8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): November 8, 2016

REAL GOODS SOLAR, INC.

(Exact Name of Registrant as Specified in its Charter)

Colorado	001-34044	26-1851813
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

833 W. South Boulder Road, Louisville, CO 80027-2452

(Address of Principal Executive Offices, Including Zip Code)

Registrant’s telephone number, including area code: (303) 222-8300

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 8, 2016, Real Goods Solar, Inc. (the “Company”) issued a press release announcing results for its third quarter ended September 30, 2016. A copy of the press release is attached as Exhibit 99.1.  The disclosure under Item 7.01 below is incorporated by reference herein. 

Item 7.01. Regulation FD Disclosure

Attached as Exhibit 99.2 to this Current Report on Form 8-K and incorporated by reference herein is an updated investor presentation, which describes the Company’s business turnaround strategy and will be made available in the investor relations section of the Company’s website at https://investors.rgsenergy.com/presentations/.  The investor presentation contains, among other things, information about the Company’s results for its third quarter ended September 30, 2016 derived from the Company’s Quarterly Report on Form 10-Q for the third quarter ended September 30, 2016, which the Company expects to file today. 

This Current Report on Form 8-K, including Exhibits 99.1 and 99.2, are being furnished by the Company pursuant to Item 2.02 “Results of Operations and Financial Condition” and Item 7.01 “Regulation FD Disclosure.” In accordance with General Instruction B.2 of Form 8-K, the information contained in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. In addition, this information shall not be deemed incorporated by reference into any of the Company’s filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release issued by Real Goods Solar, Inc. on August 22, 2016
99.2	Real Goods Solar, Inc. Investor Presentation

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

REAL GOODS SOLAR, INC.

By:	/s/ Alan Fine
	Alan Fine
	Principal Financial Officer and Treasurer

Date: November 8, 2016

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by Real Goods Solar, Inc. on November 8, 2016
99.2	Real Goods Solar, Inc. Investor Presentation

EX-99.1

Exhibit 99.1

 

RGS Energy Reports Third Quarter 2016 Results

LOUISVILLE, CO, November 8, 2016 – RGS Energy (NASDAQ: RGSE), a residential and small commercial solar company since 1978, has reported results for its third quarter ended September 30, 2016. The Company also filed today its quarterly report on Form 10-Q, as well as posted its most recent Investor Presentation to the Investor Relations’ section of its website.

Business Turnaround and Capital Raising Update

The Company’s business turnaround strategy is to optimize its operating costs such that the required level of sales necessary to achieve break-even or better operating results is lowered. To fully execute the business turnaround strategy, the Company had to become better capitalized. The Company successfully raised $10 million of convertible notes on April 1, 2016 with a large portion of the proceeds deposited in a restricted cash account; releases of cash from the restricted cash account occurs upon certain predetermined intervals, the occurrence of certain trigger events, or as the convertible notes are converted to common equity. As a result, the Company did not have access to this capital to execute its business turnaround strategy for the last six months.

To be able to successfully execute its strategy to operate the Company at break-even or better results in the future, the Company made it a priority for the last six months to raise additional financial capital:

· Raised on September 14, 2016 gross proceeds of $2.8 million from convertible preferred stock, all of which was converted to common equity of the Company by September 29, 2016.

· Received on September 30, 2016 proceeds of $1.6 million from the exercise of warrants issued with the convertible preferred stock.

· Commencing October 3, 2016, principal and interest on the Company’s convertible notes began to convert into Class A common equity with the following activity through November 4, 2016:

Amount of Principal converted to Class A common stock	$7.1 million
Release of cash from restricted cash	$5.8 million
Net increase in shareholders’ equity from conversions	$5.9 million

· The Company has used the proceeds from the releases from the restricted cash account to reduce accounts payable, purchase materials to convert its backlog to revenue, and for other corporate purposes.

For the third quarter of 2016, the Company reported a net loss of $7.7 million. Under applicable accounting rules for complex financial instruments, the Company recorded during the third quarter of 2016 $4.6 million of non-cash charges to operations for the above capital raises, representing approximately 60% of the loss for the quarter. The Company’s Comparable Net Loss, as shown in the accompanying Supplemental Presentation of RGS Results, is approximately $3 million, as was the Comparable Net Loss for the second quarter of 2016. The Company’s revenue for the last six months was materially impacted by not having the necessary access to capital to grow revenue. The Company maintained the same level of Comparable Net Loss during this period as it was successful at reducing its operating costs. When compared to the results for the first nine months of 2015, the company reduced its cash outflow from operations by approximately $8 million.

Cash and cash equivalents were $1.4 million at September 30, 2016 versus $0.5 million at June 30, 2016.

