Universal Ice Blast, Inc. (fka UIBT)

[PappaJohn]

Letter to Shareholders November 24, 2004



This letter has information containing forward looking statements. We ask that readers of this corporate release read the last paragraph on forward looking statements relating to future events and managements’ adjustments to the results for the period June 2003 for non recurring expenses.



Dear Shareholders.



Many shareholders have requested that I report on the state of the Company, other than through our SEC filings. Here is my report and I think you will see that we have achieved a substantial leap forward. We are often prohibited from reporting on our progress because of non disclosure agreements, in addition we have to be careful about putting out news that might not be come to fruition. We reported on all events as of November and we are confident about our progress and expect 2005 to be an improvement over 2004.



Technology: Summary, Recent Developments and Accomplishments.



Summary: What we have, where are we going

· We have 5 patents issued in the US and we have applied for patents in Europe and Japan.

· There are other patents in the application process.

· The objective of our testing with Ford and other companies is position ice blasting as a replacement tool for high pressure water blasting with its myriad of chemicals, high pressures and large volumes of water required for simple cleaning applications. We know that water has long peaked as an effective cleaning tool.

· We have developed robotic cleaning and deburring systems in conjunction with Ford and other companies.

· Todd Engineering (Canadian Licensee) has developed a semi automatic cleaning and deburring system for smaller applications.

· Our technology uses minimal amount of water and no chemicals are added to the water, these are two key drivers that have caught the interest of industrial clients and more recently, auto manufacturers, in Europe.

· In the US automotive market, contamination (cleanliness) is still an issue and ice blast has clearly demonstrated through numerous tests that it is a more effective cleaning tool than high-pressure water by a significant margin.

· The Company has focused on deburring and cleaning of engine and transmission components in the US and we have transferred that knowledge to our marketing staff in Europe. We will be placing additional emphasis on the European market in 2005.



A word of appreciation to these supporters of our technology



· The efforts of key management and senior staff at Ford’s Advanced Manufacturing Technology Development group as well as the support we received from the management of Fords’ Automatic Transmission Organization is acknowledged and appreciated by all of us.

· Our Canadian Licensee, Todd Engineering, has also been extremely helpful in providing support during our various testing phases and presentations of the technology to US and Canadian clients.



Recent Developments:



Our commitment to improving the existing technology and developing new products has produced two additions to our growing family of products. This is the first time we are releasing this information to the public, all of which has been developed in the second half of this year.

The first: We designed two smaller ice generation units, one model, designated SX45, will be rolled out in December 2004; and the other is a conceptual design for a small mobile ice generation unit. Read on for more information.

The Second development is: Our technical team has developed a new generation of ice blast guns which has an immediate impact on our existing and future technology. This is being field tested in Canada and Europe.

The advantages of the new guns are:

· Guns will be adaptable for both the industrial and precision cleaning markets.

· Initial gun designs are smaller and 50% lighter.

· Attached air hoses will be cheaper; have a smaller diameter, be lighter and therefore easier to handle. Ice hose remains the same.

· Air consumption is 66% less. We are expecting that this will reduce compressed air costs (smaller compressor, less capital cost and much reduced operating costs).

In our planning last year, we identified a need to enter bigger markets (we refer to as a mid-market) characterized as having many smaller cleaning applications. We focused our technology endeavors on the two smaller machines. We were able to advance our plans, from concept to design to delivery, because of the smaller guns and other development work. The SX45 is a product we are releasing to the market this December. The conceptual mobile unit should be a working prototype some time in Q2 2005. Both these machines will make ice on a real time basis; each has identifiable applications with prospective customers in mind.



This is what we have accomplished in the second half of 2004:



· The Company has developed more product offerings for more applications to our existing clients, licensee clients and to prospective clients.

· We now offer ice generation units at various price points to better target smaller applications in bigger markets.

· Our equipment can be built in the markets where they are sold. These benefits include, cost savings, machines can be serviced locally and they are built to the industrial standard required for their market. CE is an example of the European standard.

· Products are designed in the US and patents are first issued here in the US and we file for international coverage. The modifications to make machines in local countries using local parts are well established by us.

· The SX45 will be delivered to a German client in December 2004 and is targeted for general industrial cleaning applications, but is sufficiently flexible that it can be installed in a small booth targeted for in-house cleaning in large manufacturing plants and as a cleaning cabinet designed to replace chemical cleaning. There are new restrictive laws in California that will positively affect these applications.

· The new concept mobile unit is the smallest of our ice generation units. We see a great need for small mobile systems comprising ice generation unit, compressor and generator selling in the $25,000 to $30,000 range. The cleaning power of the ice will be the same with less ice produced to match the smaller applications. Companies such as Wendy’s, McDonalds and other fast food outlets where cleaning cooking hoods, tile floors are examples of applications. Target time for a working prototype is Q2 2005.

