Interview with: A.J. Francel, COO - featuring: their unique and patented construction technology called the ACTech® Panel System that is used in the design and production of state of the art buildings in commercial, residential, industrial and modular building applications.

Alternative Construction Technologies, Inc. ACCY.OB
(AMEX Application made, proposed symbol: SIP)

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Political Climate And Consumer Preferences Align With Environmental And Energy Efficient Values Of Alternative Construction Technologies’ To Establish New Standard For Fast Growing Future Of Technology Driven Construction Materials

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Construction-Commercial, Government & Residential
ACCY.OB (AMEX Application made, proposed symbol: SIP)

Alternative Construction Technologies, Inc.

2910 Bush Drive
Melbourne, FL 32935
Phone: 800 859 8813

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A.J. Francel
Chief Operating Officer

Interview conducted by:
Lynn Fosse, Senior Editor
Published - September 14, 2007

A. J. Francel
Chief Operating Officer, Alternative Construction Technologies, Inc.

 A.J. Francel is the Chief Operating Officer and the Corporate Communications Officer for Alternative Construction Technologies, Inc. Mr. Francel has a financial, administrative, sales and communications background with publicly traded companies. He also has marketing and sales, operations and manufacturing experience in the field of alternative materials and environmentally friendly and socially responsible products. He has served as a Senior Advisor at an Advisory and Intermediary firm where he analyzed businesses to determine value and/or remedy efficiency and costing issues. Mr. Francel was bonded and licensed in the U.S. Securities and Insurance Industries for 12 years as a retail and institutional broker. He has held Series 7, Series 63, Life and Health, and Fixed and Variable Annuity licenses and has served at various capacities within the industry. Mr. Francel resigned from A.G. Edwards and Sons in 1997. Since, Mr. Francel helped to successfully grow an environmentally friendly alternative materials company to over $500 million in projects under development and an $820 million dollar market cap. Mr. Francel has served as an employee or a consultant to several companies providing Investor Relations, Public Relations, Media Relations, Funding and Sales & Marketing expertise. He has considerable experience with the "Environmentally Friendly", Organic, Sustainable and United Nations communities. His experience with and relationships in the United Nations, federal and state governments, Securities Industry and business are invaluable resources and are helping to position the company globally and politically.

Company Profile:
Alternative Construction Technologies, Inc. (ACCY) possesses a unique and patented construction technology called the ACTech® Panel System that is used in the design and production of state of the art buildings in commercial, residential, industrial and modular building applications. Generically known as structural insulated panels (SIPs), ACCY’s revolutionary and efficient construction solution utilizes an inherently better galvanized steel “skin” SIP system to complete energy efficient, stronger, safer, faster, and more economical structure than conventional wood and brick based building products. The patented ACTech® SIP system is environmentally-friendly and easier to construct with – not only saving labor cost and cutting construction time, but also reducing recurring monthly heating and cooling energy bills by 30-50% and  often more. Most importantly, the ACTech® Panel System possesses disaster tolerant strength and has tested stronger than conventional concrete block or wood frame construction. In hurricane projectile tests, the ACTech® Panel System has proved to meet or surpass the most stringent wind, projectile and uplift codes in the nation levied by the 2006 Florida Building Code. The ACTech® Panel System offers builders and consumers many competitive and comparative advantages of use due to its wide range of features and benefits. As this new construction technology gains awareness or hurricane- and tornado-prone states establish new energy efficient and disaster tolerant building codes and rebuild from recent weather disasters, ACCY believes its’ products will be in greater demand.

CEOCFO: Mr. Francel, what is your vision as you have become a public company?
Mr. Francel:
“Hi, and thank you for having us. We envision becoming a global supplier of e-friendly, energy efficient, safe and healthy buildings and building materials that improve the economics of construction and home or building ownership. We have changed our name to Alternative Construction Technologies in order to address more widely the positive changes in the construction material world and the ever-growing dynamics of earth friendly and energy efficient consumerism. Our vision is to become a vertically integrated provider of alternative building materials and the components that add up to a very safe, healthy, energy efficient and economical home. The economics are designed to work NOT ONLY for the homeowner but also for the builders that choose to use them. So we have changed our name and our disposition in order to more directly pursue this vision.”

