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To OTC Journal Members:

News on Engineering Powers Systems Limited (OTC BB: EGPDF)

Recently we have had a lot of requests for updated information on Engineering Power Systems Limited, a company we believe has tremendous upside potential.

Last Friday Engineering Power Systems Limited (OTC BB: EGPDF) published a news release concerning an earnings restatement.  While the numbers in the press release were not particularly important, other information within the release gives us some direction of the future of this Company.

For those of you that are not familiar with this Company, we originally began coverage in the first quarter of 1999.  At that time we believed that this company had one of the most exciting business models we had ever reviewed.  We still believe it. At the time the stock was trading in the $1.50 range.  Since then the stock has traded up near $3 several times, only to fall back into the $1.50 range and trade with very light volume.  Click here if you wish to review the original profile.  Investors that have sold on the price surges have had opportunities to take profits, but for the most part this stock has been a lackluster performer through 1999.

We still believe that the Company has a shot a charging into the $200 million annual revenue run rate in the year 2,000, up from the current $40 million.

In the last several months we have been unable to speak directly with Management about ongoing developments.  The Company is in the process of funding a $25 million bond offering, and securities regulations require them to be in a regulatory "Quiet Period" until this process is completed.

We have learned the following as a result of last Friday's press release about ongoing developments:

• In the first nine months of fiscal 1999 revenues came in at $25 million (CDN), right in line with expectations.
• Gross Profits for the time period were $3.4 million.
• Net losses for the period were just over $5, most of which is still attributed to the costs associated with the upfront expenses associated with the development of their two contracts to provide power in India.
• The Andrah Pradesh project has been converted to a land based natural gas power plant and Engineering Power will only own 25% of the joint venture.
• The Karnataka project is moving forward as planned.

Here is some more detailed information about on-going developments:

The Company has decided to convert this project into a land based natural gas project as opposed to the original Power Barge Power Plants.

This offers several benefits to shareholders:

• Their joint venture partner has a 30 year supply of natural gas which is a more profitable source for power generation.
• Their  joint venture partner already has several ongoing projects, and can deal more efficiently with the cumbersome Indian bureaucracy.
• The project will be completed sooner.
• Engineering Power will only have to invest $12 million to cover their portion of the costs.  Engineering Power will still get 80% of the originally anticipated revenue stream, but only needs to invest 40% of the originally anticipated capital.
• The Karnataka Power Barge project will replace the lost revenue stream from the Power Barge Construction Phase. The Company is only capable of building and deploying one project at a time, so no short term revenue loss is anticipated.
• This step will allow the Company to generate 400 MegaWatts of power sooner, thereby creating the recurring revenue streams associated with on-going power generation.

The property on which the Power Plant will be located has been purchased, and final regulatory approvals are currently in process.

On September 24th Engineering Power announced the signing of a definitive purchase agreement to acquire Innovative Steam Technologies (IST), a subsidiary of one of Canada's largest construction companies.  Click here to read the press release.

IST manufactures a once through Steam Generator.  This technology is part of a combined cycle power plant configuration, and uses exhaust heat to generate steam power.

IST has 50 installations in 20 locations worldwide.  These installations have over 2 million hours of combined operating time.  The technology is smaller, weighs less, and has fewer moving parts than other competing technologies.  This technology will be built into Engineering Power's projects, make the plants more efficient and the Company more profitable.

Reading between the lines, one can assume that the proceeds from the bond offering will be used to complete the purchase of IST and replenish the Company's treasury.

To learn more about IST go to their web site at www.otsg.com.

In a recent article which appeared on Reuter's, Gill Rider, a partner in Andersen Consulting's European Utilities Unit, was quoted as saying "By 2010 40% of Europe's Power is likely to be generated by gas, compared with 10 to 15% today.  The trend is being driven by new technologies, new sources of supply, price demands, and environmental concerns."

Engineering Power is positioning itself as a leading power provider for Third World Countries where it is desperately needed.  Furthermore, the company is investing in leading edge technologies which represent the future of power generation.

It has been a long a frustrating road with this stock as we feared it might be due to the complexities of launching these Power Projects.

At this point, we feel that the future of the Company rests with the successful completion of the current bond funding.  This bond is being issued as a "144A" security, meaning that potential purchasers must have over 1/2 billion in assets to participate.  If sophisticated investors of this magnitude are willing to invest in this Company you have to like your chances as a shareholder.

This will give the Company enough capital to purchase IST, roll out the Andhra Pradesh project, and begin the Karnataka Power Barge Project.

In the meantime, the stock does not want to trade much below $1.50, suggesting that investors providing an excellent entry level for investors prepared to wait for more developments and the next price surge.

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The OTCjournal.com Newsletter is an independent electronic publication committed to providing our readers with factual information on selected publicly traded companies. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. All statements and expressions are the sole opinions of the editors and are subject to change without notice. This profile is neither an offer nor solicitation to buy or sell any securities mentioned. This newsletter is owned by SSP Management, Inc, a wholly owned subsidiary of 1st Net Technologies, Inc ("1st Net").  While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The editor, members of the editor's family, and/or entities with which they are affiliated, may own stock in and have other financial dealings with the companies who appear in the publication.  To that degree, this newsletter should not be regarded to be an independent publication.   SSP Management has received the following compensation from Engineering Power Systems: 125,000 options, exercisable at $1.75.  As part if the Agreement, Engineering Power has paid $83,750 in fees for Web-Site development, proprietary database management systems, and Internet Marketing Technologies which have been provided by 1st Net, the parent company of SSP Management. To date, SSP Management has exercised 47,857 options, and as of the date of the release of this profile holds 6857 shares.  SSP Management reserves the right to exercise its options at anytime, and may sell shares of Engineering Power anytime at its sole discretion.  This should be viewed as a potential conflict of interest.   The OTCjournal.com critiques may contain forward looking statements relating to the expected capabilities of the companies mentioned herein.

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