Today we are fortunate to be with Jim Cassina, the President and CEO of Energy Power Systems Ltd., which trades on the OTC Bulletin Board under the symbol EYPSF, and the Canadian Venture Exchange under the symbol YPX. 

[OTCJOURNAL] Jim thanks a lot for joining us today.  Can you give us a brief description of your company including your current annual sales and profit picture?

[Jim] We are an energy source and service company.  When I say energy source company, we are involved with oil and gas exploration, development, and production.  When I say energy service company, I am referring to our engineering and off-shore division, which is involved in building the massive infrastructure, the mega-projects, currently in Atlantic, Canada to develop these off-shore oil fields. 

Our year ends June 30th, so we are looking to report around $18 million in sales.  This will not be a profitable year because we are taking some breakdowns of our project developments and power projects over in India.  In terms of going forward we anticipate a very good year for us.

[OTCJOURNAL] So could you go on record as projecting how things look for fiscal 2002 which will begin on July 1st?

[Jim]  We are in our first quarter of fiscal 2002.  In terms of projecting actual numbers, our regulations require that our auditors have to audit any numbers we put out so we can't come up with any firm numbers.  Again, we will be reporting around $18 million in fiscal 2001 and in the first quarter of this year we have around $7.5 million in backorders in terms of our engineer and off-shore division.  Our oil and gas division are actively producing as we speak so it looks very good for us.

[OTCJOURNAL] So based on how the first quarter went, if you stay on track for the rest of year of fiscal 2001 it looks as if you will have a 50% increase over fiscal 2001.

[Jim] A dramatic increase in profit as well.

[OTCJOURNAL] Jim, give us your vision of the company over the next year and your vision of the company over the next five years.

[Jim] Over the next year I think you are going to see us focusing more on the oil and gas exploration and development, There is a severe energy shortage here in North America and finding the oil and gas is a very important component of solving that entire energy picture which is going to be a very critical part of our going forward strategy.  At the same time, our engineering and off-shore division is really well positioned right now because there are some mega-projects developing in Atlantic, Canada.  There is this Husky Oil Backed White Rose field is probably going to schedule to announce the end of August or the beginning of September sometime that the go-ahead for another $2 billion floating production, off-loading and storage platform.  We are expecting our engineering and off-shore division to participate in building some modules for that mega-project.

[OTCJOURNAL]  Can you paint a picture five years down the road where you hope to take this company? 

[Jim] Five years down the road I'm looking at some dramatic oil and gas production.  I think our focus five years from now, obviously in natural gas as opposed to oil.  I think our engineering and off-shore division will be well positioned to participating in these on-going maintenance contracts which will be the offshoot once you build these huge infrastructure projects.  The operation and maintenance of these projects becomes a very important revenue stream for a company like ours. 

[OTCJOURNAL] How could you quantify the next years?  Would you want to be a $100 million dollar company? Is there a certain number or is the goal to grow at a certain clip every year?

[Jim] In five years, I’d like to be at 2000 barrels of oil produced each day in terms of the oil and gas division.  I would like to have three long-term operations and maintenance contracts with the three mega-projects off the shore of Canada.

[OTCJOURNAL] Let's go to some of the questions submitted by members of the OTC Journal.  We had hundreds of questions from our members but we condensed them down to about five because they were pretty much the same. 

I believe it was back in June when you filed for a listing on the American Stock Exchange.  Our members would like to know, where you are in this process.  Is there any chance you will be declined, and if you get the listing, what are the long-term ramifications for the stock?

[Jim]  We are still in the review process with AMEX.  There is no foreseeable chance that will be declined by the American Stock Exchange.  The question is more of when we will be listed not if we will be listed.  Our company meets or exceeds the minimum criteria in terms of net asset value, number of shareholders and that kind of thing.  The advantage for us to get on the American Stock Exchange is that the specialist system versus the market-maker system that AMEX operates under will smooth out the fluctuating price of the stock.

[OTCJOURNAL] Relating to energy prices, a lot of people want to know about your views concerning the future price of natural gas and whether our not the company uses any hedging techniques from these commodity fluctuations.  Combining that with the price of oil, how do you foresee recent OPEC policy affecting the price of oil?  And a lot of people asked about President Bush’s interest in Canada’s natural resource reserve as he has mentioned Canada as a valuable ally for us in terms of natural resources.  How does this all affect your company?

