USDA Biofuel Engines February 14, 2010

1. Retrofitting the Legacy Fleet USDA Biofuel Engines February 14, 2010

2. Alternate Fuel Dilemma “How do you create an Alternate Fuel supply chain that can economically compete with petroleum products?” None of the Existing Options Achieved all of these Components: Key Attributes for a Successful Transition: • Collaborative effort along the entire supply chain • Fuel and vehicles need to be commercially available at a reasonable cost • There needs to be a retrofit solution for the existing supply chain • Vehicles that have multi-fuel capability provide significant advantages • CNG – high cost, poor availability, complex installation • LPG – high cost, poor availability, complex installation • FFV – no retrofit option • Hybrids – no retrofit option and high cost • Electric – not available today and very high cost forecast Must address these critical elements: Market needed a legal flex fuel retrofit option • Sufficient scale along the entire supply chain • Achieve reasonable economics during the transition

3. Flex Fuel US was founded to address this gap and to create a bridge for the FFV/E85 strategy Flex Fuel US LLC Key Milestones Founders/Partners • Founded in 2006 and first sale of shares • Utility Patent 7,349,790 awarded in 2008 • First EPA certification awarded in 2008 • Second round of funding in 2009 • Featured in Business Week as one of “America’s Most Promising Start-ups” • Four additional EPA certifications in 2010 • 100th vehicle converted in 2010 • 1 million total miles driven with conversion and on E85 • Awarded GSA approved supplier • Converted Dodge Charger Hemi with over 80,000 miles in E85 operation Automotive background • Fuel injection & racing • Aftermarket & gray market conversions • Custom car builders • Emissions testing Fuel production and distribution • Petroleum refining and marketing Government and collaboration • Business consulting

4. Our goal was to create a “street legal” and low cost flex fuel conversion technology but there were some significant challenges Challenges to Address Implications: Any modifications to the vehicle requires that a certificate of compliance from the EPA be obtained for a vehicle family including: • Meeting new vehicle tail pipe emissions requires passing a series of emission tests as prescribed by the EPA. • Demonstrate that you have not interfered with any of the vehicle’s control systems and not altered or modified the OBD-II system. • Prove that the technology and use of E85 doesn’t impact the durability of the vehicle which requires certifying the system to operate over a vehicle’s normal life cycle of ten years or 120K miles. The conversion would have to provide a way to address these requirements for a range of fuel characteristics without altering the original manufactures equipment. Federal/State Rules: Clean Air Act requires all vehicles to have fully functional OBD, tailpipe and evaporative emission systems that have not been altered or modified from their original calibration. Different fuel characteristics: E85 fuel has less BTU content and introduces a significantly higher level of oxygen into the engine than gasoline.

5. A supplemental fuel system was the only approach that would address the challenges and deliver our goal Design Approach Supplemental Fuel System Design Considerations The conversion system would have to be able to increase fuel delivery without using the OEM injectors and therefore the only way to accomplish this would be: • throttle-body style supplemental fuel injection system totally independent of the factory fuel management system • An independent fuel management system that monitors engine functions and prescribes a precise amount of fuel for the new injector to deliver • Adding fuel delivery over and above the factory settings would be required in certain circumstances • The fuel characteristics could vary from 0% to 85% ethanol • No modifications to the OEM injector pulse signal • No interference with or manipulation of OEM ECU or other instrument signals

6. Engine speed, throttle value positions and O2 sensor signals are borrowed from OEM equipment Ethanol content and air temperature is provided from sensors we add to the vehicle The processor is a race proven proprietary hi-speed controller processing information at speeds up to fifty times faster than the factory control module. Algorithm based strategy with configurable Load & RPM axes to enable optimization in desired operating range True Speed-Density algorithm allows for easier tuning Integrated dashboard logic provides real-time critical system and engine functions All electrical connections run through a common harness equipped with OE style metra-pack connectors. The harness is a universal application and can be adapted to fit most any application. The independent fuel management system provides sufficient control capability to enable these vehicles to pass stringent EPA testing Fuel Management System Engine speed Throttle position Flex Fuel US Processor Injector Pulse Ethanol content O2 sensors Air temperature

7. The independent fuel management system provides sufficient control capability to enable these vehicle to pass stringent EPA testing Fuel Management System • Base fuel map built on Alpha-N speed throttle angle/engine speed algorithm • Alcohol table that receives a signal from the alcohol sensor and increases or decreases the fuel map by a % based on the alcohol content of the fuel. • Throttle position transient fuel tables • dTPS table provides an additional asynchronous pulse to increase fuel delivery acceleration • Acceleration Enrichment position correction, reduces or increase the asynchronous pulse based on throttle speed Cold start and cold idle strategy • Ambient air temperature sensor • Cold cranking fuel table adds additional fuel during the crank cycle below 400 rpm based on ambient air temperature • Run time correction provides additional fuelling during cold idle based on running time and ambient air temperature Engine speed Injector Pulse Throttle position Run time correction table Ethanol content Cold cranking fuel table Flex Fuel US Processor Acceleration enrichment table O2 sensors dTPS table Throttle position transient fuel table Air temperature Fuel ethanol content table Base fuel map The processor contains multiple mapping strategies specifically tailored for each engine family. The maps provide an integrated logic circuit to control supplemental fuel delivery throughout the vehicle operating range.

