Let There Be Light !

Dear Reader:

In a market where not so long ago the mantra seemed to have been "anything goes," a new corporate sensibility has risen - both with investors and management. With reference to the latter, the focus for many dot-com survivors has been cutting costs and getting through the lean times, executing their business plans and becoming models of efficiency. 

And what if a cost-minded company were offered the opportunity to cut its lighting costs 20-30%?  At a time in which "rolling blackout" has become a household word, our featured company's product is making a difference in the always expensive power bills of companies and government agencies alike. 

 Perhaps guided by some harsh necessity, they're turning to Electric City.  Maybe now they've seen the light. 
 

ELECTRIC CITY (AMEX: ELC)

Electric City currently markets the EnergySaver™, the GlobalCommander™ and LightMaster™ energy conservation technologies, as well as its proprietary Total Primary Power Package (TP3) switchgear and a full line of Building Automation Systems. 

Its energy-saving product, the EnergySaver reduces electricty cost for lighting, typically by 20% to 30%, with minimal to no visible lighting level reduction.  Electric City's products are used by commercial, governmental, and industrial sectors, to reduce energy consumed by lighting without impacting the lighting level.

APPLICATIONS

THREE BUSINESS SEGMENTS

Since January 1, 2001, the Company has organized and managed its business in three distinct segments. In classifying its operational entities into a particular segment, the Company segregated its businesses with similar economic characteristics, products and services, production processes, customers, and methods of distribution into distinct operating groups.

1--The Energy Technology segment designs, manufacturers and markets energy saving technologies, primarily to commercial and industrial customers.  The principal products produced by this segment are the EnergySaver and the Global Commander.  This segment is headquartered, and most of its operations are located, in Elk
Grove Village, Illinois.

22The Power Management segment designs, manufactures and markets a wide range of commercial and industrial switching gear and distribution panels.  This segment is comprised of the business acquired from Marino Electric in May 1999 and Switchboard Apparatus, which was acquired in August 2000.  The segment operates as Switchboard Apparatus out of facilities located in Broadview, Illinois.

3--The Building Control and Automation segment provides integration of building and environmental control systems for commercial and industrial customers.  This segment is comprised of Great Lakes Controlled Energy Corp., a company that was acquired in June 2001.  Accordingly, the 2001 financial information presented below for the nine-month period ended September 30, 2001 only includes four months of results for this segment. 
 
 

HOW EnergySaver GOT STARTED

The EnergySaver technology was developed in Italy over 17 years ago, and has been the leader in Energy Management Savings Systems throughout Europe.  Units have been installed and are being used in many European Countries. 

RECENT ENERGY SAVER HEADLINES

GOVERNMENT INCENTIVES

With the EnergySaver, today’s businesses can save time, money, and most importantly, energy consumption, achieving both business and environmental goals. The federal government is also encouraging businesses to develop less expensive, environmentally friendly ways to light their facilities, and have started numerous programs to assist in that endeavor. 

Currently, there are 2400 businesses nationwide that have joined the Environmental Protection Agency's Green Lights program, established to prevent pollution through energy efficient lighting.  Yet a variety of companies across the United States have chosen to undertake large, expensive lighting upgrades, many of which require tedious retrofitting of each individual lamp or ballast. They do use less energy (which is very good for the environment) and they do pay less each month on their utility bills, but the initial expense of such retrofitting is often more then most companies can afford to spend. 

The EnergySaver is the perfect solution for every company that understands that the fiscal responsibility of increasing the bottom line does not have to come at the expense of the environment. 
 

GOVERNMENT REGULATION

Electric City Corp.'s introduction of EnergySaver technology in the United States strategically coincides with the recent electric industry deregulation called "Open Access." Until this deregulation, the electric utility industry has acted as a monopoly, a single utility company providing the generation, transmission and distribution of electricity to its customers. Now, the electric utility industry is forced to open up to competition, offering greater choices in purchasing energy services, lowering rates, and stimulating technological advances through competition. 
 

HOW EnergySaver WORKS

 

The EnergySaver possesses technology that has served as the industry leader in Europe for over 17 years in energy conservation. Reductions of 20-50% in the lighting portion of electricity costs are achieved while reducing maintenance, repair, recycling and replacement costs of both lamps and ballasts, all without rewiring or reducing essential light levels.

Regardless of the efficiency of a current system, the type of  lamp/ballast used, whether for indoor or outdoor lighting applications, the EnergySaver is programmable to provide the precise amount of power that each lighting load needs to fully function properly. The fluctuations (power spikes, drops and surges) inherent in any power supply are eliminated, resulting in a reduction of heat generated within a lighting system, which in turn enhances lamp/ballast life. The power is conditioned, perfecting the electrical sine wave, and the type of power factor, therefore improving the very quality of the electricity.

