MicroFuze owns, through 85 percent owned subsidiary MicroFuze Americas, Inc. (MFA), a license to exploit a patented process referred to as Microwave Diffusion Treatment (“MDT”).

MicroFuze owns 100% of Western Utilities Corporation (WUC), a South African company established to execute and manage the Water Service Provider function of the Western Basin Environmental Corporation (WBEC), a section 21 company.

The U.S. technology is based on microwave-driven diffusion of donor metals into target components.  The MFA technology base comprises two MDTs for processing alloys: microwave pack cementation, which is ready for commercialization; and cool plasma processing, which is in the early stages of development.

Microwave pack cementation involves diffusing chrome , boron or other metals into mild steel, stainless steel, cast iron, exotic alloys and high-carbon steels.  MicroFuze has expanded the pack cementation to include the following innovative technologies.

• The ability to carry out diffusion treatments outside the pack itself, as well as in air, creating a capability for over-the-pack processing and perhaps making it possible to carry out processing in remote locations.

• A method for imparting a non-stick surface on metals.

The cool plasma technology, which is in the early stages of development and as yet has not been tested commercially, if successful, could be used for diffusing low temperature alloys containing such elements as magnesium and aluminum, and creating metal and gas diffusion layers, primarily inside small internal diameters.

MFA has established itself as a commercially-focused microwave technology company specializing in the surface treatment of metals and other minerals.  Specifically, MFA intends to offer a range of surface engineering solutions to, inter alia, the power generation, automobile and general manufacturing industries.  The Directors of MicroFuze believe that parts, components and accessories used in these industries and which require hardening, lubricity, wear resistance and corrosion protection are particularly likely to benefit from the application of the MFA’s diffusion processes.

MicroFuze has recently (July ’07) acquired WUC, established to develop and commercialize a process technology which will facilitate the treatment of Acid Mine Drainage water (AMD), which is an industrial by-product of the mining process, and to sell the treated water to industrial customers.  MFZ (through WUC) intends to construct a Pilot Plant close to the AMD decant point in the West Rand region of South Africa.  The impetus for this initiative comes from the existence of large underground voids generated by mining over 120 years, now filled with AMD and potentially damaging to the environment if left untreated.  Government legislation has forced the mining companies to take the necessary steps to eliminate the environmental risks.

Consequently, a Section 21 company namely, the West Basin Environmental Corporation (not-for-profit), has been formed of which those companies liable for the water are the founders.  WBEC will establish itself as a registered water service provider, with capacity to sell treated AMD.  WBEC has contracted WUC, which has access to coveted treatment technology, to provide the processing and delivery of the water from a resource with a life estimated to be in excess of 30 years.

WUC has identified two (2) potential technologies to treat the AMD and is currently negotiating arrangements for the mining companies to buy back the treated water.  A pilot plant will be established in late 2007, with results expected by early 2008.  Those results will lead to a Bankable Feasibility Study, licensing of the preferred technology, and subsequent construction and commissioning of a commercial-scale water treatment facility.

ATC, based in Chattanooga, Tennessee, is an established player in surface treatment technologies which include conventional diffusion, thermal coating, solution annealing and specialist heat treatment.  ATC has immediate access to substantial clients currently using materials diffused in a conventional oven, and who are looking for improvement in their surface metals treatment.  Harley Grant, CEO of ATC, is a co-inventor of the MDT technology.

MicroFuze and ATC will form MicroFuze Energy, LLC, which will be the vehicle to license the technology for the energy sector; initially, boron-diffused turbine blades.  MicroFuze will own 90% of the company and ATC 10%.  ATC will dedicate the time and expertise of its principals in lieu of cash as its contribution to the joint-venture vehicle.  The company is considering putting in place similar joint-venture structures in the future to exploit high valued applications in other industries such as medical, aeronautics, electronics, automotive and defense.

ATC has been assisting with the development of MDT for the past six (6) years on a consulting basis and will now adopt a more active and visible role.

MicroFuze, through WUC, intends to assist with the establishment of the Western Basin Environmental Corporation as a registered water service provider.  This will enable the commercial transaction necessary to contract for supply of treated water.  MicroFuze will also establish and operate a process pilot plant, again through WUC, which is expected to prove the application of an identified treatment technology, confirm cost parameters, yield results and produce a Bankable Feasibility Study within 18 months.  The cost of this program is estimated to be ?1.8 million leading to construction of a 75 million liter-per-day commercial-treatment plant the following year at an estimated capital cost of £14 million.  Additional expansion up to 200 million liters/day is expected as mining operations continue to proliferate and the limited supply of naturally-occurring water is prioritized for domestic uses.  The program benefits from strong and formalized relationships between WUC and the legally-responsible mining companies, which, coincidentally, have a demonstrated need for more water.

In addition, MicroFuze continues to seek to launch new applications of emerging technologies for rapid commercialization, with particular emphasis on energy efficiency, resource conservation and minimum social impact.