PURE TRANSIT TECHNOLOGIES, INC. (PTTL) - Description of business

Company Description
We were originally incorporated in the State of Nevada in January of 2002 under the name Juris Travel. On March 24, 2003, we changed our name to "Dogs International" in connection with our acquisition of assets Bed & Biscuit Inns of America, Inc. On February 9, 2005, we changed our name from Dogs International to AFV Solutions, Inc. in anticipation of entering the alternative fuel industry with our wholly-owned subsidiary, AFV Research, Inc ("ARI"). In addition to ARI, we operate another wholly owned subsidiary, Bed & Biscuit Inns of America, Inc. ("Bed & Biscuit"). Under this subsidiary we operate a pet care facility under the name "Bed & Biscuit Inn". All of our current revenues are generated through Bed & Biscuit. However, we have discontinued our previous plan of expanding the upscale pet care facilities and decided to focus on the alternative fuel and brokerage transportation industry. Due to the diversity of our subsidiaries we announced on May 5, 2006, our intention to spin off the Bed & Biscuit subsidiary to our stockholders. As of the date of this filing, we are still in the process of finalizing the spin-off. Our Business Business Strategy We are aggressively pursuing and focusing more of our resources towards brokering buses to international customers and have discontinued our previous plan of expanding our upscale pet care facilities beyond the Bed & Biscuit facility we currently operate. Until we have furthered our operations in the transportation brokerage and alternative fuel industry, we will continue to operate Bed & Biscuit in accordance with its original business plan and it will remain as a wholly-owned subsidiary of AFV Solutions. Furthermore, we will continue our current business operations through Bed & Biscuit until an effective registration has been declared for our intended spin-off. Under this subsidiary we currently operate a pet care facility and we have focused these operations by offering our customers a complete assortment of pet-related (initially focused primarily on dogs) products and services at competitive prices with superior levels of customer service. ALTERNATIVE FUEL INDUSTRY Overview Our business is focused on the alternative fuel industry, primarily the brokerage of hybrid electric, CNG and LPG buses manufactured in China. Alternative fuels, as defined by the Energy Policy Act of 1992 (EPAct), include mixtures containing 85% or more volume of alcohol fuel, including methanol and denatured ethanol; natural gas; liquefied petroleum gas (propane); hydrogen; coal-derived liquid fuels; fuels derived from biological materials; electricity; and 100% bio-diesel. The EPAct was passed by Congress to reduce the United State's dependence on imported petroleum by requiring certain fleets to acquire alternative fuel vehicles, which are capable of operating on nonpetroleum fuels. EPAct requirements apply to certain fleets of 20 or more light duty vehicles that are centrally fueled or capable of being centrally fueled and are primarily operated in a Metropolitan Statistical Area or Consolidated Metropolitan Statistical Area. The U.S. Department of Energy administers the regulations through the: • Federal Fleet Requirements • State and Alternative Fuel Provider Rule • Private and Local Government Fleet Rule • Alternative Fuel Designation Authority These fuels are being used worldwide in a variety of vehicle applications. We believe three independent market factors; economics, energy independence and environmental concerns, are driving the growth of the market for alternative fuel technology. We believe the historic price differential between propane or natural gas and gasoline results in economic benefit to end users of alternative fuel technology. The price of alternative fuels such as natural gas or propane is typically 40% to 60% less than the price of gasoline. By converting a liquid fueled internal combustion engine to run on propane or natural gas, customers can capitalize on this fuel price differential. End-users may recoup the cost of the conversion within six to eighteen months, depending on the fuel cost disparity prevailing at the time. Transportation companies in various countries are taking advantage of these economics. Our nation's energy security depends on the efficiency of our transportation system and on which fuels we use. Transportation in the United States already consumes much more oil than we produce here in the United States and the situation is getting worse. Domestic oil production has been dropping steadily for over 20 years, and experts predict that by 2025, about 70% of our oil will be imported. Alternative fuel vehicles that operate on natural gas or propane can lessen the demand for gasoline. In addition to economic benefits of alternative fuels to end-users, some governments have sought to create a demand for alternative fuels in order to reduce their dependence on imported oil and reduce their unfavorable balance of payments by relying on their natural gas reserves. Governmental emissions regulations, which support the use of clean burning alternative fuels, are also expanding industry growth. Internal combustion engines are a major source of