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): ~~January~~June 319, ~~2005~~2006

~~AXIAL~~Axial ~~VECTOR~~Vector ~~ENGINE~~Engine ~~CORPORATION~~Corporation

(Exact name of registrant as specified in its charter)

Nevada	000-49698	9820-~~0353007~~3362479
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

One World Trade Center, 121 SW Salmon Street, Portland, Oregon	97204
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~~) 471~~-~~1348~~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 84 - ~~Other~~MATTERS ~~Events~~RELATED TO ACCOUNTANTS AND FINANCIAL STATEMENTS

Item 84.~~01 Other~~02 Non-Reliance on Previously Issued Financial Statements or a Related Audit ~~Events~~Report or Completed Interim Review.

On ~~January~~June 19, 32006, ~~2005~~the Company’s Board of Directors, weafter ~~entered~~discussion ~~into~~with athe ~~Memorandum~~Company’s independent auditors, authorized the restatement of ~~Understanding~~our previously issued (~~“MOU”~~audited) ~~with~~consolidated financial statements for the year ending June 30, 2005, ~~Emirates~~in ~~Advance~~our ~~Investment~~annual report on Form 10-KSB as filed with the Securities and Exchange Commission (the “~~EAI~~Commission”) on October 14, 2005. The Board also authorized restatement of our previously issued (unaudited) consolidated financial statements for the periods ended September 30, 2005 and December 31, 2006 in our quarterly reports on Form 10-QSB as filed with the Commission on November 17, 2005 and February 21, 2006, respectively.

~~The~~In ~~purpose~~connection ofwith the ~~MOU~~evaluation isof ~~to outline~~ the ~~understanding~~restatement ofdescribed ~~the~~above, ~~parties concerning~~management ~~the establishment~~has ofconcluded athat ~~joint venture between EAI and us. In~~ the ~~proposed~~restatement ~~transaction outlined~~was in the ~~MOU,~~result ~~the~~of ~~parties~~material ~~will~~weaknesses ~~form a business entity~~ in ~~Abu Dhabi in~~ the ~~United~~Company’s ~~Arab~~internal ~~Emirates~~control ~~where~~over ~~EAI~~financial ~~will~~reporting. ~~have~~A amaterial ~~51%~~weakness ~~ownership~~is ~~interest and we will~~a ~~own~~control ~~the~~deficiency, ~~remaining~~or ~~49%~~combination ~~ownership interest. Pursuant to the terms~~ of ~~this contemplated~~control ~~transaction~~deficiencies, wethat ~~will~~results ~~grant the joint venture entity a license~~in tomore ~~distribute,~~than ~~sell,~~a ~~and~~remote ~~service~~likelihood ~~our~~that ~~products~~a tomaterial ~~commercial~~misstatement ~~non-military~~of ~~markets,~~the financial ~~directly~~statements orwill ~~indirectly~~not ~~through~~be ~~distributors~~prevented or ~~agents,~~detected. inThe aCompany ~~territory~~previously ~~consisting~~disclosed ofthat ~~Saudi~~a ~~Arabia,~~material ~~Kuwait,~~weakness ~~Bahrain,~~existed ~~Qatar,~~over the ~~United~~accuracy ~~Arab~~and ~~Emirates,~~valuation ~~and~~of ~~the~~its ~~Sultanate~~financial ofstatements ~~Oman.~~for ~~The~~the ~~proposed~~period ~~terms~~ended ~~contemplate~~March an31, ~~expansion~~2006, ofin ~~this~~its ~~territory~~quarterly ~~during~~report aon 24Form ~~month~~10-QSB ~~period~~filed ~~following~~with the ~~execution~~Commission ofon aMay ~~Joint~~23, ~~Venture~~2005. ~~Agreement~~There can tobe no ~~include~~assurance ~~Algeria,~~that ~~Comoros,~~such ~~Djibouti,~~control ~~Egypt,~~deficiencies ~~Iraq,~~would ~~Jordan~~not, ~~Lebanon,~~individually ~~Libya,~~or in the ~~Mauritania~~aggregate, ~~Morocco,~~constitute ~~Palestine,~~additional ~~Somalia,~~material ~~Sudan, Syria, Tunisia, and Yemen~~weaknesses.

WeFOR ~~proposed~~THE EFFECT toOF ~~charge~~THE ~~the~~RESTATEMENT ~~joint~~OF ~~venture~~THE noCONSOLIDATED ~~licensing~~FINANCIAL ~~fee,~~STATEMENTS ~~but~~OF ~~will receive royalty~~THE ~~payments~~COMPANY ~~based~~FOR ~~upon~~THE ~~our~~YEAR ~~ownership~~ENDED ~~interest~~JUNE in30, ~~the~~2005, ~~joint~~AND ~~venture~~PERIODS ~~and~~ENDED ~~gross revenue~~SEPTEMBER ~~generated~~30, ~~from product sales. The current understanding of the parties~~2005 isAND ~~that~~DECEMBER ~~EAI~~31, ~~will~~2005, ~~advance~~PLEASE ~~all~~REFER ofTO ~~the~~THE ~~initial~~AMENDMENTS ~~costs~~TO ofOUR ~~the~~FORM ~~joint~~10-KSB ~~venture such~~FOR asTHE ~~set-up,~~YEAR ~~buildings~~ENDED JUNE 30, ~~staff~~2005 ~~and~~AND ~~operations~~FORMS ~~and~~10-QSB ~~these~~FOR ~~expenditures~~THE ~~will~~PERIODS beENDED ~~repaid~~SEPTEMBER 30, ~~to EAI~~2005 ~~from~~AND ~~revenue~~DECEMBER ~~generated~~31, by2005, ~~the~~EXPECTED ~~sales~~TO ofBE ~~service~~FILED ofBY ~~our~~JULY ~~products.~~31, 2006 OR DATE SOON THEREAFTER.

The contemplated transaction also includes provisions where EAI will have the option to participate in research and development projects with us.

In connection with this MOU, we granted EAI an option to acquire 1,000,000 shares of our restricted common stock exercisable at the market price on the date of exercise for a period of 30 days from January 3, 2006, the signing date of the MOU.

The contemplated transaction is not final and is subject to final negotiation and the execution of a definitive agreement. We anticipate that a definitive agreement will be executed during January 2006.

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/ ~~Dr,~~ Raymond Brouzes

~~Dr.~~Raymond ~~Raymond~~ Brouzes~~, Chief Executive Officer~~

~~Date:~~ Chief ~~January~~Executive 9Officer, ~~2005~~Chief Financial Officer, and Director

2Date: June 19, 2006

Filing Compare · AXIAL VECTOR ENGINE CORP