UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 10-QSB



xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period endedMarch 31, 2006



[   ]         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission file number333-84565



AFV SOLUTIONS, INC.

(Exact name of small business issuer as specified in its charter)



|Nevada                                                         | 90-0006843                       
|-------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.)



9710 Research Drive

Irvine, California 92618

(Address of principal executive offices)



(949) 748-6600

(Issuers telephone number)



Copies of Communications to:

Stoecklein Law Group

402 West Broadway, Suite 400

San Diego, CA 92101

(619) 595-4882

Fax (619) 595-4883



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of during the last 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesxNoo



Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

|Yeso | Nox
|---- | ---



The number of shares of Common Stock, $0.001 par value, outstanding on March 31, 2006, was 21,280,000 shares.



Transitional Small Business Disclosure Format (check one):  YesoNox



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PART I -- FINANCIAL INFORMATION



Item 1. Financial Statements.

AFV Solutions, Inc.

Consolidated Balance Sheet

(unaudited)



|                                        |                                                     |                                                                                                                           |             |              | March 31,   | December 31,
|--------------------------------------- | --------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ----------- | ------------ | ----------- | ------------
|                                        |                                                     |                                                                                                                           |             |              | 2006        | 2005        
|                                        |                                                     |                                                                                                                           |             |              | (audited)  
|Assets                                  |                                                     |                                                                                                                           |             |              |            
|                                        |                                                     |                                                                                                                           |             |              |             |             
|Current assets:                         |                                                     |                                                                                                                           |             |             
|                                        | Cash                                                |                                                                                                                           | $           | 8,526        | $           | 167,141     
|                                        | Prepaid Expenses                                    |                                                                                                                           | 625         |              | -          
|                                        |                                                     | Total current assets                                                                                                      |             | 9,151        |             | 167,141     
|                                        |                                                     |                                                                                                                           |             |              |             |             
|Fixed assets, net                       |                                                     | 475,721                                                                                                                   |             | 486,639     
|                                        |                                                     | Total fixed assets                                                                                                        |             | 475,721      |             | 486,639     
|                                        |                                                     |                                                                                                                           |             |              |             |             
|Other assets:                           |                                                     |                                                                                                                           |             |             
|                                        | Goodwill                                            |                                                                                                                           | 18,269      |              | 18,269     
|                                        |                                                     | Total other assets                                                                                                        |             | 18,269       |             | 18,269      
|                                        |                                                     |                                                                                                                           |             |              |             |             
|                                        |                                                     |                                                                                                                           |             | Total assets | $           | 503,141     
|                                        |                                                     |                                                                                                                           |             |              |             |             
|Liabilities and Stockholders' (Deficit) |                                                     |                                                                                                                           |             |             
|                                        |                                                     |                                                                                                                           |             |              |             |             
|Current liabilities:                    |                                                     |                                                                                                                           |             |             
|                                        | Accounts payable and accrued expenses               | $                                                                                                                         | 1,238       | $            | 4,681      
|                                        | Accrued expenses - related party                    |                                                                                                                           | 13,500      |              | 12,000     
|                                        | Notes payable                                       |                                                                                                                           | 43,500      |              | 6,000      
|                                        | Notes payable - related party                       |                                                                                                                           | 30,000      |              | 30,000     
|                                        |                                                     | Total current liabilities                                                                                                 |             | 88,238       |             | 52,681      
|                                        |                                                     |                                                                                                                           |             |              |             |             
|Long term liabilities:                  |                                                     |                                                                                                                           |             |             
|                                        | Installment loans                                   |                                                                                                                           | 18,947      |              | 20,623     
|                                        | Mortgage payable                                    |                                                                                                                           | 175,216     |              | 175,552    
|                                        | Mortgage payable - related party                    |                                                                                                                           | 200,000     |              | 200,000    
|                                        | Interest payable - related party                    |                                                                                                                           | 34,750      |              | 31,750     
|                                        |                                                     | Total long term liabilities                                                                                               |             | 428,913      |             | 427,925     
|                                        |                                                     |                                                                                                                           |             |              |             |             
|Stockholders' equity:                   |                                                     |                                                                                                                           |             |             
|                                        | Preferred stock, $0.001 par value 20,000,000 shares |                                                                                                                           |             |              |            
|                                        |                                                     | authorized, 28,334 shares issued and outstanding                                                                          |             | 28           |             | 28          
|                                        | Common stock, $0.001 par value, 100,000,000 shares  |                                                                                                                           |             |              |            
|                                        |                                                     | authorized, 21,280,000 and 21,120,000 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively |             | 21,280       |             | 21,120      
|                                        | Stock subscription payable                          |                                                                                                                           | 130,966     |              | 130,966    
|                                        | Stock subscription receivable                       |                                                                                                                           | (10,000)    |              | (10,000)   
|                                        | Additional paid-in capital                          |                                                                                                                           | 3,795,583   |              | 3,222,743  
|                                        | Accumulated (deficit)                               |                                                                                                                           | (3,951,867) |              | (3,173,414)
|                                        |                                                     |                                                                                                                           |             |              |             | (14,010)    
|                                        |                                                     |                                                                                                                           |             |              |             |             
|                                        |                                                     |                                                                                                                           |             |              | $           | 503,141     



The accompanying notes are an integral part of these financial statements



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AFV Solutions, Inc.

