Aisystems, Inc. (fka ASYI)

[Clutch Cargo]

ASYI –The clock is ticking on Merus Capital…

They want OUT of this trade!

And your suspecions are correct littlebrother1492… Merus Capital NEVER invested $5,000,000.00 in ASYI.

They instead invested that $5,000,000.00 in the privately-held, Washington State company, Airline Intelligence Systems (AIS) and its two co-founders, Stephen Johnston and Roy Miller (who created the JetEngine software).

AIS was founded in December of 2005, and It did not merge into ASYI until March 17, 2010. The company that it reverse-merged into was not ASYI, but a mining company known as Wolf Resources Inc., who changed its name to ASYI immediately after the reverse merger took place.

In william48’s Esquire Magazine article about Merus Capital, that was published on September 30, 2008, the author clearly states that

“Merus Capital has invested $5 million in Airline Intelligence Systems (AIS), which uses proprietary algorithms to improve airline flight scheduling and routing efficiency.”

The link to that 6-page interview with the founder of Merus Capital is set forth here … and I would STRONGLY urge you to read it, as it gives an in-depth look at the man who is one of our controlling shareholders, as well as one of our FELLOW-shareholders; as well as the man who has invested in AERO-IQ:

http://www.esquire.com/features/google-diaspora-1008-2

Merus Capital invested that money on February 28, 2008 … two full years BEFORE Wolf Resources reverse-merged into AIS (on March 17, 2010), and then immediately changed its ticker symbol to ASYI.

The shares of stock that Merus Capital received were not like the shares of ASYI’s common stock that we now hold.

Merus Capital’s shares were deemed to be the “Merus Securities”, and as such they were a hybrid of both debt and equity. For instance, they contained various anti-dilution triggers, which were backed-up with warrants. They also contained a provision for their immediate liquidation and replacement with a promissory note of up to $5,000,000.00 bearing annual interest at 5% if certain events took place that harmed Merus Capital’s interests.

So then, in 2008, Merus Capital (who was headquartered in California), invested $5,000,000.00 in AIS (a firm that was headquartered in Washington State). In exchange for its investment, Salman Ullah also received a seat on the AIS BOD so that he could keep a close eye on his investment (a requirement he continues to extract from every single company that he invests in).

At the time of his investment, his shares in AIS had no stated value … because AIS was still a privately-held company. Then, two years later, AIS reversed-merged into ASYI and its shares began to publicly traded under the ASYI ticker. Shortly after the reverse-merger took place, ASYI’s new shares dramatically rose in value.
In a Market Wire PR, dated March 17, 2010, that trumpeted the reverse merger deal, it was disclosed that “certain shareholders” of AIS received 75% of Wolf’s common stock and 100% of its Series B Preferred stock. You can correctly assume that one of those “certain shareholders” of AIS was none other than Merus Capital.

Indeed, in a stunning display of Salman Ullah’s MAJOR involvement in that reverse merger transaction, he was directly quoted by Market Wire as having said the following:

“Salman Ullah, PhD, Managing Director of Merus Capital, a leading venture capital firm based in Palo Alto, CA, and a key investor in [AIS] commented,

"AISystems has groundbreaking technology with a mathematical foundation that redefines resource planning and scheduling. We are excited to be associated with [ASYI]."

Please remember that these gushing words were spoken by a man who has a Phd in Psychics from Stanford University and who rose to become Google’s Vice President for World-Wide Acquisitions.

The link to that PR is here:

http://search.sys-con.com/node/1337256

Typically, a venture capitalist stays in a deal from 3 to 7 years before cashing-out.

http://en.wikipedia.org/wiki/Venture_capital
Merus Capital has been clinging to its ASYI stock for more than 5 long years.

The idea behind ASYI’s JetEngine software was new and exciting … way back in 2008 … but the world has since changed and moved on. There are many companies now offering the airline industry exactly what ASYI promised to offer … five long years ago. Those companies are all up-and-running … and producing revenue and generating new clients. ASYI (and its AERO-IQ) are not. They don’t even have an operating website.

Merus Capital has had its $5,000,000.00 investment stuck in the ASYI deal for more than 5 years now. Had it invested that $5,000,000.00 in corporate bonds or some other similar security, earning, say, a modest 7% per annum, that $5 Million would now have grown to well over $7 Million by now … with very little risk. Therefore, you can be CERTAIN that Merus Capital is “CONCERNED” about the total non-performance of its investment in ASYI.

