American Flywheel Acquires 58 Percent of Trinity Flywheel Power, Announces Flywheel Ride-Through and UPS Systems to Address Utility Grid Problems.

Business Editors & Energy Writers

SEATTLE & LIVERMORE, Calif.--(BUSINESS WIRE)--Aug. 9, 2000

Shipments to Beta Users to Continue Through December;

Company Booking Orders for Volume Shipments in 2001 That Provide Bridge-Power Solutions for Utility Grid Interruptions, Sags and Spikes

Seattle-based American Flywheel Systems Inc. (AFS) today announced that it has acquired 58 percent of Livermore-based Trinity Flywheel Power for an undisclosed price and has introduced new capital and management into the company.

The company also reported that Trinity is now taking orders for up to 225 kVA (191 kW) super-fast recharge uninterruptible power systems (UPS) and ride-through systems, with deliveries commencing in 2001.

The company believes these are the first flywheel systems that not only handle initial power anomalies but also protect the digital economy's critical network systems from rapid successions of minor and major sags and spikes.

Trinity said that this capability is a result of its bore-loaded, composite flywheel rotor and ironless motor generator, which, unlike heavier and slower flywheel systems, can discharge and recharge completely in 10 to 20 seconds.

"By infusing both capital and technology into Trinity's compact and reliable flywheel ride-through and UPS systems, we intend to leapfrog chemical battery and other flywheel UPS and flywheel ride-through solutions," according to AFS and Trinity Chairman and Chief Executive Officer Edward W. Furia.

"We are also well positioned to address a wide range of future mission-critical power-bridging requirements of the expanding digital economy."

AFS and Trinity President and Chief Operating Officer Joel Levinthal explained: "Our strategy is to occupy the middle ground between sub-low-speed steel flywheels -- now around 8,000 rpm -- and experimental super-high-speed carbon fiber flywheels -- targeted for 90,000- to 100,000-rpm operation. We operate our composite flywheel at 40,000 rpm, which means we don't have to push the envelope.

"Our rotor has also undergone extensive independent safety tests conducted by Test Devices Inc. for the U.S. government that show it operates within a generous and reliable safety margin.

"The bottom line is, we believe these systems deliver better performance than any chemical batteries or noncomposite flywheel systems we know of. As a result, in many applications, we believe we are in an excellent position to deliver the fastest, lightest, most useful and cost-effective UPS and power-bridging solutions."

Furia and Levinthal said the company is taking orders now for volume shipments of high-power ride-through systems to be shipped in 2001 with the following power technology competitive advantages:

-- Recovery times that are up to 100 times faster than any other

flywheel UPS or flywheel ride-through devices we know of --

recovery times that therefore provide protection from clusters

of lightning strikes and other multiple minor as well as major

sag and spike episodes.

-- Systems that, because they are small, light and cool-running,

do not need to be placed in their own battery rooms or

equipment sheds but virtually anywhere -- inside, immediately

adjacent to servers or PDUs, or outside in 0- to 120-degree F.

environments.

-- The only commercial flywheel UPS or ride-through systems that

double as power flow management units. With recharge times

measured in seconds instead of minutes, they can absorb surges

as well as smooth power flow in semiconductor manufacturing,

tasks beyond the capability of any chemical battery and any

other flywheel UPS system of which AFS and Trinity are aware.

The company said its products target the backup power problems of a wide range of customers, such as digital equipment operators, hospitals, Internet service providers, semiconductor makers, airport control towers, commercial buildings and others who need clean, reliable, uninterruptible power.

American Flywheel Systems was formed in 1990 to commercialize flywheel energy storage for the wide range of power and energy applications.

In 1992, AFS announced that it had been awarded the first U.S. and international patents for a flywheel battery. In 1994, at the Los Angeles Auto Show, AFS showed the first working flywheel battery in a low-speed, low-power demonstration unit as well as a flywheel concept car that received extensive national and international coverage.

