1 Rapid Carburizing and Atmosphere Recovery Atmosphere Recovery, Inc nd Avenue North, Suite 110 Plymouth, MN Ph: (763) Fax: (763) Web:

2 Company History  Founded Dana & USDOE R&D  Heat Treating Furnace Processes  Grant & Contract Funding  Process Gas Recycling System Development  Laser Gas Analyzer & Process Gas Controller Developments  Initial Sales: $300K

3 Industrial Heat Treating of Metals  Typical Parts  Gears  Springs  Bearings  Tubes  Fasteners  Tool  Typical Processes  Hardening  Softening  Brazing  Sintering  Cleaning  Coatings  Typical Waste  Process Gas: 50-95%  Energy: 20-40%

4 Industrial Furnace Atmospheres – Similar Constituents  Carburizing, Carbonitriding, FNC & Nitriding  N 2, CO, H 2, CO 2, H 2 O, CH 4, O 2, NH 3, CH 3 OH  Atmosphere Tempering and Annealing  N 2, H 2, CO, CO 2, H 2 O, CH 4, O 2, NH 3, Ar  Steel, Copper and Aluminum Brazing  N 2, H 2, CO, CO 2, H 2 O, CH 4, O 2, NH 3, Ar  Powdered Metal Sintering and Annealing  H 2, N 2, CO, CO 2, H 2 O, CH 4, O 2, NH 3, H 2 S

5 Typical Atmosphere Control - Measures Only One Gas Species  Types  Zirconia Oxygen Probe – Measures Oxygen  Dew Point Meters – Measures Water Vapor  Electrochemical Cells – Low Range Single Gases  Benefits  Proven Technology  Lower Capital Cost  Low Complexity  Disadvantages  Other Gas Constituents Assumed (Guessed)  Assumptions Often Wrong  Limits Process Control & Improvement Options  Requires High Process Atmosphere Flows

6 Improved Atmosphere Control – Single Gas Plus Infra-Red  Economically Measures Three More Gases  Carbon Monoxide  Carbon Dioxide  Methane  Benefits  Proven Technology and Vendors  Can be Used to Reduce Atmosphere Use  Disadvantages  Cannot Measure Hydrogen, Nitrogen and Inerts  Expensive to Measure Other Significant Gases  Limited Measurement Range  Requires Frequent Calibration  Limits High Efficiency Atmosphere Gas Mixtures  Can’t Significantly Reduce Atmosphere Use

7 Other Gas Analysis Technologies – Not Very Applicable to Atmospheres  Gas Chromatography (GC)  High Capital Cost ($15,000 - $60,000)  Slow (2 Minutes+)  Complex – Use Requires Training  Carrier Gas and Frequent Calibration  Few Used for Atmosphere Control  Mass Spectroscopy (MS)  Higher Capital Cost ($50,000 - $120,000)  Best Applied on Vacuum Processes  Expensive to Maintain  Many Gases Cannot be Determined (Equal Mass)

8 Ultimate Atmosphere Control Goal – Practical Complete Gas Analyzer  Measure All Gases  Except Inert Gases (Can be Inferred)  Low Levels of Oxygen (Work with Existing Controls)  Monitoring of Any Industrial Atmosphere  Fast Analyzer Response  Compact and Operator Friendly  Rugged, Reliable, Easy to Service  Minimal Calibration  Cost-Effective  Allows Advanced Atmosphere Control

9 ARI Products Measure, Control & Recycle Furnace Process Gases ARI Laser Gas Analyzer (System 1) ARI Process Gas Controller (System 2) ARI Process Gas Recycle System (System 3) Industrial Process Gas Furnace Natural Gas and Other Process Fuels Process Gases and Vapors

