Please do your homework on this one but I truly believe this
stock POR Alberta will have considerable gains within the next
2 weeks. There are things happening that I can't talk about but
will have many releases in the next month.
>>THE COMPANY
Advanced Process Fuels Inc. (the "Company" or "APF") was incorporated pursuant to
the Business Corporations Act (Ontario) on October 31, 1994 under the name 1102634
Ontario Inc. It changed its name on February 10, 1995 to Advanced Process Fuels Inc.
APF has agreements to acquire a 20% direct interest and 87.5% of a company holding
the remaining 80% of 941037 Ontario Limited (operating as Encore-Fuel - "Enviro-Fuel").
Enviro-Fuel operates the APF micro-refinery on leased land near Kingston, Ontario which
has been permitted as a waste-oil handling facility by the Ontario Ministry of Consumer
and Corporate Relations. APF has set aside 250,000 common shares of APF for acquiring
100% of Enviro-Fuel. Such acquisition is expected to be completed prior to closing of the
Major Transaction.
The company also has a 25% interest in RRR Environmental Services Ltd., which
operates a waste oil refinery in Regina, Saskatchewan. The head office of APF is located
at 5405 Eglinton Avenue West, Suite 211, Etobicoke, Ontario, M9C 5K6 and the registered
office is located at Suite 2500, 181 Bay Street, Toronto Ontario, m5j 2j7.
BUSINESS OF THE COMPANY
From October, 1994 to the end of 1996 APF operated a batch process waste oil
refinery near Kingston, Ontario, during which time APF built a similar refinery in Regina,
Saskatchewan. APF has since designed and built a continuos process micro-refinery, near
Kingston, Ontario using the "Yu Process". In consideration of using the Yu Process , APF
pays a royalty to the developer of the greater of $50,000 or 7 1/2% of the manufacture's net
invoice price on the process equipment. APF is in the business of designing, manufacturing
and installing turnkey waste micro-refineries, using a unique pending process. The micro-
refineries convert used motor oil and other waste lubricants into diesel fuel. APF has completed
construction of a micro-refinery at the APF Training and Research Center near Kingston,
Ontario. The facility is in the start-up and commissioning phase. APF is discussing proposals
with other interested parties worldwide for future new installations. No contracts have been
entered into and are subject to further discussions upon completion of testing at the Kingston
micro-refinery. For the fiscal years ended October 31, 1995 and 1996, the Company and its
affiliate had consolidated revenues of $8,500 and $1.5 million respectively , acquired feedstock
as throughput in the refining process from five suppliers and sold the output to several customers
directly and through fuel brokers. For fiscal 1996 the Company generated revenue from the sale
of a refining plant to a third party operator, leaving revenue on a refinery plant built for an affiliate.
The Company generated losses in fiscal 1996 primarily as a result of higher than expected installation
costs of the plants constructed in 1996 and of the lower than expected quality of the output of the
facility operated by its affiliate. During 1996, the Company decided that the technology it had
acquired does not produce an acceptable quality of output and results in a low price per unit of
volume produced. It began developing a new process to refine waste oil to produce a higher quality
output. The refinery in operation in October, 1996 closed down in early 1997 pending the completion
of the construction of the new refinery at the Kingston plant. The new refinery is based on modern
refinery technology currently employed in the oil refinery business which has been adapted to
convert waste oil to diesel fuel. It is known as the Yu technology. The new refinery is expected to
be operational at the end of 1997. The new refinery was engineered by Kilborn Inc. a member of the
SNC-Laalin Group. The new refinery will operate continuously which represents a significant
improvement over the batch process previously employed. The Kingston facility is central in APF's
business plan. It is intended to provide the following:
a. Based on satisfactory production in accordance with the design criteria present "rack
price" for #2 diesel Fuel and current cost of waste oil, the plant will generate sufficient
revenue to implement APF's current 12 month Business Plan. Such assumptions may not
be valid and will be dependent on the completion of testing at the Kingston Plant.
b. Provide an environment for potential customers to see first hand all operational
aspects of a micro- refinery.
c. With the independent verification of the plant's production capabilities, management
is confident that they will have contracts for plants to be shipped and installed in fiscal
1997/98.
d. Manufacturing of plants will be financed with a combination of customer deposits and
progress payments.
e. In addition to the operation of the Kingston Refinery it should be noted that APF's
focus is intended to be building, installing and monitoring turnkey micro-refineries. The
success of such program is in part dependent on the results of the Kingston refinery.
THE APF TECHNOLOGY
APF holds the North American, South American, and South Pacific manufacturing
rights for the new patented process technology known as the YU system. The new modular
equipment which is transportable has been engineered and designed by Kilbrn Engineering , a
member of the SNC Lavalin Group. A brief description of the Yu System is that the waste oil
is used to provide cooling in the distillation column, which also serves to preheat the waste oil
feedstock. The heater is used to bring the waste oil up to pyrolysis temperature. At this point
the feedstock is separated with the oil going into a pyrolysis chamber and the remaining sludge
going into a coke reactor.l The distillation column then completes the separation of Number 2
diesel fuel which is stored for sale; heavier fuel oil which is recycled and light ends are
separated and used as fuel to operate the plant. |