The flywheel systems related to these introductions were the subject of a five-year legal contest with a major aerospace subcontractor that resulted in a verdict in AFS' favor and a cash settlement in 1999. AFS also retained its patents and obtained additional perpetual, royalty-free licenses to additional intellectual property.

AFS has developed highly advanced flywheel battery system technology and very high-speed rotor and magnetic bearing technologies with Oak Ridge National Laboratories, the University of Virginia Magnetic Bearings Center, Georgia Tech and NASA.

This work has resulted in AFS patent filings for breakthrough gain-scheduled controllers for magnetic bearings that the company views as the "pacing" technology for very high-speed flywheel batteries for spacecraft, vehicular and other portable applications.

Additional U.S. and international filings have been made by AFS for a portable, light and very high-speed flywheel battery system for vehicular and space applications.

AFS received the prestigious national Tibbetts Award in 1999 for its revolutionary magnetic bearings controls work, one of only 37 companies of 5,000 that were eligible to receive the award from NASA and SBA for excellence in technology development.

Trinity Flywheel Power is a majority-owned subsidiary of American Flywheel Systems that was created in 1993 to commercialize flywheel architecture conceived by Dr. Richard Post, a Lawrence Livermore National Laboratories physicist, who visualized the concept of a flywheel battery in a seminal article in the Scientific American in 1973.

That concept was the genesis of the flywheel ride-through system that was developed by the Trinity engineering team headed by Donald Bender, former assistant to Post. Starting with Post's concept, Bender and his team at Trinity successfully integrated an advanced bore-loaded flywheel rotor into a practical and cost-effective flywheel UPS system.

Trinity's R&D was driven by private capital as well as awards of numerous federal and state government contracts. Prior to settling on the current configuration, Trinity shipped prototype and beta test units to diverse U.S. civilian and military customers as well as select Asian customers.

"Had we been able to find a strategic partner like AFS earlier, we could have begun shipping commercial products this summer," said John Eastwood, co-founder of Trinity and president of the Trinity Engineering Center in Livermore. "We are now virtually debt-free, and the infusion of AFS' cash, management and engineering capabilities into Trinity has had a major impact."

Bender said: "What we have built is a system that combines a lighter, smaller bore-loaded flywheel rotor with a practical and cost-effective 20kg ironless motor-generator, meaning that everything else in the system can be lighter and smaller -- the cabinet, the framework, the floor loading, etc., are all more compact, less expensive, easier to site and easier to install.

"We believe the additional ability of our systems to smooth power flows in semiconductor manufacturing is also unique, an additional capability made possible by the very fast 10- to 20-second charge and recharge times we can achieve."

Furia said: "AFS and Trinity expect to participate in the power technology sector along with companies like Active Power in flywheels, Capstone in microturbines, and H Power in fuel cells.

"These leaders today are extremely important to the development and growth of this marketplace; however, no technology and no one approach will be the solution for every niche in what is shaping up to be an enormous set of utility-grid problems that have been created by power quality anomalies and interruptions; these problems will need to be addressed by several participants.

"For many applications, we are confident that AFS and Trinity flywheel solutions represent very strong, competitive advantages now. At the same time, AFS' broad umbrella of intellectual property and trade secrets position AFS and Trinity for increasing importance going forward to address the whole range of power quality, peak shaving and renewable energy opportunities presented by the burgeoning demand for clean, high-quality, uninterruptible electrical power," Furia said.

American Flywheel Systems and Trinity Flywheel are both private companies. The four directors of AFS are four of the seven directors of Trinity. The two companies began formal merger discussions in July.

Skadden, Arps, Slate, Meagher and Flom LLP assisted AFS in its acquisition efforts, which resulted in AFS' recent purchase of a majority of Trinity.

Some statements in this news release are forward-looking. These statements may be identified by the use of words such as "will," "expects," "believes," "targets," "intends" and words of similar import. Actual results may vary depending on circumstances both within and outside the control of the company, including market acceptance of products, technology development cycles and other risk factors. Neither AFS nor Trinity takes responsibility for updating any forward- looking statements made in this release.

Note: Additional background is available at www.trinityflywheel.com.