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): October 17, 2000
SONEX RESEARCH, INC.
(Exact name of registrant as specified in Charter)
Maryland 0-14465 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)
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ITEM 5. - OTHER EVENTS
On October 17, 2000, Sonex Research, Inc. (the "Company") posted the
following report on its website (www.sonexresearch.com):
SHAREHOLDER UPDATE
ANNAPOLIS, MARYLAND, October 17, 2000 - SONEX RESEARCH, INC. (OTC Bulletin Board
Symbol "SONX") reports that it is working on a number of potential business
opportunities during the fourth quarter for its patented Sonex Combustion System
(SCS) emissions reduction technology, but that it will require additional
capital to pursue these initiatives.
This summer the Company disclosed that it had developed a new SCS process in
addition to the SCS diesel technology now in pre-production and OEM evaluation.
Sonex believes that this new process, referred to as Stratified Charge Radical
Ignition (SCRI), will enable practical application of an alternative combustion
process known as homogeneous charge compression ignition (HCCI) that is being
examined by the worldwide automotive industry. HCCI has been studied by many
researchers for years because, in theory, it can lower emissions while also
achieving reduced fuel consumption. The lack of a method for controlling the
ignition point, however, has prevented practical implementation of HCCI. With
the SCRI, Sonex believes it has attained the control of ignition that will make
HCCI viable for commercial application.
On a direct injected, single cylinder laboratory engine at Sonex, the SCRI
reduced oxides of nitrogen (NOx) emissions by 80%, smoke by 90%, and fuel
consumption by 20% to 30%, using diesel-type fuels. Sonex believes that the
SCRI, with further development, can also be applied to gasoline engines.
Sonex has two near-term objectives for SCRI that are intended to set the stage
for licensing negotiations with engine and vehicle manufacturers: (1) Confirm
the SCRI single cylinder engine advances in performance on diesel fuel in a
multi-cylinder diesel engine; and (2) transition the SCRI process to a single
cylinder gasoline engine. The Company is seeking committed industrial partners
to provide substantial on-going financial support and technical expertise to
achieve these objectives.
In June a U.S. diesel engine manufacturer proposed to fund a program for
Sonex to apply the SCRI advances to an industrial diesel engine, and the basic
terms of an agreement were negotiated with its technical team in July. After a
representative visited Sonex in August, the manufacturer asked for a short
series of additional tests, which the Company is now concluding. Sonex cannot
predict when a decision on theproposed funded program will be made, however, as
the engine manufacturer has recently indicated that there have been changes
involving its senior management and that its personnel are currently devoting
their attention to a number of business planning issues.
Discussions are ongoing with technical personnel from two other major
international vehicle manufacturers and a major supplier of automotive
components and systems regarding potential funded programs for the development
of the SCRI. Proposed projects include both diesel and gasoline engine
applications.
Meanwhile, progress has slowed on engine manufacturer evaluation of the SCS "Low
Soot" design that focuses on reducing particulate emissions and NOx in
"classical" diesel engines. The results from initial tests concluded recently in
Europe by a major international truck engine manufacturer on a six-cylinder
turbocharged diesel engine using SCS pistons fabricated by Sonex did not meet
the Company's expectations. The control of combustion achieved by Sonex
previously in a smaller engine for this manufactuer was not evident in the
six-cylinder engine, apparently due to major differences in the combustion bowl
of the two engines. Sonex expects to meet with the manufacturer later this
quarter to reach agreement on redesign of the SCS piston for this engine. The
Company is confident that the desired control of combustion can be demonstrated
such that the emissions targets can be met.
A second international truck engine manufacturer is waiting to receive
pre-production SCS pistons from its piston supplier for evaluation in a six
cylinder diesel engine. The piston supplier has recently informed Sonex that
several in-house design issues have been resolved, and that it expects to
deliver the pistons to the engine manufacturer in December.
Sonex has also applied the SCS to the conversion of small gasoline engines to
start and operate on military heavy fuels in a variety of applications such as
small, remotely controlled military unmanned aerial vehicles (UAVs). During the
third quarter of this year, the Company completed delivery on orders from two
defense contractors for a total of five UAV heavy fuel engines. On the basis of
recent discussions and correspondence with a number of defense contractors, as
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well as with respect to proposals for funding submitted to the military, Sonex
expects to secure additional contracts for heavy fuel engine work during the
fourth quarter.
When the third quarter report is filed in a few weeks, Sonex will report
higher revenue than the previous year. Total revenue reported for the nine
months ended September 30, 2000 is expected to exceed $360,000. Total revenue
through September 30, 1999 was $164,393, while significant revenue realized in
the fourth quarter last year brought total revenue for the entire year to
$324,286. Sonex reports, however, that revenue for the fourth quarter of 2000 is
not likely to reach the level earned in the same quarter of the previous year.
The Company's available cash and proceeds from the collection of accounts
receivable as of September 30, 2000 will not be sufficient to fund operations at
the present level for the entire fourth quarter. The Company is hopeful,
although there can be no assurance, of receiving several modest contract awards
in the near future with respect to heavy fuel engine applications, but in the
event that anticipated revenue does not materialize, or if additional short-term
capital is not arranged, the Company will have to reduce the scope of its
operations later in the quarter. Furthermore, the Company's prospects beyond
December 31, 2000 are dependent upon its ability to enter into significant
funded contracts for the further development of its SCS technology, establish
joint ventures or strategic partnerhips with major industrial concerns, or
secure a major capital infusion. There is no assurance that the Company will be
able to achieve these objectives.
Caution Regarding Forward-Looking Statements
This announcement, as well as all publicly disseminated material about the
Company, contains information in the form of "forward-looking" statements within
the meaning of the Private Securities Litigation Act of 1995 (the "Act"). Such
statements are based on current expectations, estimates, projections and
assumptions by management with respect to, among other things, trends affecting
the Company's financial condition or results of operations and the impact of
competition. Such statements are not guarantees of future performance and
involve risks and uncertainties, all of which are difficult to predict and many
of which are beyond the control of the Company. In order to obtain the benefits
of the "safe harbor" provisions of the Act for any such forward-looking
statements, the Company cautions shareholders, investors and prospective
investors about significant factors which, among other things, have in some
cases affected the Company's actual results and are in the future likely to
affect the Company's actual results and cause them to differ materially from
those expressed in any such forward-looking statements. Accordingly, readers are
cautioned not to place undue reliance on such forward-looking statements.
Shareholders, investors and prospective investors should read this announcement
in conjunction with the Company's most recent Annual Report on Form 10-KSB and
Quarterly Report on Form 10-QSB.
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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.
October 17, 2000 SONEX RESEARCH, INC.
Registrant
/s/ George E. Ponticas
-----------------------------
George E. Ponticas
Chief Financial Officer
