SolarAttic's Prospectus pages 13-16

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Shares, after deduction of estimated
offering expenses and potential sales commissions to brokers, will be $4,080,000 if all of the
Shares offered are sold, $2,040,000 if 50% of the Shares offered are sold, $1,020,000 if 25% of
the Shares offered are sold, and $123,000 if the Minimum Offering proceeds are sold. The
following table sets forth the Company’s anticipated use of the proceeds at these levels.

4,800,000

2,400,000

1,200,000

150,000

Shares Sold
$4,800,000 (100%)

Shares Sold
$2,400,000(50%)

Shares Sold
$1,200,000(25%)

Shares Sold
$150,000(3%)

Gross Proceeds

Less Expenses
Commissions (a)
Office Supplies
Printing
Postage
Employees
Legal
Filing Fees
Public Relations
Email Campaign
Advertising
Miscellaneous
Total Expenses

480,000
5,000
17,000
19,200
10,000
4,000
12,100
12,500
24,000
120,000
16,200
720,000

240,000
3,500
10,000
8,000
4,000
2,000
2,100
1,500
12,000
70,000
6,900
360,000

120,000
2,000
7,000
5,000
2,000
1,200
1,100
1,000
1,700
35,000
4,000
180,000

11,000
500
4,000
1,200
0
1,200
1,100
0
0
4,000
4,000
27,000

(15%)

(18%)

Net Proceeds

$4,080,000

(85%)

$2,040,000

(85%)

$1,020,000

(85%)

$123,000

(82%)

Use of Minimum(b)
Sales Staff
Trade Shows
Advertising
Inventory
Office Staff

Minimum Plan
58,000(47%)
16,000(13%)
21,000(17%)
18,800(15%)
9,200(7%)
$123,000100%

Use of Proceeds(c)
Marketing/Sales
R & D
Inventory
Debt Reduction
Working Capital
Total Net Proceeds

100% Plan
1,920,000(47%)
480,000(12%)
120,000(3%)
200,000(5%)
1,360,000(33%)
$4,080,000(100%)

50% Plan
960,000(47%)
240,000(12%)
100,000(5%)
200,000(10%)
540,000(26%)
$2,040,000(100%)

25% Plan
480,000(47%)
120,000(12%)
70,000(7%)
115,000(11%)
235,000(23%)
$1,020,000(100%)

Notes: (a) Any commissions not paid to brokers will be applied to working capital. (b) SolarAttic believes that this
specific minimum plan will significantly increase growth rates and will help drive its annual sales to above $400k.
(c) Use of proceeds for the various amounts above the minimum will be apportioned on a percentage basis as
indicated above. Pending application of its proceeds of the Offering, the Company may invest the net proceeds in
short-term, investment-grade, and interest-bearing securities.

THE ABOVE REPRESENTS THE COMPANY'S BEST ESTIMATE OF ITS ALLOCATION OF
NET PROCEEDS BASED UPON ITS CURRENT BUSINESS OPERATIONS, ITS CURRENT
BUSINESS PLANS AND CURRENT ECONOMIC AND BUSINESS CONDITIONS AND IS
SUBJECT TO REALLOCATION AMONG THE CATEGORIES LISTED ABOVE.

NOTE: AFTER REVIEWING THE PORTION OF THE OFFERING ALLOCATED TO THE
PAYMENT OF OFFERING EXPENSES, POTENTIAL INVESTORS SHOULD CONSIDER
WHETHER THE REMAINING PORTION OF HIS, HER OR ITS INVESTMENT, WHICH
WOULD BE THAT PORTION OR PART AVAILABLE FOR FUTURE DEVELOPMENT OF
THE COMPANY'S BUSINESS AND OPERATIONS, WOULD BE ADEQUATE.

______________________________________

CAPITALIZATION

The following table shows the capitalization of the Company as of June 30, 1999, on an actual
basis and on an as adjusted basis giving effect to the Offering if, of all the Shares offered herein,
100 percent, 50 percent, 25 percent and the Minimum Offering are sold. The table assumes the
payment of offering expenses estimated at 15%. See “USE OF PROCEEDS.”

IMPLICIT POST-OFFERING VALUE

The above table does not reflect shares of Common Stock, which are subject to the exercise of
options or the Company’s incentive stock option plan. If all Shares are sold and all existing
options are exercised—there would be 15,285,947 shares outstanding. At $1.00 per share, this
would be a market value of $15.3 Million. The exercise value of all options outstanding is
$260,000. When added to the $4,118,469 stockholders' equity resulting from all Shares sold the
total stockholders' equity would be $4,378,469. At an estimated market value of $15.3 Million,
the Company's market value would be $15.3 ÷ $4.38 or 3.5 times the Company's actual net equity.

NOTE: AFTER REVIEWING THE ABOVE, POTENTIAL INVESTORS SHOULD CONSIDER
WHETHER OR NOT THE OFFERING PRICE FOR THE SECURITIES IS APPROPRIATE AT
THE PRESENT STAGE OF THE COMPANY'S DEVELOPMENT.

