VISTA, Calif.-- Eco Building Products, Inc. (OTCBB: ECOB.OB) The following letter is being released to its shareholders:

Dear Fellow Shareholders:

With the start of the New Year now under way, I thought it would be helpful to provide you with an update on the goals achieved over the past twelve months and our thoughts for the future of ECOB. We all know how tight the housing market has been over the past few years. The Company's main goal is to create a paradigm shift in the lumber industry towards protected lumber. The key to achieving this goal is to apply our value added coatings to all lumber products without changing the historical supply chain process. In addition we needed to prove the efficacy of our coating methodologies as a critical component to our success. The following information illustrates how the Company is meeting its' objectives through the achievement of various milestones over the past year.

Creating the Paradigm Shift :

Many factors play into successfully implementing a paradigm shift. The lumber industry has not experienced much change over the past 100 years. The manufacturers have done an excellent job in forest management allowing the world to continue to experience great supply by figuring out how to grow trees in 30 years instead of 80 years. What has changed; the growth rings of the solid sawn lumber. Grading rules and structural reviews have not been updated in the past 30 years. To that end, today's lumber is more porous, making it more susceptible to moisture and termite infestation. Compounding the problem is rapid urbanization that has propelled the termite population into an out of control state.

Today's lumber has more mold growth than ever before creating health risks for all of us. ECOB has taken on the challenge of providing protection for all vertical framing members in wood framed construction providing moisture control, inhibiting mold growth, encapsulating solids to prevent wood rot fungi-decay, coupled with AF21 Fire Inhibitor to create a value added fire protection never before available to the everyday homeowner.

All this protection is provided with one coating of our technology that employs no carcinogens and virtually emits no VOC's (Volatile Organic Compounds). ECOB has been successful in maintaining our patent pending application for our chemical composition as well as how we employ our wood coating throughout wood framed structures.

In order to create brand awareness, I have personally reached out to many organizations around the world offering our technology to assist in rebuilding efforts from major disasters in areas like New Orleans, Japan and Haiti. USA housing starts are down approximately 60% from the peak and are experiencing a very slow recovery. We envision the world utilizing lumber as a viable building product to meet the enormous housing demands within so many emerging economies.

We have proven to many countries' governments that regardless of what materials the walls are constructed from our buildings provide the best opportunity for overall viable construction that can be erected with speed, less cost, long-term viability, increased fire safety, termite protection, earthquake safety, hurricane safety and no ground water contamination for construction to meet the housing demands.

The Company has created the Eco Home division which is focused on providing low cost affordable housing to meet the world's demands in places like: Saudi Arabia, Egypt, Jamaica, Haiti, Ghana, Kenya, Turkey, Jakarta, Dubai and Papua New Guinea. We are confident that the potential for the Company to secure a housing development contract in an emerging economy is within our reach in 2012. The Company has expanded its manufacturing base via affiliates and Company-owned factories all strategically located around the USA. This will allow the Company to meet production demands as the paradigm shift occurs. We have connected the east and west coasts with our product, Red Shield ™ Protection, and is available at competitive prices. The company now has the ability to handle the demands of the housing recovery that has begun in select hot pockets.

Another strategic move made by ECOB was the creation of E Build & Truss, a wholly owned subsidiary, to provide the local Southern California market with a turnkey Framing and Truss manufacturing arm to supply production home builders with the complete package of Eco Red Shield coated lumber, labor and trusses. E Build & Truss allows ECOB to break down the barriers of entry into the production home builders. This bold move has proven extremely effective with many homebuilder contracts releasing more and more housing starts every month to the Company. As of the beginning of this year the housing start releases have begun to significantly increase versus this time a year ago.