Consolidated Statements of Operations

(unaudited)



|                                                                               | Three months ended
|------------------------------------------------------------------------------ | ------------------
|                                                                               | March 31,         
|                                                                               | 2006              
|                                                                               |                   
|                                                                               |                   
|                                                                               |                   
|                                                                               |                   
|Revenue                                                                        | $                 
|Cost of sales                                                                  |                   
|                                                                               |                   
|Gross profit                                                                   |                   
|                                                                               |                   
|Expenses:                                                                      |                   
|General and administrative expenses                                            |                   
|General and administrative expenses - related party                            |                   
|Depreciation                                                                   |                   
|Financing expenses                                                             |                   
|Share-based compensation                                                       |                   
|Professional fees                                                              |                   
|Research and development                                                       |                   
|Total operating expense                                                        |                   
|                                                                               |                   
|                                                                               |                   
|Net operating (loss)                                                           | $                 
|                                                                               |                   
|Other income (expense)                                                         |                   
|Interest income                                                                |                   
|Interest expense  related party                                               |                   
|Total other income (expenses)                                                  |                   
|                                                                               |                   
|Net (loss)                                                                     | $                 
|                                                                               |                   
|Weighted average number of common shares outstanding - basic and fully diluted |                   
|                                                                               |                   
|Net (loss) per share - basic and fully diluted                                 | $                 



The accompanying notes are an integral part of these financial statements



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AFV Solutions, Inc.

Consolidated Statements of Cash Flow

(unaudited)



|                                          |                                                 | Three months ended
|----------------------------------------- | ----------------------------------------------- | ------------------
|                                          |                                                 | March 31,         
|                                          |                                                 | 2006              
|                                          |                                                 |                   
|Cash flows from operating activities      |                                                 |                   
|Net (loss)                                | $                                               | (778,453)         
|Depreciation                              |                                                 | 10,918            
|Share-based compensation                  |                                                 | 448,000           
|Adjustments to reconcile net (loss) to    |                                                 |                   
|                                          | net cash (used) by operating activities:        |                   
|                                          | Increase in prepaid expenses                    |                   
|                                          | (Decrease) in cash overdraft                    |                   
|                                          | (Decrease) in accrued liabilities               |                   
|                                          | Increase in interest payable - related party    |                   
|                                          | Increase in accrued liabilities - related party |                   
|Net cash (used) by operating activities   |                                                 | (319,104)         
|                                          |                                                 |                   
|Cash flows from investing activities      |                                                 |                   
|Assets acquired                           |                                                 | -                 
|Net cash (used) by investing activities   |                                                 | -                 
|                                          |                                                 |                   
|Cash flows from financing activities      |                                                 |                   
|                                          | Checks issued in excess of cash available       |                   
|                                          | Proceeds from notes payable  related party     |                   
|                                          | Proceeds from notes payable                     |                   
|                                          | Proceeds from installment loans                 |                   
|                                          | Payment on installment loans                    |                   
|                                          | Proceeds from mortgage loans                    |                   
|                                          | Payment on mortgage loans                       |                   
|                                          | Proceeds from mortgage loans  related party    |                   
|                                          | Prior period depreciation adjustment            |                   
|                                          | Cash from issuance of common stock              |                   
|                                          | Subscriptions payable                           |                   
|                                          | Subscriptions receivable                        |                   
|                                          | Donated capital                                 |                   
|Net cash provided by financing activities |                                                 | 160,489           
|                                          |                                                 |                   
|Net increase (decrease) in cash           |                                                 | (158,615)         
|Cash - beginning                          |                                                 | 167,141           
|Cash - ending                             | $                                               | 8,526             
|                                          |                                                 |                   
|Supplemental disclosures:                 |                                                 |                   
|                                          | Interest paid                                   | $                 
|                                          | Income taxes paid                               | $                 



The accompanying notes are an integral part of these financial statements



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AFV Solutions, Inc.

Notes to Financial Statements



Note 1 - Basis of Presentation



The consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2005 and notes thereto included in the Company's 10-KSB annual report.  The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not indicative of annual results.



Note 2  Going concern



The accompanying financial statements have been prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  For the Company to continue as a going concern the Company must seek additional sources of capital, and the Company must attain future profitable operations. The Company is currently initiating its business plan and is in the process of raising additional capital.  The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.



Note 3  Goodwill



Management periodically reviews the carrying value of acquired intangible assets to determine whether impairment may exist. The Company considers relevant cash flow and profitability information, including estimated future operating results in assessing whether the carrying value of the intangible can be recovered. If the Company determines that the carrying value will not be recovered from undiscounted future cash flows of the acquired business, the Company considers such carrying value as impaired and reduces them by a charge to operations in the amount of the impairment. As of March 31, 2006 management had determined impairment did not exist.



Note 4  Fixed Assets



The Company records fixed assets at cost and computes depreciation using the straight-line method. The Companys fixed assets consist of the following:







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AFV Solutions, Inc.

Notes to Financial Statements





|                              | March 31,
2006
|----------------------------- | --------------
|Land                          | $ 137,000     
|Vehicles                      | 135,864       
|Furniture and fixtures        | 15,608        
|Operating equipment           | 11,650        
|Buildings and improvements    | 283,764       
|                              |               
|Total fixed assets            | 538,886       
|Less accumulated depreciation | (108,165)     
|                              |               
|Total                         | $ 475,721     



The Company recorded depreciation expense of $10,918 and $10,550 during the three months ended March 31, 2006 and 2005, respectively.



