Compiled Statement GAAP Supplement

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SolarAttic, Inc.
Management's Supplementary GAAP Notes for
1999 Auditor's Compiled Financial Statements

Note 1Auditor's Compiled Statements

Management supplement:

These notes are a GAAP supplement to the auditor's compiled 1999 financial statements dated July
20, 1999.They are supplied by and are the sole responsibility of SolarAttic's management.The
compiled statements and these notes do not reflect the current financial position of SolarAttic. The
compiled financial statements and these notes are provided for historical reporting purposes.

GAAP adjustments made:

The compiled financial statements have been prepared on a basis substantially consistent with
GAAP audited financial statements.In the opinion of management, all necessary adjustments have
been included to present fairly the 1999 compiled results when read in conjunction with all prior
audited financial statements.

Accounting system failure:

During the crossover to the year 2000 ("Y2K"), the Company's accounting and payroll systems
crashed.They were not Y2K compatible.In addition to this compatibility issue, the Company
found it necessary to upgrade its system operating software.The combined software update left
the Company's accounting and payroll systems in a state of disarray.These internal management
control systems are now being rebuilt using new accounting and payroll software.

Subsequent events and disbursements analysis:

Due to a shortage of personnel resources, SolarAttic has not yet completed the task of rebuilding its
accounting systems.Year 2000 accounting and payroll records were not available for the auditors
to review.To complete the 1999 GAAP audit, the auditors need 2000 records available to perform
an analysis of "subsequent events and disbursements."

Interim compiled statements:

SolarAttic now expects to finish its 1999 GAAP audits at a later date when the 2000 records are
fully available to its auditors.In the interim, the Company has reluctantly withdrawn from a full
completion of its GAAP audit due to incomplete 2000 records.It would be an unnecessary burden
on SolarAttic to complete the audit before the 2000 records can be reconstructed on new accounting
software.Therefore, the Company has an interim compilation report available from its auditors.

Note 2

Nature of Business and Significant Accounting Principles

Nature of operations:

SolarAttic, Inc. (the Company), a Minnesota corporation, was formed on August 11, 1986 and
was in the development stage through December 31, 1996.The year 1997 is the first year during
which it was considered an operating company.Sales are currently throughout the continental
United States.However, markets for the Company’s technology and products are international in
nature.Products sold included primarily swimming pool heaters, space heaters and ventilation
systems.Sales are direct to consumers and through dealers.

Cash equivalent policy and cash flows:

For purposes of reporting cash flows, cash and equivalents is comprised of bank checking
accounts.