10 Unique & Protected Product Family  System 1 ($30K-60K): Furnace Gas Analyzer  Laser Gas Detector ($20M Spent to Develop)  Sole Instrument Based on Raman Spectroscopy  11 US Patents Awarded  Exclusive ARI License for Non-Medical  Gas Flow and Control Software ($300K Spent)  ARI Proprietary Algorithms  Software Developed and Operating  System 2 ($75K-150K): Process Gas Control  ARI Proprietary Processes ($500K Spent)  Software Mostly Developed  System 3 ($250K-1M): Gas Recovery & Reuse  Initial Focus on Metals ($700K Spent)  Many Future Applications

11 Core of ARI Technologies – Unique Process Gas Detector Mirror Polarizer Prism & Mirror Laser Beam Gas Sample Tube Gas Out 8 Optical Filters/Sensors (1 for Each Gas Measured) Detector Assembly Gas Out Gas to be Analyzed In Plasma Cell

12 Standard Furnace Constituents Monitored and Detection Limits Gas SpeciesLower Limit Hydrogen - H ppm Nitrogen - N 2 50 ppm Oxygen - O 2 50 ppm Water Vapor - H 2 O10-50 ppm Carbon Monoxide - CO50 ppm Carbon Dioxide - CO 2 25 ppm Organics - C x H y ppm Ammonia - NH ppm

13 Gas Measurement Options for ARI Analyzers

14 Analyzer – Industrial Product Model 4EN Furnace Gas Analyzer Inside View Outside View

15 Gas Analyzer – Basic System View Detector Assembly Integrated Computer & Control System Sample Pump, Valves and Pressure Control

16 Example Main Control Screen

17 Continuous Data Recording

18 Benefits of Laser Gas Analysis and Control  Multiple Gas Analysis Capability = System Versatility  Paybacks in Many Ways  Reduce Energy Costs  Increase Production Capacity  Improve Component Quality  Improve Component Consistency  Reduce Destructive Analysis Costs  Reduce Re-Work Costs  Better Process Documentation  Maintenance Early Warnings  Enhanced Furnace Safety

19 Economic Benefits of Laser Gas Analysis  Atmosphere Gas Consumption Reduced Endothermic Example – 90%+ Exothermic Example – 50%+  Extra Gas Generators Turned Off  Shorter Cycle Times Inherent Carburizing Example – Up to 20%  Process Energy Savings Significant Carburizing Example – 25% of Total Furnace Use Exothermic Example – 15% of Total Furnace Use

20 System Paybacks in Less Than 12 Months * Includes Furnaces, Atmosphere Generators, and Ancillary Equipment if Plant New or Near Capacity Benefit Standard Carburizing Rapid Carburizing Exothermic Annealing Productivity Improvement Reduced Processing Times Improved Quality Up to 20%Up to 50% Reduced Energy Consumption25%40%Up to 30% Reduced Process Gas UseUp to 90%Up to 98%Up to 90% Reduced Regulated EmissionsOver 90%Over 98%Over 90% System Price (Typical)$40-100K$70-150K$40-90K Example Customer Gear Manufacturer Axle Manufacturer Non-Ferrous Annealer Cost Benefits Capital Savings (Avoiding Conventional Equipment)* Operation & Maintenance Cost Reduction $150K $100K/year $250K $200K/year $90K $100K/year

21 Product Quality Benefits of Laser Gas Analysis  Surface Carbon (or Nitrogen) Properties  Improved Surface Hardness  Controlled Surface Retained Austenite  Consistent Compressive Residual Stress  Reduced Intergranular Oxidation  Improved Same Batch Consistency  Improved Batch-to-Batch Consistency  Faster Cycle Times

22 Case Depth and Profile of Parts  RC 50 Value Case Depths Always Obtained Faster  Improvement Percentages Depends Primarily on Desired Final Case Depth (Shallower is Faster)  Less Case Depth Variation in Load  Hardness and Carbon Profile Consistent  Profiles Consistent with Higher Surface Carbon Potentials  Surface Hardness Acceptable  Surface Cleanliness not Significant (8620/8625/8630)  Higher Quality Parts

