VISTA, Calif., June 24, 2014 /PRNewswire/ -- Eco Building
Products, Inc. (PINK: ECOB) today released the following letter to
its shareholders:
Dear Shareholders:
With the first half of the year coming to close, and looking
toward the second half of 2014, I wanted to take some time to
provide our loyal shareholders with some perspective on the
Company's current position, the goals and expectations we are
setting for the second half of 2014, and our strategic plan for
meeting those objectives as we now are gaining national attention
with national supply chain via our primary client, a Major Big Box retailer.
WHERE WE ARE TODAY: CROSSING THE BRIDGE INTO THE MAIN SUPPLY
MARKET
Moving forward with the Company's new 'supply only'-focused
business model, we have created a leaner, better organized company
that has transitioned to a business plan positioned to
strategically support the supply chain of the $60B North American lumber industry by way of
coating services and special orders sales for Eco Red Shield™
protected lumber, the Company's flagship product. Our Big Box
retailer customer has deployed Eco Red Shield in dozens of stores
throughout the Northeastern United
States and is expected to move into California in the near term. Significantly, in
the second half of the year, we forecast demand exceeding current
capacity as a result of demand seen in the marketplace in the first
half of the year. Based on these projections, we are expanding our
supply chain capacity as the summer season brings an increase in
demand for lumber to support new constructions throughout
North America.
From the financial stability standpoint, the Company has
reclassified certain liabilities into Preferred Equity and has
expanded its access to working capital by way of previously
announced financing transactions that significantly mitigate the
financing risk for the Company and give us sufficient access to
capital to fulfill our long-stated milestone of becoming a
cash-flow positive business ahead of turning to significant
profitability in 2015. We believe we can achieve a cash-flow
positive position in the next four months due to increased
expectation in orders, and new access to capital to meet that
demand. Going forward, we are working to bolster the Company's
financial infrastructure as we prepare to engage additional
business opportunities in the lumber industry.
Armed with a forward-looking approach and conscious mindset,
founded on the principles of maintaining profitable margins and
providing a competitively priced product and assortment driven by
consumer demand and market trends, the Company is crossing 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 a
select group of consumers who became early adopters due to specific
experiences, including both mold due to Hurricane Sandy, and
wildfires as recently seen throughout Southern California. The lumber industry is
still recovering, and we believe Eco Red Shield represents a unique
offering in the industry; affordable mold, wood-rot decay, termite
and fire protection for the entire superstructure of wood framed
construction projects.
GOALS FOR THE BALANCE OF 2014: BECOMING A PROFITABLE COMPANY
Throughout the course of the current quarter, the Company has
successfully managed its supply relationship with a major national
retailer including direct in store sales, direct to distribution
sales and special order sales. Going forward for the balance of
2014, our goal is to transform these initial successes into
meaningful sales that will offset the Company's plateauing
production, research & development and marketing activities to
position ourselves for massive profit growth in 2015. We have
positioned the Company to scale as product demand grows due to our
initial marketing efforts, and our increased focus on intellectual
property protection. We represent a breakthrough opportunity in a
$100B worldwide industry, which is
central to infrastructure development, while providing an
ecologically friendly solution to key unmet needs in the space. As
we begin to achieve economies of scale in our operations, we have
three distinct ways of capitalizing on the increasing demand for
our product:
- Direct to consumer sales via our Major
Big Box retail customer in North
America: As the Company gains a footing in the lumber
industry, our Big Box retailer is seeing a significant increase in
demand due in part to an increased focus on safety and longevity on
the part of builders and home buyers. Red infrastructures are
becoming a source of pride among a forward thinking segment of the
lumber industry. As this occurs, we are hopeful to see additional
marketing resources committed by our Big Box retail partner that
will not only provide additional credibility to our brand, but
further increase sales in existing stores and potentially expand
the geographic footprint that Eco Red Shield enjoys in the United States and Canada. While direct to consumer sales
represent the lowest profit margin for our Company, at
approximately 20%, we believe it is an essential component of our
overall strategy by building brand awareness in the marketplace,
credibility via the association with our Major Big Box retailer, and revenue that will
allow the Company to achieve profitability and stabilize its
financial operations prior to addressing the broader lumber
industry;
- Partnered, pre-packaged home infrastructures for distribution
to emerging high-growth areas in North
America, as well as humanitarian use throughout the
developing world in situations of natural disaster where current
lumber supply has become the root of socioeconomic problems. This
effort is meant to fill a key humanitarian need and serve the
Company's social responsibility mission as well as job creation.
This will represent a niche, but critical component to the
Company's revenue model by creating several high profile, large
quantity orders that the Company has established an affiliate
network to fill without stretching internal Company resources.
Additional details will be made available to the marketplace in the
near future.