air pollution, which has led to increased government regulation and oversight on vehicle and industrial engine emissions. Most major international cities are experiencing significant pollution from gasoline and diesel emissions. These cities also have the largest concentrations of fleet operators, and many of these cities, particularly those outside the United States, are taking steps to reduce emissions, typically by implementing natural gas or propane-fueled vehicles. For example, in London, Milan, Rome and India, the respective governments have taken steps such as prohibiting the use of certain vehicles on designated days of the week. Principal Products and Services Our original pursuit in the alternative fuel industry was to target the alternative fuel industry with a focus on manufacturing of propane, natural gas, hydrogen and electrical conversion kits for trucks, automobiles and industrial equipment as a result of an acquisition of assets pertaining to this line of business. In pursuit of this line of business we entered into a consulting agreement with Stalk, LLC in June of 2006 and under the acquisition agreement we agreed to purchase certain assets involved in the testing and analysis of alternative fuel systems in anticipation of entering into the bifuel conversion kits industry. The bifuel conversion kits were to be used on a vehicle originally designed to operate on gasoline but was then later altered to run on alternative fuel such as compressed natural gas (CNG) or liquefied petroleum gas (LPG or propane). However, this decision to pursue the bifuel conversion systems was largely influenced by our former CEO, Jeffrey Groscost, who suddenly passed away on November 3, 2006. Since that time we have continued to reevaluate and reexamine ARI's direction and involvement in the production and distribution of alternative fuel conversion kits. Furthermore, on December 1, 2006, Stalk, LLC terminated its consulting agreement, which had provided the alternative fuel testing, consulting, training services, and EPA or CARB certified party and components for the bifuel conversion systems. Since the death of Mr. Groscost and the termination of the STALK Agreement, we have decided to terminate the bifuel conversion systems as a line of business for the immediate future. At this point in time, ARI would have to seek personnel or consultants with the knowledge and expertise in the alternative fuel conversion industry if it intends to continue any progress in commercializing the conversion systems. We intend to focus the majority of our attention and efforts to brokering and assisting in the distribution and sale of hybrid electric, CNG and LPG buses such as those produced by Wuzhoulong Motors of China ("WZL") and Guangzhou Baolong Group Automotive Manufacturing Corporation ("Baolong"). Through our agreement with WZL, we are the exclusive representative for sales, marketing, and distribution of these different types of buses for five specific countries, including the United States, Mexico, and India and potentially additional countries upon further negotiation. These buses use an electrical system, which recharges the batteries using excess electricity during peak operations as well as during deceleration and down hill operation. We paid $500,000 to WZL for the purchase of 5 sample buses and ancillary expenses. In November 2006, we entered into an exclusive five year sales agreement with Baolong to act as the exclusive world-wide, excluding China, sales representative of their various buses and vans, hybrid buses and vans, CNG buses and vans, LPG buses and vans, and garbage truck and other related vehicles. The Technology Hybrid Electric Vehicles Technologies come together in hybrid electric vehicles, also known as HEVs or hybrids. Present-day hybrids are equipped with internal combustion engines (ICEs) and electric motors. A hybrid's ICE engine, as in any ICE-powered car, produces power through continuous, controlled explosions that push down pistons connected to a rotating crankshaft. That rotating force (torque) is ultimately transmitted to the vehicle's wheels. A hybrid's electric motor is energized by a battery, which produces power through a chemical reaction. The battery is continuously recharged by a generator that like the alternator of a conventional car is driven by the ICE. Hybrids can have a parallel design, a series design, or a combination of both. In a parallel design, the energy conversion unit and electric propulsion system are connected directly to the vehicle's wheels. The primary engine is used for highway driving and the electric motor provides added power during hill climbs, acceleration, and other periods of high demand. In a series design, the primary engine is connected to a generator that produces electricity. The electricity charges the batteries, which drive an electric motor that powers the wheels. HEVs can also be built to use the series configuration at low speeds and the parallel configuration for highway driving and acceleration. In conventional vehicles, energy from deceleration is wasted as it dissipates. In some hybrid vehicles, regenerative braking systems capture that energy, store it, and convert it to electricity to help propel the vehicle-ultimately