Turbo Pwr Systems 3rd Quarter Results -2-

* Delivery of the Electrical Machine and Drive for the European Research organization.

* Cash outflow has stabilized during the later part of the quarter. * Discussion have commenced with several of our customers for follow-on orders.

High Speed Electrical Machines

The optimal size range for electrical machines based on the Company's permanent magnet technology is between 15kW and 2MW.

Markets

The key markets for the Motor derivatives are: * HVAC and Refrigeration * Air and Gas Compression * Turbo-Machinery * Aerospace - Actuators, Pumps, Fans * Ship Propulsion * Rail Traction Motors

The key markets for Generator derivatives are: * Distributed Generation (Gas Turbines) * Micro-Generation * Vehicle based auxiliary power generation * Flywheel systems

Customers and Contracts

* 1MW high-speed generator for a US Defence Contractor

The Design has been reviewed with the customer and material procurement has commenced. The unit is anticipated to complete in Q4 with follow-on orders being discussed for delivery in 2009.

* Industrial motor and drive agreement

Delivery of the 75 units commenced in the quarter.

Discussions have commenced regarding follow-on orders for delivery in 2009 and beyond. The framework agreement anticipates sales of 500 systems over the first two years of production, and incorporates a manufacturing agreement with an initial term of 5 years.

* US Process Gas Customer

This order for a high speed electrical machine and variable frequency drive is for a development project from a North American Industrial and Process Gas Company. The system has been successfully delivered. The products utilize our own permanent magnet and inverter technologies giving a high performance and high efficiency solution.

Once the customer has completed its systems development phase it is anticipated that further systems will be purchased during the course of 2009.

* European Programme

This order from a European Research Organization, acting on behalf of a major international manufacturing company, was for a high speed electrical machine and variable frequency drive. The equipment has been delivered and discussions on follow on orders and for this and other size ranges are ongoing.

* SKF

Extended reliability trials on the 35kW -70,000 rpm high speed motor and drive system have now completed satisfactorily. However, there has been a delay in the customer's programme and discussions are currently underway with SKF regarding the timing and quantity of the likely production volumes.

* ALC

Further units have been delivered in the period in preparation for shipment to North America for full systems level operational evaluation by ALC's customer. This is expected to be completed in early 2009.

High Performance Power Electronics

TPS designs and manufactures rugged power electronics products for rail, industrial and transport applications, all of which require high reliability and availability in operation.

Markets

The key markets for the electronics products are: * Auxiliary Power Conversion for Rail and Light Transit * Variable Frequency Drives to complement HSEMs * Motor Drives for aerospace application * Industrial Pulsed Power Supplies * Grid Connected Inverters

Customers and Contracts

* Bombardier Transportation-Canada ("BT")

* BT- Chicago Transit Authority

The initial engineering units have now been built and delivered to our customer. Modifications to address previously identified technical issues are being incorporated into production units which are anticipated to be fully qualified by the end of 2008 and delivered in Q1 2009.

The Chicago (and Toronto) designs incorporate a new generation of hardware and software microprocessor control system which the Company is investing in as a common modular platform for all future rail products.

The base CTA contract is valued at some $14US million including production, spares and engineering services, which with possible options for additional cars, could increase the value to in excess of $20US million.

* BT- Toronto

The first 11 units have been delivered and work is underway on the next delivery scheduled for Q1 2009.

The contract for the initial quantity of 234 cars is expected to exceed $8 million, with the potential for further option quantities to extend that to some $14US million.

Other Rail Products

* PT3000

Regular small orders for the PT3000 At-Seat power supply, currently in operation with many UK operators including Virgin and National Express, continue to be received, however there are a number of UK rolling stock refurbishment programmes currently under review where the potential quantities of PT3000s are considerably larger.

* Catering Converters

The order received at the end of Q2 for catering converters for Bombardier UK's TurboStar fleet of passenger has completed its design phase and manufacturing is anticipated to commence at the end of Q4.