23 Retained Austenite/Carbides in Parts  “ARI Process Better (Lower Levels)”  Levels Can Be Adjusted to Suit Desired Result  Controllable with Wide Atmosphere Fluctuations Baseline ARI Accelerated

24 Grain Boundary Oxidation in Parts  “ARI Process Better (Lower Levels)”  Levels Can Be Adjusted to Suit Desired Result  Controllable with Wide Atmosphere Fluctuations Baseline ARI Accelerated

25 Rapid Carburizing – Metallurgical Findings Summary  Batch Cycle Times Faster (Load to Unload)  Same Process Temperature (Typically 1750 Deg. F.)  Case Depth of.040” – 35% to 50% Faster  Case Depth of.065 – 20-30% Faster  Less Case Depth Variation Though the Load  Controllable Carbon Content/Hardness Profile  Controllable Retained Austenite Levels  Controllable Iron Carbide Levels  Wide Variation in Atmosphere Constituents Tolerated  Soot Control Algorithms Do Not Affect Parts  All Parts Released for Production

26 Improvements May Be Initiated Because of Air Emission Concerns  Previously Recognized Air Emissions  Smoke from Quenching  Burner Combustion Gases  Unrecognized Air Emissions Issues  Carbon Monoxide (CO) from Atmosphere Use  Comes from Atmosphere Generation, Leakage and Flaring

27 ARI Products’ Sustainable Competitive Advantages * Includes Furnaces, Atmosphere Generators, and Ancillary Equipment if Plant New or Near Capacity ARI Approach Features ARI Systems Multi-Gas Detection (Eight) Fast – Response in Seconds All Key Gas Processes Controlled Rugged and Reliable Other ApproachesLimitations Manual Flow Control Inefficient & Quality Control Issues High Energy Use & Emissions Infrared Analyzers Can’t Detect Key Gases Low Range & Frequent Calibration Gas Chromatographs Slow – Response in Minutes Carrier Gas & Frequent Calibration Mass Spectrometers (Future) Can’t Discriminate Key Gases Complex & Expensive

28 ARI’s Heat Treating Market is Huge Current ARI Installations IndustriesNear Term CustomersMarket Size Manufacturers  Automotive  Aerospace  Machinery  Dana, Timken, ZF/Ford  John Deere $650M US $1.5B WW Job Shops  Bodycote, Hi-Tech Metals $300M WW Metal Process  Refining  Powder  Tube/Sheet  Amax Steel  Hoeganaes  Cerro Copper Tube $150M US $500M WW OEM Vendors  Praxair, Air Products, Drever $80M WW Other  IIT Research Institute $20M WW

29 Furnace Installation & Startup Furnace Manufacturer Furnace Design Furnace Supplier Furnace Consultant Gas Supplier Controls/Analyzer Manufacturer Furnace Maintenance Furnace Operation Furnace Update or Replacement Gas Contractor Controls Contractor Furnace Contractor Service Contractors Furnace Marketing & Sales Thermal Processing Value Chain

30 Capturing Customer Value  Profit Margin on Analyzers Sales  Analyzer Services: Leasing & Contract Fees  Analyzer Leasing to Service Contractors and/or Gas Suppliers  Control System Sales as Control Contractor for System 2 Upgrades  Licensing Fees for Control Software Usage  Consulting, Licensing & Service Fees from Recycling Systems (System 3)  Shared Energy/Operational Savings

31 Publications Featuring ARI Technology

32 Why ARI Will Be Successful  Unique, Fully-Developed Product  Exclusive License for Patented Detector  $20M Spent to Develop (by Licensor)  $1.1M Spent on Proprietary Software and New Gas Control Methods (by ARI)  Compelling Customer Benefits  Reduced Costs & Improved Quality  Payback in less than 12 months  Large Existing Customer Opportunity  80,000 Furnaces installed in U.S.  200,000 Furnaces Worldwide