VISTA, CA--(Marketwired - Jun 28, 2013) - Eco Building Products, Inc. (
Dear Fellow Shareholders:
With the first half of the year behind us, I wanted to take some time to provide all of the shareholders with some valuable insight; useful in navigating and understanding the Company's recent milestones and relevant accomplishments that have effectively enabled the Company to reach its intended business goals and we are now showing up in the national supply chain with a large Big Box retailer.
CROSSING THE BRIDGE INTO THE MAIN SUPPLY MARKET
Moving forward with the Company's newly focused supply only operation; a lean, reorganized and restructured company has effectively transitioned from its previous business plan. Gone are the days of turn-key, labor driven, red buildings; we are now well positioned to support the supply chain side of the industry by way of coating services and special orders sales. As of the previous issuance of this letter, the Company was still in the process of positioning for entry into the main stream market with the Company's flagship product, Eco Red Shield protected lumber. Albeit we consistently received multiple inquiries detailing attractive business opportunities as offered by many sectors within the Industry, the Company's leadership has chosen to cautiously approach supply chain channel opportunities with a specific and predisposed end-state in mind. Armed with a forward-looking approach and conscious mindset, founded on the principles of maintaining profitable margins, providing a competitively priced product and assortment driven by consumer demand and market trends; the Company has successfully and cost-effectively crossed the bridge into the mainstream market. Our plan of creating primary demand through ECOB's social media campaign driven by the company's vertical plan using E Build & Truss summoned the attention of consumers making our product a choice from the buyer, not the seller. We knew the lumber supply side was still recovering and that what Eco created represents the only real protection in the industry that offers affordable mold, wood-rot decay, termite and fire protection for the entire superstructure of wood framed construction projects.
The company is still focused on innovations solving the problems associated with raw lumber whether in structures or any types of disaster related rebuilding. Eco Disaster Products now include Disaster Break Coating that adds additional mold and fire protection to existing raw lumber before buildings are closed in with siding. At Eco we think tar paper and fabrics under siding allow water to rise directly into the building and it provides a warm blanket for termites to crawl right out of the ground and into the structure; this also serves as the potential start for mold related problems derived from landscape irrigation. Our coatings eliminate these problems as we suggest tar paper and fabric should be used from the window up, not down to ground level. We believe in making buildings as water proof as boats; examples can be viewed by visiting www.ecobmedia.com. Eco Defensive Fencing is protected by a coating that adds mold, wood-rot decay, termite and fire protection to fencing and fence structures; applied in a factory setting with an additional coating providing Ultra Violet and weather protection increasing the fence's life span while also serving as the first line of defense in fire storms. Eco has launched a cleaning solution and flood caulking; representing products that provide disaster victims a defensive solution when rebuilding against future storms.
THE ORIGINAL PLAN
Throughout the course of the current quarter, the Company has successfully established a supply relationship with a large national retailer including direct in store sales, direct to distribution sales and special order sales. The Company has also launched Eco's Fire Break and Christmas Tree Protection products which are now available on the retailer's web site.
In the most recent weeks, the Company has leveraged an agreement to catalyze the immediate launch of special order and direct to store sales pilot programs, respectively. These programs, by virtue, enable Eco to efficiently engage two specific test markets called pilot programs that are now underway in the -- Northeastern US and Southern California markets -- comprised of twenty-two select, retail stores. Of the stores currently identified for participation in this program, nine have been activated for special orders, including one standout store that is now maintaining physical on-the-shelf inventory in Copiague, Long Island. The remaining eight stores in the Northeast test market are tentatively scheduled to become active in the direct to store sales program, physically carrying a select product assortment comprised of six SKUs, the week after Fourth of July holiday weekend. The Southern California market pilot is scheduled to begin in the coming weeks and will mirror the activation and in-place operation currently underway on the East Coast.
In conjunction with Eco's agreements with this large retailer, the Company has created the National Account Manager position, organically selecting a qualified candidate directly responsible to the Company's CEO for the day-to-day account management and supervision for all associated business as it pertains to the aforementioned agreements. The newly selected National Account Manager, Nathaniel Bruce, is currently in the process of training stores and their associates within the test markets for activation in the special order sales program and follow-on direct to store sales program, respectively.
The Company's affiliate network has experienced success and subsequent growth as a result of Eco's momentum created in the Industry. With the paradigm shift in the lumber industry underway, the acceleration toward the adoption of protected lumber is being experienced by both the Company and our affiliates. Specifically, Denver and Austin-based Eco Affiliates are now reaping the benefits of the company's aggressive market and social media campaigns with large multi-family projects in their regions. The affiliates increased production within their respective regions has resulted in repeat bulk orders of Eco's Red Shield chemistry; and with the increase in red lumber being utilized on high-profile jobs serviced by these affiliates, professionals within the Industry are taking note, yet again supporting the shift away from raw, unprotected lumber.
INCREASED PRODUCTION TO MEET DEMAND
As a result of the projected coating service sales volumes in support of the large retail business channels, ECOB's Salem facility continues to coat lumber shipped in directly from the Retailers lumber producer creating a finished product for resale into the retailer's locations. The increased production has been scaled to meet the retailer's demand in which the Company has delegated the controlled release of product and the speed of the roll to the discretion of the Retailer, which in turn has created an environment supportive of maximizing the Company's success in this program.
