POWERSKI INTERNATIONAL CORP. IS AWARDED UTILITY PATENTS, ALL CLAIMS ALLOWED, FOR ENGINE TECHNOLOGY
Tuesday August 21, 2001

SAN CLEMENTE--August 21, 2001--PSI has been awarded utility patents for its Jetboard engine technology in the United States (the most difficult country in which to obtain them), South Africa, and Korea with all claims allowed on 2-stroke and 4-stroke internal combustion engines—patents that are almost impossible to get in this day and age. From the European market, a favorable International Preliminary Examination Report by the Commission of Patents and Trademarks dated July 2001 found that PSI engine patent claims “meet the requirements for novelty, inventive step and industrial applicability.” This preliminary report will ultimately lead to utility patents issued for the European Union. Worldwide, the company currently has an additional 22 engine patents pending in 22 countries.

MARKET
The market for the PowerSki™ SuperTorqueXT™ inflatable boats, sailboats, catamarans, canoes and small jet-drive boats. The military market for PSI’s integrated engine and jet-drive package includes pontoon boats and other military vessels.

The PowerSki™ SuperTorqueXT™ is the first of PSI’s proprietary 2- and 4-stroke Marine Engines with jet-drive pump assemblies. PSI enters the market with its proprietary, patented engine technology and a strategic partnership agreement with French-based, $1.2 billion multinational marine and aeronautical products company Zodiac Group. The agreement calls for Zodiac Group, which has made a substantial equity investment in PSI through Zodiac of North America, to equip a complete new line of rigid and semi-rigid tenders aimed at the worldwide market with PSI's proprietary engine. “The horsepower-to-weight ratio of the powerful, compact Jetboard™ engine makes it perfect for Zodiac’s lightweight boat tenders,” said Maurice Pinault, president of Zodiac Group

PSI arrives on the marine engine scene at an opportune time. According to the NMMA, the marine engine market exceeds $4.6 billion in annual sales, but the market is stagnating as manufacturers struggle to adjust to increasingly stringent industry regulations and rising competition. The NMMA reported annual retail unit sales in 2000 of 348,700 outboard motors and 109,300 sterndrive and inboard engines, down from a 1988 high of 460,000 and 211,900, respectively.

The recreational marine industry faces waves of consolidation, beginning with outboard companies, according to Boating Industry International (BII). Bombardier Recreational Products of Canada, which already obtains engines from Mercury Marine, and another PWC builder, U.S.-based Polaris Industries, bought Outboard Marine Corp. (OMC) for its engines and technology. U.S.-based OMC had sought protection from its creditors by filing Chapter 11 bankruptcy at the end of 2000. Competition in technology and markets is increasing, profit margins continue to fall and markets continue to soften, bringing further downward pressure on prices and profits, at a time when outboard companies are spending record sums on research and development. Already, manufacturers are sharing technology and manufacturing. Japan-based Tohatsu Outboard Motors makes engines for another Japanese company, Nissan Marine, and Japan-based Yamaha Motor Corp.'s Marine Power Group makes some motor parts for Mercury Marine, a division of U.S.-company Brunswick Corp. (NYSE: BC). Italian outboard company Selva S.p.a. is also getting some engines from Yamaha, while another Japan-based company, Suzuki Marine, was working with OMC.

PSI engines offer distinctive advantages over traditional marine engines in a market looking to find growth through new and innovative products.

And as a PWC company/marine engine manufacturer, PSI is leading a major market trend confirmed by Bombardier’s acquisition of OMC. According to BII’s John Kettlewell, “PWC companies, like Japan-based Kawasaki, are known to be eyeing the recreational outboard motor market carefully. PWC companies may be very interested in acquiring outboard companies, particularly in light of shrinking PWC sales in recent years. Sales declined more than 15 percent in 2000. The requirement for less-polluting engines, combined with smaller sales volumes, helped jack up PWC prices by close to 8 percent in 2000.”

PSI is creating an engine division within the company in preparation for introducing to the worldwide market its award-winning (Design News Magazine 2000 Engineering Achievement Award / Popular Mechanics Design & Engineering Award Winner), proprietary SuperTorqueXT™ engine.

PSI’s patented compact, proprietary SuperTorqueXT™ engine is the heart of the PowerSki™ Jetboard™. This unique power plant jet pump delivers 350 lbs. of thrust through a proprietary gear-reduction transmission. The gear reduction, built into the bottom end of the engine, is new to the PWC industry. It enables engineers to match the engine's optimum RPM to that of the jet pump to enhance the craft's performance.