Archie's Corner

[Paule]

Leading Edge Eart Products OTC-BB LEEP

Special Reports:
By Lawrence C. Oakley

There are occasions when I find a company that is sufficiently interesting to
bring to the attention of not only my regular Conservative Speculator
readers, but to the attention of everyone who visits WallStreetCorner. This
is the first such Special Report. I have been following this company since
late 1998. In March 1999, I did a Sneak Preview, & in July 2000, I did a
recommendation. Things have been progressing fast at LEEP, so I decided to
use LEEP as my first situation to include as a Special Report.

Leading Edge Earth Products, Inc.

EMERGING GROWTH COMPANY -- UNIQUE NEW BUILDING MATERIAL

Key Facts:

Business: Frameless Building Technology
Listed: OTC Bulletin Board
Symbol: LEEP
Shares Out: 39,724,254
Approximate Float: 12 million shares
Market Cap (at 10/9/2000): $8.3 million
Current Assets:* $392,489
Total Assets:* $1,834,050
Current Liabilities:* $938,366
Long-Term Debt (Leases):* &848,424
Accumulated Deficit:* ** ($7,465,832)
Shareholders' Equity:* $47,260

* At 7/31/2000; Production has recently begun, so no P&L
numbers are as yet
available. When they are, I will update this Special Report.
** Accumulated during development stage.

Overview

Leading Edge Earth Products, Inc. (LEEP), incorporated 12/23/91, became
public via a reverse merger in 1993. LEEP developed & manufactures a
composite structural insulated building construction compo-nent known as
"LEEPR STRUCTURAL CORE" (LEEPCORE). It is the basis of LEEP's proprietary
Frameless Building System.

The LEEP Building System offers high strength, lightweight, R25-value
insulation, non-combustibility; & insect, corrosion, high-wind, &
water-damage resistance. Pre-engineered Leep LEEPCORE building sections are
used for construction of bearing walls, commercial load sub-floors, roofs, &
such other structural detailing as elevator shafts, sound-proof rooms, etc.

The potential for this emerging technology company is amazingly
attractive. When used to build one- or two-story buildings, the overall cost
is considerably less than when using more traditional materials, even though
the material cost is higher than that of traditional construction materials.
The total cost is lower because the labor cost is much less, & labor is a
major component of the total cost of any building.

I interviewed Grant Record, founder & CEO when he was at the top of a
new 8,000 square-foot two-story office building that was being constructed in
Houston using LEEP's panels. The building is Brance-Krachy's new corporate
headquarters. The LEEP panels are being used for the 24' high perimeter
shear walls, the second floor commercial floor system, & the elevator shaft.
Record says: "This $100,000 order is important to LEEP because it
demonstrates that our building system is capable of prevailing in intense
competition; we emerged in Houston as the competitive-cost, high-performance
bidder. The order was secured by Larry Cook & Associates of Houston, our
first regional distributor."

This building serves as an effective demonstration of how the system can
be used to save money both in construction, & in the cost of heating,
cooling, & maintaining the building once it's built.

On 4/20/2000, LEEP acquired the assets of LEEP Building Systems, Inc.,
the company's manufacturing affiliate in Pennsylvania. This allows LEEP to
have control over its manufacturing technology, equipment, & processes. It
also leased a 33,000 sq.ft. manufacturing facility in Montoursville, PA where
it installed a new 120-foot 3-stage rollformer it developed to produce its
steel skins more economically. Within the next quarter, LEEP should be able
to produce enough panels to build about three buildings per week.

The engineering advantages of the product are impressive. In regular
types of construction, the insulation value is greatly reduced by the solid
wood or steel connection between the outside surface of a wall & the inside
surface. Not so with LEEPCORE panels -- they do not have such a heat
conducting connection, so heat transfer is far less & insulation value far
greater. With LEEPCORE panels, there is no uninsulated connection. The
result is that in a building made using LEEPCORE panels, the cost of heating &
air conditioning is substantially reduced -- a great advantage in Houston.

I like the fact that a building made from LEEP panels won't burn down,
won't be blown down by a hurricane, & will provide lower costs during & after
construction, excellent sound insulation, water resistance, & other benefits.

Additional wind-resistance tests were recently completed, with the force
applied to the side of a wall section, the most dangerous direction. The
results indicate that the LEEP walls will withstand wind gust speeds greater
than 200 MPH.

I interviewed Larry Cook, LEEP's new regional distributor. He told me
there have been a large number of innovations in the building that LEEPCORE
panels have provided. For example, the panels were used as interior
partitions for a sound-proof room -- he says they provide an amazing degree
of sound insulation.

