To Shareholders

To: Our Shareholders;

From: Norm Ehrlich

Date: February 2010

“It was the best of times and it was the worst of times.”   The US economy hasn’t been in this  miserable shape since the great depression yet in the 30 years of doing business, the future of Trendsetter has never been brighter.

It’s been one year since the former CEO Dirk Atkinson was replaced.    The economic crash didn’t help the situation but it was evident that if the company were to get back on track, new management was needed.

In order to weather the economic storm and a scarcity of customers,  the decision was made  to drastically reduce overhead and cut back on non essential expenses.  We have now stabilized,  reorganized and are positioning for the inevitable upturn in the energy sector of the US economy.  We are better focused and prepared to take advantage of a market surge when it happens.

We have four legs on our platform to provide diversification and stability:

• The Piggyback residential water heater
  • This division is located in Reno NV and will mass produce a newly patented thermal battery system with integral pump and heat exchanger.  This unit will be certified to operate with most popular brands of solar thermal collectors.
  • The Trendsetter flat plate and evacuated tube solar thermal collectors
    • These collectors are produced in China under the Trendsetter brand. We are the exclusive US  marketing partner for Jayhawk International  distributor of  collectors world wide.
  • The large residential and commercial tank and heat exchanger business
    • We are the premiere manufacturer of solar drain-back tanks.  We currently ship solar storage tanks for large commercial projects around the US.  We are highly regarded in this business and will continue to see growth as the solar business expands over time.
  • The SRS contracting division
    • We are available to perform as sub contractors to provide design and installation services

Our technical support services that help market and sell our products are second to none.  We currently offer “no charge” design support to engineering firms on sizing and specifying Trendsetter equipment. 30 years of design, installation  and servicing experience in the solar thermal field wins us loyal customers as we “train” them to bid and install Trendsetter drain-back systems.

Our short term goals require funds to bring the Piggyback to market.  In three months California will roll out it’s generous thermal rebate program.  We need to be prepared to maximize our marketing and sales as this program is rolled out.  We will extend our marketing and financing package nation wide to our dealer network.

Mean while Trendsetter has has not stood idle.  During the past year we have shipped and continue to process orders for solar thermal storage tanks up to 5,000 gallons.  Over two dozen residential and  commercial solar hot water systems of varying sizes are currently being certified by the Solar Rating and Certification Corporation (SRCC).  Trendsetter manufacturers the largest capacity systems listed on the SRCC web site.

On a personal note I wish to reaffirm my commitment to Trendsetter, our re-emerging solar industry and to our country and environment.  I have waited decades for our nation to address its addiction to oil.  Those of you who remember the oil embargo of the late 1970’s may remember our pledge during the Nixon era to become energy independent by the year 2000.  Had we not relapsed into apathy this country would have been more secure place and possibly have avoided two costly wars.  Indeed we went from energy innovators leading the rest of the world to the lagers behind China, Germany, Japan, Australia, Spain to name a few.  We need to pick ourselves off the floor and get to work or we will perish.

What is Trendsetter’s role in the big picture.  We are focusing on a “sure fire” solar thermal technology.  It may surprise you to know the world market in solar thermal is orders of magnitude greater than solar electric.  Moreover the savings in energy and associated greenhouse gas emissions achieved with solar water heating  is cheap and effective second only to insulation and weatherization.

Each Trendsetter solar collector will save 2,000 pounds annually of pollution from natural gas fired water heaters and 6,000 pounds of pollution from electric water heaters.  It will significantly reduce the upward price pressure on natural gas, create jobs and create real tangible wealth for our customers.

The stakeholders in Trendsetter are not only the investors but it’s customers, employees, the US and world at large.  We are a mature company with a new vision.   Our goal is to maximize financial returns for our investors while achieving benefits for all of our stakeholders.