Actual

As Adjusted for Shares Sold
4,800,0002,400,0001,200,000150,000
SharesSharesSharesShares

Common Stock, no par value;
100,000,000 shares authorized;
Shares issued and outstanding:

9,985,947

14,785,947

12,385,947

11,185,947

10,135,947

Current paid-in capital

$871,777

Additional paid-in capital

4,080,000

2,040,000

1,020,000

123,000

Stock notes receivable

(23,500)

Accumulated deficit

(809,808)

Total stockholders' equity

$38,469

$4,118,469

$2,078,469

$1,058,469

$161,469

June 30, 1999

DILUTION

The NET TANGIBLE BOOK VALUE ("NTBV") of the Company as of June 30, 1999 was
$2,163 or approximately $.0002 per share of Common Stock. Net tangible book value represents
the physical assets of the Company minus all of the Company's liabilities. The formula used to
calculate this value is (Net Tangible Book Value = Total Tangible Assets - Total Liabilities). The
net tangible book value does not include any of the Company’s non-physical assets such as the
Company's four patents, trade secrets and customer lists, etc.

Giving effect to the sale by the Company of all 4,800,000 Shares at a public offering price of
$1.00 per Share, there will be an immediate substantial dilution in the NET TANGIBLE BOOK
VALUE to purchasers of Shares as set forth below. Dilution is determined by subtracting net
tangible book value per share after the Offering from the initial offering price. The following table
sets forth as of June 30, 1999 a comparison of the respective investments of the current
shareholders and the public investors.

The table below does not take into effect the additional and substantial dilution of exercised
options or the employee stock option plan. See “INVESTOR % OWNERSHIP” below.

INVESTOR % OWNERSHIP

The above table does not reflect shares of Common Stock, which are subject to the exercise of
options or the Company’s incentive stock option plan. If all Shares are sold and all existing
options are exercised—there would be 15,285,947 shares outstanding. Investors in the Offering
would own 4,800,000 shares ÷ 15,285,947 shares then outstanding or 31.4% of the Company.

NOTE: AFTER REVIEWING THE ABOVE, POTENTIAL INVESTORS SHOULD CONSIDER
WHETHER OR NOT THE OFFERING PRICE FOR THE SECURITIES IS APPROPRIATE AT
THE PRESENT STAGE OF THE COMPANY'S DEVELOPMENT.

Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net tangible book value per share before offering. . . . . . . . . . . . .
Increase to current shareholders in net tangible book
value due to offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net tangible book value per share after offering . . . . . . . . . . . . .
Dilution per share to public investors . . . . . . . . . . . . . . . . . . . .
Percent dilution per share to public investors . . . . . . . . . . . . . . .

$1.00

$.0002

$.3727
$.3729

$.3729
$4.63
62.7%

THE BUSINESS

GENERAL

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 was 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. SolarAttic manufactures solar-powered water heating, solar-powered space
heating and attic ventilation systems. The solar-powered heating systems use the heat that collects
in the attic space as a result of solar radiation on the roof. The attic ventilation systems use the
Company’s new duct technology that collects or distributes air evenly along its length, which is
useful in collecting attic air for heat transfer, attic ventilation or other purposes. The Company
believes its strengths are its technology patents and experience in developing systems that harness
the heat energy contained in hot attic air. The Company believes that its proprietary heating
systems can replace or augment heating systems that use fossil fuels or conventional solar panel
technology. The Company believes that its new duct technology can replace or augment devices
that are used for ventilation, air collection or air distribution in attics and other building structures.
The Company’s goal is to establish a nationwide network of independent dealers who will sell,
install and service the Company’s products.

SOLARATTIC’S VISION OF THE FUTURE

The future will see home attics being used as productive "Solar Energy Vehicles." Attics will
be used to heat swimming pools, spas, hot tubs, hot water and space. Products will evolve to
create a new roof and attic structure that will absorb more incident solar radiation instead of less
[which is the current thinking]. New ventilation systems will provide a controlled attic ventilation
and moisture environment that enables maximum heat extraction to occur.

Roofs will be painted black instead of white with newly [to be] developed "solar absorption
paint." New asphalt shingles will absorb greater amounts of solar radiation. New roofing
materials will conduct heat easily in one direction and hard in the opposite direction. These new
products, plus others, will increase the effective heat collection and storage capacity of attics.
Automatic ventilators will vent attics only when absolutely necessary. Houses will be built to
optimize the attic as a "Solar Energy Vehicle." Attics will demonstrate their economics in terms of
receiving, storing, and transferring free solar heat energy. Attics will evolve into a new solar class
of device "the hybrid solar energy system " which will be part passive (the roof itself as a large
solar collector) and part active (the “inside-the-attic” low cost forced air heat transfer system).

People around the world will take advantage of this new source of free solar heat energy
through economical and practical products that require no massive or significant roof alterations. In
fact, no solar thermal roof panels will be needed. However, photovoltaic energy cells (“PV cells”)
can be used to supply power for SolarAttic devices because most have small power requirements.

Markets will expand as the "low operating cost" water heating, space and ventilation systems
supplied by SolarAttic, Inc. are accepted into the market place and displace other inefficient "fossil
fuel" heating systems. Legislation will be enacted to help solve the "Greenhouse Effect" that will
encourage home owners to stop using fossil fuel systems as alternative systems like the PCS1
swimming pool heater become more commonplace and it becomes readily apparent that we do not
have to burn fossil fuels for such heating applications. SolarAttic, Inc. will be the leader, the
creator, the innovator and the pacesetter in this FUTURE new marketplace.

The Company’s founder and president, Ed Palmer, now believes that some aspect of the
Company’s new proprietary and patented energy technology can be applied to every single
building structure worldwide regardless of its use, size or construction. Because of this, the
Company’s founder also believes that the markets for the Company’s emerging new technology
and products are now massive. See “MARKETING AND SALES”.