CEOCFO: Please tell us about your unique technology.
Mr. Francel: “Our technology is generically known as a structural insulated panel or SIP, but we call ours the ACTech Panel system. There are hundreds of individual small cottage type businesses that are in the structural insulated panel business, but we differ in a couple of important ways. One way is the product and construction system itself. We produce a patented, structurally reinforced galvanized steel skin that surrounds a rigid polyurethane insulating foam core. This combines efficiently to provide excellent structural strength and high insulation value. The combination gives builders and consumers a simple and easy to use material that is strong, disaster resistant, mold/mildew and fungus resistant, as well as, termite resistant. There is no food value, so termites and many other insects choose not to nest in it. Most notably, it saves 30 to 50% and even more in some cases, on monthly energy expenses, so it lowers the monthly budget. We also differ further with our material in how we manufacture the material. With 9.6 acres of property that has a 154,000 square foot manufacturing facility, we certainly have a lot of production capacity. Typically, it’s considerably more than most others who make SIPs. How we produce is a matter of our product and process patents. Our process patent allows us to make one very large continuous panel and cut the panels to specified lengths to meet the customers’ needs. This differs significantly from other members of the SIP industry who must cut their lengths first and then construct or glue the material together as a secondary consideration. Conventional construction has to cut and configure raw materials in the field with expensive labor. What that offers us is a comparable advantage and great production leverage over competitors, and therefore the economic leverage almost always works out better too.”

CEOCFO: Who is using your materials now?
Mr. Francel: “We are a pretty attractive solution to most aspects of the construction market including residential, modular, commercial, and industrial applications. The material works very well in “big box” type applications. Those include anything from warehouses, larger restaurants and/or retailers that have lots of space and high ceilings that desire energy efficiency. Builder developers that want to build residential communities fast and economically are also prime candidates. Generally, they want to throw buildings up rather fast and time and labor savings translate to higher profits for builders. These are all great applications for us. In most residential applications, we are cost effective. Geographically, we have a growing foothold across the entire South East and Gulf Coast regions. Desert regions are also seeing activity. We address the gamut in the housing market…. everything from the hurricane replacement market to the state housing initiative programs, which is government money, allocated through state and local governments for low-cost housing, right on through affordable and/or custom jobs. Single story, multi-story, multi-family or housing tracts are all areas that we work. We also provide materials or complete buildings relative to modular. For example in the state of Florida, we are generally suppliers for between 70 and 130 portable, modular, or scalable classrooms per month. We have one customer that can completely finish 8 portable classrooms per day using our panels.” 

CEOCFO: How do you generate new business?
Mr. Francel: “In general, it’s kind of like ‘viral’ marketing. People see it and they want if for themselves or tell someone. Like Kevin Costner says, ‘Build it and they will come.’ The website videos and media hits have also been very effective. For the most part, we have been suppliers to the modular builders and classroom market for several years and it has been the primary component of our business. We have diverged from that recently and more aggressively begun to pursue the residential and commercial side of the business just in the last several months. In the company’s history, we never did much advertising and marketing, it sort of sold itself. But now we are in the midst of launching a major campaign that is pretty much targeting the coastal communities one hundred miles inland from Texas all the way around the coastline of the Gulf of Mexico including all of Florida, and some desert regions. Because these markets address the best cross section of our product features and benefits- just about every feature and benefit that our material has can be effectively utilized in those markets – so naturally, we have targeted print and broadcast marketing efforts in those areas. The campaign begins this month, be on the lookout.”

CEOCFO: Why is this the time for the company to have gone public and to have put on this initiative?
Mr. Francel: “We feel like the time is right because we have gone through years of prototyping and testing and as far as making our claim, we feel that there is no other company that has the number of features and benefits that our product has or the level of quality, at any cost. As a result of 9 years of testing, prototyping, third party endorsement and those sorts of efforts, we also feel that we have positioned the company and gotten efficient internally. We know of no company that has expensed the amount of product testing or approvals that Actech panels have, it’s over $7 million spent. We have also set up our document flow, our supply chain requirements, our finance requirements, and all the things that are necessary to have customer satisfaction. We have even applied for the American Stock Exchange. Separately, we had a business revelation and changed how we view ourselves and our customers. Our revelation was that we have two customers: the consumer AND the builder. In a way, we felt we are very much like Intel. To advertise a chip to consumers will not necessarily generate a chip sale. But, to co-market or co-develop computers, or companies that utilize the best chip in it, probably will generate more sales. So we now drive sales to builders who want to build with our materials in their buildings and help to promote them at the local level. This is now the basis of our sales and marketing efforts. In the end, co-developing a market region and providing advertising and media attention with the builder, should attract both the builder and consumer as satisfied customers. We also get ACTech Panel recognition, which we then try to leverage into new markets and regions. All of those ideals and alignments that bring a business together and position it properly for success; we feel we have now accomplished those things, this is why it is the right time.”