increasing overall efficiency. Some hybrids also use ultracapacitors to extend the life of a hybrid vehicle's on-board battery system because they are better suited to capturing high power from regenerative braking and releasing it for initial acceleration. Hybrid passenger cars arrived in the United States in model year 2000, following their introduction in Japan a few years earlier. The two-seat Honda Insight was the first hybrid passenger car, followed by the Toyota Prius in model year 2001. Honda then introduced a hybrid version of its Civic sedan, and Toyota offered a second-generation Prius. Ford introduced its first hybrid, a version of the Escape sport utility vehicle, in model year 2005. Several other major automakers now either offer HEVs or plan to do so in the near future. Hybrid systems have also proved effective in buses and heavy trucks. For example, Oshkosh Truck Corporation has demonstrated a diesel-electric system that may significantly improve the fuel economy and driving range of military vehicles. As a bonus, hybrids can be devised to generate alternating current electricity for other applications such as plug-in power tools. General Motors, through its Allison Transmission Division, produces a diesel-electric hybrid drivetrain for transit buses. CNG and LNG ("Natural Gas") Vehicles Natural Gas Vehicles (NGV) have been in use since the 1930s but there are currently far more NGV in use throughout the rest of the world than in the United States. The largest number of NGVs is found in Argentina, Italy, and Russia. However, in the United States, the majority of NGVs can be found on the West Coast. Natural gas is a mixture of hydrocarbons that is extracted from underground reserves and can be domestically produced and readily available to end-users through the utility infrastructure. Natural gas can be utilized and stored as either compressed natural gas (CNG) or liquefied natural gas (LNG). It is also clean burning and produces significantly fewer harmful emissions than reformulated gasoline or diesel when used in natural gas vehicles. In addition, commercially available medium- and heavy-duty natural gas engines have demonstrated over 70% reductions of carbon monoxide (CO) and particulate matter and more than 85% reduction in nitrogen oxides (NOx) relative to commercial diesel engines. Natural gas contains less carbon than any other fossil fuel and thus produces lower carbon dioxide emissions, the primary greenhouse gas, per vehicle mile traveled. According to the Natural Gas Vehicle Coalition (NGVC) there are 150,000 natural gas vehicles in the United States and 5 million worldwide. Additionally, of all the new transit bus orders, approximately 22% are for buses fueled by natural gas. Dedicated natural gas vehicles are designed to run only on natural gas and bi-fuel NGVs have two separate fueling systems that enable the vehicle to use either natural gas or a conventional fuel (gasoline or diesel). In general, dedicated NGVs demonstrate better performance and have lower emissions than bi-fuel vehicles because their engines are optimized to run on natural gas. In addition, the vehicle does not have to carry two types of fuel, thereby increasing cargo capacity and reducing weight. The largest benefit of NGVs is that natural gas is mostly domestically produced. As mentioned above, natural gas is extracted from underground reserves and can also be produced as a by-product of landfill operations. In addition to the availability of natural gas, NGVs have been reported to last 2 to 3 years longer than gasoline or diesel vehicles and allow for extended time between required maintenance. In fact, some natural gas vehicle manufacturers recommend oil changes at intervals of every 10,000 to 12,000 miles, which is twice as long as similar gasoline or diesel models. Finally, NGV horsepower, acceleration, and cruise speed are comparable with those of equivalent conventionally fueled vehicles and bi-fuel NGVs offer a driving range similar to that of gasoline vehicles. A large majority of non-dedicated CNG vehicles are light-duty vehicles, which include compact automobiles to larger sedans, cargo vans, pickup trucks and trucks weighing less than 33,000 pounds. The cost of a gasoline-gallon equivalent of CNG can be favorable compared to that of standard gasoline vehicle, but varies depending on local natural gas prices. Purchas prices for NGVs are somewhat higher than conventional gasoline vehicles but federal incentives can help offset some of those costs. Additionally, CNG fueling stations are becoming more readily available in most major cities. LNG is often utilized more in heavy-duty vehicles and fleets and its availability is more limited in its fueling stations so often times a direct supplier is necessary. Additionally, NGV Fleets may require on-site maintenance and may require the upgrading of their facilities to accommodate NGVs; however the costs for upgrading maintenance facilities will largely depend on the number of modifications required. Although LNG is currently harder to come by the emphasis on fueling infrastructure and increase of NGV fleets is continuing to grow and heavy-duty LNG vehicles are expected to have larger roles in the natural gas vehicle market in the future.