Note 5  Long Term Liabilities



The Company has a 5-year note payable in the principal amount of $200,000 with an interest rate of 6% to the Companys former President, Rosemary Williams, pursuant to the Real Estate Acquisition Contract for the purchase of the Bed & Biscuit Inn facility in Flagler Beach. During the three months ended March 31, 2006 the Company has accrued interest payable of $34,750.



The Company has two mortgages payable on the Bed & Biscuit Inn facility in Flagler Beach in the amount of $97,635 and $77,582 respectively. The first mortgage has an interest rate of prime plus one percent (currently 7.5%) per annum and monthly interest only payments. The second mortgage has a stated interest rate of 9.5 % per annum with monthly and principal interest payment of $625. The Company expensed $2,920 in interest for the two mortgages during the three months ended March 31, 2006.



Note 6  Stockholders equity



The Company is authorized to issue 20,000,000 shares of $0.001 par value preferred stock and 100,000,000 shares of $0.001 par value common stock.



On January 6, 2006, the company issued 160,000 shares if its $.001 par value common stock for services valued at $448,000 which the company expensed as share-based compensation at March 31, 2006.



Note 7  Related party transactions



The Company leases nine hundred square feet of office space from a former officer and director at a fair market value of $500 per month.  During the three months ended March 31, 2006 the Companyaccrued rent expense to a related party in the amount of $1,500.





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AFV Solutions, Inc.

Notes to Financial Statements



An Officer of the Company donated capital in the amount of $125,000 during the three-month period ended March 31, 2006.



During the three-months ended March 31, 2006 an officer lent the Company $37,500 which is non-interest bearing and due on demand.



Note 8  Subsequent Events



On May 5, 2006, we officially announced the spin-off of our wholly owned subsidiary, Bed & Biscuit Inns of America, Inc. to AFV stockholders of record as of May 10, 2006.



In May 2006, the Company closed a private placement of units totaling approximately $4,750,000.  Pursuant to the memorandum we sold Investment Units at $50,000 and $80,000 per unit, for approximate proceeds of $1,775,000 and $3,099,600, respectively.  Each unit consisted of 20,000 shares of common stock.



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FORWARD-LOOKING STATEMENTS



This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.



Forward-looking statements may include the words may, could, estimate, intend, continue, believe, expect or anticipate or other similar words.  These forward-looking statements present our estimates and assumptions only as of the date of this report.  Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.



Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:



| |  | increased competitive pressures from existing competitors and new entrants;
| | - | ---------------------------------------------------------------------------

| |  | increases in interest rates or our cost of borrowing or a default under any material debt agreements;
| | - | -----------------------------------------------------------------------------------------------------

| |  | deterioration in general or regional economic conditions;
| | - | ---------------------------------------------------------

| |  | adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | successful entrance into the alternative fuel industry;
| | - | -------------------------------------------------------

| |  | loss of customers or sales weakness;
| | - | ------------------------------------

| |  | inability to achieve future sales levels or other operating results;
| | - | --------------------------------------------------------------------

| |  | unavailability of funds for capital expenditures and/or general working capital; and
| | - | ------------------------------------------------------------------------------------

| |  | operational inefficiencies in distribution or other systems.
| | - | ------------------------------------------------------------



For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see Factors That May Affect Our Results of Operation in this document and in our Annual Report on Form 10-KSB for the year ended December 31, 2005.





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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.



OVERVIEW



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 anticipation of our acquisition of our Flagler Beach facility.  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).



ARI intends to enter the business of manufacturing Propane, Natural Gas, Hydrogen and electrical conversion kits for trucks, automobiles and industrial equipment. Its customers are intended to include new vehicle manufacturers, major utilities, fleets, and a wide network of installation centers. ARI will also be a distributor of alternative fuel parts and components.



In addition to ARI, we operate another wholly owned subsidiary, Bed & Biscuit Inns of America, Inc. (Bed & Biscuit).  All of our current revenues are generated through Bed & Biscuit.  Under this subsidiary we operate an upscale pet care facility under the name Bed & Biscuit Inn.  Due to the diversity of our subsidiaries we are planning to spin off the Bed & Biscuit subsidiary.  Furthermore, we anticipate focusing more of our resources in pursuit of the alternative fuel industry.



For the last two fiscal years ended December 31, 2005 and 2004, we sustained net losses of $2,825,539 and $209,185, respectively.  At March 31, 2006, we had a working capital deficit of $79,087.  As a result of our financial condition, our financial statements for the period ended March 31, 2006 reflect the fact that without the realization of additional capital, it would be unlikely for us to continue as a going concern.



CURRENT OPERATIONS



We are aggressively pursuing opportunities within the alternative fuel industry and at this point in time have discontinued our previous plan of expanding our upscale pet care facilities beyond the Bed & Biscuit facility we currently operate.  Furthermore, we officially announced on May 5, 2006, our intention to spin-off our subsidiary, Bed & Biscuit to our stockholders of record as of May 10, 2006.



