Investor differences said to blame; ex-CEO Webley hopes to start new venture

NOVATO – PAX Streamline, the 2-year-old high-tech spinoff from San Rafael-based Pax Scientific, has dissolved.

According to its former CEO John Webley, differences among groups of shareholders are responsible for the breakup, which has put on hold technology development that some officials hoped would result in PAX Streamline moving into Sonoma County with the potential for 200 jobs.

Other parties involved in the affair could not be reached or declined to comment.

"The issue is very complex, involving shareholders who can't come to agreement on the direction of the company," said Mr. Webley, a telecom veteran who founded Turin Networks.

"We're negotiating, and I hope to start another company," he said.

Pax Scientific, led by entrepreneur Jay Harmon, was launched by a group of about 100 individuals in Marin County to develop industrial products by studying and adapting the efficiencies of nature.

Pax Streamline was funded by $12 million in investments from Silicon Valley billionaire Vinod Khosla with the intent to focus on air cooling and engine turbine advances.

Its first product, developed by a hand-picked team of scientists, was an air-cooling system that could cool large spaces so efficiently as to remove up to 50 percent of electricity from the grid.

Another product-in-the-making, funded largely by $3 million from the federal Advanced Research Projects Agency Energy program, used "blown wing" technology to build a low-cost, lightweight wind turbine.

Pax Streamline had been in the process of closing another round of financing – "there was no shortage of people trying to fund the company," said Mr. Webley – when things fell apart.

The two technologies, he said, were moved by shareholders into an entity called New Pax, leaving Pax Streamline with neither patents nor funds.

Whether the air cooling system and wind turbines will be brought to market by New Pax is as yet undetermined, he said.

Pax Scientific declined to comment on the state of affairs. Khosla Ventures did not return calls.

Recent media stories about former British Prime Minister Tony Blair joining Khosla Ventures as an adviser mentioned Pax Streamline as one of the green companies in the company's portfolio.

The dissolution of Pax Streamline puts an end at least immediately to hopes among the real estate community and county officials in Sonoma that it would move to Rohnert Park or Petaluma and grow its 30-member staff to 200, as the company had planned.

According to Steven Leonard of Cassidy Turley BT Commercial, the company had been looking for a couple of thousand square feet of office and industrial space.

"It was a nice prospect to have a new technology company in the area, especially wanting office space. But there's a good chance John Webley will start up a new company, and if he does it's sure to be in Sonoma County," said Mr. Leonard.