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Ecoblu (OTC:ECOB ) CEO Interview

Participants

• Dominick Bianco
• steve

Dominick Bianco: Good afternoon. This is Dominick Bianco, Senior Financial Analyst for SmallCapProfits.com. Today I am here with Steve Conboy, CEO of Ecoblu, symbol ECOB on the OTC Bulletin Board. I appreciate you joining us here today. Would you mind telling us a little bit about your background and a little bit about your company?

Steve: I originally came from New York but I live in California. I was in the union working high rises in New York and transferred to California 30 years ago. I built in the California housing boom for 20 years. I then got into the lumber business. From there I went from the lumber business to the lumber protection business. That’s basically my story.

Dominick Bianco: How did you get into the lumber protection business?

Steve: Being a contractor in California and seeing all the construction defect lawsuits, with California being the epic center of it at 6.5 million a year in mold related claims, I knew that someday somebody was going to have to come up with a defense against these mold claims. This is because all framing lumber has mold on it before you build the building. When the guy who invented this technology was looking to go to market he asked some of the big lumber guys who he should look for to represent his product in the west. They told him to find me and that’s how we hooked up about 6 years ago.

Dominick Bianco: Over the 6 years have you developed any other products besides the wood treatment product?

Steve: Yes. Actually right now we are big into the disaster relief shelters. We build shelters, schools and hospitals that we ship around the world. The world wants to use lumber because it is the most cost-effective way to build. The world has basically been built with steel and concrete because you can’t ship lumber into places like Haiti or Africa or India because of all the mold and wood ingesting problems. Now that we have solved that, we’re working with a lot of engineers and non-profit organizations because our shelters are cost-effective since they’re built out of wood. We build these buildings to withstand hurricane winds and other seismic events at a very cost-effective price.

Dominick Bianco: Have you started any projects regarding this product?

Steve: We have actually shipped a container of buildings into Haiti last week. I am heading to the AID International Forum in Washington D.C. next week. They have me as one of the keynote speakers to show every Aid Foundation in the world our buildings. There are a lot of buildings that get shipped into disaster areas like acrylic domes or plastic pop-up tents. But when you get those types of buildings in that kind of climate it’s like going into an incubator. Our buildings are more like a little cottage. If you went on a vacation and you were in one of our buildings it would be like a honeymoon cottage. They’re cute and they’re built out of wood. They’re all made with protective lumber and they’re cost-effective.

Dominick Bianco: As far as the wood treatment product, do you manufacture your products or do you outsource your manufacturing?

Steve: We manufacture them. We buy chemicals from multiple sources. We blend the chemistry together because now what we have is mold protection; rot protection, termite protection and fire protection. We buy from different chemical manufacturers and we mix them all together. We build the equipment to send the lumber through the equipment is like a carwash and coat all six sides of the board. We do this in a quality controlled setting where we have third party testing on the articles of the treated chemicals and on the finished goods so we can stand behind the lifetime warranty. We sell finished goods with the chemistry factory applied.

Dominick Bianco: Would you like to tell us about the lifetime warranty?

Steve:The lifetime warranty is a 30 year limited lifetime warranty. We’re basically standing behind our testing results, saying that mold cannot grow on this lumber, termites graze on it, dehydrate and die, and we have a disclaimer on fire. We’ve made it so that fire has a slow ignition time and we reduce the smoke index. A lot of the lumber products today are highly flammable because they are glued together with phenolic resins. That’s because we’ve been stealing lumber from the forests for so many years since after World War II. We now have to use smaller trees and glue them together to make the panels to sheet the roof, walls and floors out of things like OSB particle type boards. They are highly flammable. When we coat these boards we slow ignition time to less than half and we take the smoke index from 150 to 50. Fires are not just going to consume buildings where firemen cannot even get in them to fight the fire. Concerning termites, you see Berkley published a report that the termite population is out of control in North America. They’re consuming 1 billion board feet a year in California alone. That’s half the lumber we use in California a year being consumed by termites. When you talk about a carbon credit, if the tress are what take that the pollutants out of the atmosphere, we’re saying that you’ll consume less trees if you coat the lumber to protect it from the bugs that eat it. Regarding mold, we have three doctors on our advisory board and we just put out a report in a press release linking mold and mycotoxin to cancer. We’re now saying that every stick of lumber going into buildings has a 33% chance that it already has mold on it that’s going to become active in somebody’s home. It creates a mycotoxin that gets in the ventilation system and into people’s bloodstreams creating medical problems. We know that we can kill the mold if it’s on the lumber and it can’t grow back. All of that and our warranty is based on our test results from third parties in the industry that say our claims are real – mold won’t grow, termites wont eat it, and fire ignition time is reduced.