During the last quarter of 2005 through the beginning of the second quarter of 2006, we have successfully received our first certificates of conformity from the U.S. Environmental Protection Agency for our gasoline/propane bifuel conversion system for the 2003, 2004, and 2005 Ford Motor Company 4.6 liter engine.  The system allows a vehicle to operate on either gasoline or propane, with a simple flip of a switch, unlike other products which are dedicated to specifically propane or natural gas systems.  Additionally, during the first quarter, we received a certificate of conformity from the U.S. Environmental Protection Agency for our dedicated propane system for the 2005 Ford Motor Company 4.6 liter engine.  Although we believe this was a large step in our pursuit of alternative fuel we have yet to produce this system on a mass



8

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production level.  We anticipate selling these products as a conversion system which could be installed in the Ford Crown Victoria, Lincoln Town Car, and Mercury Grand Marquis automobiles.  We are not affiliated with the Ford Motor Companies in any way.



Subsequent to first quarter, we announced that we had reached an agreement with Wu Zhou Long Motors group to become the exclusive representative for sales, marketing, and distribution of their hybrid electric, CHG and LPG buses in five countries, including the United States, Mexico, and India.  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.



Satisfaction of our cash obligations for the next 12 months.



We are aggressively pursuing opportunities within the alternative fuel industry.  Our cash obligations are anticipated to increase substantially over the next 12 months as we establish ourselves in the alternative fuel industry.  The cash would be utilized for operational expenses, including the cash needed to pursue the activities of ARI.



We intend for these funding requirements to be fulfilled through either equity or debt financing.  During the third and fourth quarters of 2005, we sold 50 Investment Units through a private placement memorandum to accredited investors.  Pursuant to the memorandum we sold each Investment Unit at $30,000 per unit, for total proceeds of $1,500,000 prior to any offering expenses or fees.  Each unit consisted of 20,000 shares of common stock and 10,000 warrants.



During the first quarter of 2006, we issued two promissory notes to our ARI president, Karina Ducoulombier, for a total of $37,500.  These notes are non-interest bearing and are due on demand.



Subsequent to first quarter we closed a private placement of units amounting to approximately $4,750,000.  Pursuant to the memorandum we sold approximately 36 Investment Units at $50,000 per unit, for total proceeds of $1,775,000.  Each unit consisted of 20,000 shares of common stock.  We also sold an additional 38 Investment Units at $80,000 per unit, for approximate proceeds of $3,099,600.  Each unit consisted of 20,000 shares of common stock.  At the time of this filing, we have closed the private placement but are still awaiting all the monies to clear.  We anticipate that with these funds we will be able to sustain our cash obligations for the next 24 months; however, we may have future obligations that would require additional equity or debt financing.



Summary of any product research and development that we will perform for the term of the plan.



During the three months ended March 31, 2006 and the year ended December 31, 2005 we spent $290,250 and $434,401, respectively, on research and development.  We anticipate significant research and development expenditures in the future as we continue implementing our revised business plan of alternative fuel.  However, at this time we cannot estimate the actual amounts to be allocated to research and development.





9

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Expected purchase or sale of plant and significant equipment.



We do not anticipate purchasing or leasing any additional pet care facilities in the next twelve months.  As part of our moving into the alternative fuel industry we anticipate acquiring equipment and other assets related to this industry.  However, at this point in time we are unable to accurately determine an estimate for the amount of funds needed for these purchases.



Subsequent to the first quarter, ARI did take delivery of the patented electric bus built under our agreement with GYD of China.  We had the bus shipped to the United States for testing and to begin the process of gaining federal authorization to import into the United States market.  We also plan to open a new Southern California showroom, which will be used for showcasing our products, including the electric hybrid buses from Wu Zhou Long Motors Group.  We anticipate the showroom opening by end of our second quarter.



Significant changes in number of employees.



The number of employees required to operate our business is currently 8 employees, which is mostly due to our operations of our pet facility in Florida.  However, as a result of the change in our business plan establishing ourselves in the alternative fuel industry, we are anticipating a substantial change in the number of employees required to operate our facilities.  These increases will occur concurrent with our acquisition and/or lease of facilities for our ARI subsidiary.  With the opening of our new showroom in Southern California, we have brought on Nelson Barba to head our International Sales.  Mr. Barba will begin to establish a sales force to distribute and sell our CNG, LPG, and electric hybrid buses.



Results of Operations for the Three Months Ended March 31, 2006 and 2005 Compared.



The following table is a summary of our operations for the three months ended March 31, 2006 as compared to the three months ended March 31, 2005.



|                                    | For the Three Months Ended March 31, 2006 | For the Three Months Ended March 31, 2005
|----------------------------------- | ----------------------------------------- | -----------------------------------------
|Revenues                            | $                      29,731             | $                    31,560              
|                                    |                                           |                                          
|Cost of Sales                       | 1,941                                     | 2,437                                    
|                                    |                                           |                                          
|General and Administrative Expenses | 12,967                                    | 41,412                                   
|                                    |                                           |                                          
|Share-based compensation            | 448,000                                   | -                                        
|                                    |                                           |                                          
|Research and development            | 290,250                                   | 15,000                                   
|                                    |                                           |                                          
|Total Operating Expenses            | 800,134                                   | 68,462                                   
|                                    |                                           |                                          
|Other income (expense)              | (6,109)                                   | (3,497)                                  
|                                    |                                           |                                          
|Net Loss                            | $                   (778,453)             | $                   (42,836)             