· The introduction of the new blast guns provides many benefits to our customers such as reduced the operating costs and is directed to both cleaning and deburring; especially where customer supplied compressed air has lower air pressures.

· Distribution of these products will be through licensees; commercial rental outlets; and other distribution channels servicing boat cleaning, automotive remanufacturing and graffiti removal, among others.



Machines sold or orders received for the period July to November 2004:



North America:



· The company delivered a cleaning system to a US nuclear facility. This sale defines our licensing strategy. The product, complete with ice generation unit, filtration module and a blast booth, was designed by our staff. However all manufacturing was performed by our licensee partners in Canada and the US. UIBI delivered and installed the equipment.

· CX91 ice generation unit was built for a Taiwanese client and is expected to be delivered in November 2004; we are waiting for the final payment. The unit was manufactured by our licensee.

· We delivered a CX91 ice generation unit to a Japanese client which they will use as a marketing tool. This group is interested in entering a Licensee arrangement for Japan and other parts of Asia. We have had several meetings and negotiations are still in progress.

· In November we received a PO from Ford for a SX110 ice generation unit which will be used to assess the process capability for large volume production cleaning and deburring of aluminum components. This machine was delivered in November 2004.



European office:



· We received a purchase order for a SX110 ice generation unit from a German Tier One supplier. This unit will be used as a cleaning tool in their manufacturing process. The machine will be built by our licensee in Holland and is expected to be delivered in December 2004.

· A purchase order for the newly introduced product, SX 45, was received from a German company. The machine will be built by our licensee in Holland and is expected to be delivered in December.






Engineering fees:



The Company continues to work with Ford Motor Company and Metaldyne in testing and development of the ice blast technology for cleaning and deburring of machined transmission valve bodies (aluminum components). Our development is done in Seattle and in Detroit with Fords’ Advanced Manufacturing Technology Development group and their Power Train Organization. Testing of our technology also takes place in Canada and Holland. Development with Ford is expected to continue through 2005.



Discussion on Europe:



We have made excellent progress in our European operation. We were forced to make a management change and appointed Mr. Jan Heijne as the MD for Europe and have also appointed him to the Board of UIBI. Mr. Heijne has been involved with the technology since 1999 when he and his partner acquired the distribution rights for Holland.



Industrial Cleaning market:



· The focus of the European marketing plan has been centered on renting equipment into the Industrial Cleaning market.

· The Company currently has two Dutch companies as industrial cleaning partners, Etics and Mourik, they use the ice blast equipment to service their client’s needs on an exclusive basis. We are pushing to improve our installed base of equipment on every front. Marketing efforts are directed to finding partners in Germany and other parts of Europe, such as Sweden, Denmark, Norway and Finland.

· In October we presented our technology at an exhibition in Stockholm, and we have interested parties looking to partner with us.

· We have also received submission for a distributorship in Russia through a Dutch contact.



Precision Cleaning market:



· In July this year we decided to leverage our US automotive marketing knowledge and initiated a campaign to introduce our technology to several high value companies.

· September kicked off the first round of presentations to the following companies: DaimlerChrysler (Advanced Manufacturing group), MTU (a subsidiary of DaimlerChrysler); ZF (Transmission builder); FreeGlass (supplier of components for the Smart Car) and Eisenmann. Our presentations were well received and we demonstrated our cleaning and deburring capabilities.

· We are happy to report that we have received a purchase order from FreeGlass for a SX110 for delivery in December 2004. Our engineers are currently working with our Dutch manufacturing licensee in order to meet their needs.

· We have also discussed a license for marketing our technology with a German high pressure water washer company. They would use the technology as part of their products offered to their existing and prospective clients.

· We expect to see a continuation of our progress pick up in 2005.





We have effectively re-engineered our company by embracing a licensing strategy. Licensing allows us to leverage our technology which has multi-market applications and extensive geographic reach. Now it all comes down to capital. How much money can we raise or have access to, in order to deliver our equipment into these markets.



Like many companies our size we have to be regimented about our focus. To provide some insight into how we operate, we run our business plan by working off our To Do List. Everyone has their own list. However for any line item to make the list it has to pass these questions: (A) does this make money? or (B) does this improve or advance our technology?. The accountant and I are the only persons who engage in activities outside of (A) or (B) because of our administrative role.



The Company has faced unprecedented challenges in the last 20 months; chief among them is the sharp decline in our stock price, two management changes; re-tooling of the business plan; introduction of new products and new revenue opportunities in Europe. I am not alone in my efforts, everyone in this Company does what is required when called upon, and often times more. I am surrounded by wonderful and talented staff.