Management Commentary

“The last six months have been challenging for the company in that we did not have the financial capital available to fully execute our strategy and grow revenue,” said Dennis Lacey, CEO of RGS Energy. “We are very pleased to be realizing the financial capital we had arranged previously, as this is necessary for our future growth. We look forward to being able to demonstrate what our employees can do with the benefit of sufficient capital for growth.”

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Segment Results:

Residential Segment:	3rd Quarter			2nd Quarter			3rd Quarter
(000's omitted)	2016			2016			2015
Revenue	$	1,427		$	3,296		$	6,894
Cost of goods sold		1,591			2,842			6,032
Gross Margin		(164	)		454			862
Gross Margin %		(11.49	)%		13.77	%		12.50	%
Operating Expenses		1,235			1,347			2,671
Business Unit Contribution	$	(1,399	)	$	(893	)	$	(1,809	)
Backlog	$	9,722		$	8,225		$	11,503

During the third quarter of 2016, the residential segment did not have access to sufficient capital to grow revenue.

The Company installed solar equipment on 54 roofs in the third quarter of 2016, as compared to 98 installations in the previous quarter and 204 installations in the third quarter of 2015.

Gross margin percentage in the third quarter of 2016 declined as compared to the previous quarter and the year-ago quarter. The decrease is due to the impact of lower revenue compressing the gross margin arising from less efficient absorption of the fixed portion of operating costs.

Residential segment backlog increased to $9.7 million at September 30, 2016 from $8.2 million at June 30, 2016. New sales orders decreased 36% to $3.7 million during the third quarter of 2016 as compared to $5.8 million in the prior year quarter. Net cancellations decreased 85% to $0.9 million in the third quarter of 2016 as compared to $5.2 million in the third quarter of 2015.

Sunetric Segment:	3rd Quarter			2nd Quarter			3rd Quarter
(000's omitted)	2016			2016			2015
Revenue	$	1,036		$	1,588		$	3,544
Cost of goods sold		755			1,625			2,848
Gross Margin		281			-37			696
Gross Margin %		27.12	%		(2.33	)%		19.64	%
Operating Expenses		381			254			582
Business Unit Contribution	$	(100	)	$	(291	)	$	114
Backlog	$	2,871		$	4,757		$	10,950

During the third quarter of 2016, the Sunetric segment did not have access to sufficient capital to grow revenue. Sales for Sunetric have been adversely impacted by the regulations of the local utility and, in response, Sunetric has begun piloting sales of other energy savings products. Gross margin percentage for Sunetric in the third quarter of 2016 increased as compared to the year-ago quarter. The improvement was due to a favorable product mix shift to higher gross margin commercial projects.

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Corporate Segment & Other:
(000's omitted)	3rd Quarter			2nd Quarter			3rd Quarter
Corporate Segment:	2016			2016			2015
General and Administrative expenses	$	1,268		$	1,478		$	1,561
Stock Option Compensation		175			177			131
Litigation		-			-			1084
Depreciation & amortization		96			101			92
Business Unit Contribution	$	(1,539	)	$	(1,756	)	$	(2,868	)
Other:
Other Income and Interest Expense	$	(1,330	)	$	(876	)	$	20
Change in derivative liabilities, net		(535	)		309			660
Debt Extinguishment		(2,831	)		-			-
Income Taxes		-			27			2
Discontinued Operations		(1	)		70			(397	)

Change in valuation of derivative liabilities, net, was a loss of $535,000 in the third quarter of 2016 versus a gain of $309,000 in the previous quarter and a gain of $660,000 for the third quarter of 2015. The loss for the third quarter of 2016 is principally related to change in value of the embedded derivative liability arising from the convertible note financing. Included in interest expense was $1 million of non-cash amortization of debt discount arising from the convertible note and convertible preferred stock financings.

On September 14, 2016, the Company raised $2.8 million of convertible preferred stock that was accounted for as debt. By September 29, 2016, all of the convertible preferred stock was converted to Class A common stock of the company, extinguishing the debt. As the trading price of the Company’s stock was higher at conversion than at issuance of the debt, a loss on extinguishment is recorded for this 14-day period. As of September 30, 2016, the amount recorded as an increase to shareholders’ equity for the September 14, 2016 offering was equal to the cash received, net of costs, and warrants exercised aggregating $3.8 million. 

Loss from discontinued operations, net of tax, was $1,000, reflecting winding down of the Company’s Large Commercial segment. This compares to a loss from discontinued operations, net of tax, of $0.4 million in the third quarter of 2015.

Conference Call

RGS Energy will hold a conference call to discuss its third quarter 2016 financial results later today.