Dominick Bianco: Is the majority of your revenue commercial or residential?

Steve: The company is just getting going in terms of revenues and how we’re going to market. Basically, in southern California we have probably the largest lumber facility out here. It’s 100,000 square feet under roof with a fifty car rail spur. What we’re doing here is we’re going to the production builders that are finally showing back up to build houses. The builders are starting to run a little bit in the west and we’re seeing production houses going up. Eco is now starting to get contracts with these builders. In August we have a 17 house tract going up and a 40 house release under way. So you’re really going to start seeing a difference in our revenues. We also created a model for where we sell affiliate programs, where somebody in Texas or Idaho or Washington who wants to get behind the chemistry will be leased or sold a piece of equipment that we make. We would then put them in a quality control program and sell them the juice so they can coat their own lumber. The model is that we create the demand with our facility in California so that other people can get behind this green technology to protect lumber and protect people who live in houses that are built out of lumber.

Dominick Bianco: Does your wood treatment product qualify for any rebate programs to the home owner or home builder?

Steve: We do qualify for LEED’s points and Build It Green programs. Our products are green and we’re GreenSpec so people have done the due diligence to find out there is nothing toxic in our product. We have zero VOC’s, zero leaching into the ground water, and we’re doing this with minerals. All of a sudden now, insurance companies are starting to take notice of us and we see some spotty rebates for people that build with it.

Dominick Bianco:In Southern California, where can a consumer find your product?

Steve: We have 8 Lowes stores in San Diego with inventory. We have 60 stores where we’re open with Lowes for SOS (Special Order Sales), so really anybody can walk into Lowes and buy it around the country. Lowes is talking about rolling in many locations. They have 1,800 stores and really like what the product represents. We’re hoping for a great future with Lowes. Lowes has Hampton Lumber Sales available, which is one of the largest privately-held wholesalers in the world. They are starting to take positions in it and Hampton sells to all the lumber yards. If a builder wanted to use his framer he could go to his lumber yard and get Blu because it’s now available in the wholesale market out of Hampton.

Dominick Bianco: I just wanted to clarify something you had said before - that a lot of construction today uses particle board with glues that increase the flammability. Will your product coat particle board as well as lumber?

Steve: Particle board, plywood, we could do your hardwood flooring or your entry door.When you look outside you see wood rot and paint peeling. Paint peels because it has fungus in it. If you put our product on the outside of the wood it will kill the fungus so that the paint won’t ever peel. You don’t even need a primer when you paint over Blu. We do all types of wood and moisture is a food source for mold. So coating all wood is good. Plus, termites don’t care what species of wood it is. They’re going to eat it.

Dominick Bianco: What about other insects like carpenter ants?
Steve: We have had testing where we annihilate the carpenter ants. People are telling us they don’t even have signs of cockroaches or ants in their building at all. These insects are smart and need moisture to survive. Ecoblu controls the moisture so there will be no insects in the house.

Dominick Bianco: What is the active ingredient in Ecoblu?

Steve: There are multiple ingredients. There are corn derivatives/ polymer chains coupled with disodium based additives and borate, it’s like salt. The product is produced under a trade secret and we don’t have a patented formula at this point because we don’t want everybody to know what’s in it until we get a hold of the market.

Dominick Bianco: Are you worried someone might come in to steal the patent?

Steve: Until we have a hold of the market and get this paradigm shift heading intocoatedlumber, we don’t want to publish. But we have the juice.

Dominick Bianco: How many shares are issued an outstanding?

