FAFCO: CoolPV® can deliver up to 4x the power of stand alone solar panels

Freeman Ford

Founder & Chairman

He was president of the Solar Energy Industry Trade association, holds a Master’s degree from Stanford Business School and graduated from Dartmouth College before flying for the Navy in Viet Nam.

Robert Leckinger

President & CEO

A co-inventor of our new combined solar electric and solar heating product called CoolPV®. Mr. Leckinger was previously the vice president and general manager of Worthington Precision Metals .

Terra Ayers

Vice President of Operations

Before joining FAFCO, Ms. Ayers worked in procurement for a large contract manufacturer and in human resources for two subsidiaries of Johnson & Johnson.

Investor Q&A

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What does your company do?

CoolPV is an enhanced solar electric panel that generates electricity and heats water from one panel using the same valuable roof space. Because CoolPV cools the solar electric module, it increases the output of the PV module by up to 20%. Including thermal energy, CoolPV can generate up to 4x the power of PV alone. CoolPV lets customers save money, increase their home value, and be environmentally friendly all at the same time. Made in the USA, CoolPV generated $570K in sales in 2016.

Where will your company be in 5 years?

Founded in 1969, FAFCO revived the nascent US solar thermal industry. Our first innovation replaced copper with engineered polymers in solar pool heating panels. Today, our goal is to transform the industry again. We introduced CoolPV in late 2015, a combination of solar thermal and solar electric technology which we believe will revolutionize the solar industry. After all, we're no startup; we've been in business for forty years and in 2015, we generated over $6.9 million in revenue.

What is FAFCO?

We manufacture heat exchangers out of engineered polymers that are used in many energy saving applications, primarily solar thermal heating, thermal energy storage (www.icestor.com) and our latest innovation called CoolPV (www.coolpv.com). CoolPV’s unique performance characteristics make it an ideal candidate to help the US in its pursuit of zero energy homes and businesses.

When did FAFCO start?

I first conceived of FAFCO when I was an undergraduate at Dartmouth, talking with my high school friend, Dick Rhodes, who was an undergraduate at Stanford University. Our idea for a manufacturing business was to bring Silicon Valley technology to an enterprise that would “do good while doing well”. Forty-seven years later, that is still the mission of our solar manufacturing company located in Chico, CA. When we incorporated in 1972, there was no solar industry whatever, no incorporated solar companies of any sort, no trade association, essentially nothing. We pioneered the solar thermal industry in the United States. Our initial focus was on solar pool heating because solar pool heating is a thermal application that's very efficient, uses solar energy when it's most available during the warm summer, provides its own circulation and provides its own storage. Sales grew very rapidly in the 1970s and through the 1980s. Solar pool heating remains foundational to our business today.

How has FAFCO done as far as progress since 1972?

Starting in 1972, energy prices were extremely low, but then the energy crisis of 1973-1974 came along. Energy prices began to rise, and solar pool heating became very popular based on technology that FAFCO had developed to convert fossil fuels into polymers and then use the polymers to make solar collectors. They are low cost, highly efficient, and last longer than the copper panels that had been used before. We entered the solar water heating market in the 1980’s, which grew quite rapidly until President Reagan changed our energy policy and abruptly cancelled all national solar incentives. The entire solar industry almost disappeared. FAFCO survived. We had another surge in the 1990s when we adapted our polymer solar collectors for storage. You can think of our storage solution called IceStor (www.icestor.com) as a thermal battery that stores electricity in the form of ice. We put our polymer solar collectors into a large tank of water. Using surplus power at night, we freeze the water in the tank and the next day, when electricity is scarce and expensive, we use the ice to air condition buildings. Our thermal energy storage business in the US grew rapidly until deregulation decimated the US industry in the mid to late 1990s. Today, thermal energy storage is making a comeback in the US as storage is now recognized as essential to realizing the full potential of other renewable energy resources. Our Asian business, in countries with defined and consistent energy policies like China and Korea, continues to perform well. Several years ago, it became clear that people around the world favored solar electric technology. It also became clear that lower natural gas prices in the US would negatively impact the growth of solar thermal. We decided to shift our focus and pursue a combined solar thermal and solar electric panel we started working on in the late 1990’s. That product, called CoolPV, has seen two years of exponential sales growth in the US. In 2000, we bought land, built a 50K square foot building specialized in making polymer heat exchangers, and moved to Chico, California. We benefit substantially from our close relationship with CSU Chico, especially the engineering talent developed by the university.

