Thermwood Corporation announced today that it has established a business-to-business program covering the sale and resharpening of cutting tools. Initially, the program will focus primarily on CNC router tools in the woodworking industry but the company plans to expand the program to encompass other types of cutting tools in other markets.

The major feature of this program is that, once a tool has been purchased from Thermwood's web site, ToolingOnTheWeb.com, resharpening service on that tool is free. Normally, an industrial router bit can be sharpened and reused three or four times before it must be discarded. The cost of sharpening service on a tool can amount to a third or more of the original tool cost. Thus, management believes that a free resharpening service can substantially lower overall tooling cost for a company. Management believes that even companies that purchase tools in large quantity, at a discount, directly from the tool manufacturer can realize a total cost savings by buying the same tools through this program and taking advantage of the free resharpening service.

Thermwood management believes it can provide the free resharpening service and still make a profit on the overall program because of the nature of the tool sharpening process. Commonly, sharpening service is provided by a local tool dealer or tool shop that uses a tool-grinding machine. Different types of tools have different geometry. The tool-grinding machine must be set up for each different tool geometry. The set up process can require five to ten times as long as it takes to actually sharpen the tool. Thus, the major cost of resharpening a tool is not the actual grinding process but the cost of repeatedly setting up the machine for different tools.

To resharpen tools quickly, and at low cost, Thermwood believes that it is necessary to eliminate the set up process. To do this, Thermwood installed a separate tool-grinding machine for each different tool geometry covered by the program. Thus, any tool returned, can be sharpened at low cost without the need for machine set up. Thermwood has initially installed sixteen tool-grinding machines, providing an initial sharpening capacity of approximately 5,000 to 10,000 tools a day.

Thermwood does not intend to manufacture cutting tools, but instead plans to offer tooling from established vendors. Thermwood currently represents tooling provided by seven different tool manufacturing companies and is actively negotiating with others in an effort to add additional products to the offering. The company believes that the major component of the investment required to initiate the program to a level that can achieve profitability has already been made. It does not anticipate additional material expenses to establish the program. The company has filed for a patent on the business practices associated with this program.

Although there are no established or industry accepted estimates for the size of the woodworking router bit tooling market, management believes that the market it is initially targeting amounts to approximately $200 million annually. If successful, the company hopes to expand the program to include different types of tools, targeting different industries.

The `Free Sharpening" service has been posted on the company's web store and management expects an initial "testing' period, where customers make small trial purchases to test the program before making volume purchases. At this point in the program it is not possible to accurately estimate whether or not it will be successful, and if successful, the rate of growth and ultimate market share it may achieve.

Thermwood Corporation is an automation products company that is bringing advanced technology to the manufacturing process. Its line of sophisticated, computer-controlled machines integrate into today's modern computer network environment. They are intended to produce complete products or components, rather than simply performing a single manufacturing process, as is common with most machine tools. This equipment is supported with a variety of software, services and supplies.

Forward-looking statements in this document are made pursuant to the "Safe Harbor" provision of the Private Securities Litigation Act of 1995. Readers are cautioned that the actual results may differ substantially from such forward-looking statements. Forward-looking statements involve risks and uncertainties, including but not limited to, continued acceptance of the Company's products in the marketplace, competitive factors, new products and technological changes, the Company's dependence on third-party suppliers and other risks detailed from time to time in certain of the Company's filings with the Securities and Exchange Commission.