~~Table~~UNITED ofSTATES ~~Contents~~

~~UNITED STATES~~ 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~~Pursuant ofto ~~Report~~Section 13 or 15(~~Date~~d) of ~~earliest event reported): July 7, 2006~~

~~APPLIED~~The ~~INNOVATION~~Securities ~~INC.~~ Exchange Act of 1934

~~(Exact~~Date ~~name~~ of ~~registrant~~Report as(Date ~~specified~~of inearliest ~~its~~event ~~charter~~reported): May 8, 2007

Delaware	0-21352	31-1177192
(State or other	(Commission File Number)	(IRS Employer
jurisdiction of		Identification No.)
incorporation or
organization)

APPLIED INNOVATION INC.

~~5800 Innovation Drive Dublin, Ohio 43016~~ (~~614) 798-2000 (Address,~~Exact ~~including zip code, and telephone number~~name ~~including~~of ~~area~~registrant ~~code~~as ofspecified ~~registrant’s principal~~in ~~executive~~its ~~offices~~charter)

Not Applicable (Former name or former address, if changed since last report)


Delaware	0-21352	31-1177192
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

~~Check~~5800 ~~the~~Innovation ~~appropriate~~Drive ~~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 (see General Instruction A.2. below):~~

oDublin, ~~Written~~Ohio ~~communications~~43016 ~~pursuant to Rule 425 under the Securities Act (17 CFR 230.425)~~

~~o Soliciting material pursuant to Rule 14a-12 under the Exchange Act~~ (17614) ~~CFR 240.14a~~798-~~12)~~ 2000

~~o Pre-commencement communications pursuant to Rule 14d-2~~(b)Address, ~~under~~including ~~the~~zip ~~Exchange~~code, ~~Act~~and ~~(17~~telephone ~~CFR 240.14d-2(b))~~ number,

oincluding ~~Pre-commencement~~area ~~communications~~code, ~~pursuant~~of toregistrant’s ~~Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))~~

~~TABLE~~principal OFexecutive ~~CONTENTS~~offices)

~~Item~~Not ~~1.01~~Applicable Entry into a Material Definitive Agreement Item 1.02 Termination of a Material Definitive Agreement Item 2.02 Results of Operations and Financial Condition Item 7.01 Regulation FD Disclosure Item 9.01 Financial Statements and Exhibits SIGNATURES EXHIBIT INDEX EX-10.1 EX-10.2 EX-10.3 EX-10.4 EX-99.1

~~Table~~(Former ofname ~~Contents~~or former address, if changed since last report)

~~Item 1.01~~Check ~~Entry~~the ~~into~~appropriate abox ~~Material~~below ~~Definitive~~if ~~Agreement~~the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

On¨ ~~July 10,~~Written ~~2006,~~communications ~~John~~pursuant F.to ~~Petro~~Rule ~~entered~~425 ~~into a resignation letter agreement (the “Petro Letter Agreement”) with Applied Innovation Inc. (the “Company”)~~ under ~~which Dr. Petro resigned as~~ the ~~Company’s~~ ~~Chief~~Securities ~~Technology~~Act ~~Officer. The Petro Letter Agreement between Dr. Petro and the Company amends the employment agreement between Dr. Petro and the Company, dated May 20, 2002~~ (~~the~~17 ~~“Petro Employment~~CFR ~~Agreement”), to state that the resignation will be treated as a termination by the Company without cause, and, as a result, Dr~~230. Petro will be entitled to a severance benefit of six months of his current base salary, which was $180,000 on an annual basis, payable bi-weekly over a six-month period. The Petro Letter Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. 425)

In¨ ~~addition,~~Soliciting ~~the~~material ~~Company~~pursuant ~~and~~to ~~Dr. Petro~~Rule have entered into a separation agreement and release of all claims (the “Petro Separation Arrangement”) on July 11, 2006. Under the terms of the Petro Separation Arrangement, Dr. Petro will be paid an additional $10,000 of severance, payable bi14a-~~weekly~~12 ~~over~~under ~~a six-month period and will be reimbursed for COBRA expenses incurred for six months from July 10, 2006. In exchange, Dr. Petro released~~ the ~~Company~~Exchange ~~and~~Act ~~its~~(17 ~~affiliates,~~CFR ~~directors, officers, agents, employees, successors and assigns from any and all claims~~240. ~~The Petro Separation Agreement is attached as Exhibit 10.2 and is incorporated herein by reference.~~ 14a-12)