What is CoolPV?

CoolPV (www.coolpv.com) is an enhanced solar electric panel that generates electricity and heats water using the same panel on the same valuable solar roof space. Because CoolPV cools the solar electric module, it can increase the electrical output of the PV module by up to 20%. Including the thermal energy, CoolPV generates up to four times the power of PV alone and can convert 60% of the sun’s energy into usable power compared to just 20% for PV alone. FAFCO’s approximate 200,000 solar swimming pool customers are an ideal place to start to sell CoolPV using our dealer-direct channel. There are several other large and attractive markets for CoolPV. These include solar water heating for homes and businesses and pre-heating water for commercial and industrial applications like laundromats and food processing plants around the world. A developing market for CoolPV involves its use with ground-sourced heat pumps to heat water and homes. In countries like Korea where we are establishing our first international licensee, CoolPV could play a significant role contributing to their energy independence.

When did you decide to combine solar thermal and solar electric?

We first combined solar thermal and electric into one panel in the 1990’s. The development was resumed with a US Navy contract in 2012. To date, we have invested approximately $2M to develop CoolPV. CoolPV is tested, certified, class A fire rated, and locally code compliant. It was introduced to the market in late 2015.

Why focus on swimming pools?

Since we have direct access to an estimated $221M US swimming pool market, it seemed like the best place to start. We began selling through our established dealer network to our existing 200K customers. We will start selling to our competitor’s 600K customers and the rest of the 5.1M solar eligible swimming pool owners soon. CoolPV addresses two critical needs faced by all pool owners. An unheated pool is essentially and unused pool, and the cost to heat a pool using natural gas is several thousand dollars per year. CoolPV uses the sun’s energy to heat the pool for free. Pools also use a substantial amount of electric power to run the pool pump. Cooling the PV panels in CoolPV systems provides more electricity than standard PV alone. Finally, CoolPV provides the thermal and electrical energy with a single, aesthetically pleasing system that maximizes the energy production on a home’s most valuable roof space. Swimming pools are just a start. 33% of the energy used in the US is directly consumed for heating water and spaces. Nine million water heaters are replaced in the US every year. There are many other commercial and industrial applications where CoolPV can be used to offset a significant portion of the energy we use in the US for heating fluids.

How does your product make its way from manufacturing to people’s homes?

Our products are made in Chico, CA. Today, we sell to the US pool market using our dealer direct selling channel to access FAFCO’s 200K existing solar pool heating customers. There are an additional 600K solar pool heating systems that have been sold by our direct competitors. There are a total of 5.1M in-ground pools in the US, and we believe over half are eligible for solar heating systems like CoolPV. Starting in 2018 we intend to begin selling to the US military and global commercial CoolPV markets. There are two paths for rapid growth. As regional markets develop, we intend to license our CoolPV assembly machines and provide the essential polymer heat exchangers to each licensee who will optimize CoolPV sales in their respective markets. We expect to sign an agreement with our first CoolPV licensee for Korea in April of this year. They plan to integrate CoolPV with ground source heat pumps and use the energy produced to heat water and homes. Another option for growth would be an acquisition of FAFCO by a large PV manufacturing company. That would allow FAFCO to do what it does best – produce polymer heat exchangers. In turn, it would allow the large multinational PV company to do what it does best – manufacture, distribute, and sell PV modules worldwide. The benefits from an economy of scale standpoint are obvious. For now, we are focused on growing FAFCO organically.

