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): August 22, 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 August 22, 2006, the Registrant posted the following announcement on its
website (www.sonexresearch.com):
INVESTORS REFILE FEDERAL LAWSUIT PREVIOUSLY DISMISSED
ANNAPOLIS, MARYLAND, August 22, 2006 - SONEX RESEARCH, INC. (OTC SONX) has
learned that on August 18, 2006 a group of Pennsylvania investors amended and
refiled their federal lawsuit which had been dismissed in July 2006 by the U.S.
District Court for the Eastern District of Pennsylvania for failure to meet the
legal standard for bringing a valid complaint under applicable federal and state
securities laws. Sonex management continues to believe that, aside from failing
to meet the legal requirements, many aspects of the claims in the Amended
Complaint are without merit and contain factual inaccuracies. Sonex plans to
timely respond to the Complaint and defend itself accordingly.
The original Complaint was filed in February 2005 by Bruce W. Majer of Plymouth
Meeting, PA, Allen W. Fortna of Whitehall, PA, and the Hermitage Partnership of
Philadelphia, PA (together, referred to as the "Investors"). The Complaint was
an action for federal and state securities fraud, common law fraud, and related
claims by the Investors who believe they were induced to purchase securities
based on a series of alleged misstatements and omissions, and was filed against
Sonex, its former President, CEO and director Roger D. Posey, former director
Jim Z.I. Williams, current CFO, Secretary and director George E. Ponticas, and
Dr. Andrew A. Pouring, current Sonex Chairman of the Board, CEO and President.
The Investors sought the return of $175,000 in equity investments made in Sonex
during 2004. Sonex notes that Mr. Majer is a former colleague of Mr. Posey.
In March 2005 Sonex filed its Motion to Dismiss the Complaint for failure to
state a cognizable claim as a matter of law, which motion was granted by the
Court on July 19, 2006. The Plaintiffs had 30 days to file an Amended Complaint.
The Amended Complaint restates the claims of the original lawsuit, cites
additional examples of alleged misrepresentations, and makes several allegations
concerning the involvement of former Sonex consultant James A. Rose, II, of
Arnold, Maryland, president of Global Equity Consultants, Inc. ("GECI"),
contending that Rose had authority to act on behalf of Sonex and his alleged
misrepresentations, in part, induced the Plaintiffs to invest. Despite such
allegations, the Amended Complaint does not name Rose or GECI as defendants.
In September 2005 GECI filed an action against Sonex for alleged non-delivery of
stock pursuant to a consulting agreement. Sonex opposed the claim, asserting
that the consulting agreement was procured by negligent and/or intentional
concealment by Mr. Rose of the fact that GECI had transferred 300,000 shares of
Sonex stock to Jim Z.I. Williams, one of three members of the Board of Directors
who was to vote to approve the consulting agreement. In April 2006, GECI's
Motion for Summary Judgment against the Company was denied.
In July 2006 GECI filed another lawsuit, a stockholder derivative complaint,
against Dr. Pouring and Mr. Ponticas alleging violations of Maryland Corporation
Law with respect to interested director transactions. This latest action
challenges the grant by Sonex in early 2005 of security interests in its patents
to its officers, directors and other creditors to secure payment of compensation
being deferred on an ongoing and future basis as well as new loans and other
financial obligations. The stockholder derivative complaint alleges that the
security interest was "procured by negligent and/or intentional concealment of
material facts" and seeks rescission of the transaction. GECI claims that the
transaction "is unfair and unreasonable" to Sonex. Three local shareholders
previously filed a lawsuit in April 2005 challenging the grant of the security
interests, but after court-ordered mediation in July 2005, the matter was
settled and voluntarily dismissed by those plaintiffs in March 2006.
Dr. Pouring and Mr. Ponticas believe that the allegations in the stockholder
derivative complaint are without merit and that the filing of the lawsuit does
not serve the best interests of Sonex stockholders as implied by GECI in the
Complaint. They believe the grant of the security interests, taken to keep the
Company in operation, meets the legal standard for interested director
transactions that requires such transactions to be fair and reasonable to a
corporation.
While both of the actions by GECI continue in litigation, the parties have
engaged in settlement discussions.
Contact: George E. Ponticas, CFO, Sonex Research, Inc., tel: 410-266-5556,
email: george.ponticas@sonex-na.com, website: www.sonexresearch.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 UAVs (unmanned aerial vehicles).
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 an audit of the related financial statements
and because it lacks the staffing to prepare the Forms 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.
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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.
August 22, 2006
SONEX RESEARCH, INC.
Registrant
/s/ George E. Ponticas
----------------------
George E. Ponticas
Chief Financial Officer and Secretary