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Revenues



|                                     | 2006          | 2005          | Increase/(decrease)
|------------------------------------ | ------------- | ------------- | -------------------
|$                                    | %            
|For the three months ended March 31: |               |               |                    
|Revenue                              | $      29,731 | $      31,560 | $    (1,829)       



Revenues for the three months ended March 31, 2006 were $29,731 compared to revenues of $31,560 in the three months ended March 31, 2005.  This resulted in a decrease in revenues of $1,829, from the previous year.  Although we plan to transition our business to the alternative fuel industry, we have not begun producing revenues in this industry.  We do still have operations through the Bed & Biscuit Inn.  The decrease in revenues is related to a slight reduction in our clientele at our Bed & Biscuit facility in Flagler Beach, Florida.  Our Bed & Biscuit facility is subject to peoples travel plans and need to board their pets.  Therefore, indirectly our clientele will be determined on how much traveling is done by pet owners surrounding our facility in Flagler Beach.



Cost of sales



|                                     | 2006          | 2005            | Increase/(decrease)
|------------------------------------ | ------------- | --------------- | -------------------
|$                                    | %            
|For the three months ended March 31: |               |                 |                    
|Cost of sales                        | $       1,941 | $         2,437 | $        (496)     



Cost of sales for the three months ended March 31, 2006 was $1,941, a decrease of $496 from $2,437 for the same period ended March 31, 2005.  We had a decrease in cost of goods sold compared to the same period last year because of the slight reduction in our operations of pet boarding.  Additionally, our operations through our Bed & Biscuit Inn have somewhat stabilized allowing us to more efficiently manage our cost of sales.  We have continued to operate our Bed & Biscuit Inn and have not had any cost of goods associated with our new planned business of the alternative fuel industry.



General and Administrative expenses



|                                     | 2006          | 2005          | Increase/(decrease)
|------------------------------------ | ------------- | ------------- | -------------------
|$                                    | %            
|For the three months ended March 31: |               |               |                    
|General & Administrative expenses    | $      12,967 | $      41,412 | $  (28,445)        



General and administrative expenses were $12,967 for the three months ended March 31, 2006 versus $41,412 for the three months ended March 31, 2005, which resulted in a decrease of $28,445.  The decrease in general and administrative expenses was primarily due to the Companys reduction of cash compensation to our personnel.  We chose to utilize the issuance of shares as compensation as a means to conserve our cash.  During the three months ended March 31, 2006 we issued a 160,000 shares valued at $448,000.  We did not have any share-based compensation during the three months ended March 31, 2005.



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We anticipate an increase in the general and administrative expenses by the Company as we continue to add more operational and administrative personnel, legal and other professional assistance with our continued plan to enter into the alternative fuel industry with ARI.  We anticipate this transition to create up front costs but we are unable to determine how long these expenses will sustain or if they will continue for an extended amount of time.



Total Operating Expenses



|                                     | 2006         | 2005       | Increase/(decrease)
|------------------------------------ | ------------ | ---------- | -------------------
|$                                    | %           
|For the three months ended March 31: |              |            |                    
|Total operating expenses             | $    800,134 | $   68,462 | $  731,672         



Overall operating expenses were $800,134 for the three months ended March 31, 2006 versus $68,462 for the three months ended March 31, 2005, which resulted in an increase of $731,672.  This substantial increase is primarily due to the change in focus with our new subsidiary, ARI.  Comparatively in 2005, we only had operating expenses relating to our Bed & Biscuit Inn.  However, in later part of 2005 and through 2006, we have incurred substantial increases in expenses for professional fees, share-based compensation, and research and development all related to ARI and the move into the alternative fuel industry.  We anticipate this transition to create up front costs but we are unable to determine how long these expenses will continue or if they will continue for an extended amount of time.



Net Loss



|                                     | 2006           | 2005            | Increase/(decrease)
|------------------------------------ | -------------- | --------------- | -------------------
|$                                   
|For the three months ended March 31: |                |                 |                    
|Net loss                             | $      778,453 | $        42,836 | $     735,617      



The net loss for the three months ended March 31, 2006 was $778,453, versus a net loss of $42,836 for the three months ended March 31, 2005, a change in net loss of $735,617.  The increase in the net loss was primarily due to the increase in total operating expenses as mentioned above associated with our transition to the alterative fuel industry as well as the share-based compensation and research and developments expenses incurred as a result of our planned transition.



Critical Accounting Policies



The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ materially from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements; we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments:



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| |  | stock-based compensation
| | - | ------------------------

| |  | revenue recognition
| | - | -------------------



Stock-Based Compensation



In December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.  The Company adopted SFAS No. 123 (R) in 2005.



Revenue Recognition



Revenue from boarding and care fees are recorded when pets are picked up and an invoice is given to the customer.  The cost of services, consisting of feed and supplies, is expensed as incurred.



Going Concern



The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of us as a going concern. Our cash position may be inadequate to pay all of the costs associated with our operations. We intend to use borrowings and security sales to mitigate the effects of our cash position, however no assurance can be given that debt or equity financing, if and when required will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue existence.



Off-Balance Sheet Arrangements.



We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.



Liquidity and Capital Resources at March 31, 2006 and December 31, 2005.



The following table summarizes total assets, accumulated deficit and stockholders equity.





