1-4 5-8 9-12 13-16 17-20 21-24 25-28 29-32 33-36 37-40 41-44 45-48 49-52 53-56 57-60 61-64 65-68 69-72 73-76 77-80 81-84 85-86 
1-4 5-8 9-12 13-16 17-20 21-24 25-28 29-32 33-36 37-40 41-44 45-48 49-52 53-56 57-60 61-64 65-68 69-72 73-76 77-80 81-84 85-86
SolarAttic Pool Heater - Automatic
SolarAttic Pool Heater - Auto+
SolarAttic Space Heater - BD465
SolarAttic Space Heater / Ventilation System - GB980
SolarAttic Space Heater / Ventilation System - GB495
SolarAttic Space Heater / Ventilation System - GB465
SolarAttic Ridge Ventilator - Automatic (14-900A)
SolarAttic Ridge Ventilator - Manual (14-900M)
Electronic Temperature & Humidity Control - SAVC02
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The above product-pricing matrix shows the Company’s current pricing strategies, which are
the result of only building in limited quantities. The Company expects to be able to reduce its
prices when it is able to purchase in higher volumes and still maintain margins. The Company has
higher dealer volume pricing available that reflects reduced volume production costs. Parts are
typically job shop oriented and involve set up charges to produce. Costs are substantially reduced
as the parts runs increase in volume. The Company is able to forecast this volume oriented parts
cost reduction “learning curve.”
The Company notes that all of its products provide consumers with tangible and measurable
energy benefits. They have a definable & reasonable payback period. Having a cost savings that
is predictable or other strong financial incentives [i.e.-venting attic to eliminate problems] is very
important from a marketing perspective. It has been the Company’s experience that product sales
are not motivated only by the fact that they are “environmentally friendly” or “energy saving”
appliances. In the marketplace, consumers are voting for such products but only to the extent that
they make economic sense and have a relatively short (5-10 year) payback period.
An example of a tough sell is a solar panel hot water heater that costs $3500 to a customer
currently using natural gas hot water and who spends $14 a month. In such instance, payback is
3500 ÷ 14 or 250 months, which is about 21 years. No sale! The marketing reality is that all of
the Company’s products must make economic sense. The Company believes its products will do
well in the marketplace and that they can sell on their own strengths. The Company does not
believe it needs federal tax credits or other “green marketing” incentives to sell its products.
SolarAttic endeavors to maintain a gross margin of 50%. This has not been hard to achieve and
the Company believes it can meet or exceed this sales objective in volume production.
SolarAttic believes that its method of using hot attic air to heat hot water, pools and space offers
the Company a unique marketing position. The Company’s technology — offering solar energy
without having to use roof-mounted solar panels — is a differentiating factor in the market. The
Company has taken steps to protect its marketing slogan, “Solar Without Panels.” The Company
believes its new solar heating technology will appeal to consumers who would purchase solar
technology if it did not involve using solar collection panels.
SolarAttic believes that its new duct technology offers the Company a unique marketing
position in the air distribution, air collection and air ventilation markets. The Company believes
that providing a method to equalize air distribution or collection can greatly enhance the comfort
level in just about any living area that is occupied by humans. This would be most useful in new
home construction where retrofitting existing air moving systems would not be an issue. The
Company envisions that sales of the duct technology will emerge quite rapidly as the Company
determines how to best automate the duct’s perforation and construction process. There are no
plans to immediately sell custom duct technology, as SolarAttic does not have the staff resources to
deal with the engineering issues. Ducts are perforated to design criteria that include the fan
performance ability. SolarAttic believes custom ducts will be a viable product area in the future.
SolarAttic believes that its method of providing controlled attic ventilation using its new duct
technology offers the Company a unique marketing position. The Company believes that the
“systems solution to attic ventilation” approach is a strong differentiating factor in the market.
The Company has operated with a minimal marketing budget and without any media advertising
programs or dealer network. The Company has, nevertheless, sold over 285 SolarAttic PCS1
Pool Heating System to customers spread across 31 states as of June 30, 1999. The Company
offered no installation, maintenance, service or financing for these systems. The prices ranged
from approximately $1,400 to $2,400.
To date, the Company has used publicity-driven, direct marketing techniques to sell its
products. In general, prospective customers learn about the Company’s products through
published articles that list, mention or feature the Company’s products. Prospective customers
then contact the Company via mail or telephone to request product information. Sales literature is
sent to each inquiry and follow-ups are handled over the telephone. The Company intends to
continue selling its products directly to consumers until it can establish a network of independent
dealers to provide the sales function.