- Affiliate program where the Company supplies coating equipment
and follow on sales of only application chemicals to lumber
manufacturers for use in broad distribution: This represents the
highest margin business for the Company as we ostensibly remove the
burden of acquiring wood assets and focus exclusively on supplying
chemical, which is the Company's core competency. The maturation of
the Company's affiliate program is a direct result of the Company's
marketing efforts, along with our product positioning in our Big
Box retailer creating demand for Eco Red Shield. We expect this
program will continue to grow as more traditional forms of
marketing take hold and lumber suppliers face unfilled orders for
mold and fire resistant wood. Our proprietary intellectual property
positions the Company to be the sole source of this product
throughout the industry for the foreseeable future. Specifically,
Denver and Austin-based Eco Affiliates are now reaping
the benefits of the Company's aggressive marketing 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.
STRATEGY TO MEET OUR GOALS: 2H-2014 IS TURNING FROM A
FUNDAMENTAL PERSPECTIVE
We believe the Company remains grossly undervalued due to our
breakthrough technology in a $100B
worldwide industry. Eco's existence in the Building and Lumber
Industries was perpetuated by built-in challenges, including mold
and rot-decay infestation, coupled with the fact that today's
engineered lumber and sheeting is more prone to fire ignition than
old growth lumber. In our opinion, we feel that in order to be most
effective in the manufacturing and distribution of a
cost-effective, defensive lumber product, we change the perception
that Eco Red Shield is a luxury commodity, and instead
use targeted marketing and education to appropriately instruct
the marketplace that Eco Red Shield is a critical component to
large infrastructure planning going forward and not using Eco Red
Shield is exposing end users and insurance companies to significant
additional safety risk and rehabilitation expense.
In order to be effective in the lumber commodity business,
companies like Eco must fight tooth and nail to avoid becoming a
commodity themselves. This requires constant brand awareness while
allowing no one particular party or business channel the
opportunity to monopolize our brand. Eco's early decision to stay
away from lumber mills looking to use the Eco Red Shield brand has
proven to be the right decision, as today we have gained and
maintained Big Box visibility, and a healthy and growing Affiliate
network. This strategy has allowed the Company to create a
product that serves as a solution to the snowballing
problems in the Building Industry, as we continue
mitigating builder and contractor risk against the growing
community of lawyers in construction defects and mold related
lawsuits. As we continue our quest at leading the world with
defensive building products, we strive to build a brand as big as
Coca-Cola.
To accomplish this feat, we've first had to ensure that our
product offering in the protected lumber space is vastly different
and of great significance; complete with testing and code
approvals, as opposed to the look-a-likes backed by hype and
technical fluff. Furthermore, the Company had to properly position
its operation to have the ability to consistently produce and
deliver a quality-controlled finished product. We've successfully
completed these tasks through the implementation of Eco's
quality-control program, enabling consistent and high-quality Eco
Red Shield production anywhere in the world. With global delivery
now at our fingertips, marketing this revolutionary product's
uniqueness and availability in a cost-effective way was our next
challenge to overcome. Reaching back to the Company's roots as
"builders first", we understand that good contractors and
builders want to embrace more defensive ways to protect
the buildings they construct for their clients, but we
first and foremost recognized the need to educate
these builders and contractors on the realities of building with
Eco Red Shield. We're now creating the best brand of lumber the
world has ever seen, and our next move is to promote it as the
American Brand as we show up in every rebuild disaster, backed by
an army of like-minded builders and contractors that have embraced
this new and defensive way to build.
FINANCIAL INSIGHT AND DETAILS
Eco Building Products recently closed on a financing package for
up to $3.4M in financing to fill
pending purchase orders and support capital expansion. Under the
terms of the agreements, the Company will receive up to
$1.4M in capital in equal
installments of $350,000 over the
next four months, to support the company's monthly overhead and
meet increasing demand for Eco Red Shield, with the goal of
reaching sales of $1.5M in the fourth
month, which will potentially put the Company in a cash flow
positive position. Our recent addition of an acting CFO will allow
the company to closely manage the monthly budget and cash flow
freeing up Steve Conboy's time to
drive sales, allowing the company to reach our established
aggressive sales target. Concurrently, the Company received equity
financing of up to $800,000 in two
tranches to support the expansion in production capacity at its
core manufacturing facilities from $750,000 in production capacity per month to
$2,000,000 per month, as well as
retire approximately $300,000 in
convertible debt financing previously entered into on unfavorable
terms. In addition, the Company will enter into an expandable
revolving credit facility agreement for $1.2M to support its supply chain that will allow
the Company to confidently increase its marketing efforts and
demonstrate long term sustainability to its Major Big Box
Customer.
FOCUSED: ONWARD AND UPWARD
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
info@ecob.net. We are listening, and we are excited and 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 continues to expand in the national supply
chain, we are actively seeking strategic institutional
funding partners.
Sincerely,
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.
Company Contact
Eco Building Products,
Inc.
Phone: 1 888 Red Shld (888.733.7453)
Email: info@ecob.net
Web Site: www.ecob.net
Blog: www.ecob.net/index.php?p=blog
Visit us on YouTube at: www.youtube.com/ecobuildingproducts
SOURCE Eco Building Products, Inc.