How much does a CoolPV system cost, and when does it start actually become economical?

Using the following assumptions, a CoolPV system is actually less expensive today than the cost of two separate systems after the federal investment tax credit: · 5kW PV system installed at $4.00/W· Solar pool heating system installed for $7500· 5kW CoolPV system installed at $5.75/W View the full comparison here. So you can see, there are instances right now where CoolPV is financially compelling. One of the best features of CoolPV is it uses off-the-shelf PV modules and thus, as PV prices continue to decline, FAFCO and its customers automatically benefit from falling costs. While the majority of the capital we raise will be used to build our sales team and provide working capital for our growth, part of the capital we are raising will be used to further reduce the non-PV module costs of CoolPV.

How has the new system been received by people, and have you seen a growth in revenue in the last 24 months since you launched?

CoolPV has been very well received by our dealers and end-users. The performance of CoolPV has either met or exceeded expectations. Customers are satisfactorily saving energy and heating their pools as promised. Our sales have grown exponentially from $57K in 2015 to $570K in 2016. We are all excited by the opportunity for CoolPV as we expand our sales efforts into the very large and growing $10B US solar electric market. We look forward to building our sales team. We plan to add sales to the military and / or commercial markets in 2018.

What keeps you up at night?

The things I cannot control keep me up at night. I had no control when President Reagan eliminated the solar tax credits in the 1980’s. I couldn’t control electrical deregulation in the 1990’s. I can neither control nor even guess what President Trump may do. I do believe the US solar industry is here to stay and grow. The solar industry currently employees 275K people and is universally popular with the American people. We have largely retired the product performance and durability risk. Now our task is mostly execution. Rapid growth requires agile execution to build our sales team and reduce cost. I think we are well prepared to deliver on the CoolPV promise.

What is it going to take for dealers to start selling CoolPV to everyone and being the de facto heating solution for anyone with a pool?

Our dealer in Sarasota told his first CoolPV customer that, “in ten years all solar pool heating systems will also generate electrical power - why wait?” We believe CoolPV is making that happen by becoming the obvious alternative to solar thermal heating only, solar electric only or both systems installed separately. As we drive the cost of CoolPV down with sales volume and capital equipment investment, we expect a CoolPV system will become the most preferred alternative.

What keeps other companies from copying you? Do you have patents?

CoolPV has been trademarked, URL domains have been secured, and patents are pending. That said, the heart of CoolPV is the trade secrets and expertise we have gained in making two million polymer heat exchangers over nearly fifty years. A highly specialized version of that heat exchanger is used for CoolPV. Further, we have a tremendous head start in integrating our technology with solar electric and developing the sales and installation methods, documents, and training systems that anyone who wanted to copy us would have to produce. We have first mover advantage, stress continuous improvement in all functions, and prefer to obsolete our own technology whenever we can.

Who makes up your team, and what is your experience?