 

Technically Advanced Building Material :

The Company has invested a significant amount of resources into R&D and technical market acceptance with an eye to improving the Eco Red Shield product line. Through the use of independent wood scientists engaged by the Company, we have successfully lobbied with the International Code Commission (ICC) to create an acceptance criteria (AC) defining a market space in the building codes for a topical borate treatment for wood members. On June 20th, 2011 the ICC adopted by unanimous vote a New Acceptance Criteria for Liquid Borate Fungal Decay and Termite-resistant Treatment Applied to Wood Members, AC433-0611-R1. This is a monumental triumph in creating a code approved opportunity for Eco Building Products moving forward. The Company is currently in process with all of the testing requirements to meet the defined Acceptance Criteria.

The Company has engaged Louisiana State University Wood Durability Laboratory to perform various testing for Termites, Corrosion, Rot-Decay, Wood Fiber Strength and long term in field termite testing. Our test results have fared very favorable for Termite protection and Wood Rot-Decay. We have correlated our results to prove efficacy utilizing half the traditional amount of borate. This correlation proves that our coating methodology works with the potential to be superior to traditional methods.

In addition, the Company is working closely with independent consultants to create and implement a comprehensive quality control program to meet industry standards of qualifying Eco Red Shield treatments to meet AC433. The Company is far along with all testing and quality control implementations and expects to potentially meet AC433 requirements and receive an ESR designation from the ICC by the end of first quarter 2012.

The creation of a building code (AC433) addresses a key element (Termite Protection – Wood Rot/Decay) in the wood protection offered by Eco Building products and will potentially open up significant market opportunities. Once product certification is achieved Eco Red Shield lumber products will meet industry standard Use Categories UC1 and UC2 as defined by the AWPA guidelines for usage of treated lumber. The pressure-treatment industry generates roughly $4 billion annually (Source: CBS News, February 11, 2009).

Approximately 65% of the treated wood components sold annually fall into the UC1 and UC2 use categories opening up significant opportunities for Eco Red Shield products as a direct substitute or competitive product. Eco Red Shield coated lumber is approximately 40% less cost than traditional pressure treated wood and offers mold and fire inhibition as well. Having achieved an ESR designation as defined by the ICC-ES process will be recognized by every building official across the United States as well as over 200 countries worldwide.(Source: www.iccsafe.org)

These technical achievements allow ECOB to refer to Eco Red Shield protected lumber as a Technical Advanced Building Material that will open up new markets changing the way the world builds structures and homes creating a paradigm shift in the lumber industry and ultimately changing the world.

The Company is extremely happy to have achieved these goals in 2011. Looking forward, we are close to achieving our ESR designation and obtaining an off shore housing contract. We intend to fully leverage the infrastructure currently in place allowing the Company to move towards its future goals of strong revenue growth and profitability. I'm convinced that we are on the leading edge of the lumber market and plan to work diligently and passionately towards achieving those goals. The Company has successfully created the space in the market for our products by creating a cost effective supply with superior performance. It is only a matter of time before the entire world sees the impact of the Eco Red Shield billboards on the landscape of their home town.

As we move forward from here, I want to assure all shareholders that Eco Building Products is accessible to you. If at any time you wish to express concerns or offer suggestions, you can email us directly at info@ecob.net. We are listening, we are changing, and we are committed to enhancing our value to our shareholders and the customers who have come to depend on the products and services we provide.

We thank you for your continued support and look forward to a prosperous 2012.

Sincerely,

Steve Conboy; President - CEO

About Eco Building Products, Inc.

Eco Building Products, Inc. is a manufacturer of proprietary wood products treated with an eco-friendly proprietary chemistry that protects against fire, mold/mycotoxins, fungus, rot-decay, wood ingesting insects and termites with ECOB WoodSurfaceFilm™ and FRC™ technology (Fire Retardant Coating). Eco Building products, "Eco Red Shield", "Eco Blue Shield" & "Eco Clear Shield" utilizing patent pending technology is the ultimate in wood protection, preservation, and fire safety to building components constructed of wood; from joists, beams and paneling, to floors and ceilings.

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