To: The Shareholders of LEEP, Inc. From: The LEEP Management Team March 24, 2006
Sales Update
LEEP, Inc.’s (“LEEP” or the “Company”) Management team is focusing its sales efforts on developing sales with companies that will become long-term large-volume users of the Company’s LeepCore panels. During the past three months, the Company has identified and is developing relationships with four large-volume prospects. An overview on the sales activities with each of these companies follows:
PROSPECT #1:
LEEP has been working with a company that manufactures containerized buildings for public and private applications in domestic and foreign markets. Following three months of discussions, LEEP has agreed to furnish four thousand (4,000) square feet of LeepCore panels to construct a prototype building of their light-weight transportable housing and office base units. The prospective customer will pay all expenses related to the construction of the prototype building including but not limited to the building design and engineering, LeepCore panel shipping expenses and building fixtures and furnishings. Completion of the prototype building is expected within 45 days. This anticipated customer currently has a significant backlog of orders and is planning to sell the new LeepCore constructed buildings as a replacement for their current transportable housing and office units starting in June 2006.
PROSPECT #2
HUD, FEMA, Department of Agriculture and Mississippi government funding policies have been defined and are being implemented. In addition, new flood planes have been established in southern Mississippi. With all of this now in place, developers in Mississippi are now getting ready to start the massive job of building the replacement housing, commercial and public buildings that were destroyed. Additionally, new residential developments to accommodate major relocation programs are getting underway. Management began developing relationships last November with an eastern group that is planning large, new residential development projects in the State of Mississippi. This prospective customer has major land holdings in Mississippi. Their plans are mainly focused on constructing low to medium-cost housing in the size range of 1,000 to 2,000 sq. ft. on properties they own. The planned average home price will be in the range of $100,000 to $200,000. Low income LeepCore multi-family housing is also being considered. This prospective customer plans to build higher-quality, affordable homes by starting with LeepCore panelized construction that can be phased quickly into Factory-built, permanent- construction. Management is currently working out design and other details with this customer for construction of the first of many planned LeepCore homes in Mississippi.
PROSPECT #3
The Company entered into a Distribution Agreement with Gulf Coast Industries (“GCI”) during the fourth quarter of 2005. GCI has entered into a Letter of Intent and is preparing a Joint Venture (JV) Agreement with a significant modular homebuilder to establish a new modular manufacturing plant in Mississippi. This JV plant plans to use LeepCore panels to construct the walls and roofs of its factory-built modular homes. GCI is forecasting that it will take approximately ninety (90) days for the new production plant to become operational.
PROSPECT #4
LEEP has recently appointed a Factory Representative to work with school districts throughout the state of Florida to capitalize on the Company’s successful completion of the five-building, forty-classroom Baker County School District construction project. Potential new sales include a classroom project that is being submitted in March, 2006 to the School Board Trustees for their approval to construct twenty (20) LeepCore classrooms. Approximately 60,000 square feet of LeepCore panels will be required to construct the walls and roofs for this project. Construction is scheduled begin during the summer of 2006.
LEEPCORE HIGH-SPEED LAMINATOR FUNDING LEEP management is working on agreements with an investor/development group on the coast of Mississippi. After a two-year planning phase, this investment/ development company is implementing a comprehensive redevelopment project in southern Mississippi. The total planned funding for the redevelopment program exceeds $2 billion dollars. The redevelopment project includes construction of 5,000 new homes, a new high school, public buildings, retail outlets and a new industrial-park complex. LEEP has successfully negotiated an initial term sheet and is now firming up a formal Letter of Intent with this Mississippi-based company. As part of the terms of this agreement, Management is structuring a $34 million loan, coupled with a long-term lease on a build-to-suit manufacturing facility to house the Company’s first automated LeepCore lamination plant. Management believes that this funding structure can be brought into final form for signatures by May, 2006.
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