8. Supplemental fuel is added after the throttle body Supplemental Injection System • Throttle body style fuel injection utilizes high performance Bosch 65lb. Injector: • Universal style can be adapted to most engine configurations • Injector modified and custom machined to our specification • Low impedance quick response peak & hold design • Improved drivability at idle and low speed operation Industry standard ethanol sensor: Factory fuel rail Factory fuel line Intake manifold Air intake Fuel lines are equipped with OE style quick-disconnect fittings Throttle Body Valve • Precision machined injector plate application specific. • Injector plate machined to produce optimal air/fuel atomization. • Throttle bore matched for maximum air flow Legend Factory equipment Provided by Flex Fuel US

9. Proven Track Record of Performance The technology has been robustly tested across a wide range of conditions and with key stakeholders Quality Assurance Testing On Road Fleet Testing Independent Testing • EPA NVFEL Lab, Ann Arbor, MI • Roush Labs, Livonia, MI. • Oak Ridge National Labs, TN. • Mercedes Labs, Ann Arbor, MI. Test Vehicles • 2006 Charger with 80k miles of testing • 2006 Grand Marquis with 50k miles • 2006 F-150 with 10k miles Engineering Reviews • Reviewed to ensure the system meets or exceeds engineering safety standards for fuel handling, component durability, and ethanol compatibility Demonstration Pilots • City of Chicago • State of Iowa, Iowa National Guard

10. Tailpipe Performance Our test results have proven to improve tailpipe emissions for used vehicles using E85 fuel This table shows the FTP test results for a 2007 Chrysler 300 that had been driven 21,000 miles when it was tested at Roush Labs. The data is from official certification testing without DF corrections.

11. Durability Testing We completed a comprehensive review of the vehicle materials to ensure they were compatible or did not significant reduce components life • Approach • Engineering Reviews: Utilized retired Detroit fuel systems supervising engineer to review vehicles to be converted • Destructive testing of components: Key components were dismantled and tested for compatibility with ethanol • Parts comparison: We compared the parts in a FFV with a non-FFV to understand the difference • Literature search: We reviewed the significant body of research to identify problem areas • Field testing: Purchased non-FFV vehicles, converted them and placed into daily service • Key Findings • Most parts in the fuel and evaporative system in the vehicles we reviewed are compatible with high concentrations of ethanol • Parts that were not specifically designed for E85 service performed well and achieved end of life requirements for the new service

12. ODB II & Evaporative Testing The design approach does not alter or modify the vehicles original factory power train control system in any way, and the factory control system operates as originally intended • The On Board Diagnostic System (OBD-II)regularly performs circuit integrity loops to insure that the engine and emission systems are functioning properly . • EPA requires that the OBD system be fully functional at all times and that a conversion system not alter or modify the original system. • In order to prove to EPA that the OBD system is fully operational we were required to run a battery of destructive tests on the OBD system to demonstrate that an MIL would illuminate within an FTP test cycle when using failed components and/or simulators for the following: • Catalyst Monitor • O2 sensor • Rich / Lean misfire • Fuel system • EGR • The evaporative emissions system is also tested as part of the testing process by loading the charcoal canister with butane to its maximum capacity, and than running an FTP to record how much butane the system purges over the FTP cycle. • The canister is required to purge a minimum amount of butane based on the requirements of a two-day diurnal shed test • The evaporative system must not setoff an MIL during canister purging.

13. Converted Vehicle Performance Our technology coupled with the characteristics of E85 provides improved performance for the converted vehicles versus gasoline operation When a converted vehicle is operating with E85 fuel, several performance improvements have been noted in literature and in our testing: • Increased horsepower and torque by 8 to 12% because: • E85 has 105 octane and late model electronic spark controlled vehicles can take advantage of improved spark timing • The placement of the supplemental fuel increases volumetric efficiency and lowers pumping losses by cooling the air intake • Cleaner Combustion zone with less carbon build-up and improved oil life because: • Low carbon content • Lower combustion temperature

14. Converted Vehicle Performance While the use of E85 reduces fuel economy, our experience has been better than the theoretical BTU decline Although the technology wasn’t developed with a goal to minimize fuel economy loss, our experience has been much better than the theoretical BTU difference with losses of just 10 to 20%. We believe the improvement is due to the following: • E85 has 105 octane and most vehicles can take advantage by advancing the timing • The placement of the supplemental fuel also lowers pumping losses by cooling the air intake • Data that supports this claim Fuel Economy Comparison using Federal EPA Fuel Economy Testing Standard FTP 75 City of Chicago Police Car Conversion Results • 25 Police vehicles were converted • Vehicles average idle times of approximately 40% • Fuel loss on identical vehicles, gasoline to E85 have averaged 18%

15. Moving Forward The technology is viable now and adds a critical strategic component to the ethanol alternate fuel strategy The technology is building credibility in the marketplace and more projects are in the works There’s a high quality, street legal, commercially available FFV option in the market today • Project approved with State of Illinois • Scale up of a program with National Guard • Proven track record of performance • It’s low cost and easy to install • Simple to operate • Maintains the factory warranty • Product has a two year warranty

16. Working in Collaboration The successful Alternate Fuel strategy will require collaboration across the entire supply chain and a strategy that achieves good economic returns Experience to date suggests several principles that should be adopted in the plans moving forward: • Think big, create a National Program. Collaboration is needed across the entire Supply chain. Government (DOE, EPA, USDA, Commerce), Automotive Manufacturers and Dealers, Fuel Suppliers, Distributors, Retailers, Fleet managers and Automotive Technology colleges • Make Retrofit solutions part of the plan. The existing legacy fleet is the largest opportunity to generate demand. With over 100 million vehicles capable of conversion, this opportunity is the fastest way to achieve scale in the near term. • Re-align and enhance policies already in place. Fundamentally, policies, incentives, and grants need to focus on creating acceptable economic returns. At the Federal level, this would imply some policy changes and several options are listed below to achieve this vision: • Create competition in the Market. The fuel (E85 or higher blends of ethanol) needs to be priced competitively and consistently to build confidence in the marketplace • Think National, start local – “you can’t eat an elephant in one bite”.