Freeman Ford has served as our chairman and a director since 1972. Mr. Ford served as an outside board member of HB Fuller for nearly thirty years, chaired the finance committee, and served on the audit committee. Mr. Ford was president of the Solar Energy Industry Trade association, holds a Master’s degree from Stanford Business School and graduated from Dartmouth College in 1963 before flying for the Navy in Viet Nam. He is married, has four children and ten grandchildren, and is a proud owner of a CoolPV system himself. Bob Leckinger has served as our president since June 2008 and as CEO and a director since June 2016. Mr. Leckinger is a co-inventor of our new combined solar electric and solar heating product called CoolPV®. Prior to joining us, Mr. Leckinger was the vice president and general manager of Worthington Precision Metals and held several key management, engineering and operations positions with Hitco Carbon Composites and Pratt and Whitney, a division of United Technologies Corporation. Mr. Leckinger holds a BS in engineering from Purdue University, an MBA from Santa Clara University (Beta Gamma Sigma), and was certified in production and inventory management (CPIM) through APICS. Phil DelNegro joined the our team in February of 2017as vice president of sales and marketing. Prior to joining us, Mr. Del Negrowas the market director for American Solar Direct from June of 2016 untilFebruary 2017. Before that, he served as vice president of sales and marketingand residential director of sales for Heliopower from September 2014 until June2016. In 2014, Mr. DelNegro served as a regional sales manager with Verengo Solar. Mr. DelNegro also served in an executive capacity with Suntrek Solar Industries, Specialty Pool Products, Leslie’s Poolmart and Blue Haven Pools & Spas. His diverse and thorough background has given Mr. DelNegro significant insight into the home improvement industry and familiarity with sales and marketing best practices both in the “backyard and the boardroom”. Mr. DelNegro holds a BSBA in Marketing from Western New England University and an MBA from the University of Phoenix with a concentration on e-Business. Terra Ayers is a dynamic operations executive withover eighteen years of progressive human resources, materials, leanmanufacturing and management experience. Ms. Ayers joined us in 2007 afterearning an MBA from California State University, Chico. She is currently our vicepresident of operations. Before joining us, Ms. Ayers worked in procurement fora large contract manufacturer and in human resources for two subsidiaries ofJohnson & Johnson. Her specialties include waste reduction, team building,culture development, project management and community outreach. Bruce McCaul has served as a Director since April 2013. Since December 1996, he has also served as the President of Oxigraf, Inc., a manufacturer of oxygen analyzers based on tunable diode laser spectroscopy. From 1987 to 1990, Mr. McCaul served as CEO of ILC Technology, a NASDAQ public company manufacturing lamps for lasers, medical fiberscopes, and spacecraft and silicon photodiodes for various applications. From 1970 to 1983, Mr. McCaul was the CEO of Molectron Corporation, a manufacturer of scientific tunable lasers, infrared detectors, and medical lasers. Mr. McCaul holds a B.S. from Yale, MBA from Harvard, and Ph.D. in physics from Stanford. David Ford has served as a director since February 1999. Between 2005 and the present, he has served as Senior Managing Partner for Gartner Consulting, Technology & Strategic Practice, North America, where he focuses on go-to-market strategies for tier one technology vendors and runs the Global Market Diligence Practice.

1	One of the oldest and largest solar thermal manufacturers in the U.S.—founded in 1969 and incorporated in 1972.
2	Generated $6.9 million in revenue in 2015 (fiscal year)
3	CoolPV is a commercially viable combined solar thermal and solar electric system. CoolPV can generate up to 4x the power of a regular PV system
4	CoolPV can decrease energy bills by 50% or more
5	20 issued or pending patents (CoolPV) in the U.S. and global markets over 47 years
6	FAFCO's products have been installed on approximately 200,000 customer's homes since its inception
7	Founder has been inducted into International Solar Hall of Fame
8	FAFCO's vertically integrated United States manufacturing facility was designed and built to make engineered polymer heat exchangers for solar thermal, thermal batteries, and CoolPV applications for their respective global markets.

