the product and assuming that the tests of the OX2 prototype are successful, AET will attempt to introduce the OX2 engine into the market. Marketing activities will include demonstrations to prospective original equipment manufacturers of products using internal combustion engines and the development of additional joint venture partners to assist in marketing the engine.
In the shorter term, the Company's plans are to develop an engine for stationary generator applications, and in the longer term, it plans to develop an engine for automobile, marine and/or aircraft applications. To that end, AET has acquired two custom designed compact water-cooled 30 kW generators from Danotek Motion Technologies which are designed to be mounted to the backplate of the OX2 engine and driven directly off the the OX2 driveshaft creating an extremely compact genset package. AET is also testing the compact generator using a commercial GM 4 cylinder propane engine. AET is contracting with several engineering companies to develop electronic controls for the OX2 and the generator system.
DIRECTORS AND OFFICERS
The following individuals serve as the Company's directors and executive officers, as of December 2009:
Name Age Current Position
---- --- ----------------
Noel Holmes 60 Director
Alexandria Phillips 61 Director, Treasurer
Carroll Shelby 85 Director, President
John Luft 52 Chief Operating Officer
M. Neil Cummings 58 Secretary
James A. Jeffs 56 Director
Directors will serve in such capacity until the next annual meeting of shareholders and until their successors have been elected and qualified. Officers serve at the discretion of the directors. There are not any arrangements or understandings between any director or officer or any other person pursuant to which any officer or director was or is to be selected as an officer or director.
Biographical information follows for each individual elected as director at the Annual Meeting and for each executive officer.
Carroll Shelby - President, Director
Carroll Shelby has over 50 years of successful experience in the engine industries. He has been inducted into a number of automotive-related Halls of Fame. Mr. Shelby has been AET's president since May 2000 and one of AET's directors since 1998.
Mr. Shelby is a founder and director of:
Shelby American, Inc.
Carroll Shelby International Inc.
Carroll Shelby Licensing, Inc.
Shelby Technologies
Carroll Shelby Enterprises
Carroll Shelby Children's Foundation
International Chili Society
Shelby Automobiles, Inc.
M. Neil Cummings - Secretary
M. Neil Cummings has been a practicing lawyer in the State of California since 1977 and was a partner for many years in the Los Angeles law firm of Walker, Wright, Tyler & Ward. In July 1995, Mr. Cummings founded, and is currently the owner and president of, M. Neil Cummings and Associates, a professional law corporation that focuses on the area of business law, with an emphasis on licensing and intellectual property in the context of existing and emerging modes of ground transportation. Mr. Cummings has been AET's secretary since 1999.
John Luft - Chief Operating Officer
John Luft was the director of resorts/attractions marketing for the Walt Disney Corporation at the Walt Disney World (WDW) Resort in Orlando, Florida from 1992 to 1994. From 1985 to 1992, Mr. Luft was the corporate director of U.S. marketing for Hilton Hotels Corporation and from 1994 to 1999 he served as Hilton's director of global and strategic partnership & product development. He also served as the senior vice president of global marketing and sales and business development at SkyNet Holdings, Inc. from 1999 to 2000. Mr. Luft earned a BA degree from the University of Southern California in Marketing and Speech Communications. Mr. Luft has been AET's chief operating officer since September 2001. Mr. Luft is also president, chief financial officer and director of Carroll Shelby International, Inc. and president of Carroll Shelby Licensing, Inc.
Alexandria Phillips - Director/Treasurer
Alexandria Phillips brings to the Company her years of wide ranging experience and expertise as a tax advisor and financial consultant to Robert E. Petersen and entities controlled by Mr. Petersen. Ms. Phillips resides in Southern California and has been AET's treasurer since 2000 and one of AET's directors since 1999.
Noel Holmes - Director
Noel Holmes was born and resides in Australia, but spends a good deal of time in Southern California, while maintaining a diverse international business and accounting practice. Mr. Holmes commenced his career as a chartered accountant in 1968, gained an Australian public practicing certificate in 1973 and practiced as a senior partner in a firm of Chartered Accountants since 1974. Mr. Holmes is a director of private investment and property companies in the United States, Australia, Singapore, the United Kingdom, Malaysia, Hong Kong, China, The Netherlands and New Zealand. Mr. Holmes has been one of AET's directors since 1999.
James A. Jeffs - Director
James A. Jeffs is an Executive Vice President and the Chief Investment Officer of The Whittier Trust Companies of California and Nevada since 1994. The Whittier Trust Company manages the Petersen Trust Fund. Mr. Jeffs has an extensive background in research and in managing investment portfolios for institutional and high net worth clients and has in-depth experience in the areas of oil and gas on a global basis. Mr. Jeffs received both his Bachelors degree and his Masters of Business Administration from the University of Southern California. and is a native of Los Angeles. Mr. Jeffs became an AET director in 2009.