The EnergySaver is able to interface with only existing lighting panels and lamps/ballasts without necessary rewiring.  Enclosed in a self contained unit without moving parts to experience wear, the EnergySaver regulates the power and flow, while reducing volts, amps and kilowatts to the exact amount of power needed to maintain essential lighting needs by only allowing that specified amount of electricity to enter the establishment. 

ENVIRONMENT & EFFICIENCY

On average, ELC customers,  use 30%  less energy than they did before installing the EnergySaver unit. That results in 30% fewer emissions into the ozone, reducing the levels of carbon dioxide, sulfur dioxide, and nitrogen oxides, thereby curbing acid rain and smog production. If the EnergySaver saves 3,500,000 kWh per year, that is equivalent to planting 700 acres of trees or taking 500 cars off the road. 

The EnergySaver is easily installed, with minimum interruption to facilities, and more importantly, will save ELC customers 20-50% on lighting bills WITHOUT the costly replacement of bulbs or ballasts.  The EnergySaver is the most cost efficient and effective way to reduce lighting bills and help protect the environment at the same time.

DRUG STORE EFFICIENCY MODEL (NOTE THE SAVINGS IN RED)

REVENUE GROWTH & STOCK FUNDAMENTALS

ELC

ELC total revenue for the three-month period ended September 30, 2002 increased $1,826,171 or 117.9% to $3,374,654 as compared to $1,548,483 for the quarter ended September 30, 2001. 

Revenue related to EnergySaver sales increased approximately $520,000, or 124%, to approximately $938,000 as compared to approximately $418,000 for the same period in 2001. 

Revenue from the sale of building automation products and services increased approximately $661,000 to $766,000 during the three month period ended September 30, 2002, from approximately $105,000 recorded in the same period of 2001. 

Revenues derived from the sale of switchgear and distribution panels increased approximately $646,000 or 63% to approximately $1,671,000 during the third quarter as compared to approximately $1,025,000 for the same period in 2001. 

ELC total revenue for the nine-month period ended September 30, 2002 increased $2,459,650 or 32.8% to $9,948,457 as compared to $7,488,807 for the nine-month period ended September 30, 2001. 

Revenue related to EnergySaver sales increased approximately $2,190,000, or 171%, to approximately $3,471,000 as compared to approximately $1,280,000 for the same period in 2001. 

Switchgear and distribution panel revenue declined approximately $1,149,000 or 19% to approximately $4,923,000 during the nine months ended September 30, 2002 as compared to approximately $6,072,000 for the same period in 2001.  A significant portion of the switchgear and distribution panel revenue earned during the first nine months of 2001 was tied directly or indirectly to the telecom and Internet industries. (ELC has since redirected this business segment to focus more on local construction markets in order to stabilize revenue and earnings) 
 

LEADERSHIP

John Mitola has over 15 years of experience in the energy industry, commercial real estate, engineering and construction. In December 1999 he was elected to the Board of Directors of Electric City Corporation and was appointed C.E.O. effective January 2, 2000. 

Prior to his appointment at Electric City, Mr. Mitola was a member of Unicom Thermal and Commonwealth Edison where he held senior management positions in various capacities.  He has been with Unicom Thermal since the company's inception in August 1993 and was most recently the Vice President and General Manager. 

Mr. Mitola received his Bachelor's Degree in Mechanical Engineering from the University of Illinois at Urbana and Juris Doctorate from DePaul University in Chicago. 

Mr. Mitola is a member of ASHRAE, IDEA, and the Association of  Energy Engineers. His community affiliations include membership in the Union League Club, the governing board of the Chicago Film Festival and the Christopher House Board of Directors where he serves as Vice President.  Mr. Mitola is also a member of the board of Nucon Corporation, a privately held manufacturer of plastic shipping pallets.  In addition, Mr. Mitola is a board member of the Illinois Tax Payers Association, South Loop Congress and the Wacker Drive Association.
 

CONTACT

CORPORATE HEADQUARTERS

1280 LANDMEIER ROAD, ELK GROVE, IL 60007, 847-437-1666, Click here for ELC Corporate Web site

Investor Relations, Glen Akselrod, The Stockpage, 800-797-5683, glen@thestockpage.com or investor@elccorp.com 

Media Contacts, Julie Shepherd, 847-669-0633, Julie@accentuatePR.com

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