October 31, 2002

News Release: Third Quarter Results, Poised for Record Revenue Year

Alternative Fuel Systems Inc. ('AFS'or the 'Company') is pleased to announce the financial results for the third quarter ended September 30, 2002 and provide an update on operating activities.

Highlights

- AFS recorded revenues of $1,303,000 during the third quarter,
representing a 105% increase over revenues reported for the same quarter last year. The Company has now posted revenue growth in three consecutive quarters. Revenues for the first nine months of 2002 were $3,462,000, a 53% increase over revenues for the same period in 2001. - Revenues for the first three quarters of 2002 are already in line with the highest annual revenue level ever achieved by the Company. Based on current orders on hand, AFS expects revenue in the fourth quarter to grow over third quarter revenues. Current backlog consists of orders for the Falcon natural gas pressure regulator and Sparrow engine management systems.

- The Company reported negative EBITDA of $458,000 during the third quarter of 2002 which translates into an average net 'burn rate'of $153,000/month. The net burn rate for the first nine months of 2002 averaged $172,000/month which is a 57% improvement over the net burn rate of $397,000/month for the same nine-month period of 2001.

- AFS exited the third quarter with cash and short-term investments of $3.0 million and an additional $1.6 million in non-cash working capital. During September, the Company established a $600,000 operating line of credit which will be used to finance a portion of AFS'near-term growth requirements. As at September 30th, $354,000 of this line had been drawn. The Company continues to focus on growing revenues, controlling operating costs and optimizing use of its capital.

- AFS continued the development of three new products during the last quarter: two new versions of the Sparrow engine management system and the new gaseous fuel injector. These development projects are all currently in the field trial stage with commercialization of these products targeted by year-end 2002.

- During the latest quarter, AFS sales personnel visited existing and potential clients in Europe, the U.S. and India. In early October, AFS exhibited in Washington, D.C. at the World Natural Gas Vehicle Conference and Exhibition, which was focused on 'Clean Transportation for a Livable World.'Plans are being finalized for AFS to visit China In November to exhibit at a clean transportation exhibition in conjunction with visiting several Chinese automotive companies.

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CONTACT: TEL: (403) 516-6625 Richard Rysak, Director, Investor Relations

FAX: (403) 237-7441

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Website: www.afsglobal.com

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