LEEP's part of the construction is completed, & the expected move-in
date should occur about the time this profile is published in 8/2000. You
can see color photos of all of the various stages of construction using
LEEP's panels at LEEP's Internet site at www.leepinc.com, & at Cook's site at
www.lcook.com/leep.htm.

LEEP's production of panels began about three years ago in a 5,000 Sq.
Ft. pilot plant in PA. LEEP recently purchased an option to buy a 109,000
Sq. Ft. plant in Walla Walla, WA which it plans to enlarge to 130,000 Sq. Ft.
to house a continuous production line (as opposed to its current batch
process in its new 33,000 Sq. Ft. plant in PA). Assuming the financing LEEP
is organizing is funded in a timely way, manage-ment expects to be shipping
from the Washington plant in 2001.

The plant is expected to be funded through an application to the USDA's
RDA (Rural Development Agency) loan guarantee program for a $20,000,000
20-year debt financing to be used for purchasing the required assets &
providing adequate working capital. The Omni Bank of Houston has agreed to
be the bank of record required by the Federal Government -- an important step
in the application process.

The plant will serve as a model for a series of such facilities planned
to be constructed in the future throughout the world to meet the expected
long-term demand for LEEPCORE product. The continuous full-scale plant is
designed to produce 80 square feet linear feet of 24-inch wide LEEP
Structural Core per minute, on a three shift per day basis.

Calculations

Management would not divulge any numbers regarding production, revenues,
etc., so being an engineer, I did some simple computations strictly on my own
-- here they are:

40' per minute x 2' wide = 80 Sq. Ft. per minute. A continuous
production line like this is normally run 3 shifts, without interruption.
Instead of reflecting downtime on a daily basis, he assumed the line would
operate five days a week, with the weekends reserved for routine maintenance.
80 Sq. Ft. per minute x 60 minutes per hour = 4,800 Sq. Ft. per hour. In 24
hours it is 115,200 Sq. Ft. per day. A five day week gets us 576,000 Sq. Ft.
per week. If we assume 48 weeks per year of operation (one week per quarter
being allocated for major maintenance), that comes to 27,640,000 Sq. Ft. per
year.

27,640,000 Sq. Ft. x $7 per Sq. Ft. sales price = $193,536,000 per year.
The $7/Sq. Ft. price is based on the fact that industry-standard 4' wide
steel/foam "curtain-wall" panels sell for around $5/Sq. Ft & do not generally
serve any structural wall, floor, or roof applications.

To be conservative, I assumed the company only performed to about
one-half of its capacity. That still computes to about $100,000,000 in sales
coming out of each LEEP plant. I was further encouraged to hear that LEEP's
breakeven is expected to be less than 20% of its plant capacity, which means
there is a bit of additional safety in the figures.

I feel that LEEP may very well become a type of grass roots industry
company that investors can see as having "Fortune 500" potential with less
risk than Dot coms offer. Actually, it is a true hi-tech play -- hi-tech in
terms of its advanced proprietary processes & the unique advantages of its
product. We can add to that the economy of scale & automation LEEP has built
into its manufacturing process.

I asked around, & it appears that in this industry, the net after tax
profit is in the 10% category. Assuming it's only 8%, that would come to $8
million on sales of $100 million. With about 40 million shares outstanding,
that would be about $0.20 per share; again, from each plant LEEP builds over
ensuing years.

I usually use a price to earnings ratio of 20 to 1 for a company that
has a high-quality product, proprietary technology, & substantial market
potential. At a P/E of 20, the stock value expected after a year of such
operation from the first plant in Washington would come to $4. Is this
guaranteed? Of course not, but this exercise does demonstrate that there is
good potential, though you should keep in mind that all emerging growth
situations have high risk.

Management

Grant C. Record is founder, CEO, & VP corporate development. He was the
founder of Data I/O.

Kenneth A. Rogstad is president. He was owner & CEO of H.W. Blackstock
Co., a major panelized building systems company with annual sales of over
$100 million. He was a director of the Federal Home Loan Bank, & is a
director of the Washington Housing Development Corporation.

Donald C. Bazemore is chairman. He is a Seattle architect.

L. Eugene Laughlin is executive VP. He has extensive experience in
marketing & sales positions with Boeing Commercial Airplane Co. & with the
Ford Motor Co.

Key Advantages

LEEP's product has so many advantages for low-cost (based on low labor
cost construction), subsequent low heating & air conditioning cost, high
structural strength, fire resistance, sound insulation, & other beneficial
characteristics, I see it being very popular in Third World countries as well
as in the more wealthy countries in North America, Europe, Asia, South
America, & the Pacific Rim.