Date: Tuesday, November 8, 2016

Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)

Toll-free dial-in number: 1-888-211-4430

International dial-in number: 1-913-312-0833

Conference ID: 2621119

Webcast: http://public.viavid.com/index.php?id=121670

The conference call will be webcast live and available for replay via the investor relations section of the Company's website at RGSEnergy.com. The company’s most recent investor presentation is available at the investor relations section of the Company’s website; http://investors.rgsenergy.com

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time on the same day through November 15, 2016.

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Toll-free replay number: 1-844-512-2921

International replay number: 1-412-317-6671

Replay ID: 2621119

About RGS Energy

RGS Energy (NASDAQ: RGSE) is a residential and small commercial solar Company since 1978 which has installed more than 25,000 solar power systems. RGS Energy makes it very convenient for customers to save on their energy bill by providing turnkey solar solutions - from system design, construction planning, customer financing assistance, installation, to interconnection and warranty.

For more information, visit RGSEnergy.com, on Facebook at www.facebook.com/rgsenergy and on Twitter at www.twitter.com/rgsenergy. Information on such websites is not incorporated by reference into this press release.

RGS Energy is the Company’s registered trade name. The Company files periodic and other reports with the Securities and Exchange Commission under its official name “Real Goods Solar, Inc.”

Forward-Looking Statements and Cautionary Statements

This press release by Real Goods Solar, Inc. (the “Company,” “we”, “us,” “its,” “our”) contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including statements regarding the Company’s capital formation activities, business and financial strategies, its growth opportunities, future sales and installation revenue, its business turnaround strategy and plans to achieve break-even or better results in future periods resulting from increased sales and reduced cost of goods sold and operating expenses. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they provide our current beliefs, expectations, assumptions, forecasts, and include statements regarding our future results of operations and financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words “hypothetical,” “anticipate,” “believe,” “plan,” “target”, “estimate,” “expect,” “strive,” “future,” “intend,” “may,” “will” and similar expressions as they relate to us are intended to identify such forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward looking statements. In order to implement its business turnaround strategy, the Company requires better capitalization and expansion of its sales and installation operations. Therefore, the Company cautions you against relying on any of these forward-looking statements.

Additional key risks and uncertainties that may cause a change in any forward-looking statement include: the Company obtaining additional capital for implementation of its business turnaround strategy; the effect of electric power generation industry regulations in the states the Company operates,; net electric power metering and related policies; the level of demand for our solar energy systems; the availability of a sufficient, timely, and cost-effective supply of solar panels the Company’s ability to implement required cost containment and reductions,; compliance with,the terms of the Company’s outstanding indebtedness; the Company’s ability to generate sufficient cash flow from operations to fund operation, ; litigation and contract disputes; and the Company’s ability to satisfy the conditions under its convertible notes permitting release of funds from the collateral accounts and for payments to be made in shares of Class A common stock. You should read the section entitled “Risk Factors” in our 2015 Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q, for 2016, each of which has been filed with the Securities and Exchange Commission, which identify certain of these and additional risks and uncertainties. Any forward-looking statements made by us in this press release speaks only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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Investor Relations Contact

Ron Both, Senior Managing Director

Liolios Group, Inc.

Tel 1-949-574-3860

RGSE@liolios.com

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RGS Energy

Condensed Consolidated Balance Sheets

(in thousands)

	September			December
	30, 2016			31, 2015
Cash & cash equivalents	$	1,378		$	594
Restricted cash		8,250			-
Accounts Receivable		2,571			4,374
Inventory		1,384			2,051
Other Current Assets		1,675			2,527
Assets of Discontinued Operations		2,675			2,853
Total Current Assets		17,933			12,399
Goodwill and Intangibles		1,338			1,338
Other Assets		2,251			2,420
Assets of Discontinued Operations		717			878
Total Assets	$	22,239		$	17,035
Line of Credit	$	3,598		$	774
Convertible debt		2,309			-
Accounts Payable		6,354			9,121
Other Current Liabilities		4,840			3,054
Liabilities of Discontinued Operations		4,042			4,510
Total Current Liabilities		21,143			17,459
Convertible debt		3,079			-
Common stock warrant liability		1,890			342
Other Liabilities		1,480			22
Liabilities of Discontinued Operations		225			225
Total Liabilities		27,817			18,048
Stockholder’s Equity (deficit)		(5,578	)		(1,013	)
Liabilities and Stockholders' deficit	$	22,239		$	17,035