1	An investment in our shares involves a high degree of risk and many uncertainties. You should carefully consider the specific factors listed below, together with the other information included in this offering circular, before purchasing our shares in this offering. If one or more of the possibilities described as risks below actually occur, our operating results and financial condition would likely suffer and the trading price, if any, of our shares could fall, causing you to lose some or all of your investment. The following is a description of what we consider the key challenges and material risks to our business and an investment in our securities.
2	There is no assurance that we will be profitable in 2017 and through 2020 which may negatively impact our ability to service our debt obligations. While management believes that we will be profitable in 2017 and through 2020, there is no assurance that we will be profitable or be able to meet our debt obligations. Furthermore, we expect to continue to make significant capital expenditures and anticipate that our expenses will increase as we continue to research and develop new products, enhance our manufacturing processes and expand our sales and distribution network. We may be unable to satisfy our current debt obligations solely from cash generated from operations.
3	Our business strategy depends on the widespread adoption of solar thermal technology. The market for solar thermal products is emerging and rapidly evolving, and its future success is uncertain. If demand for solar thermal products fails to develop sufficiently, we may be unable to generate enough revenues to achieve and sustain profitability. The factors influencing the widespread adoption of solar thermal technology include: • cost-effectiveness of solar thermal technologies as compared with conventional and non-solar alternative energy technologies; • performance and reliability of solar thermal products as compared with conventional and non-solar alternative energy products; • success of alternative distributed generation technologies such as fuel cells, wind power and micro turbines; • fluctuations in economic and market conditions which impact the viability of conventional and non-solar alternative energy sources, such as increases or decreases in the prices of oil and other fossil fuels; • continued deregulation of the electric power industry and broader energy industry; and • availability of government subsidies and incentives.
4	The demand for our products is affected by general economic conditions which could cause our revenue to fluctuate or be reduced. The United States and international economies have experienced a period of slowing economic growth. A sustained economic recovery is uncertain. In particular, terrorist acts and similar events, continued turmoil in the Middle East or war in general could contribute to a slowdown of the demand for energy systems in residential and commercial buildings. In addition, increases in interest rates may increase financing costs to customers, which in turn may decrease demand for such products. If the economic recovery is delayed as a result of the recent economic, political and social turmoil, or if there are further terrorist attacks in the United States or elsewhere, we may experience decreases in the demand for our products, which may harm our operating results.
5	Decrease in construction could adversely affect our business. Approximately 10% of our revenues are generated from the installation of solar thermal products in newly constructed and renovated buildings and residences. Our ability to maintain or increase revenues from new installation services may depend on the number of new construction starts and renovations, which will likely be correlated with the cyclical nature of the construction industry. The number of new building starts will be affected by general and local economic conditions, changes in interest rates and other factors.
6	The growth of our business depends on our ability to finance new products and services. We operate in a rapidly changing industry. Technological advances, the introduction of new products and new design and manufacturing techniques could adversely affect our business unless we are able to adapt to the changing conditions. To remain competitive, we must continue to incur significant costs in product development, equipment, facilities and invest in working capital. These costs may increase, resulting in greater fixed costs and operating expenses.
7	Products we manufacture may contain design or manufacturing defects, which could result in customer claims. Any defects in the products we manufacture, whether caused by a design, manufacturing or component failure or error, may result in returns, claims, delayed shipments to customers or reduced or cancelled customer orders. If these defects occur, we will incur additional costs and if in large quantity or too frequent, we may sustain loss of business, loss of reputation and may incur liability.
8	We may be subject to unexpected warranty expense. We believe our warranty periods are consistent with industry practice. Due to the warranty period, we bear the risk of extensive warranty claims long after we have shipped products and recognized revenue. Any increase in the defect rate of our products would cause us to increase the amount of warranty reserves and have a corresponding negative impact on our financial results.
9	We must effectively manage our growth. Failure to manage our growth effectively could adversely affect our operations. We may increase the number and diversity of our products in the future and may further increase the number of locations from which we manufacture and sell. Our ability to manage our planned growth effectively will require us to: • enhance our operational, financial and management systems; • expand usage of our facilities and equipment; and • successfully hire, train and motivate additional employees, including the technical personnel necessary to operate our production facilities.
10	The reduction or elimination of government and economic incentives could cause our revenue to decline. At present, the cost to produce solar energy generally exceeds the price of electricity in the U.S. from traditional sources. As a result, to encourage the adoption of solar technologies, the U.S. government and numerous state governments have provided subsidies in the form of cost reductions, tax write-offs and other incentives to end users, distributors, systems integrators and manufacturers of solar energy products. Reduction, elimination and/or periodic interruption of these government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may result in the diminished competitiveness of solar energy, and materially and adversely affect the growth of these markets and our revenues. Electric utility companies that have significant political lobbying powers may push for a change in the relevant legislation in our markets. The reduction or elimination of government subsidies could cause our revenues to decline and materially and adversely affect our business, financial condition and results of operations.