Moreover, the Company is active in discussion with several US-based financial institutions capable of providing funding to support Eco's need to ramp output in all facilities. The need for automating existing production equipment is now prevalent more than ever as evidenced by the Company's Salem coating facility operating at full capacity. While the need to purchase high-volume equipment represents a significant financial requirement, this strategic move will not have any effect on the manpower requirements needed to perform a smooth, full-service operation. The new, high-volume, automated lines will become operational and be positioned next to current production equipment to safeguard against potential operational stoppages. Furthermore, this new higher volume equipment will allow for significantly higher production output to meet the anticipated demand.
1. One of the Company's primary goals of producing protected whole house lumber readily available in most markets around the US creates an "excuse free" environment for big national builders that continue to use raw, unprotected lumber when mold claims are on the rise.
2. If the predicted weather pattern changes become a reality, and fire seasons start earlier in the year, our Eco Red Shield lumber could become the product of choice in all rebuild scenarios. The key to achieving these goals is through the application of ECO's value added coating to all lumber products used in the rebuild markets without creating havoc in the historical supply chain process; all of which can be made possible through the constant production of high volume coating facilities in and around the same locations where timber is manufactured into lumber. As a result, this will facilitate exponential growth for the Company's Affiliate Network capable of supporting ECO's just in time business.
3. What makes Eco Red Shield different in comparison to the green pressure treated lumber readily available in all the retail lumber facilities is the fact Eco's protected lumber is safe for use throughout the whole house; not just for decking and sill plate applications.
4. We at Eco strongly feel that the super storm rebuilds are going to accelerate the awareness of mold related issues and the inherent insurance claims. This is evidenced by contractors and Government-funded rapid repair organizations overlooking and cutting corners pertaining to mold issues thereby fertilizing a potential breeding ground for construction defect lawsuits.
ECO'S TECHNOLOGY RECEIVES RECOGNITION
Eco's lumber protection technology has received significant attention in the realm of innovation and high-tech. In November 2012, Eco Red Shield received a HOBI Award by the Connecticut Homebuilder's Association for the "Best New Product of the Year"; in December 2012 the product received recognition at the 25th Annual CONNECT Most Innovative Product of the Year (MIP) Awards; then again in April of this current year, the product received 'Gold' at the Edison Awards hosted at the Navy Pier in Chicago. The Company -- as a whole -- was also recognized in April this year by Vista's Chamber of Commerce as the Most Innovative Business of the Year.
FINANCIAL INSIGHT AND DETAILS
On May 31, 2013, The Company ("ECOB") entered into a Debt Assumption and Equity Cancellation Agreement (the "Agreement") with Redwood Management, LLC ("Redwood") and Manhattan Resources, Ltd ("MRL"). Terms of the Agreement can be found starting at page 22 of the following link: http://www.sec.gov/Archives/edgar/data/1409885/000112785513000448/ecobuilding10qa2093012.htm. The successful execution of this agreement has settled all outstanding disputes with MRL allowing the company the ability to move forth achieving our corporate goals. In concert with this agreement the Company ("ECOB") entered into a Securities Settlement Agreement (the "Agreement") with Redwood Management, LLC ("Redwood").
On or about May 14, 2013, Alpha Capital Anstalt initiated an action against Eco Building Products, Inc., E Build and Truss, Inc. and Seattle Exchange Coffee in the United States District Court, Southern District of New York. The suit seeks $1,080,000. Alpha agreed to assign the debenture to a third party which has paid Alpha $960,000 to the date of the suit. On or about June 7, 2013 a settlement to the action from Alpha Capital Anstalt was agreed upon by all parties involved. The agreement settles the dispute in full providing for final payment to Alpha Capital Anstalt and a dismissal of the action in the United States District Court, Southern District of New York.
On June 14, 2013, Eco filed a preliminary proxy, form 14A, to increase our authorized shares and approve a reverse stock split at a special shareholder meeting. Let me assure all of my fellow shareholders that these financial decisions are for the benefit of the long term viability of the company and to support the upcoming growth and sustainability of the business model. The increase in authorized shares is to potentially assist the company to attract a long term strategic investor and the reverse split will enable us to obtain our future goal of up-listing ECOB to a nationally recognized Stock Exchange so that Institutional Investors and Retail Brokers that will not buy bulletin board companies can invest in ECOB.
FOCUSED AND ON THE MOVE
In closing, it is my desire to assure all shareholders that Eco Building Products is accessible to you. If at any time you wish to express concerns or offer suggestions, you can email us directly at firstname.lastname@example.org. We are listening, and we are committed to enhancing value to our shareholders and the customers who have come to depend on the products and services we provide. As this company shows up into in the main supply chain, we are actively seeking strategic institutional funding partners, and the Company is searching for a permanent Chief Financial Officer.
We thank you for your continued support and look forward to a prosperous second half of 2013 as the foundation of this product and company are ready to go.
Steve Conboy; President - CEO
About Eco Building Products, Inc.
Eco Building Products, Inc. is a manufacturer of treated wood products that are protected against fire, mold/mycotoxins, fungus, rot-decay, wood ingesting insects and termites by our proprietary eco-friendly chemistry utilizing ECOB WoodSurfaceFilm™ and FRC™ technology (Fire Retardant Coating). Eco Building products, "Eco Red Shield" utilizing patent pending technology is the ultimate in wood protection, preservation, and fire safety to building components constructed of wood; from joists, beams and paneling, to floors and ceilings.
Safe Harbor Statement: This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. Forward looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in this release. ECOB takes no obligation to update or correct forward-looking statements, and also takes no obligation to update or correct information prepared by third parties.