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RGS Energy

Consolidated Summary Statements of Operations

(in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net Revenue	$	2,463		$	10,438		$	12,286		$	35,775
Cost of Goods Sold		2,346			8,880			11,669			30,871
Gross Margin		117			1,558			617			4,904
Gross Margin (%)		4.75	%		14.93	%		5.02	%		13.71	%
Selling and Operating		1,613			3,430			5,504			10,417
General and Administrative		1,266			1,304			3,936			4,375
Stock option compensation		175			131			517			531
Restructuring Costs		-			66			37			424
Litigation		-			1,084			24			1,584
Depreciation and amortization		101			102			316			376
Total Expenses		3,155			6,117			10,334			17,707
Operating Loss from Continuing Operations		(3,038	)		(4,559	)		(9,717	)		(12,803	)
Other Income		-			74			17			422
Interest Expense		(1,330	)		(54	)		(2,253	)		(423	)
Change in derivative liabilities, net		(535	)		660			(268	)		6,924
Debt Extinguisment		(2,831	)		-			(2,831	)		-
Income Tax Expense/(Benefit)		-			2			27			(22	)
Income/(Loss) from Continuing Operations, net of tax		(7,734	)		(3,879	)		(15,079	)		(5,858	)
Income/(Loss) From Discontinued Operations, net of tax		(1	)		(397	)		230			(712	)
Net Income/(Loss)	$	(7,735	)	$	(4,278	)	$	(14,849	)	$	(6,570	)
Earnings per share	$	(10.27	)	$	(6.97	)	$	(22.10	)	$	(19.44	)
Weighted average shares outstanding		753			614			672			338

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Supplemental Presentation of RGS Results

Since Commencement of Business Turnaround Strategy Commencing 4th Quarter 2014

	2014			2015												2016
$000's omitted	Q4*			Q1			Q2			Q3			Q4			Q1			Q2			Q3**
Loss from Continuing Operations	$	(13,394	)	$	(3,552	)	$	1,575		$	(3,881	)	$	(3,949	)	$	(3,812	)	$	(3,533	)	$	(7,734	)
Separately Reported Items in the Statement of Operations:
Financial Instrument Non-Cash accounting income (expense):
Change in valuation of warrants		(5,956	)		(1,755	)		(4,509	)		(660	)		(203	)		42			(309	)		535
Interest expense for financial instruments		0			0			0			0			0			0			798			1,240
Debt Extinguishment		0			0			0			0			0			0			0			2,831
M&A expense		(21	)		0			0			0			0			0			0			0
Litigation Expense		0			0			500			1,084			420			24			0			0
Asset Impairment charge		10,400			0			0			0			0			0			0			0
Restructuring expense		252			21			337			66			23			37			0			0
Comparative Loss from Continuing Operations		(8,719	)		(5,286	)		(2,097	)		(3,391	)		(3,709	)		(3,709	)		(3,044	)		(3,128	)
Discontinued Operations Income/(Loss)		(2,784	)		(182	)		133			(397	)		(260	)		161			70			(1	)
Comparable Net Loss	$	(11,503	)	$	(5,468	)	$	(1,964	)	$	(3,788	)	$	(3,969	)	$	(3,548	)	$	(2,974	)	$	(3,129	)
Capital Available:
Cash & Availability Under Line-of Credit	$	3,597		$	2,765		$	6,058		$	1,090		$	597		$	188		$	711		$	1,780

* Commencement of Turnaround

** Q3 2016 Availability under Line-of-Credit based upon October 1, 2016 facility size of $4 million

Note about Non-GAAP Measures

Comparative Loss from Continuing Operations and Comparable Net Loss is not a GAAP measurement of results of operations. The company is presenting these non-GAAP measures, including the reconciliation above to the GAAP measure Loss from Continuing Operations, to provide additional insight into the results of operations and convey changes in results from items it views as unusual, infrequent and not representative of the underlying trend.

RGS Energy

Condensed Statements of Cash Flows

($000's omitted)

	Nine Months			Nine Months
	September 30			September 30
	2016			2015
Net Cash Used In Operations	$	(6,507	)	$	(14,159	)
Net Cash Provided by Investing Activities		10			31
Net Cash Provided by Financing Activities		7,281			13,422
Net change in Cash		784			(706	)
Cash and cash equivalents, beginning		594			1,947
Cash and cash equivalents, ending	$	1,378		$	1,241

