Albuquerque Journal from Albuquerque, New Mexico • Page 33

MONDAY, JANUARY 1, 2007BUSINESS OUTLOOK 3 Whatever happened to Freight Feeder? he builder of a proposed twin-engine freight aircraft, which recently moved to Double Eagle II airport despite the collapse in 2005 of a major financing and manufacturing deal, is having another go at selling over-the- counter stock to finance the project. Utilicraft Aerospace Industries Inc. announced the day after Christmas that it had begun trading on the Bulletin Board as UITA. Utilicraft emerged in 2004 from the closure of Georgia- based American Utilicraft which traded as AMUC. It aims to build the FF-1080 Freight Feeder, a boxy, 112- foot aircraft and power it by using twin Pratt Whitney turboprop engines.

It is designed to carry standard air freight containers and operate from short runways ferrying freight to and from major international hubs. It is designed to carry payloads exceeding 40,000 pounds, according to the company. Utilicraft was aggressively recruited to New Mexico in 2004. In 2005, company and state officials announced an arrangement with the Navajo Nation, in which the tribe would invest $34 million in the company in exchange for providing hundreds of jobs building airplane components on tribal land. Gov.

Bill Richardson, in a news release at the time, applauded the proposal, and a Web site supporting his 2006 gubernatorial re-election bid counts the Utilicraft deal as one of several developments Richardson has helped spearhead for Native Americans. But within days of the 2005 announcement, state officials backed away from supporting it, after a review of the proposal commissioned by the New Mexico Finance Authority questioned certain parts of the proposal. Among the concerns was sales relationship with Luke Butler, a former Australian businessman who had allegedly bankrupted several companies there and was more recently embroiled in legal disputes over aviation businesses in Africa. New Mexico Economic Development Secretary Rick Homans called the deal in a January 2005 letter to the tribe, which later voted to scrap the investment plan. Meanwhile, financing for several FF-1080 Freight Feeders from various companies run by Butler never materialized.

But Utilicraft soldiered on, signing a lease last year on a city-owned warehouse and hangar at Double Eagle, which company officials have said could eventually employ up to 450. Though Utilicraft is still completing engineering work on the plane, a Utah supplier has begun construction of some fuselage components for a prototype. always felt they had a great said Art Peralez, a former business recruiter for the New Mexico Economic Development Partnership, which took Utilicraft to a 2004 National Business Aviation Association convention in 2004. had a tremendous positive response from people that were associated with aviation companies all over the Peralez said. of the opinion that over these years, that changed.

Once this product is out there, I think it is going to be really needed, liked and well-received by different countries all over the A recent stock prospectus said a deal announced early this year with Benin Airlines, which is also operated by Butler, is still on. That deal calls for Benin Airlines to complete some final assembly of FF-1080s in Africa, handle some sales activity there, and purchase some of the planes to haul freight. The company is also working on proprietary freight tracking and efficiency-improving software to be used on the planes, according to a news release. Company officials did not return a call from the Journal. The FF-1080 Freight Feeder has been in development for about 15 years.

The parent company, American Utilicraft, was reorganized because of failure to raise funds, according to Utilicraft prospectus, and is now just a company. According to the prospectus, which is available on the U.S. Securities and Exchange Commission Web site, Utilicraft estimates it will need $71 million over the next three years to fund building of prototype aircraft and seek Federal Aviation Administration certification. An Isle of Mann maritime finance firm, PacifiCorp, which agreed to help the company raise $40 million to $80 million in 2005, has so far raised about $1.25 million for Utilicraft, according to its prospectus. Utilicraft the only New Mexico company to begin publicly trading in recent months.

Albuquerque-based Biomoda began over-the- counter trading in late November as BMOD. Biomoda, which says it is developing cancer testing and diagnostic technology, is closely related to, and shares executives with, Advanced Optics Electronics, another Albuquerque firm, which trades on the bulletin board as ADOT. Utilicraft and Biomoda are among more than half a dozen so-called companies in New Mexico. Over-the-counter stocks trade outside major exchanges, such as the NASDAQ or New York Stock Exchange, and are loosely regulated. Because they are sold at very low prices, they are popular with some investors who hope the companies will eventually grow exponentially in value.

Such investments are generally considered extremely speculative, as they get much less scrutiny from the SEC. Investors risk losing entire investments, and financial professionals frequently accuse such companies of issuing fraudulent news releases in efforts to artificially stock values. Andrew Webb covers technology for the Journal. You can reach him at 823-3819 or JOURNAL This is a model of the proposed FF-1080 Freight Feeder, a boxy, 112-foot aircraft that would be powered by twin Pratt Whitney turboprop engines, according to the builder, Utilicraft Aerospace Industries Inc. JOURNAL Before a major deal with the Navajo Nation collapsed, Navajo President Joe Shirley, right, posed with Utilicraft CEO John Dupont and a model of the proposed freight aircraft.

ANDREW WEBB Of the Journal Tech Bytes.