Gerry Klopp at Vancouver Investment Conference:
First a bit of a preface here, because some will not find this pretty. I really like this company, it's products, it's potential, and the many, many, irons in the fire. I've been in and out at least 4 times since last spring. I now hold 5000 shares in an RRSP account which will stay long, but when $$ are available I will continue to trade it in the <$1.40 range to $1.70+. Following, you are getting my initial, shoot from the hip, first impressions, on Klopp's presentation. These are my opinions only, other people that were there may have a totally different impression, and it would be great if we heard from some of them as well - I'd sure like to, as I had no time to stay around and get any general comments.
Upon leaving the presentation my thoughts were:
1. Either Gerry was very, very nervous, had no idea of what sort of audience he was speaking to, just having a bad day, or ??? please keep him away from this type of event and keep him doing whatever it is that he does best. Send someone like Bonnie!!!!!
2. Anyone at the presentation who was unfamiliar with AFS, still has no clue as to what the products are, what the potential is, what they have done, or where they are going. My opinion only.
3. Any of the long timers, and probably many of the newcomers to this thread, could have done a better job of presenting an overview of the company and it's products, and certainly, without a doubt, done a better job of answering most of the questions. The opening remarks would have been much more informative had Gerry simply read us page 1 of the 1998 annual report.
4. Some questions that should have received simple answers got rambling, disjointed, long answers, that really did not help, or even answer the question, IMO.
5. Attendees who knew nothing about AFS going in would now know that they have something to do with natural gas, something to do with diesel engines, something to do with catalytic converters and that it is a huge market, that there is something going on in Mexico City, a bit about Phase 1 and 1000 units of something being sold, that there is some sort of phase 2 there and that memorandums of agreement are very important, they are doing something in Argentina, Chile and Brazil, and that Quebec Hydro is somehow involved, that Mercedes-Benz and Caterpillar were mentioned a few times, that their products (whatever they are) are made in Vancouver, Calgary, Winnipeg and Toronto, but they have access to offshore products, and not a whole lot more.
Gerry was given 5 minutes to make some opening remarks, then it was open to questions from the floor, and from hosts Chris Bunka and Joe Martin, for 25 minutes. Gerry's opening remarks were kind of rambling but touched on Noram, the Simmons Group and what they do, that Noram and AFS amalgamated in 1998,(sorry Gerry, but it was July 1, 1997) that Dale Simmons offered him the presidency, and that he accepted only on the condition that it be run "his way as AFS". He noted that they developed products but were now a "marketing company", that they "go where there is cheap fuel" and where there are pollution problems, "niche markets". He commented that "for the next 15-20 years natural gas would be the auto fuel of the future" and mentioned Argentia, China and Brazil, where there are pipelines in place, sources in place, and pollution. Did a little name dropping and admitted it - Caterpillar, Mercedes-Benz, Quebec Hydro etc., but didn't really explain about what is/was going on with them. He did mention that M-B "hates to buy engines from other people" and that in Mexico they had to go to Caterpillar to buy engines. Why?? Dunno.
My note, written as soon as Gerry commented that his 5 min must be up and stopped, says - "If I wasn't familiar with AFS I would have been totally confused with those 5 minutes of opening remarks - what business are they in, what are their products?"
Question period:
Chris Bunka started it off by asking, and I think he was asking because the opening remarks gave no clue: "What do you actually sell and how will you sell it?" The answer: "Technology, devices,...." and I really didn't follow the rest of the answer although I did try, but no mention of Eagle, Sparrow, RFC, dual fuel systems, Sherex gas regulator systems. In fact with the exception of an audience member asking about the RFC, non of those words were ever used.
Following are some examples of the questions and answers from my notes. Sorry, I should have recorded the whole thing.
Question from the audience: "What's your share structure, what's your burn rate, do you have any money?" Answer: "30 million dollars (???), 25 million outstanding, and 5-6 million held by officers and directors"
Here Chris Bunka jumped in and asked again, "What is your burn rate, how much do you spend a month". Answer: "$150,000"
"Do you have any money?" Answer: "We do have cash, not tons of it, but we do have sources."
"Are you making money?." Answer: We projected $5mm in revenues, I know it doesn't sound like very much, but we are at $3MM now, so we have 7 months to get there. We project revenues to double for 1999.
Question from the audience on the status of the RFC. Answer: (Sorry it was kind of long and rambling, but) it started with a bit about their partner Matros, then about the big 3 converter makers, including J-M, that AFS cannot compete with the big 3, that the big 3 are happy to supply them with parts, but that they have said that "before we do business with you, you have to...." then he branched off and said that the catalytic converter market is $7 billion and will grow to $30 billion, and "if we can show a metals reduction of 20-30%, and we can do that, they will look at a licensing agreement".
At one point Joe Martin said something like "so the symbol is AFS and it trades where?" Gerry answered that it trades on the VSE "but we will move to the Toronto Stock Exchange this year." Audience member corrected them that the symbol is ATF.
Chris Bunka, I think still wondering what AFS actually sells, but now knowing that there is some sort of device that can be installed on engines to save fuel or cut down on pollution, commented that the company should maybe be focusing more on retailers to sell their product. Gerry gave another sort of disjointed answer but his bottom line seemed to be that outfits such as Quebec Hydro are their retailers.
Asked about competition, we got something about "pie in the sky" alternative fuels, but unless someone invents a thing to run engines on rays from the sun, we'll be okay. ??????
Another question from the audience was "what is happening with your Japanese partners?" The answer first was a short discourse on the Asian flu and ended with "I'm going back to Calgary today" and something like I'll be trying to pick their pockets. ??????
Given another 1/2 hour or so I think those in the audience that know AFS could have asked very simple questions to turn the whole thing around and make it more informative, but time ran out. It started off confusing and disjointed, and never recovered.
Sorry,
Jim |
