Axis Technologies Group Inc (AXTG)

[nbm16yankees]

PR TODAY

We did have a PR today,pennypusher, unfortunately, not the type we want to see...
http://www.amtddj.inlumen.com/bin/djstory?StoryId=CrBbquaebqLqWmdu1mZq

DJ Walgreen Disputes Lighting Co. Claim On Installations>WAG

01/19/2007
Dow Jones News Services
(Copyright © 2007 Dow Jones & Company, Inc.)



By Judith Burns
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--Axis Technologies Inc. (AXTG), which calls itself "The Future of Fluorescent Lighting," may be in hot water over a 2006 press release claiming its products were being installed in Walgreen Co. (WAG) locations.

In a Nov. 16 press release, Axis Technologies, of Lincoln, Neb., said a private energy-consulting firm notified it of the Walgreen installation. Axis called that "an incredible opportunity" to showcase its energy-saving lighting technology - and its stock, which trades in the Pink Sheets, jumped nearly 43% the next day.

Walgreen disavows the release, as does Energy Solutions Group, an Appleton, Wis., consulting firm whose clients include Walgreen, and complained to the Securities and Exchange Commission.

"The press release is just not an accurate representation," said Walgreen spokeswoman Tiffani Bruce. She said Deerfield, Ill.-based Walgreen has 5,584 drugstores and, to date, no equipment from Axis has been installed in any of them. She said Walgreen raised concerns with Axis, but if it issued a correction, "we haven't seen one."

Energy Solutions Group President Michael Verkuylen said he only learned of the release after it was issued, when Walgreen executives phoned him and were "none too pleased by it."

"We've contacted the SEC," said Verkuylen, adding that he understands the agency has begun a formal investigation into the matter. SEC spokesman John Heine declined to comment.

Axis Chief Executive Kip Hirschbach and President Jim Erickson said they're not aware of having done anything wrong. They said they've apologized to Walgreen, and called the press release "100% true."

Executives offered conflicting accounts of how the press release came to be issued. Verkuylen said his firm tested the Axis ballast - which adjusts fluorescent lighting based on the level of natural light available - in its own offices. He said the energy-saving product was promising enough that his firm decided to try it at two Walgreen locations, and supplied shipping addresses to Axis without identifying them as Walgreen stores. He thinks Axis figured out where the shipments were headed and issued the press release without checking with him or Walgreen.

Verkuylen said that on the advice of its lawyer, his company has had no subsequent contact with Axis. While "they seem to have a decent product," Verkuylen said, "we can't work with companies that are unscrupulous."

For their part, Axis Technologies executives say they received emails from Energy Solutions stating their product would be tested at Walgreens. Robert Axelrod, a Houston lawyer who represents Axis, said the company won't release the emails and "has no further comment."

Axis hasn't been shy in the past about issuing upbeat information. Its Web site's "success stories" feature a Texas A&M University Energy Systems Laboratory study comparing Axis ballasts against a competing product in a terminal at the Dallas-Fort Worth airport. The 2005 report concluded the Axis product was superior, offering energy savings of up to 37%.

Harold Huff, an associate research engineer at the lab in College Station, Texas, said he wasn't aware that Axis Technologies had posted the findings, but said the results are accurate. He said ballasts used in the test were donated and that the airport hasn't made any decisions yet on purchasing the product.

Brite-Lite, a wholesale lighting distributor in Vancouver, British Columbia, is another fan. It has an exclusive distribution agreement to sell Axis products in Canada, which Axis announced in a Dec. 1 press release. Brite-Lite sales manager Dave Sinclair said his firm is impressed with the Axis product. He said he was quoted accurately in the release and termed Axis' estimate that the deal would generate more than $5 million in sales this year "a possibility."

Axis projects 2007 revenue will approach $13 million and nearly double, to $25.8 million, in 2008. Its stock, which jumped above $1 a share on Nov. 17, hit $2.16 a share last week, a one-year high. It closed Thursday at $1.83.

Shares in the company were rising even before the Walgreen announcement. One reason: Beacon Equity Research, of Plano, Texas, issued a Nov. 13 report predicting Axis stock would outperform the market and set a one-year target price of $3.06 a share. Editor Jeff Bishop said the research firm doesn't have an equity position in Axis and was paid $6,750 by an Axis shareholder to produce the report. Axis executives said the company didn't pay for the bullish research report.

-By Judith Burns, Dow Jones Newswires; 202-862-6692; [e-mail]


(END) Dow Jones Newswires

01-19-07 1403ET