AFS announces fivefold growth in sales of engine management systems in Q1 -
2010

CALGARY, May 5 /CNW/ - Alternative Fuel Systems (2004) Inc. ("AFS" or the "Company") (TSX Venture: AFX) announced today its operating results for the three month period ended March 31, 2010. Total revenue from product sales, engineering and interest was $540,751 compared to $665,993 in the quarter ended March 31, 2009. Loss for the period was $67,428 compared to a loss of $107,315 reported in the same period of 2009.

AFS President and CEO Jim Perry stated "We are starting to see the results of our concentrated efforts to grow sales of engine management systems. Sales of that product line in the first quarter of 2010 were up by more than five times compared to the same period of 2009. In addition, sales of fuel injectors almost tripled in the first quarter of 2010 compared to those recorded in the same period of last year. One of the major changes to our balance sheet in this quarter was a significant growth in inventory of both engine management system and injector parts. Total inventory grew from under $700,000 to about $1 million, an increase of approximately 48%. We have undertaken this buildup in inventory as a result of anticipated sales later this year, as well as long lead times that we are seeing for both electronic components and fuel injector parts".

Mr. Perry added that "The loss we recorded in the first quarter of 2010 was smaller than that recorded in the first quarter of 2009 despite revenue being lower by about $125,000. The difference this year was the increased sales of engine management systems, which generally result in higher margins. In the first quarter of 2009, when pressure regulator sales dropped as a result of the previously announced cessation of production of the European vehicle that used AFS products, we decreased production staff by 7 people. This year, we have increased our staff by converting a part-time production position into full time. Although that is a small first step, it is needed to address the increased business we anticipate for the remainder of 2010".

Forward-looking statements

Certain statements in this News Release including but not limited to (i) statements that may contain words such as "anticipate", "could", "expect", "seek", "may", "might", "intend", "will", "believe", "should", "project", "forecast", "plan" and similar expressions, including the negatives thereof, (ii) statements that are based on current expectations and estimates about the markets in which the Company operates and (iii) statements of belief, intentions and expectations about developments, results and events that will or may occur in the future, constitute "forward-looking statements" and are based on certain assumptions and analysis made by the Company. Forward-looking statements in this News Release specifically include, but are not limited to, statements with respect to future business opportunities, nature and timing thereof; business strategy; expansion and growth of the Company's business and operations and other such matters as the case may be. Such forward-looking statements are subject to important risks, uncertainties and assumptions which are difficult to predict and that may affect the Company's operations, including, but not limited to: the impact of general economic conditions; industry conditions; customer base changes; financial market conditions; government and regulatory developments; oil and natural gas product supply, demand and pricing; foreign exchange rates; competition; market conditions in the countries where the Company operates; and the Company's ability to attract and retain qualified personnel. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do transpire or occur, what benefits or disadvantage the Company may derive there from. Except as required by applicable securities laws, the Company undertakes no intention or obligation to update or revise any forward-looking statements.

All forward-looking statements contained in this document are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current financial statements and other documents that the Company files from time to time with securities regulatory authorities. Copies of these documents are available without charge from the Company or electronically on the Internet on the Company's SEDAR profile at www.sedar.com.

%SEDAR: 00020995E

SOURCE ALTERNATIVE FUEL SYSTEMS (2004) INC.

For further information: For further information: Jim Perry, President and CEO, Phone: (403) 516-6632, E-mail jperry@afsglobal.com, Visit our website at: www.afsglobal.com

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ALTERNATIVE FUEL SYSTEMS (2004) INC.

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