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
These competitors include the following: manufacturers of gas, oil or electric pool heaters;
manufacturers of pool heat pumps; manufacturers of solar panel pool heating systems;
manufacturers of standard space heating or solar space heating systems; and, manufacturers of attic
ventilation or air moving equipment. Most competitors have substantially greater financial and
human resources than the Company. Therefore, there can be no assurance that the Company will
operate profitably within this competitive environment.
The Company believes that its technology offers substantive competitive advantages over
existing products. Over pool heaters that burn fossil fuels, the Company’s competitive advantage
is low operating cost as solar energy is much less expensive to use than fossil fuels. Over
competing solar technologies, the Company’s competitive advantage is appearance as the
Company’s technology is hidden in attic spaces and does not use roof or yard-mounted solar
collection panels. Over ventilation systems, the Company’s competitive advantage is its newly
patented duct technology, which the Company believes is very broadly protected intellectually
along with its systems solution to attic ventilation. All of the company’s products are derived from
the Company’s four patents and SolarAttic expects some degree of product exclusivity for many
years. However, there can be no assurance that the Company’s patents will remain valid. There
can also be no assurance that such product exclusivity will be a major contributor to sales or that
they will in any other way help the Company become profitable.
If and when development of the Company’s hot water heater is complete, the Company believes
this new domestic hot water heater will make use of hot attic air in the preheating or heating of
electrically heated domestic hot water. Two versions of the heater are expected to emerge. One
model, designed for use in frost-belt regions, will automatically protect itself from freezing. The
other is a simpler unit that can be used in non-freezing climates. Both product versions are covered
by three of the Company’s technology patents. It is uncertain as to when this product will be
complete. No assurance can be made that it will be completed.
The new duct technology patent that the Company has also discloses the manner in which the
entire attic cavity can be closed off to form an “energy box” with the sole exception of an air inlet
and air outlet. Technologically speaking, this has some important energy implications. First, the
Company’s technology can not only eliminate roof holes used for ventilation purposes; it can also
eliminate eave vents that are used for ventilation purposes. The Company has disclosed a method
for venting the attic based solely on its new duct technology located inside the attic. The Company
believes that eventually, this aspect of the new technology will be deployed in new home
construction.
Second, the benefit of eliminating roof and eave vents is to selectively close and open the attic
cavity and use it more fully as a “solar energy device.” I.E. - See “Attic Solar Energy Vehicle”
under “PATENTS.” No attempt has been made in this prospectus to address the markets or
products that would evolve if this aspect of the new technology were actually used. The Company
believes that, until architects are fully educated in this new technology that nothing substantive will
happen in this area. The Company believes that this is an area of development opportunity.
However, there can be no assurance that all of the Company’s technology will actually be used.
Research and development costs are charged to operations as incurred and totaled $1,853 and
$10,086 for fiscal years 1997 and 1998 respectively. For the six-month periods ending June 30,
R&D totaled $1,049 and $4,031 for 1998 and 1999 respectively.
Some engineers have “speculated” that the Company’s systems may pressurize the house or the
attic in some undesirable manner. If the Company’s Ridge Ventilator is deployed in a new airtight
energy home attic, some may speculate [for example] that it could draw air into the attic from the
house. In other words, it could cause a vacuum inside the attic thereby creating a negative pressure
situation attracting airflow from the home to the attic. The Company does not share any of these
negative pressure concerns since the amount of system power is relatively low in terms of blower
or fan horsepower; its working static pressure capacity; and, air movement in cubic feet per minute
(cfm).
Conversely, others may speculate that if the Ridge Ventilator draws in more air than it exhausts,
that this could be a plus since it would create a positive pressure condition in such an attic. Under
such positive pressure conditions, it could pressurize the attic in a way that would inhibit air influx
from the home. The Company’s space heaters are known to cause a slight positive pressure in a
home. This is normally beneficial since it helps to prevent the influx of outside air or drafts into
the home. The Company knows of space heating systems that have been installed for over ten
years without any reports of serious concerns over pressurizing the attic. However, due to the
limited experience with volume installations, there can be no assurance that pressure in the attic
might not become a development issue needing to be addressed.
The Company’s U.S. Patent 5,014,770 discloses additional Company technology involving the
hybrid marriage of its SolarAttic convection technology to that of existing heat pump technology.
For heating swimming pools, the Company believes that the result of such a marriage of
technologies could mean lowered manufacturing costs for heat pumps. The Company further
believes that this would ultimately translate into reduced energy (operating) and chemical costs for
heat pump users. In the future, the Company may explore a possible joint venture or licensing
arrangement with one or more heat pump manufacturers. The Company has no plans to
manufacture such a hybrid system itself and there is no assurance whatsoever that the Company
will be successful in joining the two technologies economically or in the forming of any joint
venture to use this new hybrid technology.
The Company’s web site contains patent drawings from the Company’s patents, in depth
engineering discussions of the patents and technical issues, engineering reports and links to the
U.S. Patent and Trademark Office data on the Company’s patents. The address for this additional
information is http://www.solarattic.com/patents.htm.
In 1991, the Company placed a performance guarantee on its SolarAttic PCS1 Pool Heater.