PRC Industrial Lasers

TPS continues to see strong ongoing demand from PRC Lasers who have now standardized on the TPS high voltage power supply for their complete range of industrial lasers. Recently TPS has developed a new "higher power" derivative which is now undergoing testing. Discussions are underway regarding production orders for the next generation of this equipment.

Aerospace

· Boeing 787

o Fuel Pump Control Equipment The fuel pump control equipment developed for Eaton Aerospace is well into it's final qualification testing and several production units have now been delivered.

The schedule for delivery going forward will be matched to the requirements of Eaton/Boeing. TPS is awaiting information from Boeing/Eaton on the effect (if any) of the recent strike at Boeing's assembly plant on these schedules.

o Motor Controllers During the period TPS and Hamilton Sundstrand have agreed to transition the contract to Hamilton Sundstrand for the provision of the rack-mounted motor controllers being provided to control their ram air fan motors that are used as part of the power electronics cooling system.

In transferring the engineering design and know-how to Hamilton Sundstrand, TPS will eliminate the requirement for any further expenditure in both prototype testing and design refinement as the product completes its qualification testing.

FINANCIAL PERFORMANCE Overview of the nine months ended 30 September 2008 Total revenues in the nine months of GBP5.85 million were 28% lower than the equivalent period in 2007 (2007: GBP8.09 million), primarily due to a reduction in production volume on rail programmes. During the first half year our major rail production programmes reached completion, but delays in final qualification on our current rail development programmes has resulted in a low production volume, particularly in the second half of Quarter 2 and throughout Quarter 3. Development costs fell in Quarter 3 as most programmes are now in final customer qualification stages, and our expenditure has reduced accordingly.

Administrative costs have decreased over the nine months as the impact of our cost review programmes takes effect and offsets the increased operating charges related to the new Gateshead facility that became operational during the second quarter of 2007.

The group's loss before interest, tax, depreciation, amortisation and stock compensation for the nine months increased to GBP5.6 million (2007: GBP3.5 million) as a result of high development expenditure and low production output, but has fallen in Quarter 3 to GBP1.5 million from GBP2.2 million in Quarter 2 of 2008.

Operating cash outflows before tax increased to GBP5.9 million (2007: GBP5.0 million) reflecting the increased development expenditure and reduced income, but were significantly reduced in Quarter 3 at GBP1.5 million from GBP2.5 million in Quarter 2.

The Company finished the nine months with an unrestricted cash balance of GBP1.3 million and held further cash of GBP1.3 million associated with performance bonds.

On 19 June 2008 the Company completed a GBP3,000,000 gross financing agreement with institutional investors. The financing comprised secured Convertible Notes and Warrants. The Convertible Notes bear interest at 15% per annum and are convertible into an aggregate of 75,000,000 of either Common Shares in Turbo Power Systems Inc. or A-Ordinary shares in Turbo Power Systems Limited at an exercise price of GBP0.04 per share. The Convertible Notes are issuable upon drawdown of the loan, of which GBP1,500,000 were issued on 19 June 2008. The loan is repayable over three years by way of regular quarterly repayments, commencing March 2009. The Warrants have a term of ten years and are convertible into an aggregate of 12,857,142 of either Common Shares in Turbo Power Systems Inc. or A-Ordinary shares in Turbo Power Systems Limited at an exercise price of GBP0.035 per share. On 15 August 2008 the Company amended the terms of the loan agreement in order to facilitate a further drawdown of GBP1.5 million. The new terms provide that if at any time, including once the Loan Note has been fully repaid, there is a change in control of TPS, or its subsidiaries or substantially all of its assets, the Loan Note Holders will be entitled to receive a risk premium, calculated according to the enterprise value ascribed to the Company under the transaction before deducting any balance of the Loan Notes and/or interest outstanding. This risk premium will be equal to an initial payment of GBP1.5m plus 75% of the next GBP6m of enterprise value and 50% of the remainder.

Other than the debt financing detailed above, the Company has had no transactions with related parties and there are no further proposed transactions to disclose.