Under normal venture capital funding situations, the reverse merger between ASYI and AiS, back on March 17, 2010, would have been viewed as a “going public” event that would have provided an EXIT point for Merus Capital to cash-out its investment after the publicly-traded shares it received were no longer subject to SEC resale restrictions. The restricted period on those shares ended on March 17, 2011, yet Merus Capital has elected not to sell any of its ASYI stock and exit its venture capital deal … even when it was announced (on March 19, 2011) that ASYI was going to totally divest itself of AIS.

It was during this time that ASYI began to experience great difficulty in acquiring new clients for its fixed-lease of the JetEngine Software. In fact, it only managed to sell that software to two airlines (Turkey and Mexico). Merus Capital, however, (together with ASYI’s other controlling shareholder, Dynamic Intelligence; and CEO Steven Johnston, and even Roy Miller, the creator of the JetEngine software) … all continued to hold on to their ASYI stock … not filing ANY required Form 4 with the SEC.

Then, in the first quarter of 2011, a decision was made to completely RESTRUCTURE ASYI by ditching its old business model of selling fixed, long-term leases for its software … and adopt in its place a new business model that was then sweeping the airline software industry… a model that would involve the selling of its software as an ON-DEMAND SERVICE (“Saas), and moving the availability of that service to the “cloud”.

AERO-IQ was then created, and its Advisory Board was populated with industry heavyweights, including a former V.P. of Oracle, whose specialty was cloud-based SaaS; as well as the former CEO of Amercan Eagle Airlines and the founder of WestJet Airlines. At this time, ALL of the 25 or more software development contractors who had been working for ASYI across the globe were also re-directed to work on the AERO-IQ project.

Ultimately, ASYI’s CEO, Stephen Johnston resigned from ASYI (in September of 2011) to work on the AERO-IQ project on a full-time basis …as did Roy Miller, who created the JetEngine software. Indeed, 3 days after CEO Johnston resigned, the poster Keech caught caught him red-handed, having purchased the domain name for AERO-IQ.
It’s important to emphasize here that AT NO TIME WHATSOEVER, through all the apparent misery, bad moves, and hard times, has Merus Capital, Dynamic Intelligence, Stephen Johnston, nor Roy Miller ever sold so much as one single share of their ASYI holdings … because the EDGAR filings do not contain any such Form 4 filing, which is required in the event of such a sale.

The operations of ASYI were totally abandoned during this time. Only two short years after it was acquired by Wolf Resources, AIS was suddenly divested (on March 19, 2012). It’s administrative employees and corporate officers were all terminated or voluntarily resigned; It’s office leases were cancelled, and all if its NON-CORE assets, such as computers, printers and office furniture was sold-off.

However, its newly-appointed CEO, David Haines, whose specialty was divestiture and corporate restructuring remained at the head of ASYI; as did its CFO, Jeff Robinson. Also, ASYI still retained one BOD member, as well as 3 members on its Advisory Board: Salman Ullah, of Merus Capital; Helmut Gosain, the former VP of Otracle, and Steven Boellers, the former CEO of American Eagle Airlines. Each of these six individuals is STILL at ASYI, and each of them CONTINUES to draw a weekly salary from ASYI … because there has never been any required 8K filing made to the contrary.

After the sale of its NON-CORE assets had been completed, ASYI then bizarrely announced that it had entered into an LOI with Birthday Slam, a start-up company that had created an APP that could be used to post birthday messages to the Web. (One wonders if Salman Ullah was “excited” to be associated with THAT undertaking!).

And then matters drifted from bad to worse as ASYI announced that it had entered into an LOI with KoolTel, a company that sold telephone-related products and services (none of which involved the development of software) and had managed to rack-up hundreds complaints with the Consumer Protection Agency for illegally charging consumers for services that they never asked to purchase. That practice is called “stuffing” … and KoolTel seemed to be very good at it. (Again, one could almost see Salman Ullah rolling his eyes over the prospect of owning a piece of such a firm!).

AND NOW FAST-FORWARD TO OCTOBER 2012 AND MERUS CAPITAL AND ITS INTEREST IN AERO-IQ:

Merus Capital announces on its web site that it has invested in AERO-IQ, and that AERO-IQ will launch its services at the “year’s end”.

But AERO-IQ doesn’t launch at “year’s end”.
And AERO-IQ still hasn’t launched … some 4 months after “year’s end”.

And then, just WEEKS ago, Merus Capital suddenly re-designated AERO-IQ as being one of its 12 vaunted “iEnterprise” Portfolio companies. But when you go to the Merus Capital web page and click on the logos of any of those 12 companies, they all work … EXCEPT AERO-IQ. No smiling photos of AERO’s founders. No hyping of AERO’s innovative products. No information on how you can invest (as a limited liability participant) on any AERO-IQ offering. Nothing at all. Just a logo … and one single sentence about what AERO-IQ is supposed to be able to do.

