Letter to the Shareholders of Axia Group, Inc.
February 14, 2006
Dear Shareholders:
I have received many inquiries from shareholders and want to apologize that I have not had time to reply
to them all. I hope this letter and subsequent communications to be posted on our web site will help
answer many of your questions. Today I would like to give you an update on current affairs.
Click here for photographs.
Six months ago we began our work in the country of Sri Lanka, an island off the southern tip of India
where thousands were killed and hundreds of thousands were displaced from their homes by a tsunami in
2004. Axia entered uncharted territory when it decided to introduce a new technology for building
homes to this side of the globe. By working in these remote areas, we have learned a tremendous amount
that could not have been gained in any other way. But the rewards have been remarkable and from
these efforts an exciting direction for Axia Group has taken shape.
The Sri Lankan project is run by Raj Janan, who is President of the Axia subsidiary, Axia Building
Technologies. Janan was born in Sri Lanka although he now makes his home in New York City. When
the tsunami struck in 2004, Janan traveled to his homeland to find a way to help. The need for
affordable homes was the most pressing need. In the summer of 2005, Janan met up with Axia to
undertake a project to bring a new panel based technology that could rapidly build strong, weather
resistant homes.
We began by forming a partnership with a Sri Lanka company called MicroConstruction, a division of
MicroCars, a local manufacturer of automobiles and trucks. MicroCars is a well established company
with a strong reputation for innovation and producing results in Sri Lanka. We demonstrated our housing
technology to the Sri Lanka government by building a model home on the grounds of the Housing
Authority back in 2005. The structural and aesthetic qualities were evident and subsequently we were
one of the first groups issued a permit to begin building homes. In conjunction with the German
nongovernmental organization (NGO), S.O.S. Kinderdorf, we were awarded 250 homes to build in the
eastern seaboard city of Batticoala. To date we have completed 30 homes, have another 30 homes
nearly completion and have won the acceptance of the government, many NGOs and the people of Sri
Lanka.
During my visit to Sri Lanka in October of last year, I met with the government and many NGOs who were
closely monitoring our progress. The problem in Sri Lanka is not the people – they are some of the
warmest, most intelligent and industrious people I have had the fortune to meet. The real challenge is
working in areas where all basic support and infrastructure has been literally washed away. We arrived to
a desert littoral where there had once been a village but now had no electricity and no running water --
even the people who used to live in the area have moved away so we had no local source for labor.
We not only demonstrated the superiority of our panel technology, but we also demonstrated our ability
to create, train and manage work teams in remote areas. That was the biggest challenge and again our
greatest success. With this experience we can move our technology anywhere in the world, I am
convinced. Just in the last few months we have indeed had inquiries from Pakistan, the Dominican
Republic and Nigeria to introduce out technology to their countries.
In addition, our technology has promising application here in the U.S. as well. In fact several homes
including higher end residences have been built with this method. We recently hired an individual with
more than 20 years experience in the construction and home development business to begin pursing
opportunities in the Gulf Coast and other areas that need a housing technology that can stand up to
hurricane strength winds and flooding.
I will be returning to Sri Lanka in March of this year with Raj Janan, to meet with the Red Cross, the
United Nations and other NGOs which have seen our development and expressed interest in our
capabilities. It is my hope to return to the US with new contracts to build our strong, simple but beautiful
single family homes, contracts that not only help people in dire need of help, but contracts that are
profitable at the same time. There is a need for nearly 200,000 new homes in Sri Lanka alone, and we
fully expect to be responsible for a fair share of these new developments.
Along with refining our operational abilities, we have made great progress in our pricing and cost
management of these programs. We are currently evaluating the benefits of owning and operating our
own manufacturing plant, which would reduce the price we pay for materials. We will pursue these
options in more earnest when we have more contracts under our belt.
I will address other issues and questions in more detail here on this web site. In the meantime, thank you
for your continued support.
Jeffrey Flannery
CEO and President
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