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Wednesday, 03/11/2015 9:51:07 AM

Wednesday, March 11, 2015 9:51:07 AM

Post# of 63559
LETTER TO SHAREHOLDERS 3/11/15

Dear Fellow Solar3D Shareholder,
We have accomplished much in recent months here at Solar3D. The acquisition of SUNworks and MD Energy has helped us create a stronger revenue producing entity. We expect 2014 to close out with $19.5 – $20.5 million in revenues with positive adjusted EBITDA. We believe we are on the path to more than double that revenue figure for 2015 and we believe that positions us for continued growth and visibility.
As many of you know, in late February and early March, we completed a series of transactions that resulted in a listing on NASDAQ. These transactions were necessary to meet NASDAQ- listing standards. The reverse split helped meet the share price requirement and the public offering of $12.5 million raised capital and helped us meet the shareholders’ equity requirement. The purpose of the NASDAQ listing and offering is designed to take our company to a new level of competitive strength. Today, Solar3D is a well-capitalized, NASDAQ-listed company with a strong model for growth. We are highly confident that, as we continue to execute our business plan, we will remain well positioned to attract more attention and investments from institutional investors and analysts. We have taken these actions after careful consideration and in the belief that they are in the best interest of Solar3D and all of its shareholders.
One of our priorities for 2015 is to provide periodic updates to you on our progress and strategy. Our recent acquisitions, the appointment of a new Chief Financial Officer, and initiatives that further drive our sales and overall growth have had a positive impact on our business. Combined, they provide us with a distinct competitive advantage over other players in our space, and they substantiate the reasons why the Solar3D story is a compelling investment in the solar industry, which is experiencing explosive growth.
Solar Industry Poised for Explosive Growth in 2015
The solar market is vibrant, untapped and virtually unlimited. We believe Solar3D is on the forefront of a powerful market trend, one that is growing rapidly and possesses significant growth opportunities. Distributed solar has penetrated less than 1% of its total [addressable] market in the residential and commercial sectors. Our SUNworks operating division has gained brand popularity throughout California due to its commitment to excellent customer service and the ability to provide flexible cost savings to large commercial organizations. More recently, SUNworks has been contracted to perform commercial solar design and installation programs for two large-scale California-based companies, Innovative Produce, Inc. and Heidrick & Heidrick Properties, L.P.
There are many reasons supporting the meteoric rise of solar implementation on both the commercial and residential fronts. A recent article from Renewable Energy World, cited several factors contributing to the growth which include financial incentives available from federal, state and local governments, lower prices, a renewed emphasis on the reduction of greenhouse
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emissions, President Obama’s pro-green agenda, widespread adoption from utility providers, and a driven consumer base.
Growth-by-Acquisition
We are proud to announce the completion of the acquisition of another profitable solar energy systems energy provider, MD Energy (MDE), based in Rancho Cucamonga in Southern California. After several weeks of due diligence from both management teams, we have been able to successfully close this transaction to better capture the commercial market for the Southern California region. Similar to SUNworks, MD Energy designs, finances, monitors and maintains solar energy systems but outsources the physical construction of its projects. In 2014, MD Energy installed 14 solar energy systems totaling 3.35MW in capacity translating in a projected $6.5-7.0 million in revenues while generating a profit. We’re excited by this acquisition because it directly adds to our top line growth. and the acquisition also fills a unique niche with the general engineering skills, general building knowledge, and electrical contracting licenses that we’ve acquired. In 2015, California will become a global leader in solar power penetration, and we are well positioned to capitalize on that market. With the solar industry being highly fragmented with high demand in the California region, we continue to focus on acquisitions in California and Nevada so that we can obtain critical mass in the market.
Executive Appointments
On the management side, Tracy Welch recently joined the Company as Chief Financial Officer. Tracy possesses a reputation for strong financial leadership and expertise in completing and integrating acquisitions, which makes him a perfect fit for our growth-by-acquisition model. Tracy joins us after holding CFO and Treasurer roles at several large private and publicly held companies, including multi-billion dollar energy companies KN Energy and Smith International, and food giant Schwan’s. During his career, he has completed 36 transactions ranging in size from $10 million to $500 million, and brings invaluable experience in this space to Solar3D. His role at Solar3D will ultimately be to drive revenue and profit optimization.
Uplisting Onto A Major Exchange
As I mentioned, we took some major steps forward with our listing on NASDAQ. To achieve the listing, we raised $12.5 million in new equity capital. This equity capital provided us with the shareholders’ equity needed to meet NASDAQ’s listing standard. Without this funding, Solar3D would not have been able to uplist its shares at this time. As an added benefit, the equity raised has strengthened our balance sheet and better positioned the Company to execute our plan to accelerate growth. We believe this uplisting will enable Solar3D to attract a broader range of institutional investors, strengthen our financing flexibility, and provide greater liquidity for our shareholders.
Sales Initiatives for Growth
We’ve reported on the growing market opportunity due to widespread adoption of solar energy in the farming industry. The agricultural industry is no longer simply exploring solar as a potential
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means of saving energy costs, but actively pursuing the best options for their business. This commitment from farmers represents a substantial shift in the traditional way of thinking, and represents a significant sales opportunity for Solar3D. Additionally, our SUNworks operating division also announced the launch of the proprietary PowerPlay Plan, which is a customer service portal allowing individual users to review their current systems, access monitoring sites and, most importantly, submit and track referrals. Given the simplicity of this system, we believe it will drive organic growth and also retain our existing customers.
We are pleased with our operational and financial growth and reiterate our anticipated 2014 revenue to be approximately $20 million with revenue in 2015 projected to be $40-45 million based on existing and anticipated orders. Our business momentum remains stronger than ever and we are growing at a rate that is much faster than the current market, as we continue to consolidate and gain market share.
Given our management know-how and expertise, we are able to reduce our cost of customer acquisition to about half of the industry average which drives our share gain. What provides us with a distinct advantage is that we have a superior management team, a focus on optimizing customer economics, and a remarkable reputation for doing quality work. We are actively pursuing acquisitions and that, too, differentiates us from the competitors in the space.
For our future outlook, we believe this year will be another record revenue year for Solar3D and that we are on the path to building the next solar powerhouse. On behalf of the management team, we encourage you to pay close attention as we continue to execute on driving sales with our customers and creating value for our shareholders. Thank you for your continued support.
Warm Regards,
Jim Nelson, CEO, Solar3D