Also, there is NO CONCRETE STATEMENT from Merus Capital that it has, in fact, invested any additional moneys in AERO-IQ. We have ASSUMED that it did … but there is no affirmative statement to that end.

OK --- SO WHAT DO WE NOW KNOW --- FOR CERTAIN?

1. We know that Merus Capital is now in the hole to the tune of some $4,999,000.00 on its original $5,000,000.00 investment in AIS; and that all of the millions of shares of ASYI common and preferred stock that he (and CEO-Johnston and the mathematician, Roy Miller) received for the reverse merger … ARE NOW ALMOST WORTHLESS. Unless something good happens, their investment s have been WIPED-OUT.

2. The same goes for ASYI’s other controlling shareholder’s investment, Dynamic Intelligence LLC, as well as the investment made in ASYI by Big Sky Investors (the firm run by Charley Swab’s 25-year-old son). Unless something good happens, their investments have also been WIPED-OUT.

3. We know that AIS has been plucked clean and its shell divested … never to see the light of day again. It’s dead. It was emptied … then killed-off.

4. We know that SOMETHING called AERO-IQ now officially exists. We know that it’s been receiving the benefit of all the intellectual property that’s been streaming into it by virtue of the work of the 25-world-wide software developers … as well as the work of ASYI’s former mathematician, Roy Miller, who now works for AERO-IQ.

5. We also know that AERO-IQ is STILL OWNED by ASYI … because if it were not owned by ASYI, then ASYI would have had to file an 8K regarding the disposition of its assets that now reside with AERO-IQ … and we have of course received no such filing to date.

6. So Merus Capital and Dynamic Intelligence, and Stephen Johnston, and Roy Miller all “CONTROL” ASYI, which in turn owns 100% of AERO-IQ.

OK --- SO WHAT HAPPENS NEXT?

1.Nothing can happen in this trade UNTIL AERO-IQ is spun-off from ASYI. If a company were to reverse-merge into ASYI before that happened, then that company would not only get ASYI’s $30,000,000.00 of NOLs, but ALSO receive virtually ALL of AERO-IQ (and its intellectual property) … so DON”T look for that to happen. Nobody gives away free money … nor free intellectual property.

2. So our focus should now be placed solely on AERO-IQ … and HOW it will be disposed of by ASYI. Nothing else in this trade is of any further importance.

SO HOW DOES ASYI GET RID OF AERO-IQ SO THAT ASYI CAN ENGAGE IN A REVERSE MERGER?

1. AERO-IQ could do an IPO. This would, however, be very costly and time-consuming … so don’t look for it to happen.

2. ASYI can find a publicly-traded company to reverse-merge AERO-IQ into. The newly-issued stock would trade under AERO-IQ’s new ticker symbol, and we, as the owners of ASYI, would all receive some of that stock. THIS IS THE “TWO-FER” EFFECT THAT I’’VE BEEN POSTING ABOUT RECENTLY..


3. AERO-IQ could be ACQUIRED, by some other publicly-traded company (such as American Eagle Airlines, or WestJet Airlines) in exchange for that company’s shares. AERO would operate as that company’s wholly-owned subsidiary; and again, we would all receive some of that company’s publicly-traded shares. (Again, the “TWO-FER” effect).

Final Thoughts:

As to #2. And #3. above, it’s interesting to note that two of the members of AERO-IQ’s Advisory Board are the former CEO of American Eagle Airlines; and the founder of WestJet, the large Canadian discount carrier that presently trades on the Toronto stock exchange at $27.00 per share (it has an average daily volume of over 330,000 shares).

It’s also interesting (VERY interesting) to note that In 2007, WestJet tried to create the exact same JetEngine software that ASYI created. WestJet poured $30,000,000.00 into the project before giving up on it.

So why would industry giants like American Eagle and WestJet still be sitting on AERO-IQ’s Advisory Board?

http://www.baselinemag.com/c/a/Business-Intelligence/Airline-Reservation-System-Hits-Turbulence/

It’s also very interesting that just weeks ago, Merus Capital re-designated AERO-IQ as being one of its 12 “iEnterprize Companies”. It seems highly unlikely that Merus Capital would do such a thing if it did not have some very big plans for AERO-IQ.

But we shall see … and quite soon I now believe.

GLTA … and thank you littlebrother1492 for raising these VERY important issues!