Steven Charles Manthey - Resigned March 25, 2005 as Director
Steven Charles Manthey is an inventor and conducts research and development in connection with engines and related devices. Mr. Manthey was a director from 2001-2005. He resides and works on the southeastern Gold Coast of Queensland, Australia near Burleigh Heads. On March 25, 2005, AET received the formal resignation of Steven Manthey, from the Board of Directors of the company. In connection with the resignation, Mr. Manthey did not state that there were any disagreements between Mr. Manthey and the Company with respect to any matters relating to the Registrant's operations, policies or practices. The resignation affects the share voting agreement with the Petersen Trust (see (2) below.)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 31, 2004, the number of shares of Common Stock beneficially owned by (i) each person who was known by us to own beneficially more than five percent (5%) of AET's Common Stock; (ii) AET's directors; (iii) AET's executive officers; and (iv) AET's directors and officers as a group. As of August 31, 2004, there were 33,815,000 shares of Common Stock issued and outstanding. (NOTE: To date, no SEC filings have been made providing this information beyond August 31, 2004.)
Amount and Nature of Percent of
Name & Address Of Beneficial Owner Beneficial Ownership Class (1)
------------------------------------------------------------------ -------------------- -----------
Robert E./Margaret M. Petersen 22,987,153(2) 67.98%
6420 Wilshire Blvd./20th Floor
Los Angeles, California 90048
Estate of Paul Ebbage 4,981,619(3) 14.73%
4 Spica Street
Coorparoo
Brisbane, QLD Australia, 4151
Steven Charles Manthey 5,621,619(4) 16.62%
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1050
Los Angeles, California 90064
Carroll Shelby 2,420,000(5) 7.16%
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1050
Los Angeles, California 90064
Alexandria Phillips 501,000(6) 1.48%
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1050
Los Angeles, California 90064
Noel Holmes 395,000(7) 1.17%
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1050
Los Angeles, California 90064
M. Neil Cummings 332,389(8) *
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1050
Los Angeles, California 90064
John Luft 300,000(9) *
c/o Advanced Engine Technologies, Inc.
11150 W. Olympic Blvd. Suite 1050
Los Angeles, California 90064
Directors and Executive Officers as a Group 9,769,021 28.89%
* Less than 1%.
1) Applicable percentage of ownership is based on 33,815,000 shares of AET's common stock outstanding as of October 8, 2004. Shares of AET's common stock that a person has the right to acquire within 60 days of October 8, 2004 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all directors and executive officers as a group.
2) Includes 13,195,534 shares that are directly owned by the Petersen Trust. Robert E. and Margaret M. Petersen (the "Petersens") are the trustees of the Petersen Trust. Also includes 4,000,000 shares of AET's common stock issuable upon the exercise of outstanding options granted to Mr. Petersen which were subsequently transferred to the Petersen Trust. The Company has been informed that the remaining 5,791,619 shares are beneficially owned by Steven Charles Manthey, one of AET's directors, but are subject to a voting agreement dated as of September 27, 2001 between Mr. Manthey and the Petersens, individually and as trustees of the Petersen Trust, pursuant to which Mr. Manthey has agreed to vote such shares at all shareholder meetings in the same manner that shares beneficially owned by the Petersens and the Petersen Trust are voted at such shareholder meetings, other than in circumstances where any proposal, resolution or issue at any such shareholder meeting relates to Mr. Manthey personally or during any period that Mr. Manthey ceases to be a director of the Company. The voting agreement is for a term of 20 years, or for so long as the Company continues to do business as a corporate entity, whichever is longer. The Company has been informed that the Petersens and the Petersen Trust have no economic interest in or investment control with respect to the shares beneficially owned by Mr. Manthey.
3) Includes 3,981,619 shares that are held of record by Macro Management Group, Inc. and 1,000,000 shares that are held of record by Resolution Services Ltd., all of which the Company understands are beneficially owned by the Estate of Paul Ebbage.
4) Includes 3,950,000 shares that are held of record by Trinity Enterprises S.A. and 1,781,619 shares that are held of record by Goldwater Estates Inc., all of which the Company has been informed are beneficially owned by Steven Charles Manthey. Also includes 50,000 shares of AET's common stock issuable upon the exercise of outstanding options granted to Mr. Manthey under the Company's 2000 Stock Incentive Plan, as amended.
5) Includes 2,000,000 shares of AET's Common Stock issuable upon the exercise of outstanding options granted to Mr. Shelby under the Company's 2000 Stock Incentive Plan, as amended.
6) Includes 375,000 shares of AET's common stock issuable upon the exercise of outstanding options granted to Ms. Phillips under the Company's 2000 Stock Incentive Plan, as amended.
7) Includes 375,000 shares of AET's common stock issuable upon the exercise of outstanding options granted to Mr. Holmes under the Company's 2000 Stock Incentive Plan, as amended.
8) Includes 275,000 shares of AET's common stock issuable upon the exercise of outstanding options granted to Mr. Cummings under the Company's 2000 Stock Incentive Plan, as amended.
9) Includes 300,000 shares of AET's common stock issuable upon the exercise of outstanding options granted to Mr. Luft under the Company's 2000 Stock Incentive Plan, as amended.
Stock Grant Agreement
In June 1999, the Company agreed to issue 1,000,000 shares of restricted common stock to the University of California Riverside Foundation in five annual installments of 200,000 shares each. The donated stock is to provide an endowment for research funds for the College of Engineering Center for collaborative research on the development of advanced engine technologies. For financial statement presentation purposes, the stock under the grant agreement is treated as committed stock until its issuance. The five installments were issued in July 1999, July 2000, September 2001, September 2002 and August 2003, respectively.