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|                               | March 31, 2006 | December 31, 2005
|------------------------------ | -------------- | -----------------
|Total Assets                   | $ 503,141      | $ 672,049        
|Accumulated Deficit            | $ 3,951,867    | $ 3,173,414      
|Stockholders Equity (Deficit) | $ (14,010)     | $ 191,443        
|                               |                |                  
|Working Capital (Deficit)      | $ (79,087)     | $ 114,460        



A critical component of our operating plan impacting our continued existence is the ability to obtain additional capital through equity and/or debt financing. Since inception, we have financed our cash flow requirements through issuances of common stock and cash generated from our operations. As we continue our activities, we may continue to experience net negative cash flows from operations, pending receipt of significant revenues.



We anticipate obtaining additional financing to fund operations through common stock offerings and bank borrowings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.  In the event we cannot obtain the necessary capital to pursue our strategic plan, we may have to significantly curtail our operations. This would materially impact our ability to continue operations.



As of March 31, 2006 the existing capital and anticipated funds from operations were not sufficient to sustain operations and expansion over the next twelve months. We anticipate substantial increases in our cash requirements; which will require additional capital generated from either the sale of common stock, the sale of preferred stock, or debt financing.  No assurance can be made that such financing would be available, and if available it may take either the form of debt or equity. In either case, the financing could have a negative impact on our financial condition and our stockholders.



During the third and fourth quarters of 2005 we conducted a private placement whereby we raised $1,500,000 through the sale of units.



Subsequent to first quarter, we closed a private placement of units for more than $4,750,000.  Pursuant to the memorandum we sold Investment Units at $50,000 per unit, for approximate proceeds of $1,775,000.  Each unit consisted of 20,000 shares of common stock.  We also sold additional Investment Units at $80,000 per unit, for approximate proceeds of $3,099,600.  Each unit consisted of 20,000 shares of common stock.  We anticipate that with these funds we will be able to sustain our cash obligations for the next 24 months; however, we may have future obligations that would require additional equity or debt financing.



We anticipate that we will incur operating losses in the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development.  Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, expand our customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.



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FACTORS THAT MAY AFFECT OUR RESULTS OF OPERATIONS



RISKS RELATING WITH TO BUSINESS AND MARKETPLACE



We are uncertain as to our ability to obtain additional capital necessary to continue our business.  Furthermore, the issuance of additional equity securities will cause dilution to our existing shareholders.



We have incurred an accumulated deficit as of March 31, 2006 of $3,951,867. As a result of these losses and negative cash flows from operations, our ability to continue operations will be dependent upon the availability of capital from outside sources unless and until we achieve profitability.  We have continued to conduct private placements and subsequent to the three months ended March 31, 2006, we raised approximately $4,750,000 in additional proceeds to be used as general working capital.



We will depend almost exclusively on outside capital to pay for the deficit in our working capital.  Such outside capital may include the sale of additional stock, loans from our officers and directors, and/or commercial borrowing. There can be no assurance that capital will continue to be available if necessary to meet these continuing operational costs or, if the capital is available, it will be on terms acceptable to our company. The issuances of additional equity securities by our company could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our company's liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable, our business and future success may be adversely affected.



Our company has no operating history in the alternative fuel industry and there can be no assurance that we will be successful in the entry into the industry or that we will be able to develop our business plan to integrate this new line of business.



Our proposed operations are subject to all of the risks inherent in the establishment of a new business, including licensing risks, insufficient capital, unforeseen problems, and expenses and complications encountered with the early phases of operations in a business. Moreover, our lack of an operating history in the alternative fuel industry makes it impossible to predict whether or not the company will operate profitably if it is able to successfully enter such industry. While we have brought on management that is familiar with this industry, there can be no assurances that we will be able to locate, hire and retain the necessary personnel to initiate, manage and operate this new line of business, develop and implement necessary systems, obtain contracts and obtain financing as contemplated in our business plan.



We anticipate some risks as a result of potential operations internationally.  These risks are a result of our sales, marketing, and distribution agreement with Shi Wu Zhou Long Motors to sell their CNG and LPG buses in five countries.



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We anticipate having some operations outside of the United States and our success will depend, in part, on our ability to manage and expand these operations.  The will require significant management attention and financial resources.  Our operations will be subject to numerous and varied regulations.  Changes in exchange rates between foreign currencies and the U.S. dollar may adversely affect our anticipated operating margins.  There is also an additional risk if the currency is not freely traded.  Some currencies, such as the Chinese Renminbi, are subject to limitations on conversion into other currencies.  These future foreign exchange rates may have a material adverse effect on our anticipated business and operating results.



International operations increase our exposure to international laws and regulations, with some additional risks associated with doing business in China.



Foreign laws and regulations are often complex and subject to variation and unexpected changes.  This could result in potential litigation.  In addition, there are few additional risk associated with doing business in China such as:  complex set of licensing requirements and restrictions, currency fluctuation and exchange rate risks, protection of intellectual property, and difficulties and limitations on the repatriation of cash.



We face intense competition and rapid technological advances by competitors.



Competition among companies in the alternative fuel industry is intense.  Several companies market products that compete directly with our anticipated bifuel products.  Other companies offer products that potential customers may consider to be acceptable alternatives to our anticipated products.  In addition, we face direct competition from companies with far greater financial, technological, manufacturing, and personnel resources.