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EX-99.2

Exhibit 99.2

Investor Presentation November 2016 NASDAQ: RGSE

Forward - Looking Statements This presentation by Real Goods Solar, Inc. (the “Company,” “we”, “us,” “its,” “our”) contains forward - looking statements and fo rward - looking hypothetical examples or constructs within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that invo lve risks and uncertainties, including statements regarding the Company’s capital formation activities, business and financial strategies, its growth opportunities, future sales and installation revenue, its business turnaround strategy and plans to achieve break - even or better results in future periods resulting from increased sales and reduced cost of goods sold and operating expenses. Forward - looking statements and for ward - looking hypotheticals examples are neither historical facts nor assurances of future performance. Instead, they provide our current b eli efs, expectations, assumptions, forecasts, and hypothetical constructs about future events, and include statements regarding our future results of operations and financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. Th e w ords “hypothetical,” “anticipate,” “believe,” “plan,” “target”, “estimate,” “expect,” “strive,” “future,” “intend,” “may,” “will” and similar expressions as they relate to us are intended to identify such forward - looking statements. Forward - looking statements and hypothetical examples should not be read as a guarantee of future performance or results, and wil l not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. F orw ard looking statements and hypothetical examples are subject to risks and uncertainties that could cause actual performance or results to di ffer materially from those expressed in or suggested by the forward looking statements and hypothetical examples. In order to implement its bus iness turnaround strategy, the Company requires additional capitalization and expansion of its sales and installation operations. The refore, the Company cautions you against relying on any of these forward - looking statements or forward - looking hypothetical examples. Additional key risks and uncertainties that may cause a change in any forward - looking statement or forward - looking hypothetical examples include: the Company obtaining additional capital for implementation of its business turnaround strategy; the effect of elect ric power generation industry regulations in the states the Company operates, net electric power metering and related policies; the level of deman d f or our solar energy systems; the availability of a sufficient, timely, and cost - effective supply of solar panels, the Company’s ability to im plement required cost containment and reductions, and to generate sufficient cash flow from operations to fund operations. You should read the sect ion entitled “Risk Factors” in our 2015 Annual Report on Form 10 - K and in our Quarterly Reports on Form 10 - Q during 2016, each of which has been fi led with the Securities and Exchange Commission, which identify certain of these and additional risks and uncertainties. Any forward - looking statements or forward - looking hypothetical examples made by us in this presentation speaks only as of the date of this presentation. Factors o r events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake any obligation to publicly update or revise any forward - looking statement or forward - looking hypothetical example, whether as a result of new information, future developments or otherwise, except as may be required by law. © Copyright 2016 Real Goods Solar, Inc. All Rights Reserved. NASDAQ : RGSE 2

• RGS Energy , incorporated in 1978, is primarily a residential solar Company with two business segments : • Residential – the largest segment offering Mainland U.S. residential homeowners solar systems and small commercial solar systems sourced from the residential customer base. • Sunetric – Hawaii residential and commercial solar systems; based in Oahu • We provide turnkey solar solutions - from system design, construction planning, customer financing assistance, installation, to interconnection and warranty: • Majority of materials are “Buy American”, American Recovery and Reinvestment Act (ARRA) compliant • Compliant with newest electrical codes • Headquartered in Louisville, Colorado, with ≈150 employees and a nationwide presence NASDAQ : RGSE 3 Who We Are – In Business 38 Years, With a National Operating Footprint

A Brief History of RGS NASDAQ : RGSE 4 1978 Real Goods Solar Trading Company opens first store; sold the first solar panels in retail 1982 First Solar Living Source Book printed - “ We wrote the book on Solar” 1996 Opened Solar Living Center 2001 Merged with Gaiam , Inc. 2003 Launched residential division 2008 IPO 2008 - 09 Acquired Marin Solar, Carlson Solar, IES, Regrid Power 2011 Acquired Alteris – became a national residential & commercial solar Company Aug - 13 Acquired Syndicated Solar 1H - 14 Rebranded Real Goods Solar as RGS Energy, and acquired Mercury Energy and Sunetric – providing entry into Hawaii Aug - 14 Dennis Lacey named CEO / 4 th quarter 2014 commencement of turnaround management Sept - 14 Launched strategy to exit large commercial business to focus on core residential solar Feb - 15 Arranged for $11M of equity from public offering Mar - 15 Initiated corporate transformation & realignment to reduce overhead with the goal of reducing the required break - even point Jul - 15 Arranged for $5M of equity from public offering Apr - 16 Arranged $10M of convertible debt offering; ≈$8M held in restricted cash Sept - 16 Raised $2.8M of convertible preferred, subsequently converted to common equity Oct/Nov 4 - 16 $7.1M dollars of convertible debt to common stock, $2.4M remain held in restricted cash 2016 Capital Raises

Residential Segment RGS Pacific Mid - Atlantic New England West Coast Total States of Operation HI NY NJ MA VT RI NH CT CA CO* 10 Residential x x x x x x x x x x 10 Small Commercial x x x x x x x x x x 10 Commercial x - - - - - - - - - 1 Company Field Sales Teams x x x x x x x x - - 8 RGS Construction Teams x - - x x x x x - - 6 Call Center Sales - x x x x x x x x x 9 Authorized 3rd Party Integrators x x x x x x x x x x 10 Number of Offices/Warehouses 2 1 - 2 1 1 - 2 - 1 10 We have a National Operating Footprint NASDAQ : RGSE 5 *Corporate Headquarters