Corporate Preamble:



10QSB for September 30th 2004. Late filing.

We are late because we have not finalized the financial statements internally. We will provide more information as we can in the next 10 days.



Review of the fiscal performance:



We are continuing to reduce overhead costs. Our US Licensee has built all of our ice blast units in 2004. This has contributed to a reduction in overhead and also a reduction in working capital requirements, such as inventory and reduced the days outstanding of our accounts receivable.

The results for the six months to June 2004 reported a loss of $720,967. By excluding the non operating expenses, the operating loss for this six month period is $366,728. Non operating expenses relate to the Visaisouk Note of $354,239 expensed in June 2004. This restated (unaudited) loss of $366,728 is a significant reduction when compared to the six months loss at June 2003 of $1,116,362. An internal forecast for the second half of 2004 shows continuing financial improvement in revenues and steadying of operating costs. We will not be profitable for the second half of 2004; however, the direction toward profitability is ongoing. There is a realistic opportunity that we could be profitable in the third quarter of 2005 if we continue like we are and the market stays the same.



Cash requirements:



In a small company cash is always front and center. 2004 is the first time we have relied on cash flow from working capital and less emphasis from equity infusions. We have increased sales and gross margins which, has reduced the need for continuous infusions of capital. This is a first for the company. Additionally we have outsourced the manufacture of components we previously built in-house, allowing us to reduce our head count.

I have, together with the newly appointed director, invested $90,000 in September through a convertible note.






Future Cash Needs:



The Company will be offering stock under a Private Placement Memorandum to accredited investors. We are looking to raise $1 million. This money will be used for working capital specifically directed to marketing to expand markets and accelerate our progress.



Stock Price and the Players in the market:



There is no reason for our stock to be traded at 1 cent or less. None.

We have a world class technology and we have Fortune 50 companies as clients. We have been in business since 1995 and withstood competing challenges on our technology over the past 6 years. We do not know of a company that has a similar crystalline ice product that can run for 20 hours a day, 7 days a week. We have sold product to the US Navy; to the nuclear industry; and importantly to the automotive market and we are really close to seeing ice blast equipment in use on the production line to displace high pressure water blasting as the dominant tool for deburring. We have sold equipment to customers in Japan, China, and Europe. Over the summer we presented our technology to German automotive and tier one suppliers. This effort resulted in our first sale, and we are optimistic that we will sell a lot more systems in Europe in 2005.

Universal Ice Blast is a realistic and viable company with an exceptional world class technology. I wish the SEC would clean house of all those market makers and naked short sellers who have driven our stock into the ground.



Everyone in this Company believes in our technology and we are a 100% confident that our revised business strategy is working well as evidenced in the financial results. The results show we are heading in the right direction to profitability.



Pay off of legal suit:



In October 2004 we settled a lawsuit with an investor. The ongoing legal costs would have been greater than the settlement.



Licensee Strategy.



Since we introduced the licensee strategy last year we successfully appointed two companies to manufacture our equipment under license and have them manufacture to the standards as required in North American and Europe. We are currently assessing a third manufacturer for Asia. The implementation of the licensee strategy has allowed us to reduce our overhead costs, increase gross margins and consistently deliver the build quality. All of which we thought we would achieve when we re-tooled our business plan 16 months ago. We are now better able to focus on what we do well, which is to identify new applications and develop ice generation units for these markets. The financial results show that revenues are increasing, costs are reducing, we can build machines in our two main geographic markets, and we have reduced the working capital requirements.






Closing remarks:



We are pursuing a clearly defined strategy. I hope that all shareholders and stakeholders in the company share our optimism for the future. I think you will concur with our assessment that we have a great technology and our prospects for financial health have improved significantly and will continue to improve. The results of our actions are better cash flows, new revenues, new product and continuing improvements in our technology, all of which make the Company more attractive to investors.



I appreciate the support and extraordinary effort of my staff. We are appreciative of the support of all our stakeholders and shareholders.



We look forward to the future.



Sincerely,





Rory Clarke,

Chairman, CEO.





This press release contains forward-looking statements relating to future events or future financial performance that involve risks and uncertainties. The words “believe,” “expect,” “intend,” “anticipate,” variations of such words and similar expressions identify forward-looking statements but their absence does not mean that the statement is not forward-looking. These statements are only predictions and actual results could differ materially from those anticipated in these statements based on a number of risk factors. Forward-looking statements in this press release include, without limitation, statements that, we look to extend our improvements going forward as the industries we serve show signs of a return to health. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement. Management has adjusted the presentation of the June 2003 six month financial statements show the operating loss excluding the write-off of the Visaisouk Note. The note write-off is deemed to be a non recurring expense.





http://www.iceblast.net/chairman11_24_04.htm