State of inertia for troubled tech firm

A Mt Maunganui technology firm that attracted $7 million from Western Bay of Plenty investors has laid off its 10 staff and faces being wound up.

Staff of Inertialess Drive, three in administration and seven in production, were handed redundancy notices this month to take effect immediately because "of lack of work and funds".

Some workers returned to complete a run of five magnetic fuel converter units, called the Better Overall Burning (Bob) system.

Last week, staff were given another notice that said they were off work on unpaid annual leave.

One worker said they had no idea why the notice was changed and had not been told whether there was any more work ahead.

"All this has come totally out of the blue. We were told straight that there's no money to pay the wages. It was certainly not because of a lack of work.

"There was no redundancy payment, no holiday pay."

Inertialess Drive was established in 1995 as a public unlisted company by Ken Pedlar, who has been in Zurich for the past 2 1/2 months.

Wife Linda said the staff were laid off because the company was restructuring. "But that's none of %your business. Bye-bye," she said.

An application to wind up %Inertialess Drive was lodged in the High Court at Rotorua more than two months ago - but it was adjourned after Mr Pedlar gave various undertakings to the court.

John McPherson, an official with the Companies Office in Auckland, said an application was made on the grounds of insolvency.

"It was Ken's money and he loaned it to the company. A stack of money was being spent by the company on his invention - every last cent went there."

Mr Pedlar had secured the advances to the company with a registered debenture.

Mr McPherson said there was nothing wrong with Mr Pedlar selling shares second-hand - he did not need a prospectus as long as the company did not help him.

Mr McPherson understood that some investors were taking court action to get their money back.

The Securities Commission warned investors last year, for the second time, about buying shares in the company.

The commission banned advertising that offered shares in Inertialess Drive and its subsidiary, Inertialess Drive Incorporation USA, because the firm failed to have a current registered prospectus.

The company, originally named Inertialess Drive Technologies (1995), also faced a ban on its advertising in 1998 after its original prospectus lapsed.

Last September, a commission executive, Norman Miller, said 1200 people, mainly from Tauranga and Mt Maunganui, had paid more than $6.8 million for shares in the firm between October 1998 and March last year.

Mr Miller said the commission believed that more subscriptions had been paid but the company's records were incomplete.

The company claimed that Bob, a magnetic fuel catalytic converter, reduced carbon emissions and, when fitted to most combustion engines, reduced fuel consumption and boosted power.

That was achieved by changing the hydrogen molecules' polarity into a form that burned easier and more efficiently. The system also provided energy for the rotation of the inertialess drive rotor.

- NZPA