Macro Conditions Positive for Industry - Strong Outlook for Business Growth 6 Source: GTM Research, Solar Market Insight Report 2015 The federal residential solar tax credit that was set to expire at the end of 2016 was extended by congress through 2021 - the tax credit expected to support continued demand. U.S. Photovoltaic (“PV”) Installation Forecast

Macro Conditions Positive for Industry: Increasing Electricity Rates & Declining Costs NASDAQ : RGSE 7 • Nationwide, rates up ~$0.04/kWh since 1990, whereas RGS Energy footprint state’s rates up ~$0.10/kWh • We select territories where: • The rate of increase in electricity costs are higher than the national average • With high sun exposure • Incentives and rebates are currently offered either by the local utility provider or the local or regional government • Prices of residential and commercial PV system prices are expected to continue to fall $6.97 $3.12 2009 2010 2011 2012 2013 2014 Falling U.S. Solar - PV System Prices for Residential Makes Solar More Affordable Estimated prices shown in per watt basis Source: U.S. Energy Information Administration We are in 8 of the 10 states

Turnaround Strategy Corporate transformation progress and initiatives by Turnaround Management: x Exited large commercial segment due to low margins and required large investment in working capital – focus on Residential Segment with anticipated higher prospects for profitability x Streamlined operations to focus on Company strengths – call center sales, engineering and managing third party integrator network from Colorado headquarters x Renegotiated vendor terms for lower material cost, targeting future gross margin of ≈20% x Lowered acquisition cost for new customers through digital marketing and emphasis on referral programs x Restructured customer contracts and sales incentives for anticipated improvement in cash - flow and meet profitability objectives x Right - sized internal installation crews to mitigate cost of “idle time”, leveraging third - party installation crews to manage fluctuations in demand x Closed unnecessary offices to reduce infrastructure costs and focus on reducing installation cycle times to reduce costs x Right - sized support staff to decrease sales & operating and general & administrative costs NASDAQ : RGSE 8 These actions have improved financial performance and dropped the revenue volume required for break - even results Operating Loss from Continuing Operations (in millions) 2014 ($40.6) 2015 ($16.8) 2016 * ($9.7) *9 months ended 9/30/16

Our Strategy - Designed to Mitigate Industry Risks NASDAQ : RGSE 9 Customer preference switching from lease to owning (customer uses own cash or cash from a loan) – RGS is not reliant upon leasing Many competitors have a high concentration in California, which has intense competition and high cost of marketing leads, which effects profitability *Reflects residential installation results in kW for 1/1/2015 – 9/30/2016

Our Strategy - Not Dependent on Leasing NASDAQ : RGSE 10 • Over 90% of RGS’ customers enjoy the benefits of Investment Tax Credit (“ITC”) • In customer presentations, the IRR is high for cash/loan purchases resulting in a strong value proposition • Net Metering (customer receives credit from utility for excess production); without net metering, IRR’s the same but smaller resulting system size, reducing RGS’ profitability • Most of our competitors focus on lease financing where the customer does not benefit from the ITC • Our niche is customers that can make a purchase with their own cash or proceeds from a loan; with the extension of the ITC through 2021, the Company believes it can grow sales in this niche Representative Customer Internal Rate of Return wit h ITC of 30% CA 11% CO 4% CT 14% MA 22% NH 11% NJ 12% NY 15% RI 17% VT 9% • Assumptions: 3.0% Annual Utility Rate Increase, $3.95/w purchase price, optimal solar site conditions, state incentives as of June 2016, 100% savings for kW hours produced, 20 year cash flow • Individual customer IRR results will vary Attractive Residential Segment Customer IRR for Cash Transactions

Progress with Turnaround Set the Stage for the 2016 Capital Raising Activities The Company required additional capital to for its turnaround strategy and to achieve its goal of becoming profitable • Turnaround Management has made progress in reducing the operating loss of the Company; strategy in place to mitigate perceived industry risks • Currently focused on organic growth in its sales organization, including focus on small commercial sourced from its residential customer base • Company successfully reduced its fixed operating infrastructure so that break - even is approximately $16M a quarter of revenue – Company has operated at that level in the past (current revenue and gross margin percentage are hampered by access to capital; as there is a fixed cost component of cost of goods sold, whenever revenue declines, gross margin percentages decline further) • In April 2016, Company closed a $10M convertible offering; majority of proceeds to be received after September 30, 2016 • In August 2016 company closed a $2.8M convertible preferred stock offering; 100% conversion to common equity as of September 29 th • Company is targeting profitable quarterly results commencing during 2017 from future sales growth and actions it has already taken to reduce cost of goods sold and to optimize acquisition costs NASDAQ : RGSE 11