CEOCFO: How do you reach your target customer?
Mr. Francel: “We have relied in the past heavily on word-of-mouth, internet and the visual experience. Very often when people see the material at work or someone building with it, they get quite inquisitive and want to know about it, and that creates a buzz in the community. It also helps that we usually provide on-site projectile testing comparing against other materials and invite the media. We take every opportunity we can to build on that opportunity.

We also reach out to our target customer through mailings, salespersons, manufacturers reps., referrals, broadcast media, etc. When somebody develops interest and wants to learn more, we concentrate our efforts to try to bring that builder or consumer to a level of interest that they want to take action. Once either one of them takes action, we either go to work to put a builder in their hands, use one of our internal companies to build for them or we develop the builder in that community that is interested in differentiating his business from traditional builders by incorporating alternative materials into his business. There is a reason we feel that that builder should want to do this; the market in any given builders’ geographic area there is generally a me-too type of mentality. Each builder is building with the same set of materials from generally the same set of suppliers in the area. The benefits that that builder may have are relative to reputation, speed, and cost-not necessarily inherent features and benefits. Ultimately, we are a selling and manufacturing organization and our company sees ourselves as customer development specialists in the end. We are trying to support these builders and bring them forward in a way where they have the opportunity to lower their labor costs, and differentiate themselves from the other builders in their market and provide a better-finished product. They can also satisfy the growing and changing needs of consumers who want the energy efficient, environmentally friendly homes with indoor air quality improvements and acoustical value improvements, termite resistance, low maintenance costs and things of that nature. While providing what consumers want, the builders basically improve their profits, their speed of build, and lower their cost of labor. Ultimately, they should fare better than their competitors. Therefore, they get a competitive edge. Anytime that a builder or a consumer can buy something that has somewhat of a hedge against rising energy prices and you can document those economic values, I think that they will probably take that choice and say yeah!”

CEOCFO: What makes you feel people are ready?
Mr. Francel: “I think that now is the time. First is the ‘policy’ climate. Whether it is the United Nations; UNEP and their Climate Conferences; the continued work of: Dr. Noel Brown, the Governor of Florida Charlie Crist or Governor Arnold Schwarzneger of California;  the New Millennium goals; State e-Friendly and energy efficiency bills that are beginning to pass across the nation; growing severe weather phenomena; rising temperature and utility costs; insurance company losses; solar initiatives; and many other things of that nature-- world leaders, policy makers and businessmen are beginning to connect all the dots. There are plenty of political initiatives out there that suggest that these changes must take place soon. The whole topic of global warming is very evident when we look at temperatures of 95 to 100 degrees at seven o’clock at night. Most people you talk to agree that this summer is hotter than last year, wherever they live. Secondly, is the issue of consumer sophistication and activism. Consumers are beginning to see the consequences of depleting the ozone and rising energy and insurance costs hitting them in their pocketbooks. Evidence of storm damage is on the news everywhere. All of these things come together for the sophisticated consumer on how to look at costs and their budgets. It used to be that the consumer would just itemize each expense individually. Now they tend to take a more sophisticated view of how they treat their money. Maybe the cost of buying a home is not just a function of what the mortgage payment is; maybe their cost of living is more a function of the mortgage payment vs. a reduced energy cost and lower insurance expenses. Collateral expenses are also important considerations. All in all it is a monthly budget and if they have a way to blend the components of that monthly budget and lower their monthly cost, then they will consider purchasing a home made w/ ACTech Panels. This is one of the things we try to stress when we are discussing the sales of our materials, how the economic benefits really work.”

CEOCFO: What is the financial picture of the company?
Mr. Francel: “We are measured in quarters…. and in years and we are in this for the long haul. We have been running at about $10 million in annual sales. We have the capacity for about six times that volume. Our financial picture is that we have become profitable so far this year. This in part because we have continued to find efficiencies within our business to offset the inflationary prices of materials and downturn in the industry and still remain profitable. The construction market has had a difficult period of time post real estate ‘bubble’ and we are a part of that overall industry. Many of our customers have suffered and yet, interestingly, many others haven’t. Although we do have current challenges, our sales pipeline remains very robust and active and still grows despite the difficult timetables and delays inherent in construction. Timing can be unpredictable. Nonetheless, we are encouraged about our past, our future and we are always working hard to manage the challenges of now.”