The limited availability of alternative fuels can hinder our ability to market our products.



Alternative fuel engines have been commercially available in the past; however, the most significant impediment to the growth in the market for alternative fuel traditionally has been the limited availability of alternative fuel sources, such as natural gas and propane.  The success of engines based on alternative fuels will probably be directly affected by the development of the infrastructure of the natural gas industry and the widespread availability of such fuel sources.  However, we believe that with the development of the dual fuel conversion systems, vehicles will not be tied exclusively to alternative fuels, but will have the option and ability to operate on standard fuel alone.  In all events, our business and the market for alternative fuel vehicles would benefit substantially from the growth of the infrastructure of the natural gas industry and the more widespread availability
of alternative fuels.



The nature of our alternative fuel products subjects us to product liability risks.



Our anticipated products relate to fuel system components which handle or come into contact with highly combustible gases.  A malfunction of or design defect in our anticipated product, or improper design, construction, or installation could result in liability, tort or warranty claims.  Although we will attempt to reduce the risk with warranty disclaimers



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and
liability limitation clauses in our sales agreements and by maintaining product
liability insurance, we cannot assure you that these measures will be effective in limiting our liability for any damages.  Any liability for damages resulting from product malfunctions or services provided could be substantial and have a material adverse effect on our business and operating results.  In addition, a well-publicized actual or perceived malfunction or impropriety involving our anticipated products or services could adversely affect the markets perception of our products in general, regardless of whether any malfunction or impropriety is attributable to our products or services.



Historically and at this present time our sole revenue generating property is located in Florida and, accordingly, we could be disproportionately harmed by an economic downturn in this area of the country or a natural disaster, such as a hurricane.



Our sole revenue producing asset, the Bed and Biscuit Inn, is located in Flagler Beach, Florida. This concentration in Florida makes our business disproportionately affected by economic conditions, competition and real and personal property tax rates in Florida.  Natural disasters in Florida, such as hurricanes and/or tropical storms, would disproportionately affect our business operations.  A change in Florida laws applicable to the pet boarding industry or a change in zoning laws would have a greater impact on us than a change in comparable laws in another geographical area, due to our Florida concentration. Adverse developments in Florida could harm our revenue or increase our operating expenses.



RISKS FACTORS RELATING TO OUR COMMON STOCK



Since our shares are thinly traded, and trading on the OTC Bulletin Board may be sporadic because it is not an exchange, stockholders may have difficulty reselling their shares.



Our common shares are currently quoted for public trading on the Over-the-Counter Bulletin Board. The trading price of our common shares has been subject to wide fluctuations. Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with limited business operations. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance.



In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.



If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.



Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board.  If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, causing the market liquidity for our securities to be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.



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Future sales of our common stock may result in a decrease in the market price of our common stock, even if our business is doing well.



The market price of our common stock could drop due to sales of a large number of shares of our common stock in the market or the perception that such sales could occur. This could make it more difficult to raise funds through future offerings of common stock.



|ITEM 3. | CONTROLS AND PROCEDURES
|------- | -----------------------



We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods.  As of the end of the period covered by this report, Jeffrey Groscost, our Chief Executive and Principle Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures.  Based on the evaluation, which disclosed no significant deficiencies or material weaknesses, Mr. Groscost concluded that our disclosure controls and procedures are effective.  There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.



PART II--OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------



We may become involved in various routine legal proceedings incidental to our business. However, to our knowledge as of the date of this report, there are no material pending legal proceedings to which we are a party or to which any of its property is subject.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.



On January 6, 2006, we issued a total of 160,000 shares of common stock to 8 individuals for services provided to the Company.  We believe the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decision, including the Companys financial statements and the 34 Act reports.  We reasonably believe that the recipients immediately prior to issuing the shares, had such knowledge and experience in its financial and business matters that they were able capable of evaluating the merits and risks of their investment.  The recipients had the opportunity to speak with our president and director on several
occasions prior to their investment decision.





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Subsequent Issuance



Subsequent to the first quarter of 2006, we closed a private placement of units for more than $4,750,000.  Pursuant to the memorandum we sold Investment Units at $50,000 per unit, for approximate proceeds of $1,775,000.  Each unit consisted of 20,000 shares of common stock.  We also sold additional Investment Units at $80,000 per unit, for approximate proceeds of $3,099,600.  Each unit consisted of 20,000 shares of common stock.  We sold the 20 accredited investors.



We believe that the sale of the units was exempt from registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Sections 4(2), and/or Regulation D, Rule 506. The units were sold directly by us to accredited investors and did not involve a public offering or general solicitation. The purchasers of the units were afforded an opportunity for effective access to files and records of our company that contained the relevant information needed to make their investment decision, including our financial statements and 34 Act reports. We reasonably believed that the purchasers, immediately prior to selling the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment. The purchasers had the opportunity to speak with our management on several occasions prior to their
investment decision.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------



None.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------



None.



|Item 5. | Other Information.
|------- | ------------------



On May 5, 2006, we officially announced the spin-off of our wholly owned subsidiary, Bed & Biscuit Inns of America, Inc. to AFVS stockholders of record as of May 10, 2006.



| | A copy of the press release announcing the spin-off is attached here to as 99.7.
| | --------------------------------------------------------------------------------