Management Targeting Future Break - Even and Better Results To position the Company for break - even and better results: ▪ Operating Expenses were reduced 50.4% from 2014 to 2015, and through Q3 2016 (annualized), 34.4% less than 2015. See information on page 13 ▪ We can sell less to reach break - even as our operating costs are less ▪ By negotiating supply side agreements for equipment, the future gross margin percentage for our largest segment, Residential, is expected to be in excess of 20%. See information on page 14 ▪ We can sell less to reach break - even if each sale is more profitable ▪ The Company has revised its approach for customer acquisition costs away from the expensive industry standard of paid leads. See information on page 15 ▪ If each sale is more profitable we can sell less for break - even results ▪ The targeted level of quarterly revenue in order to achieve break - even or better results is approximately $16 million. See information on pages 16, 17 and 18 NASDAQ : RGSE 12

Aggressive Actions Have Reduced Operating Expenses We have already taken actions to reduce 2016 Operating Expenses NASDAQ : RGSE 13 * 2014 Sunetric is annualized from acquisition date April 2014 **Excludes separately reported goodwill impairment, restructuring and litigation expenses % Reduction $000's omitted FY 2014 FY 2015 First 3Q 2016 Annualized 2016A vs 2015 Residential Operating Expenses $22,108 $9,900 $4,283 $5,711 42.3% Sunetric Operating Expenses* 5,620 2,507 $1,079 1,439 42.6% Corporate Operating Expenses** 14,620 8,600 4,972 6,629 22.9% Total Operating Expenses $42,348 $21,007 $10,334 $13,779 34.4% 2015 vs 2014 total reduction 50.4%

Targeting Improved Gross Margins We expect to achieve an improvement in gross margin NASDAQ : RGSE 14 Striving for reduced labor and equipment costs • Finalized vendor agreements for cost reductions of modules & inverters • Implementing construction efficiencies (staff utilization, overtime management, truck roll management) • Expanded customer service team and implemented process improvements to minimize customer cancellations Disclaimer: Above is neither a forecast nor a projection, but an example to illustrate hypothetical gross margin percentage wit h new contract pricing and operating at the Targeted Break - Even revenue level $000's omitted As Reported Hypothetical Impact of New Pricing* Hypothetical Example 2015 Residential Segment Revenue $30,205 $30,205 2015 Residential Segment COGS 26,082 (4,275) 21,807 Gross Margin $4,123 $8,398 Gross Margin Percentage 14% 28% *Hypothetical impact is comprised of: (i) anticipated reduction from new contract pricing of ≈20% for materials; and (ii) assuming increased revenue volume to more efficiently absorb construction crew time as anticipated to occur at the Target Break-Even revenue

Targeting The Right Blend of Customer Acquisition Costs • Customer Acquisition Costs consists of (i) salaries and commissions of salespersons, (ii) advertising, (iii) referral fees paid to customer and partners for closed transactions and (iv) fees paid to third parties for lists of prospective customer leads or access to merchant space to solicit customers. The solar industry has traditionally focused on paid leads. • Turnaround management has determined that the traditional approach results in a prohibitively high customer acquisition cost. Management determined that the cost effective approach is to expand its call center and maintain field sales teams in select markets where the local geography makes that approach cost effective (i.e., Hawaii and Mainland East Coast) and utilize: • Digital Web Leads - Higher percentage from lead to close • Partner Programs - Lower cost per acquisition • Customer Referrals - Organic lead generation with the highest conversion rate and lowest cost per acquisition • Use paid lead programs structured for performance NASDAQ : RGSE 15 Disclaimer: Above is neither a forecast nor a projection, but a hypothetical example to illustrate the company’s anticipated cu stomer acquisition costs during 2017. Residential Segment (Break Even Example) $000's omitted 2014 2015 9 Months 2016 9 Months 2017 Total acquisition costs $12,564 $4,455 $1,815 $4,740 Less fixed costs - salaries 5,286 2,603 1,356 1,800 Variable Acquisition Costs - commissions & marketing $7,279 $1,852 $458 $2,940 Total Revenue $55,818 $30,205 $8,478 $41,250 Variable Acquisition Costs as a % of Revenue 13% 6% 5% 7%