~~Effective~~¨ ~~July 7,~~Pre-commencement ~~2006,~~communications ~~Angela.~~pursuant R.to ~~Pinette~~Rule ~~entered into a resignation letter agreement~~ 14d-2(~~the “Pinette Letter Agreement”~~b) ~~with the Company~~ under ~~which Ms. Pinette resigned as~~ the ~~Company’s~~Exchange ~~Vice President~~Act ~~of Sales and Marketing. The Pinette Letter Agreement between Ms. Pinette and the Company amends the employment agreement between Ms. Pinette and the Company, dated October 4, 2004~~ (~~the “Pinette~~17 ~~Employment~~CFR ~~Agreement”), to state that the resignation will be treated as a termination by the Company without cause, and, as a result, Ms~~240. ~~Pinette will be entitled to a severance benefit of six months of her current base salary, which was $180,000 on an annual basis, payable bi~~14d-~~weekly over a six-month period. The Pinette Letter Agreement is attached hereto as Exhibit 10.3 and is incorporated herein by reference.~~ 2(b))

In¨ ~~addition,~~Pre-commencement ~~the~~communications ~~Company~~pursuant ~~and~~to ~~Ms. Pinette~~Rule ~~have entered into a separation agreement and release of all claims~~ 13e-4(~~the “Pinette Separation Arrangement”~~c) onunder ~~July 11, 2006. Under~~ the ~~terms~~Exchange ofAct ~~the Pinette~~(17 ~~Separation~~CFR ~~Arrangement, Ms~~240. ~~Pinette will be paid an additional $10,000 of severance, payable bi~~13e-weekly over a six-month period and will be reimbursed for COBRA expenses incurred for six months from July 7, 2006. In exchange, Ms. Pinette released the Company and its affiliates, directors, officers, agents, employees, successors and assigns from any and all claims. The Pinette Separation Agreement is attached as Exhibit 10.4 ~~and is incorporated herein by reference.~~ (c))

Item 1 8.0201 ~~Termination~~Other ~~of a Material Definitive Agreement~~Events.

On ~~July~~May 108, ~~2006~~2007, Applied Innovation Inc. (the ~~Petro~~“Company”) ~~Employment~~issued ~~Agreement~~a ~~terminated~~press asrelease announcing that, at a ~~result~~special ofmeeting, ~~Dr. Petro’s resignation~~the instockholders of the ~~Petro~~Company ~~Letter~~had ~~Agreement,~~voted ~~which~~to ~~was~~approve ~~treated~~and asadopt athe ~~termination~~Agreement and Plan of ~~Dr. Petro’s employment~~Merger, bydated ~~the~~as ~~Company~~of ~~without~~February 22, ~~cause.~~2007, ~~Under~~by and among the ~~Petro~~Company, ~~Employment~~KEG ~~Agreement~~Holdings, DrInc. ~~Petro~~ ~~is entitled~~(“KEG”) toand aBuckeye ~~severance~~Merger ~~benefit~~Co. of(“Merger ~~six~~Sub”), ~~months~~pursuant ofto ~~his~~which ~~current~~Merger ~~base~~Sub ~~salary,~~will ~~which~~merge ~~was~~with ~~$180,000~~and oninto ~~an annual~~the ~~basis~~Company (the “Merger”).

~~Effective~~The ~~July~~Merger closed today, May 710, ~~2006~~2007, with the ~~Pinette~~result ~~Employment~~that ~~Agreement~~Merger ~~terminated~~Sub asmerged with and into the Company and the Company became a ~~result~~wholly-owned subsidiary of MsKEG. ~~Pinette’s~~ ~~resignation~~Upon in the ~~Pinette~~closing ~~Letter~~of ~~Agreement~~the Merger, ~~which~~and ~~was~~except ~~treated~~with asrespect ato ~~termination~~shares offor ~~Ms. Pinette’s~~which ~~employment~~appraisal byrights ~~the~~are ~~Company~~properly ~~without~~demanded ~~cause.~~and ~~Under~~perfected, each share of the ~~Pinette~~Company’s ~~Employment~~common ~~Agreement~~stock, Ms$0. ~~Pinette~~01 ispar ~~entitled~~value toper ashare, ~~severance~~was ~~benefit~~cancelled ofand automatically ~~six~~converted ~~months~~into ofthe ~~her~~right ~~current~~to ~~base~~receive ~~salary,~~$3.46 ~~which~~per ~~was $180,000~~share onin ancash, ~~annual~~without ~~basis~~interest.

