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Gold/Mining/Energy : Alternative Fuel Systems ATF:VSE -- Ignore unavailable to you. Want to Upgrade?

To: syfon who wrote (553)	3/30/1998 9:42:00 PM
From: Don Billins	Respond to of 4605

Hi syfon, Not much of a bounce today, so I would guess it may come down to your price 1.50, look for CAN and YORK to be covering what appears to be a large short position @ 2.25. Here is what CAN had to say after the big run up! HEADLINERS ALTERNATIVE FUEL SYSTEMS (ATF : VSE : 25M shs issued : $300k cash) manufactures systems which convert diesel engines to operate on natural gas. Secondary product converts gasoline powered engines to run on both natural gas and gasoline. Revenues in Q1/f98 (period ending Sept. 30) were $580K and were entirely from product development contracts, thus far no revenue from product sales. The Company has announced several international deals to market this product, however, the progress of realizing sales has been slower than expected. AFS has received a cheque from CCM, its Mexican partner as part of an initial $2.0M order announced in December to convert existing diesel busses in Mexico City to natural gas. The 10-year contract is supposed to represent a potential 10,000 units per year at $1,500 per unit at its peak. One of the key issues here is the natural gas filling stations need to be installed to make this work and the necessary infrastructure is not currently in place. Other areas with deals pending are Japan, Malaysia, Thailand and Europe (Note: Deals have been pending for some time). ATF has benefited from the heavy promotion and share price appreciation of Westport Technologies (WPT.Y) which has a similar product that is still a couple of years away from market. WPT was promoted on the fact it has an environmentally beneficial emission system, and had Ballard's CFO on its board of directors (he has subsequently resigned from WPT). WPT has also been heavily touted on the internet. ATF has been promoted as being more commercially advanced than WPT, has had a Financial Post article published yesterday calling it a potential "Baby Ballard", and has also received significant internet attention. Further, ATF has a substantial amount of potential news flow regarding distribution agreements and letters of intent which should add some fuel to this fire. Managment expects sales to be $5.0M this year, and with a current market cap. of $75M gives a lofty Price/Sales multiple of 15X. We are somewhat skeptical about implementation in the medium to long term without the fueling station infrastructure, nor do we expect sales to go from zero to $5.0M smoothly. (Brook Riggins - Canaccord Research)