11	We face intense competition, and many of our competitors have substantially greater resources than we do. We compete with major international and domestic companies. Some of our current and potential competitors have greater market recognition and customer bases, longer operating histories and substantially greater financial, technical, marketing, distribution, purchasing, manufacturing, personnel and other resources than we do. In addition, many of our competitors are developing and are currently producing products based on new solar energy technologies that may ultimately have costs similar to, or lower than, our projected costs. As a result, they may be able to respond more quickly to changing customer demands or to devote greater resources to the development, promotion and sales of solar and solar-related products than we can. Our business relies on sales of our solar thermal products and our competitors with more diversified product offerings may be better positioned to withstand a decline in the demand for solar thermal products. It is possible that new competitors or alliances among existing competitors could emerge and rapidly acquire significant market share, which would harm our business. If we fail to compete successfully, our business would suffer and we may lose or be unable to gain market share.
12	Because our industry is highly competitive and has low barriers to entry, we may lose market share to larger companies that are better equipped to weather a deterioration in market conditions due to increased competition. Our industry is highly competitive and fragmented, is subject to rapid change and has low barriers to entry. We may in the future compete for potential customers with solar and HVAC systems installers and servicers, electricians, utilities and other providers of solar energy equipment or electric power. Some of these competitors may have significantly greater financial, technical and marketing resources and greater name recognition than we have. Competition in the solar energy industry may increase in the future, partly due to low barriers to entry, as well as from other alternative energy resources now in existence or developed in the future. Increased competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified technical personnel. There can be no assurance that we will be able to compete successfully against current and future competitors. If we are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results of operations would be adversely affected.
13	If we do not retain key personnel, our business will suffer. The success of our business is heavily dependent on the leadership of our key management personnel, specifically Freeman Ford and Robert Leckinger. If any of these people were to leave us, it would be difficult to replace them, and our business would be harmed. We will also need to retain additional highly-skilled individuals if we are to effectively grow. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Competition in our industry for qualified employees is intense, and we anticipate that certain of our competitors may directly target our employees and officers, all of whom are at-will employees and not parties to employment agreements with us. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees and officers.
14	Our competitive position depends in part on maintaining intellectual property protection. Our ability to compete and to achieve and maintain profitability depends in part on our ability to protect our proprietary discoveries and technologies. We currently rely on a combination of patent applications, copyrights, trademarks, trade secret laws and confidentiality agreements, to protect our intellectual property rights. We also rely upon unpatented know-how and continuing technological innovation to develop and maintain our competitive position. Any patents that may be issued to us might be challenged by third parties as being invalid or unenforceable, or third parties may independently develop similar or competing technology that avoids our patents. We cannot be certain that the steps we have taken will prevent the misappropriation and use of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.
15	We may face intellectual property infringement claims that could be time-consuming and costly to defend and could result in our loss of significant rights and the assessment of damages. If we receive notice of claims of infringement, misappropriation or misuse of other parties’ proprietary rights, some of these claims could lead to litigation. We cannot assure you that we will prevail in these actions. We may also initiate claims to defend our intellectual property. Intellectual property litigation, regardless of outcome, is expensive and time-consuming, could divert management’s attention from our business and have a material negative effect on our business, operating results or financial condition. If there is a successful claim of infringement against us, we may be required to pay substantial damages (including treble damages if we were to be found to have willfully infringed a third party’s patent) to the party claiming infringement, develop non-infringing technology, stop selling our products or using technology that contains the allegedly infringing intellectual property or enter into royalty or license agreements that may not be available on acceptable or commercially practical terms, if at all. Our failure to develop non-infringing technologies or license the proprietary rights on a timely basis could harm our business. Parties making infringement claims on future issued patents may be able to obtain an injunction that would prevent us from selling our products or using technology that contains the allegedly infringing intellectual property, which could harm our business.