~~Item~~A copy of the press release issued by the Company on May 28, 2007, is attached hereto as Exhibit 99.021, ~~Results~~which ofpress ~~Operations~~release ~~and~~is ~~Financial~~incorporated ~~Condition~~herein by reference.

OnItem ~~July 11, 2006, the Company issued a press release reporting its preliminary financial results for the second quarter ended June 30, 2006~~9.01 AFinancial ~~copy~~Statements ~~of the Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K~~ and ~~is incorporated herein by reference~~Exhibits.

~~Table~~(d) ~~of Contents~~Exhibits.

The information contained in this Item 2.02 of Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.


*Exhibit No.*		*Description*
99.1		Applied Innovation Press Release, dated May 8, 2007.

~~The~~2 information contained or incorporated by reference in this Form 8-K contains forward-looking statements, including certain statements regarding intent, beliefs, expectations, projections, forecasts and plans, which are subject to numerous assumptions, risks, and uncertainties. A number of factors, including but not limited to those set forth under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, and other factors described from time to time in the Company’s other filings with the Securities and Exchange Commission, could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements. All forward-looking statements included in this Form 8-K are based on information available at the time of the report. The Company assumes no obligation to update any forward-looking statement.

~~Item 7.01~~SIGNATURES ~~Regulation FD Disclosure.~~

~~The~~Pursuant ~~Company~~to ~~announced that Ms. Pinette,~~ the ~~Company’s~~requirements ~~former Vice President~~ of ~~Sales and Marketing, and Dr. Petro,~~ the ~~Company’s~~Securities ~~former~~Exchange ~~Chief~~Act ~~Technology~~of ~~Officer~~1934, ~~had left~~ the ~~Company~~registrant inhas ~~a press~~duly ~~release~~caused ~~entitled,~~this ~~“Applied~~report ~~Innovation~~to ~~Reports~~be ~~Preliminary~~signed ~~Second~~on ~~Quarter~~its ~~2006~~behalf ~~Financial Results~~by ~~and~~the ~~Management~~undersigned ~~Changes,”~~hereunto ~~which~~duly ~~is furnished as Exhibit 99~~authorized.1 ~~to this Form 8-K.~~

The information contained in Item 7.01 of this Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference to such filing.


	Applied Innovation Inc.

Date: May 10, 2007	By:	/s/ Jeffrey S. Estuesta
		Jeffrey S. Estuesta
		President and Chief Executive Officer

~~Item 9.01~~3 ~~Financial Statements and Exhibits.~~

~~(c) Exhibits.~~ EXHIBIT INDEX

Exhibit No.		Description
10.1		Letter Agreement between the Company and John F. Petro.
99.1		Applied Innovation Press Release, dated May 8, 2007.
10.2		Separation Agreement and Release of All Claims between the Company and John F. Petro.
10.3		Letter Agreement between the Company and Angela R. Pinette.
10.4		Separation Agreement and Release of All Claims between the Company and Angela R. Pinette.
10.5		Employment Agreement between the Company and John F. Petro (Reference is made to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2002, and incorporated herein by reference).
10.6		Employment Agreement between the Company and Angela R. Pinette (Reference is made to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2004, and incorporated herein by reference).

Exhibit No.		Description
99.1		Press Release of the Company, dated July 11, 2006, entitled “Applied Innovation Reports Preliminary Second Quarter 2006 Financial Results and Management Changes.”

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.

	Applied Innovation Inc.
Date: July 13, 2006	By:	/s/ William H. Largent
		William H. Largent, President and Chief
		Executive Officer

EXHIBIT INDEX

Exhibit No.		Description
10.1		Letter Agreement between the Company and John F. Petro.
10.2		Separation Agreement and Release of All Claims between the Company and John F. Petro.
10.3		Letter Agreement between the Company and Angela R. Pinette.
10.4		Separation Agreement and Release of All Claims between the Company and Angela R. Pinette.
10.5		Employment Agreement between the Company and John F. Petro (Reference is made to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2002, and incorporated herein by reference).
10.6		Employment Agreement between the Company and Angela R. Pinette (Reference is made to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2004, and incorporated herein by reference).
99.1		Press Release of the Company, dated July 11, 2006, entitled “Applied Innovation Reports Preliminary Second Quarter 2006 Financial Results and Management Changes.”

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