March 2006 Innodyn Testing and Delivery Update

The introduction of Innodyn turbines into the aviation market is proceeding; however progress has been slower than anticipated as we continue to test and refine our turbine. We learn more with each test flight and are working to address individual operational issues as they appear. Recently we concluded from test flights that our computerized flight system needed better integration with the companion manual system and we are now upgrading the software to accomplish that goal. As a new company, we are totally committed to delivery of an engine that will fully satisfy our customers’ needs. This commitment impacts our previously targeted production and delivery schedules. As we progress, we will provide our best estimates for product delivery and more frequent announcements.

Flight Test Results

In January 2006 a production turbine was delivered to a corporate partner, Turbine Cubs of Wyoming, LLC. (www.turbinecubs.com), formerly Smith Aviation. Installation included a new four-bladed design propeller and flight tests began in late January. After the first day of successful flight testing, the combined airframe/propeller/turbine combination flight testing continued on a second day. During the second day's flight, an off-field landing resulted in a propeller strike, but no structural damage to the airframe was sustained. A thorough examination of the turbine confirmed no internal damage to the turbine as a result of the prop strike. The turbine performed as expected, however, we did experience an issue with the manual and automated systems operating together while being managed by the pilot. From this test flight, we confirmed the need for fully integrated flight systems and the importance of specialized pilot training on operating our turbine.

Test Equipment

Innodyn has taken delivery of industry standard test equipment, which will allow us to accurately map our turbine performance. We are in the process of installing a Superflow Dynomometer to compliment our Flowbench and will take delivery of Turbine Balancing Equipment in late March. We are also in the final stages of constructing a new enclosed test cell. The combination of the state-of-the-art equipment with our newly constructed test cell will provide Innodyn with advanced, industry leading testing capabilities. When we have completed our facility and test equipment upgrades, we will fully map the first production turbine before returning it to Turbine Cubs of Wyoming, LLC. We expect this testing to be complete and the turbine returned to Wyoming in early April. The Supercub will be in the air after that with plans for a visit to Oshkosh.

Sun-N-Fun and Oshkosh Air Venture 2006

In light of the revised testing schedule, we have reassessed our plans for product delivery. We anticipate additional deliveries in the next few months and will make announcements more frequently during the final product development phase. Because we are focusing our entire efforts on completing the test facility and program, we will not be exhibiting at Sun-N-Fun 2006. However, we will be at Oshkosh/EAA AirVenture 2006 and expect to have several aircraft there powered by the Innodyn turbine. We understand the eagerness of our customer base to see Innodyn turbine finally move into production. We share that enthusiasm and appreciate your patience as we prepare for market entry.

(posted: 03/17/06)