CEOCFO: Acquisitions have been part of your growth; will that continue?
Mr. Francel: “Yes, we have a growth plan that is organic growth as well as acquired growth. Our acquired growth plan targets materials and products or construction related services that compliment our core business strategy and/or lower our overall cost to build. Our philosophy here is that many builders and/or consumers want to shop building material prices and they want to buy these materials basically as a commodity; that is typically how the lumber and brick industry is. They are commodity businesses driven primarily by price. We are constantly asked to quote materials on a material versus material basis. However, it is not an effective comparison, because the ACTech panel system offers so much more. For a more realistic comparison it is better to ask the question: ‘If I could sell you a building material for $1.00 per square foot or I could offer you a building material that was $19.00 per square foot, but when you are all said and done your cost to build was actually $100.00 per square foot with the $1.00 material, and the cost to build was $95.00 per square foot with the $19.00 material, which material would you choose to buy? Invariably people will take the $19.00 and $95.00 choice, but getting people to understand that the efficiencies of our materials go well beyond the cost of the material itself on the surface, that is our challenge. In short, our acquisition strategy will continue to encompass whatever offers a safer, faster, more efficient e-friendly home or building without increasing, or even reducing, the cost to build by delivering upon these efficiencies. Our organic growth involves expanding each of our current and new markets while continuing to support and develop existing customers with product sales.”

CEOCFO: In closing, why should investors be interested in Alternative Construction Technologies and what might they miss about the company that should jump off the page?
Mr. Francel: “Great question! From an investor’s standpoint, I think that history has typically shown that successful investing can usually fall into a revolutionary economic theme. As an example, there was the independent transportation theme at one point, a.k.a. the advent of the automobile, it didn’t necessarily matter what component of the automotive theme you bought. It was revolutionary in nature. You could have bought companies in petroleum products, streetlight signals, tires, automobiles, paving equipment, insurance, it didn’t matter. If it was something connected to the automobile that general industry or sub-industry thrived under an overall economic theme and the same is true for many other investment cycles. The advent of the computer industry and the subsequent technology advances and efficiency gains caused by that industry also provided many investment winners. The same of the medical industry and biotech; first it was pharmaceutical then came the advent of the biotech industry once traditional plant and peptide based research had become exhausted. All were investment themes and if you invested in one of those themes and chose wisely within, your investment success was pretty much assured. At this point in time I do not believe that we are at the stage where space travel and galactic farming is an investment theme yet. However, I do believe e-friendly or earth-friendly and energy efficient construction on earth to protect the earth is a theme that is rapidly developing and we are now starting to see the policy changes and political positioning about global warming and conscientious consumerism that are shaping a prolonged trend. The evidence is out there to support this. The United Nation projects a multi-million home shortage and 3 billion people living in slums over the next 10-12 years. That sounds like a worldwide housing shortage to me. Their proclamation: We must get smarter about how we build, what we build with and how to make it last without depleting Earth’s trees. Something that also supports this is the severe weather patterns that are developing and expected to happen for the next forty years and the many consequences thereof. As an example, the hurricanes that hit Mississippi, Louisiana, and Texas recently- most people think the damage is usually one-time damage, but the ongoing damage that nobody has figured out how to quantify until well after the fact is the mold and mildew damage caused by flooding and moisture. Typically, more homes have been renovated, condemned, or damaged due to mold toxicity caused by flooding than the actual storm damage itself. I believe that there is going to be a next trend of activity where insurance companies want to be protected from or will offer discounts for homes that have moisture tolerant or moisture resistant features to them, anything that avoids the mold or mildew toxicity situation. Meanwhile, Florida has already mandated insurance companies offer a discount for those who build with wind mitigating construction materials. This is the theme that we see developing and we want to be positioned for when it begins to accelerate and gets major traction. Then, we would expect to become a global enterprise within that theme.”


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“We envision becoming a global supplier of e-friendly, energy efficient, safe and healthy buildings and building materials that improve the economics of construction and home or building ownership. We have changed our name to Alternative Construction Technologies in order to address more widely the positive changes in the construction material world and the ever-growing dynamics of earth friendly and energy efficient consumerism. Our vision is to become a vertically integrated provider of alternative building materials and the components that add up to a very safe, healthy, energy efficient and economical home. The economics are designed to work NOT ONLY for the homeowner but also for the builders that choose to use them. So we have changed our name and our disposition in order to more directly pursue this vision.” - A.J. Francel does not purchase or make
recommendation on stocks based on the interviews published.