If my assumption is correct, then the first large-scale production plant
planned for Walla Walla may well be duplicated in many of those countries. I
do not imply that this will occur quickly -- I comment only to suggest that
LEEP's long-term potential is worth checking out.

I see LEEP as a truly high-tech company in the disguise of a building
construction material manufacturer.

This company is moving so fast that I am having a hard time keeping up
with the milestones being achieved -- as an example, see the special section
I added titled: "And.... Since This Special Report was Prepared:"

Don Bazemore, LEEP chairman, says: "Putting on my architect's hat, I'd
like to review why an owner would want to buy a structure made with LEEP
Structural Core, why a contractor would want to build with it, and why an
architect would want to design with it:

"The owner will appreciate that the building is not likely to blow away
or burn down. That has implications for user-friendly insurance. The
thermal insulation factor promises savings in energy costs. The life-cycle
cost will be very low -- it likely will outlast the owner.

"The contractor will like the fast construction. Labor time saving is
pure gold in our industry.

"The architect is usually unconcerned about the material to be used. The
architect's major concern is space and `what can I put in the given space to
give the client the most and best for his or her money'. The architect will
appreciate that Leep Core is strong and light. It rivals Buckminster
Fuller's dome, without the complexities of that construction. It promises
design and applications beyond today's norms.

"Once an architect is made aware of Leep Structural Core's features, he
or she will have a fiduciary responsibility to the client to make the client
aware of Leep Core and its advantages."

LEEP is emerging from its R&D phase into its production phase; I will
update this Special Report as various milestones are reached (I already had
to). Here a few specifics that stand out:

o Created the LEEP Structural CoreTM building system
o Insulated steel panels have R25-value insulation
o They are non-combustible
o They resist insect, corrosion, & water damage
o They withstand 200 mph winds
o Manufacturing plant in operation
o 8,000 Sq Ft two-story office building completed in Houston using LEEP's
panels for its construction
o Construction cost less than when using other materials
o Maintenance cost of finished buildings substantially less
o True high-tech play in terms of its advanced proprietary manufacturing
processes & the unique advantages
of its product
o Revenue & profit potential are substantial

And.... Since This Special Report was Prepared:

o LEEP was reclassified by its auditors from a "Development Stage" company
to a "Full-fledged Manufacturing"
company
o Filed a pivotal 10K as a manufacturing company
o Filed a major 43-claim patent application to protect its entirely new
building system, based on its proprietary
LEEPCORE Composite panel technology
o LEEPCORE passed its fourth & final major structural tests (clad
structural floor & long-span roof) with
numbers ranging from two to four times building code requirements.
This test completes certification of
the fact that LEEPCORE serves equally well in commercial wall, roof, &
floor construction.
o The new plant in PA is in its third month of production ramp-up. Both of
the new semi-automatic production
presses are operational, plus the automatic cut-to-length line that
handles, sizes, & cuts to length LEEP's
proprietary 7,000-pound coiled metal material, plus the new 100-foot,
three-stage proprietary metal roll
forming machine that automatically forms LEEPCORE metal prior to foam
injection
o LEEP just published its first issue of "LEEPLINE," its new shareholder
newsletter. You can request a copy
when you call LEEP.

I called the new LEEPCORE building owners in Houston, TX at
Brance-Krachy, Inc. I learned that they are extremely pleased with their new
two-story LEEPCORE office building in downtown Houston. It seems that
Brance-Krachy employees had to wear sweaters & jackets to work during the
recent Houston 112 degree temperature weather. That was while the LEEPCORE
"Ultra Insulation" building was running on almost one half the air
conditioning company's recommended capacity. The owner says that so far
their utility costs appear to be running about 50% of the costs they
experienced in their previous building. That's a rather impressive statistic
for LEEP's new building system.

Management will not admit to anything specific regarding meaningful
orders or substantial customers, & they are correct in taking that position,
but in talking with LEEP's first customer in Houston, I certainly get the
sense that LEEP will be a significant factor in future building construction.

Contact

Call 206-780-9458, 888-701-5511, or 800-788-3599, fax [phone],
e-mail [e-mail], or write Gene Laughlin, executive VP, at Leading
Edge Earth Products, Inc., P.O. Box 778, Duvall, WA 98019-0778.
www.leepinc.com

http://www.investorshub.com/beta/board.asp?board_id=451

http://quotes.freerealtime.com/rt/frt/M?IM=quotes&SA=quotes%7CChart&type=Chart&symbol=LE...

A month ago this read 95 and 85% overall

http://quotes.barchart.com/texpert.asp?sym=leep&code=BSTCZ

First time I've seen this negative to tell you the truth.