Investment Summary

Company Overview

Alternative Construction Technologies, Inc. (ACT) is a leader in the production of structural insulated panels, or SIPs, and other SIPs related products. The company's proprietary and unique, patented, and interlocking SIPs are used in the residential and commercial construction industries. The company's panels are used as a cost effective, energy efficient, disaster resistant and environmentally friendly and socially responsible alternative to conventional materials such as lumber or bricks and are at the forefront of "green" building technology. The company also produces Federal Emergency Management Association (FEMA) compliant in-house safe rooms for protection from natural disasters and home intrusions. The company's panels are used to quickly erect wall and roof structure and believes its' panels are superior to frame and block construction materials due to: superior strength and load characteristics, superior wind ratings, superior R-factor, reduced construction labor costs, speed and ease of assembly and, additionally, its' resistance to fire, moisture, mold and insects. ACT anticipates becoming a vertically integrated company by adding building and contracting subsidiaries that use their SIPs and install their safe rooms.

Industry Overview

In August 2004, the construction industry was estimated to have surpassed the annual run rate of $1 trillion dollars per year in the U.S., according to the U.S. Census Bureau. Demand for new homes has been further enhanced by damage caused by natural disasters, including recent hurricanes and mudslides. The construction industry has largely maintained the status quo in its use of conventional building materials such as bricks, in block construction, and wood, in frame construction, to the detriment of build speed, labor costs, energy efficiency, structural integrity, disaster resistance and fire, insect, moisture, mold and mildew resistance in comparison to other available products, such as ACT SIPs. Alternatively, SIPs, or Structural Insulated Panels, are a universally viable alternative comparing favorably against each of the characteristics listed above. Furthermore, Alternative Construction Technologies' SIPs are environmentally friendly, sustainable, socially responsible and completely recyclable. Despite the long-term status quo, building and consumer buying trends are finally beginning to change. "Green building" techniques and materials, as well as energy efficient building, is beginning to gain momentum. While SIPS currently represent only 1% of the total market share, statistics have recently shown that the SIPs market is experiencing growth at about 15% annually. ACT aims to play a major role in the accelerated growth of the "green building" and SIPs related marketplace.

Product Overview

The company's products are used in the construction of high-rise, commercial, industrial and residential buildings, including affordable housing, high-end elegant homes, "fabrication on demand" homes, modular construction such as "portable" classrooms and most any storage structure application. Primary benefits of use include: substantially reduced build time, reduction in heating and air conditioning costs of up to 30-50%, increased protection from natural disasters and many environmentally friendly and socially responsible aspects of our materials. The company's SIPs have undergone extensive testing by the following organizations:

Manufacturing Overview

From its 154,000 square foot, company owned manufacturing facility in Bolivar, TN, ACT has the current capacity to produce approx. 7.5 million square feet of structural insulated panels per year. From this same facility and with two additional lines of equipment, ACT has the ability to produce over 22.5 million square feet per year from this location. This production capability translates to approx. $25 million and $75 million in sales, respectively.

Competition Overview

ACT sees no real competition in the sale, manufacture and applications of its products. Although there are several companies that compete in the category, to date, ACT knows of no other companies providing the quality and strength, nor all the features and benefits that ACT SIPs panels can claim. Most other known SIPs are made with OSB (oriented strand board) for their "skins" (outer layers). ACT SIPs use galvanized steel "skins" and a proprietary strengthening technique which provides numerous structural and integrity benefits. The manufacturing process is also protected by patents. It is for this and other above listed reasons that ACT believes it continues to be selected for large contracts instead of other SIPs manufacturers. Furthermore, ACT sees the current market share small enough and the potential market opportunity large enough to support several SIPs manufacturers.