16	We are exposed to risks associated with product liability claims in the event that the use or installation of our products results in injury or damage. Since our products are electricity-producing devices, it is possible that users could be injured or killed by our products, whether by product malfunctions, defects, improper installation or other causes. As a manufacturer of products that are used by consumers, we face an inherent risk of exposure to product liability claims or class action suits in the event that the use of the products we sell or install results in injury or damage. Moreover, to the extent that a claim is brought against us we may not have adequate resources in the event of a successful claim against us. We rely on our general liability insurance to cover product liability claims and have not obtained separate product liability insurance. The successful assertion of product liability claims against us could result in potentially significant monetary damages and, if our insurance protection is inadequate, could require us to make significant payments.
17	We depend upon a limited number of third-party suppliers for key materials, and any disruption from such suppliers could prevent us from manufacturing and selling cost- effective products and reduce our revenues. Our products use materials and components procured from a limited number of third- party suppliers. We currently purchase these components from a small number of suppliers. Although we currently have in place supply contracts, these contracts offer us no or limited exclusivity and may be terminated at will or on short notice from our suppliers. If we fail to maintain our relationships with these suppliers, or fail to secure additional supply sources from other suppliers, we may only be able to deliver our products at a higher cost or after a long delay. Any of these factors could prevent us from delivering our products to our customers within required timeframes, resulting in potential order cancellations and lost revenue.
18	Terms of subsequent financings may adversely impact your investment. We will likely need to engage in common equity, debt, or preferred stock financing in the future, which may reduce the value of your investment in the Common Stock. Interest on debt securities could increase costs and negatively impact operating results. Preferred stock could be issued in series from time to time with such designation, rights, preferences, and limitations as needed to raise capital. The terms of preferred stock could be more advantageous to those investors than to the holders of Common Stock. In addition, if we need to raise more equity capital from the sale of Common Stock, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment.
19	Risks of Borrowing. We may have to seek loans from financial institutions. Typical loan agreements might contain restrictive covenants which may impair our operating flexibility. A default under any loan agreement could result in a charging order that would have a material adverse effect on our business, results of operations or financial condition.
20	Management Discretion as to Use of Proceeds. Our success will be substantially dependent upon the discretion and judgment of our management team with respect to the application and allocation of the proceeds of this Offering. The use of proceeds described below is an estimate based on our current business plan. We, however, may find it necessary or advisable to re-allocate portions of the net proceeds reserved for one category to another, and we will have broad discretion in doing so.
21	Limited Transferability and Liquidity. Each investor agrees that it will acquire our Common Stock for investment purposes only and not with a view towards distribution. Certain conditions imposed by the Securities Act must be satisfied prior to any sale, transfer, conversion or other disposition of our Common Stock. No public market exists for our Common Stock and no market is expected to develop.
22	Control by Majority Stockholder. Freeman Ford, our Chairman, prior to this offering holds approximately 69% of our common stock. Therefore, investors will not be able to control our management.
23	Projections: Forward Looking Information. Any projections or forward looking statements regarding our anticipated financial performance are hypothetical and are based on management’s best estimate of the probable results of our operations, and will not have been reviewed by our independent accountants. These projections will be based on assumptions which management believes are reasonable. Some assumptions invariably will not materialize due to unanticipated events and circumstances beyond management’s control. Therefore, actual results of operations will vary from such projections, and such variances may be material. Any projected results cannot be guaranteed.
24	Additional Disclosures. Because this transaction is a private offering and not registered under the U.S. Securities Act of 1933 or state securities laws, it has not been reviewed by the Securities and Exchange Commission (the “SEC”) or the state securities regulators. Review may have resulted in additional disclosures by us. WE ARE OFFERING THE SHARES PURSUANT TO AVAILABLE EXEMPTIONS FROM REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS. WE ARE UNDER NO OBLIGATION AND HAVE NO INTENTION, TO REGISTER THE SECURITIES AND ARE UNDER NO OBLIGATION TO ATTEMPT TO SECURE AN EXEMPTION FOR ANY SUBSEQUENT SALE. THE SHARES, WHEN ISSUED, WILL BE RESTRICTED SECURITIES AND GENERALLY MUST BE HELD INDEFINITELY. THEY MAY NOT BE TRANSFERRED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN AVAILABLE EXEMPTION FROM REGISTRATION WITH AN OPINION FROM LEGAL COUNSEL TO THAT EFFECT SATISFACTORY TO US. GENERALLY, IN ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS INVESTMENT, POTENTIAL INVESTORS SHOULD KEEP IN MIND OTHER POSSIBLE RISKS THAT COULD BE IMPORTANT.
25	Despite all the positive developments, CoolPV sales growth in California is proving more difficult than expected. Due to changes in utility rates and solar rebate programs, the residential PV market in general in 2017 is experiencing a significant slowdown especially in our primary market in California. Further, the installed price of competitive PV systems continues to drop, and we are struggling to compete in situations where customers have enough room on their roofs for separate solar pool heating and PV systems. As a result, our dealers have fewer opportunities to present CoolPV to potential customers, and when they do, they are struggling to close deals. Our sales are running behind our 2017 business plan, and we do not expect sales to recover to plan this year.
26	The parent company of SolarWorld Americas, our current sole source supplier of PV modules, filed for insolvency in Europe. SolarWorld Americas is continuing to operate out of Hillsboro, Oregon and we do not expect any supply issues. SolarWorld Americas recently secured third party backing for their warranty and access to enough capital to continue to operate their business but there is risk in this kind of instability.

