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): ~~June~~May 1916, 2006

Axial Vector Engine Corporation

(Exact name of registrant as specified in its charter)

Nevada	000-49698	20-3362479
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

121 S W Salmon Street Suite 1100, Portland, OR	97204
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 503-595-5088

___________________________________________________

(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:

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17CFR 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))

SECTION 41 - ~~MATTERS~~Registrant’s ~~RELATED~~Business TOand ~~ACCOUNTANTS~~Operations ~~AND FINANCIAL STATEMENTS~~

Item 41.~~02 Non-Reliance on Previously Issued Financial Statements or a Related Audit~~01 Entry ~~Report~~Into ora ~~Completed~~Materially ~~Interim~~Definitive ~~Review.~~Agreement

On ~~June~~May 1916, 2006, the Company’s ~~Board~~entered ofinto ~~Directors,~~a ~~after~~Confidential ~~discussion~~Settlement ~~with~~Agreement ~~the Company’s~~and ~~independent~~Mutual ~~auditors,~~Release ~~authorized~~ (the ~~restatement~~“Settlement ~~of our previously issued (audited~~Agreement”) ~~consolidated financial statements for the year ending June 30, 2005, in our annual report on Form 10-KSB as filed~~ with ~~the~~Patricia ~~Securities~~Wilks and ~~Exchange~~Dennis ~~Commission~~Palmer (the “~~Commission~~Defendants”). onThe ~~October~~Settlement ~~14,~~Agreement ~~2005.~~provides ~~The~~for ~~Board~~a ~~also authorized~~mutual ~~restatement~~reconciliation of ~~our~~all ~~previously~~disputes ~~issued~~between ~~(unaudited) consolidated financial statements for~~ the ~~periods~~parties ~~ended September 30, 2005~~ and ~~December~~the ~~31,~~end ~~2006~~of inlitigation ~~our quarterly~~brought ~~reports~~in onthe ~~Form~~United ~~10-QSB~~States asDistrict ~~filed~~Court, ~~with~~Central ~~the~~District ~~Commission~~of ~~on November 17,~~California ~~2005~~(the “Court”) ~~and~~(Case ~~February~~No. ~~21, 2006, respectively~~CV04-8790-CBM).

InUnder ~~connection with~~ the ~~evaluation of the restatement described above, management~~ ~~has~~Settlement ~~concluded~~Agreement, ~~that~~ the ~~restatement~~Defendants ~~was~~acknowledged ~~the~~and ~~result~~agreed ofthat ~~material~~on ~~weaknesses~~or inabout ~~the Company’s~~June ~~internal~~30, ~~control~~2003 ~~over~~the ~~financial~~Company ~~reporting.~~acquired Aall ~~material~~right, ~~weakness is a control deficiency~~title, ~~or combination of control deficiencies~~assets, ~~that~~and ~~results~~interest into ~~more than~~Dyna-Cam aEngine ~~remote~~Corporation, ~~likelihood~~including ~~that~~related aweb ~~material~~sites ~~misstatement~~and ofdomain ~~the~~names ~~financial~~(i.e., ~~statements will not be prevented or detected~~www. ~~The Company previously disclosed~~dynacam.com). ~~that~~Defendants aalso ~~material~~agreed ~~weakness~~that ~~existed~~they ~~over~~would ~~the~~cease ~~accuracy~~ and ~~valuation~~desist offrom ~~its financial~~sending ~~statements~~out ~~for the period ended March 31, 2006, in its quarterly~~emails ~~report~~concerning onthe ~~Form~~Company ~~10-QSB~~and ~~filed~~those ~~with~~acting ~~the Commission~~ on ~~May~~its ~~23, 2005~~behalf. ~~There~~Further ~~can be~~under nothe ~~assurance~~Settlement ~~that~~Agreement, ~~such~~the ~~control~~parties ~~deficiencies~~agreed ~~would~~to ~~not,~~permanently ~~individually~~maintain ora ~~in the~~November ~~aggregate~~17, 2005 ~~constitute~~preliminary ~~additional~~injunction ~~material~~restraining ~~weaknesses.~~Defendants from:

~~FOR THE EFFECT~~1. ~~OF THE RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE YEAR ENDED JUNE 30~~displaying, ~~2005~~controlling, ~~AND~~and/or ~~PERIODS~~operating ~~ENDED~~the ~~SEPTEMBER~~website ~~30,~~or ~~2005 AND~~any ~~DECEMBER~~other ~~31,~~domain ~~2005,~~containing ~~PLEASE~~the ~~REFER~~words ~~TO THE AMENDMENTS TO OUR FORM 10~~“dyna-~~KSB~~cam,” ~~FOR THE YEAR ENDED JUNE 30~~dynacam,” ~~2005 AND FORMS 10~~“Dyna-~~QSB FOR THE PERIODS ENDED SEPTEMBER 30~~Cam, ~~2005~~” ~~AND DECEMBER 31, 2005, EXPECTED TO BE FILED BY JULY 31, 2006 OR DATE SOON THEREAFTER.~~“Dynacam”;

2.	exhibiting any display, product, and advertisement bearing the mark Dyna-Cam, “Dyna-Cam Engine,” or “Dyna-Cam Engine Corporation”; and

3.	making, using, selling, marketing, and offering for sale, and conducting business certain products using the name(s) and mark(s) containing the words “dyna-cam,” dynacam,” “Dyna-Cam,” “Dynacam.”

In addition, the parties entered into a mutual release of claims, agreed to extinguish the pending litigation, bear their respective fees and costs, and provide for liquidated damages in the event of a breach of the Settlement Agreement.

On June 12, 2006, the Court signed a stipulation among the parties to convert the November 17, 2005 preliminary injunction into a permanent injunction. Thereafter, on June 22, 2006, the Court signed a stipulation among the parties to dismiss the action.

A copy of the Settlement Agreement is filed as Exhibit 10.1 to this Current Report.

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01

Exhibit 10.1 Confidential Settlement Agreement and Mutual Release

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.

Axial Vector Engine Corporation.

/s/ Raymond Brouzes

Raymond Brouzes

Chief Executive Officer, Chief Financial Officer, and Director

Date: June 1928, 2006

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