The Company intends to employ a two-step direct marketing approach to pool owners. Step
one includes advertising, publicity and trade shows. The Company plans to advertise regularly in
various publications to generate product inquiries. The Company also intends to generate product
inquiries through product publicity and participation in trade shows that focus on the home,
garden, pool and patio. Step two is the answer to these product inquiries, with a series of direct
mail sales pieces — including, in some cases, a demonstration videotape — to convert the inquiry
into a sale. There is no assurance that this sales strategy will be successful.
The Company intends to employ a similar two-step approach to recruit independent dealers. As
step one, the Company intends to advertise regularly in the industry publications. Planned
advertisements in these publications will demonstrate to dealers and servicers the Company’s
products and highlight the economic advantages of selling and servicing them. The Company also
expects to exhibit its pool heater products in at least one national trade show each year. Step two
comprises the follow up to inquiries developed through the advertising and trade shows.
Prospective dealers will be sent a series of direct mail sales pieces and video promotions -- with
telephone follow up. The Company plans to concentrate its formal pool heater dealer sign-up and
initial training activities during the national trade shows it plans to attend.
If and when the independent dealer network grows, step two of the direct marketing program
will identify the local dealer to the prospective customer and vice versa. Ultimately, the Company
plans to support its dealer network with cooperative advertising and customized, direct mail
marketing tools to assist dealers in generating sales activities.
Similar marketing and sales methods will be used to present and launch the Company’s other
products such as space heaters, ventilation systems, hot water systems, etc.
Sales of the Company’s space heating systems have been very limited to date. Virtually little or
no promotion has occurred up to this point in time. The Company’s existing BD465 space heater
inventory that was acquired in exchange for common stock has now been repackaged for closeout
sale. Once the remaining inventory is sold, the Company will cease its production of this model.
An updated space heater product will replace it. See "PRODUCTS."
The Company believes that, in addition to factory direct sales, its space heating products may
ultimately be distributed through do-it-yourself home care centers (I.E. Home Depot, etc.).
Sales of the Company’s hot water heaters do not exist because the product is not complete. The
Company believes that, if and when the hot water heater is developed, it will eventually be
distributed through existing plumbing dealer distribution networks. The Company believes that the
installation of the hot water heater will be required and that the plumbing dealers are best suited to
market this new technology when it is ready. In addition, this product may also be sold through
home care centers.
Sales of the Company’s Ridge Ventilator have just begun. The product was successful in its
initial debut at the 1997 Minnesota State Fair. Consumers were enthusiastic about the product and
its pricing was judged as fair. The Company has initially sold several systems and expects that
additional sales will be forth coming now that an electronic control has been designed to operate it.
The Company believes that, in addition to factory direct sales, its ridge ventilation products may
ultimately be distributed through home care centers.
SolarAttic has built a comprehensive Internet World Wide Web site. Virtually all of the
Company’s products and their specifications are available at the site for review. It is currently
possible to surf the Internet, find the Company’s site, and then review the appropriate product
information. You can even locate a local dealer if one is available for sales information. The
Company believes that, as time progresses and the site is further refined, sales via a Company
dealer network will be enhanced.
SolarAttic’s web site has been built to support dealer sales. Customers can browse product
information without obtaining price or purchasing information. When a customer desires pricing or
purchasing information, they are directed to an USA State map. The customer then clicks on their
home state. They are then directed to existing dealers. If no dealers exists in their area, the
customer is directed to the factory for sales information. The Company will provide links to a
dealer’s web site free or put two dealer pages on the Company’s web site for a small monthly fee.
SolarAttic has one existing manufacturer's representative agreement in central Florida. The
Company has decided to focus mainly on dealer-distributor agreements and has no plans to sign
any additional manufacturer representative agreements at this time.
SolarAttic has signed several dealer-distributor agreements that have given exclusive marketing
rights to its pool heater within certain counties in certain states. Two of these distributors are now
moving small volumes of the Company's pool heaters. The main areas of activities for these two
dealers are based out of Sacramento, California and Phoenix, Arizona. The Company believes that
these dealers will continue to expand and grow their businesses. The Company also believes that it
will continue to add additional dealer-distributors.
The Company announced in an April 1999 press release that it had entered a growth phase. The
following data and graph represents SolarAttic's historical sales information during the last two
fiscal years and the six-month periods ending June 30. There can be no assurance that the growth
rates shown below are representative of future growth rates or that such growth rates will continue.
1997
1998
1998 - First 6 Months
1999 - First 6 Months
61,853
117,755
53,491
107,450
Base Year
31.7%
90.4%
Base Period
124.1%
While the Company manufactures proprietary solar and ventilation products and, to its
knowledge, has no known direct competitors selling the same equipment or using the same
technology, the Company faces stiff competition from well-entrenched and well-established
competitive products within the markets the Company plans to serve.