Officer	Title	Joined
Bob Leckinger	President, CEO and Director	2008
Freeman Ford	Chairman and Director	1972

$150,000	We will spend most of the capital in sales resources and marketing.
$500,000	We will spend most of the capital in sales resources, marketing, cost reduction, and working capital.
$1,000,000	We will spend most of the capital in sales resources, marketing, cost reduction, and working capital, with an emphasis on the cost reduction and working capital.

Class of Security	Securities (or Amount) Authorized	Securities (or Amount) Outstanding	Voting Rights
Debt Securities
Preferred Stock	1,000,000	0	Yes
Other

Director	Occupation	Joined
Bob Leckinger	President, CEO and Director @ Fafco, Inc	2008
David Ford	Senior Managing Partner @ Gartner Inc	1999
Freeman Ford	Chairman and Director @ Fafco, Inc	1972
Bruce McCaul	President @ Oxigraf, Inc	2013

Why you may want to support us...

Our Team

And Our Major Accomplishments

Why people love us

Some of our investors

we've raised $204,529 from 89 investors since our founding

Downloads

We are One of the Oldest and Largest Solar Thermal Manufacturers in the U.S.

We have a forty-seven year history of innovation and are one of the founding companies in the modern day solar industry.

CoolPV Delivers up to 4x the Power of Stand Alone Solar Panels

CoolPV combines solar thermal and solar electric technology to create a cleaner, more efficient and economical way to generate power.

Annual System Energy Performance based on 400sqft pool in Sacramento, CA.

How it Works

CoolPV delivers up to 4x the power of a stand alone solar electric system using the same roof space.

More Power From Your Roof

Enhance the Electrical Output of your Solar Electric System

We're not a startup—and we have the experience and the revenue to prove it.

We Want to Power the Everyday Task

Laundromats

Showers

Food Processing

Swimming Pools

A leader in the Solar Thermal Industry for Over 40 Years

FAFCO is one of the largest and oldest solar thermal manufacturers in the U.S. We're now leveraging that experience and network to bring CoolPV nationwide.

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Join 310,116 investors who funded 313 startups with over $112.5 million¹