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

To: Ally who wrote (556)	3/31/1998 12:06:00 AM
From: Ally	Read Replies (5) \| Respond to of 4605

Well.. I've done some more DD into this AFS "baby ballard" story and have looked into how urgently I should buy into the story. After reading through all the press releases, the articles, the financial statements, it seems to me that some of the mathematics in the AFS news releases, the article by Laurel De Yturralde, and the FP's article may have given an overly optimistic impression to readers. Perhaps this is why the stock shot up to $3 soon after the FP article and the stock is now correcting! The FP article seems to get its source mainly from Laurel's article, and gave a similar impression of certainty that AFS has a contract worth $180 million in revenue over 10 years to install Mexican microbuses with the Sparrow units. In fact, the only sure contract at this time is for 1,080 Sparrow units for a total of $1.5 million. And this sale is not new... it was announced by the company in December. The only thing new last week was perhaps the comparison to "baby ballard". AFT issued a news release the day after FP article was published: " CALGARY, March 27 /CNW/ - Alternative Fuel Systems Inc., (''AFS'' or the''Company'') announced to day that the Financial Post article of March 26,1998 included certain statements which requires further clarification. AFS has a firm contract with Convertidores Cataliticos Mexicanos(''CCM'') for 1,080 Sparrow Conversion Systems valued at approximately $2,000,000 AFS and CCM entered into a letter of intent on January 13, 1998 which stipulates the delivery of minimum 10,000 conversion systems per year for the next ten years solely within the Valley of Mexico." The mathematics on the letter of intent seem a bit optimistic. If it takes months to install 1,080 Sparrow units, how do you get to install 10,000 units per year??? Do you have to have a firm contract for each 1,000 units (which means negotiating terms etc... etc)? It begs the question... how firm is the letter of intent? Before I get carried away in the frenzy of this "baby ballard" I'd better look back and note that it was only last month that 555,555 shares were issued at 72 cents per share (the average market price of the stock in Feb/98) to finance working capital. And from the looks of the Dec 31/97 statement, the slim cash balance ($4,271) may call for further share issuance this year and further dilution to present stock holders. Question: has the stock price gone way ahead of its fundamentals? All comments are welcome.

To: Ally who wrote (556)	3/31/1998 12:32:00 AM
From: Tom Jordan	Respond to of 4605

<<For the many number of years the company has been in existence, and with the Caterpillar connections in the U.S. the revenue seems surprisingly small to me.>> A couple of years ago, AFS and Clean Air Partners, teamed up to develop the diesel/ng system. Although AFS 'owns' the technology, AFS receives no revenues or royalties from Clean Air Partners or CAT, unless they sell outside of the US or China. Their agreement is that AFS uses CAP's solenoid valves and CAP uses AFS' engine management tech. CAP markets in US and China, AFS gets the rest of the world. It was expressed to me that both companies are content with the agreement at this time. There are however, contingencies to modify the marketing agreement at a later time if it is deemed necessary by AFS. I do not know how feasible it would be to amend this arrangement. Note, this pertains to Eagle diesel/ng dual fuel systems only; AFS has no limitations re Sparrow gasoline/ng system. North America is fair game along with the rest of the world. They just haven't had the time to aggressively market in NA. regards, tj