Steve: I think there are 27 million out.

Dominick Bianco: How many are there on a fully diluted basis?

Steve: I estimate there is 77 million on a fully diluted basis.

Dominick Bianco: Do you think that your current market cap fairly reflects the value of your company?

Steve: It’s like anything. You have to watch your cash flow, watch how you grow,watchhow you spend…We see our July, August and September starting to ramp. We held everything back until late this spring because we wanted to wait until we started to see the builders move again. When the top of the market caved in the production builders went completely dormant. We sat around for a year waiting for them to come out. They really only started to show back up in May. We’re seeing significant signs of our housing starting to increase at a pretty rapid pace for July, August, September and October.

Dominick Bianco: What kind of payment terms do you usually offer your clients?

Steve:When we deal with lumber companies it’s net 10 days while builders are 30 days. Lowes is 1% Net 10 days.

Dominick Bianco: What percent of the company is owned by officers and directors of the company?

Steve: Steve: Most of the company. Between me and the GM we own 50 million shares.

Dominick Bianco: Out of the 77 million?

Steve:Correct.

Dominick Bianco: You said you’re going to be out of town presenting in Washington D.C. Would you like to tell our subscribers a little more about that event and what you expect to achieve from presenting at that conference?

Steve:Yes. I am really excited about it. When you look at places like Haiti or Pakistan or Iraq, there are hundreds of thousands of people displaced and living in tents. I started to build and design these shelters about a year ago and I now have them perfected with engineering. We can mass produce them now making one thousand units a week.

Dominick Bianco: Do you have a shelter on your website for someone to see?

Steve: Yes. If you go to http://ecobluproducts.com/products/ there is a tab that says EcoShelters and you can see what we’ve been doing in Haiti or best to view on our YouTube page at http://www.youtube.com/ecobluproducts . The U.S. military is talking to me now about specifying our product on all military bases because they have a major mold problem and their soldiers are getting sick. As we look at the competition – domes out of Alaska and polystyrene buildings that look like barracks – our buildings are more like a cottage. These are buildings people would be proud to live in. They even have a little porch on it. And, it’s half the cost of anything else out there. We’re very cost-effective. We know we can withstand the elements. We’re hoping this design will give people a new hope. We’re hoping to see orders coming in because all this money that has been raised is getting ready to be released. They have to do something for these people so they are not living in tents before hurricanes show up. Our buildings will withstand a hurricane.

Dominick Bianco: Could you give a ballpark percentage of the increase in cost to treat the wood?
Steve: The best way to look at it is if you take a 3,000 square foot house, the lumber for that house would be about $25,000. If you got every stick of lumber on that house treated, the total lumber cost would then be $28,000. It’s about $1 per square foot or in this case 3,000 dollars to treat 3,000 square feet. That’s if you treat every stick of lumber that goes into making the house.

Dominick Bianco: So there’s a 9-10% increase in the cost of lumber to use your product?

Steve: Correct.

Dominick Bianco: But your product has the benefit of longevity and protection from mold, mildew and termites.

Steve: Correct.

Dominick Bianco: Before we conclude, is there anything else you would like to tell our subscribers about you or your business?

Steve: I think everybody has got to pay attention to this kind of new technology. We’ve been building the same way since the housing boom after World War II in Levittown, Long Island. We’ve all heard about these radical mold claims and they’re tying it to all these medical problems. Wouldn’t it be amazing if we found out that all of these accelerations in cancers are caused by something as simple as the lumber that is used to build the home? Pay attention. Look at the press releases. This product is going to change the way we build for healthier homes. I think we’re really on to something when it comes to protecting the forest, reducing our carbon footprint, and using less wood. We need to stop acting like wood is a renewable resource that will be there forever while we continue to hog them all down and replace them in 10 years because of the rot and termites. We make it so you never have to replace it. We’re going to cut fewer trees. We’re out there against the big lumber guys trying to convince them to do it through the consumer and the production builder rather than have them continue to do the same things they’ve been doing forever.

Dominick Bianco: On behalf of SmallCapProfits.com we wish you and your company a lot of success in the future.

Steve: Thank you.

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