[Jim]  OPEC is certainly the benchmark for fossil fuels throughout the world.  However, what I think you are seeing now in North America and Bush’s interest in Canada’s natural resources which is primarily on the gas side, is that natural gas is being priced at a higher multiple or component of the OPEC oil prices.  The reason for that is because a lot of the natural gas is now being consumed by the major power plants in North America.  I think you are going to see continuation of that.  I believe there was a Bank First Report that came out in the 1990s and said that about 10% of power produced throughout the North America was generated through burning natural gas.  By the year 2010, 40% of electricity in North America will be fueled by natural gas.  This will have a tremendous upwards pressure on natural gas.

[OTCJOURNAL] Do you use any hedging techniques?

[Jim] Yes, first of all the whole corporate structure is a hedge.  We have the oil and gas exploration and development division and the off-shore and engineering division.  The off-shore and engineering division are actively involved in projects that take 3-4 years to build and the oil and gas division is actively involved with the daily fluctuations of the price of commodity.  However, not withstanding that, we do look at selling forward gas when the prices are favorable for that. We can sell it at from two to five years ahead if we want.

[OTCJOURNAL] Many people have been asking about your recent press release concerning your decision to write down your intangible assets related to your India power project developments.  Can you describe this and tell us why you did it?

[Jim] Yes, I’m glad you brought that up.  We still have investments in India in Independent power projects.  We’ve made the decision to write those investments down in terms of the development costs component of that investment so that shareholders will be surprised on the upside instead of them being disappointed on the downside. So it is a very conservative approach to our presentation of our financial information.  I think it is going to help the shareholders understand where we are in terms of a bare bones kind of an approach.  And as I say, I’m still very optimistic about those projects in India, we’re still developing those projects, and we’ve just decided to write down those intangible assets that relate to those projects. 

[OTCJOURNAL]  Here is one from the editors from the OTC Journal; a bulk of your revenues comes from the M & M Engineering division, which provides construction services for large drilling and exploration companies in Atlantic, Canada.  Can you explain how this division will benefit from the renewed exploration projects off the coast of New Finland by these off-shore oil companies?

[Jim] The benefits are what I call two tiered or even two term.  The first benefit is the immediate revenue from the construction contracts.  As I mentioned earlier, say we are $20 million dollar module for one of these off-shore projects and complete that in a year or 18 months, we hit revenue and profits etc.  The big picture is after these infrastructures are built, we are well-positioned to take advantage of the enormous maintenance contracts that naturally fall when building these huge infrastructures. 

[OTCJOURNAL]  One last question from our members, which I’m going to read verbatim from one of our members named Ralph Seward, what most investors want to hear from you.  “What is there about your company that would make me want to buy it, where do you see the stock price in one month, 6 months, and 1 year, and is there anything about your company what will cause growth of the company and an increase in share price and what is it?”  Thanks for the question Ralph.

[Jim]  The first one, the stock price, I cannot comment on because I’m not a licensed rep.  I can say that we believe that we will outperform our industry.  In terms of what can increase the value to shareholders would be if we are involved with some of the developments and if we hit a rather large reservoir of either gas or oil.  That in itself, some of the assets that we have on the books today, because of our accounting treatment recorded at a cost value, if, as, and when we drill that and hit a tremendous reservoir of gas or oil it will cause a tremendous upswing in company value which certainly will affect the stock.  The other thing is if you look at our history we have grown by acquisitions and we have been fairly active in that area.  If something like that comes as a credo for investors we would certainly pursue that. 

[OTCJOURNAL]  Well, one of the things that we liked at the OTC Journal about your company is that we felt we needed to represent a smaller energy company but we liked the way that you were vertically integrated with having the oil and gas exploration with ongoing revenue streams but also having the construction division for the construction projects.  So you have a good core business and a lot of upside.  Are there any small companies like yours with this unique model? 

[Jim]  I think small companies focus on one thing, get good at it, then turn into a bigger company and integrate after that.  We take this two tiered approach so that we protect our shareholders, protect our company, and grow the company at the same time. 

[OTCJOURNAL] Jim, thanks for spending the time with us today.  I’m sure that shareholders and investors alike are happy to hear from management.  Ladies and Gentleman, we will be back one week from today with another interview from our series.  We will be interviewing the President and CEO of MedGrup.  Thank you for your time.