FAFCO

Dear Kristaps – Sorry for the slow response. We ran into a few technical difficulties with the Q&A that I believe we’ve ironed out. CoolPV needs a water source to cool the PV module and increase its electrical output. Whether the heat from the PV module is used to heat a pool or heat domestic water, it’s a load for the heat that makes CoolPV what it is. Further, the power produced by CoolPV is up to 4x greater than the electrical power produced by standard solar alone, and the increase is all due to thermal energy. We have no current plans to reenter the domestic water heating market, but if a value proposition develops for domestic water heating, we would consider combining CoolPV with our water heating technology and introducing a product for that segment of the market. We decided to launch CoolPV with Solarworld’s Protect module because the j-box on the panel allowed the greatest contact surface area for the thermal heat exchanger. We also viewed the glass back sheet of the Protect module as a lower initial risk for launch. Further, we found Solarworld to be a very willing partner at a time when everyone else in the PV industry was busy and had no time for us. I also really like the thirty-year performance guarantee Solarworld offers on Protect. In theory, any PV module with enough contact surface area for our polymer heat exchanger would work well. We are conducting tests with a polymer backed PV module and looking at 72 cell modules for future product extensions. I really appreciate your concern over our valuation. CoolPV sales grew exponentially from 2015 to 2016. Since we believe we are selling into a $221M US solar pool heating market, we believe there is tremendous room for growth. A good rule of thumb is to value a rapidly growing manufacturing business at some multiple of sales. Therefore, combining a $221M market with our exponential sales growth leads us to believe the valuation is fair for both FAFCO and our investors.

Hi Rob, It is too late as the fund closed. If you are an accredited investor and wish to invest please give our president, Bob Leckinger a call at 530 332 2190

As you can see, we are closing the fund in less than ten days. While we have not changed the subscription agreement yet, rest assured that we intend to treat all equity investors the same.

Thanks for pointing this out. We are working on an update to the subscription agreement that will allow all investors to share equally in what we hope will be substantial value appreciation. We plan to eliminate this clause in the new agreement. I expect the update will be completed shortly, but certainly before escrow.

Thanks for your question, Ryan. CoolPV installs exactly like all standard solar panels world-wide. CoolPV has the advantage it can be retrofitted while roof tile solar is best installed during construction of the roof – either when it’s being built for the first time or replaced. Total power output can be much higher per unit roof area for CoolPV assuming you have a use for the thermal energy CoolPV collects. The cost of CoolPV will likely be lower as CoolPV benefits from very large PV module scale while roof tiles have not entered the market yet. Let me know if you have any additional questions.

Robert – Since you are in the solar industry, you know there’s a race to the bottom in pricing for solar electric systems. Manufacturers and installers are taking business at negative margins, and frankly, it’s not a lot of fun to be in the PV business. There are two great things about CoolPV. First, since we are using off the shelf PV modules, we essentially “ride along” as the price of PV modules changes. Second, CoolPV takes dealers out of the race to the bottom by allowing them to offer something that is truly unique. The CoolPV value proposition differentiates CoolPV from standard solar electric systems is three key ways: CoolPV maximizes valuable solar roof space; CoolPV qualifies for the Federal ITC; and CoolPV qualifies for solar financing like programs like PACE. Our goal is to get the installed price of CoolPV to the point where it is close to the same price as a separate solar pool heating system and solar electric system. We designed CoolPV panels to install on a roof just like PV modules. Cool PV is designed to integrate with any racking system. You can use any inverter you want with CoolPV. Most PV installers can easily install the panels on the roof. There is some training required to plumb the water connections to and from the supply and return piping to the pool. Additionally, if it’s a new system, someone will need to plumb the water from the pool pump house to the roof. This does take some skill, and we have manuals and training available to assist your installers. We will also send our application engineers into the field to support your first installation. If you’d like, I can put you in touch with Phil Del Negro, our VP sales and marketing, to discuss your specific needs. Please let me know what I can do to help, and I look forward to adding you to our growing list of investors.

Steve - Great question. First, UL 1703 does not cover PVT products, so we are plowing a bit of new ground as we work through the listing requirements for CoolPV. The PV module we’ve selected is already UL1703 listed. We’ve already passed our SRCC OG-100 thermal performance test, passed all the Class A fire test requirements, and received an ICC listing for CoolPV. This is enough for us to sell CoolPV right now. Most the cost of a UL 1703 listing is associated with the PV module itself. Since our PV module is already listed, we avoid most of the expense that PV module manufacturers incur to get a UL 1703 listing. We’ve budgeted one more round of testing that we plan to use to certify a lower cost PV module.

We use a very unique manufacturing process to convert raw resin and additives into our polymer heat exchangers. As such, the cost of our materials is one of our largest expenses. We are very interested in ensuring that our investors are rewarded for their faith in FAFCO. One way we could share our success with our investors would be to continue our organic growth in the US, set up regional licensees around the world, and pay dividends as our earnings increase. As far as exit strategies, one option is an acquisition of FAFCO by a large, multinational PV company. The PV company would start assembling their own CoolPV panels and distributing and selling them around the world. A company like Flextronics comes to mind. A second option would be for a market to develop for crowdfunded equities that would allow investors to buy and sell shares of crowdfunded stock. While I don’t know if that will ever happen, it sure is a good idea! The last option would be a full public offering. While not out of the question, many things would have to happen before an IPO would make sense.

Kurt – To my knowledge, there really isn’t a viable competitor for CoolPV right now even though there are many companies with PVT solutions. In solar pool heating applications, I believe we perform better than the rest of the competition that’s been third party certified by the Solar Rating and Certification Corporation (SRCC) and passed the Class A fire rating tests in California. We don’t have solid information on prices for the competition, but based on anecdotal information, we believe we are about 25% less expensive. We have measured the improved electrical output of CoolPV. We monitored our first small above ground pool installation over a full year and measured a 2% increase. While that doesn’t seem like much, PV manufacturers are spending hundreds of millions of dollars to increase the efficiency of their modules by even one percent. Dealers are reporting 4% to 5% increases in electrical performance of their CoolPV systems. One dealer in FL compared the electrical output of his CoolPV installation to several other PV installations he was tracking. He reported that CoolPV hands down outperformed his other systems during the test period. When we ran a constant load of cool water through CoolPV in our test lab, we measured the 20% increase. Actual results for everyone will vary depending on the load for the thermal energy and the weather. When we designed CoolPV, we made sure that it would install on the roof exactly like any standard PV module. You can use any inverter on the market with CoolPV. While we are currently certified with UNIRAC for our racking system, we believe CoolPV will integrate with most racking systems being sold today. Finally, the weight of CoolPV on a roof is just under 4 PSF. That means CoolPV installations do not need wet stamped engineered drawings to get a permit. There are no structural issues associated with installing 28 CoolPV panels on any type of roof that I am aware of.

Charles - CoolPV can be adapted to any large thermal load including domestic water heating and heating water for commercial and industrial processes. We’ve already developed the technology we need to integrate CoolPV with large water heating applications and have most of the technology we need for the domestic water heating application. We are starting with solar pool heating because it’s a great application, there is a solid value proposition for the customer and dealer, and we have a long history of being successful in that market. We will do most of the product development associated with CoolPV, but we anticipate finding partners like our new Korean licensee who have access to other technology and have the ability to successfully integrate CoolPV themselves. All product extensions must have compelling value propositions throughout the value chain (FAFCO – dealer – end user) before we will pursue them.