On May 10, 2006, we announced the appointment of Grant Gazdig to our Board of Directors.  Mr. Gazdig will serve until the next annual meeting of our stockholders.  Mr. Gadzig is currently the Founder and Managing Partner of Access Capital Limited of London, England, which he founded in 2004.  Access Capital is a traditional Merchant Bank, whom is offering strategic and advisory services to AFV as well.  Prior to founding Access Capital in 2004, Mr. Gazdig was a partner at Clearbrook Capital Partners LLP, a private equity firm in London.  From 1999-2004, Mr. Gazdig served as the executive director of WESTLB, a principal finance group that was responsible for identifying opportunities, devising capital structure, and completing acquisitions of UK based entities as way to unlock asset value for shareholders.  Mr. Gazdig has 17 years experience in investment banking and has worked at UBS
Capital and Merrill Lynch in New York.  Mr. Gazdig served as a Director and later as Vice President of UBS Capital.  Prior to his involvement with UBS, Mr. Gazdig was a financial analyst and later an Associate / Assistant Vice President of Debt & Equity Capital Market division for Merrill Lynch in New York City.



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A copy of the press release announcing this appointment is attached hereto as Exhibit 99.8.



On May 11, 2006, we announced that we had closed a private placement of units for more than $4,750,000, which has been described in greater detail in this report.



A copy of the press release announcing the closing of the private placement is attached hereto as Exhibit 99.9.



|Item 6. | Exhibits and Reports on Form 8-K.
|------- | ---------------------------------



a) Exhibits



|Exhibit     | Description                                                                                                                                                   
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|2           | Real Estate Acquisition Contract, (Filed as an exhibit to the Current Report on Form 8-K, dated April 9, 2003 and incorporated herein by reference).          
|3(i)a**     | Articles of Incorporation of Juris Travel filed on January 23, 2002.                                                                                          
|3(i)b***    | Certificate of Amendment changing name from Juris Travel to Bed and Biscuit Inns of America, Inc.                                                             
|3(i)c****   | Certificate of Amendment changing name from Bed and Biscuit Inns of America, Inc. to Dogs International.                                                      
|3(i)d*****  | Certificate of Amendment to Articles of Incorporation changing the Companys name to AFV Solutions, Inc.                                                      
|3(ii)a**    | Bylaws of Juris Travel filed on January 23, 2002.                                                                                                             
|3(ii)b***   | Bylaws of Bed and Biscuit Inns of America, Inc.                                                                                                               
|3(ii)c****  | Bylaws of Dogs International                                                                                                                                  
|3(ii)d***** | Bylaws of AFV Solutions, Inc.                                                                                                                                 
|10.1***     | Travel Agency Agreement with Global Travel International                                                                                                      
|10.2        | Commission Schedule (Filed as an exhibit to SB-2/A, dated May 14, 2003 and incorporated herein by reference).                                                 
|10.3        | Intellectual Property Assignment Agreement (Filed as an exhibit to the Current Report on Form 8-K, dated March 28, 2003 and incorporated herein by reference).
|10.4        | Commercial Office Lease, dated July 1, 2003 (Filed as an exhibit to the Current Report on Form 8-K, dated July 24, 2003 and incorporated herein by reference).
|31*         | Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002                                                                                           
|32*         | Certification Pursuant to Section 906 of Sarbanes-Oxley Act of 2002                                                                                           
|99.1*       | Press Release announcing EPA Certification of Bifuel System, dated April 5, 2006                                                                              
|99.2*       | Press Release announcing agreement with Shenzhen Shi Wu Zhou Long Motors Group Corp, Ltd. of China, dated April 6, 2006.                                      





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|99.3* | Press Release announcing delivery of hybrid bus built by Shenzhen Shi Wu Zhou Long Motors, dated April 18, 2006.      
|----- | ----------------------------------------------------------------------------------------------------------------------
|99.4* | Press Release announcing the hiring of Nelson Barba as Vice President of International Sales, dated April 20, 2006    
|99.5* | Press Release announcing EPA certification of propane system for automobile engines, dated May 2, 2006                
|99.6* | Press Release announcing Access Capital signing formal engagement as a strategic financial advisor, dated May 3, 2006.
|99.7* | Press Release announcing plan to spin off Bed & Biscuit subsidiary, dated May 5, 2006                                 
|99.8* | Press Release announcing Grant Gazdig being appointed to the Board of Directors, dated May 10, 2006                   
|99.9* | Press Release announcing completion of Unit Placement totaling $4,750,000, dated May 11, 2006                         

________________________

|*     | Filed herewith                                                    
|----- | ------------------------------------------------------------------
|**    | Incorporated by reference in Form SB-2 filed March 19, 2002       
|***   | Incorporated by reference in Form 10-QSB filed on May 15, 2003.   
|****  | Incorporated by reference in Form 10-QSB, dated April 2, 2003.    
|***** | Incorporated by reference in Form 10-QSB, dated December 23, 2004.



b) Reports on Form 8-K

| | None.
| | -----





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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



AFV SOLUTIONS, INC.

(Registrant)



By:/s/
Jeffrey Groscost

| | Jeffrey Groscost,                          | 
| | ------------------------------------------ | 
| | President and Principal Accounting Officer
| | (On behalf of the registrant and as        | 
| | principal accounting officer)              | 
| |                                            | 



Date: May
18, 2006



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