The Company guarantees that its pool heater will heat a pool as well as any roof-mounted solar
panel system. The guarantee is for up to 90 days, and the Company will either fix the system or
repurchase it. The only conditions that apply are that the pool owner’s attic must be at least as
large as the pool in square footage, the roof must be sunny (non-shaded), the attic must normally
get hot and that the installer must follow the Company’s basic installation instructions.
All SolarAttic pool heaters are sold today with this performance guarantee and only one of the
limited sales and installations to date have requested any refunds or service under this guarantee.
The Company now includes some type of performance guarantee with all of the products it sells.
The pool industry is seasonal, and this characteristic will be felt by the Company each year.
The higher sales periods are Spring through Summer; Fall and Winter are the lean periods. The
Company, with its national approach, expects to flatten this seasonal cycle somewhat by shifting
its marketing activities to specific geographical markets during certain periods of the year. For
example, pool heating near Fort Myers, Florida takes place from October through March. In
contrast, Minneapolis’ pool heating takes place from April through September.
As previously discussed the Company feels that the combination of all of its products will lead
to a stable non-seasonal overall business. The Company fully expects that within its overall
business that different products may have seasonal cycles attached to them. There can be no
assurance, however, that the Company will not have a seasonally affected business.
The Company currently receives subassemblies or piece parts from a number of suppliers in
several states and does a final assembly and test of its products before they are shipped. None of
the Company’s current suppliers are considered essential to the Company’s success at this time
because the Company operates with limited production and does not have substantial vendor or
tooling investments. All of the Company’s Officers and Directors have extensive manufacturing
experience.
SolarAttic currently holds four U.S. Patents. The Company’s space heater patent Re. 32,607
expires in the year 2002. The Company’s solar technology patents 5,014,770 and 5,452,710 both
expire in the year 2008. The Company's fourth U.S. Patent expires in September 2016. The first
three patents are U.S. Patents only and the Company does not have any patent protection outside
of the United States. The Company has already filed for international protection on its fourth
patent in several foreign countries. See “PATENTS AND INTELLECTUAL PROPERTY.”
The Company has successfully registered its logo and name as a U. S. Trademark, which the
Company plans to use for Brand Name identification. See “Registered Trademark.” The
Company has significant internal data regarded as trade secrets such as proprietary customer lists,
custom marketing databases and engineering test data. The Company believes that although the
patents and other proprietary information it holds and may obtain will be of value, they will not
solely determine the Company’s success, which also depends upon the Company’s management
and its emphasis on quality, service and value to the Company’s customers.
As of the date of this prospectus, the Company has two employees. One is paid a monthly
salary and one is uncompensated for his services. None of the Company’s employees are
represented by any collective bargaining organization or any employment contracts. The Company
believes that its relations with these two individuals are satisfactory. Mr. James F. Stanley serves
as the Company’s vice president of marketing and sales and is paid a monthly salary for his
services. Mr. Edward G. Palmer is the Company’s CEO, CFO, president, secretary and chairman
and is currently uncompensated for his services. Upon completion of this Offering, the Company
expects to start paying a salary to Mr. Palmer for his services. See “ MANAGEMENT” &
“COMPENSATION.” The Company believes it could grow to 10 or more employees during the
next 12 months depending upon the outcome of this Offering.
It is the Company’s policy to not grant any stock options at the time of issue, at any value that
would be less than either: A) the fair market value (FMV) of the stock; or, B) the current price that
the Company is selling its common stock.
Repairs
Total
0.00
26.00
139.52
139.52
The Company’s principal offices are located at 16820 Highway 10, Suites 130 & 140, Elk
River, Minnesota 55330 where the Company occupies 3,546 square feet of space. This is the new
Elk River Business Center; an incubator set up to assist small companies by the City of Elk River.
SolarAttic currently pays cash rent of $665 per month under a one year lease agreement which
expires on April 15, 2000. Under the lease, SolarAttic prepaid 80% of its rent in the form of
common stock. See “Notes to Financial Statements” & “CERTAIN TRANSACTIONS.”
While the lease has provisions for a possible extension, the Company expects to move at the
end of its lease to a more permanent location. No such location has been identified at this time
albeit the Company plans to remain in the Elk River area. The Company believes that such
relocation will not be extremely difficult in Elk River. If the Company determines that it will be
necessary to build a new facility, additional capital will be required. No assurance can be given
that an adequate location can be found or that sufficient capital will be available to build a new
facility at the end of the Company’s current lease.
The Company’s board of directors and shareholders have approved an “Incentive Stock Option
Plan” (the “Plan”) in order to provide for the granting of stock purchase options to employees of
the Company. The Plan permits the granting of “incentive stock options” meeting the requirements
of Section 422 of the Internal Revenue Code. Presently 1,000,000 shares of Common Stock have
been set aside for issuance under this Plan. The per share exercise price of an option shall not be
less than 100% of the fair market value of the shares on the date of grant, or 110% of the fair
market value in the case of incentive stock options granted to an individual then owning more than
10% of the voting power or value of the Company’s stock.
The Plan terminates on February 13, 2001 and is administered by the Company’s board of
directors. The board of directors may elect to grant stock options under the Plan to existing
employees as a bonus for past work performed or as an incentive for the faithful performance of
future services and may also grant stock options to new employees as an incentive of hire. No
employee stock options have been granted under the provisions of this plan.