Targeted Revenue Break - Even Point Calculated on Segment Basis NASDAQ : RGSE 16 Disclaimer: Above is neither a forecast nor a projection, but an example to illustrate hypothetical relative revenue/margin % f or break - even results The company intends to use the proceeds from 2016 capital raising activities to fund the investment in growth to achieve break - even and better results. Quarterly $000's omitted Residential Sunetric Total Target Hypothetical Annual Revenue for Break-Even Results $55,000 $10,000 $65,000 $16,250 Gross Margin Percentage (see page 14) 28% 22% 27% Gross Margin $15,291 $2,152 $17,443 Using the hypothetical annual revenue and operating expenses to solve for break-even: 3Q YTD 2016 Operating Expenses (see page 15) $10,334 Anticipated increased acquisition costs at the break-even installation volume 2,700 Hypothetical 9-month operating expenses at break-even volume 13,034 Hypothetical Annualized Operating Expenses at the break-even revenue volume 17,379 Hypothetical Operating Income (Loss) - Approximate Break-Even Results $65 Actual 2015 Results Residential Sunetric Revenue $30,205 $15,319 Gross Margin 14% 15% Assuming Better Capitalization

Targeted Revenue Break - Even Calculated on a Per Watt Basis NASDAQ : RGSE 17 Disclaimer: Above is neither a forecast nor a projection, but an example to illustrate hypothetical revenue/contribution to rec overy of overhead for break - even results Residential Sunetric Sales Price w/typical additional installation features ("adders") $3.80 $4.93 COGS (including pass through financing fees and adders) 2.74 3.87 Gross Margin $ 1.06 1.06 Gross Margin % 28% 22% Customer Acquisition Costs 0.44 0.25 Contribution to Recovery of Overhead $0.62 $0.81 Using the per watt contribution per transaction to solve for break-even revenue: ($ 000's omitted) Total Actual Overhead for 9 months ended September 30, 2016 (see pages 13 and 15) $8,364 Hypothetical 3Q YTD Revenue for Break-Even Results (derived page 16) $41,250 $7,500 Hypothetical 3Q YTD Watts Installed for Break-Even Results (3Q YTD Revenue /Sales Price Per Watt) 10,867 1,521 Hypothetical 3Q YTD Contribution to Recovery of Overhead (Watts Installed x Overhead Contribution per watt) $6,739 $1,234 7,973 Hypothetical Operating Income (Loss) - Approximate Break-Even Results ($391) Price Per Watt Installed

Break - Even Revenue Target – Historical Lookback* *On a segment basis, the Company has reported installation revenue in excess of the Targeted Break - Even amounts in the past. In prior periods, RGS had a larger sales force than present and, accordingly, amounts are not directly comparable. For example, the Company will have to increas e t he size of its sales force to achieve Break - Even revenue (see page 20). Prior installation revenue amounts are not necessarily indicative of future results an d there cannot be any assurance that the Company will be able to achieve its Targeted Break Even revenue amounts in the future NASDAQ : RGSE 18 Results reflect awaiting full access to 2016 capital raises necessary to grow revenue $000's omitted Residential Sunetric Total Targeted Quarterly Break-Even Revenue: (Derived from pages 16 & 17) $13,750 $7,500 As reported: 2013: 2nd Quarter $10,719 $10,719 3rd Quarter $15,425 $15,425 4th Quarter $17,014 $17,014 2014: 1st Quarter $13,274 $13,274 2nd Quarter $15,943 $3,071 $19,014 3rd Quarter $14,357 $3,803 $18,160 4th Quarter $12,242 $5,868 $18,110 2015: 1st Quarter $6,857 $3,753 $10,610 2nd Quarter $11,110 $3,617 $14,727 3rd Quarter $6,894 $3,544 $10,438 4th Quarter $5,344 $4,405 $9,749 2016: 1st Quarter $3,752 $1,187 $4,939 2nd Quarter $3,296 $1,588 $4,884 3rd Quarter $1,427 $1,036 $2,463 Revenue

To Grow our Revenue, We Need to Increase The Size of Our Sales Organization NASDAQ : RGSE 19 We will need to increase the size of our residential sales organization Residential Segment annual target revenue in Break-Even analysis (See Slide 16) $55,000,000 Anticipated small commercial contribution: 2015, without dedicated follow-up on leads 2,263,000$ Budget with dedicated leader and "mining" leads from Residential homeowner sales team 8,000,000 Remainder - anticipated residential homeowner annual revenue $47,000,000 Required size of sales organization to achieve the anticipated residential homeowner annual revenue: Anticipated quarterly # of deals closed per the average sales representative 12 Anticipated average price of system size sold $31,000 Anticipated average quarterly sales per the average sales representative $385,778 Anticipated average annual sales of the average sales representative $1,543,111 Average required number of sales representatives (Homeowner Revenue / Avg. Rep. Annual Sales) 30 Number of sales persons at September 30, 2016 17 Net additional increase in head count 13

Use of Proceeds from 2016 Capital Raises - Grow Revenue Use proceeds to fund the investment in growth to achieve break even results and better, in the future: • Grow Sales Organization: • Additions to sales headcount • Training • Incur marketing spend to generate leads • Additions to sales support headcount • Close Sales with customers in advance of installation: • Order equipment in advance • Increase construction organization to match sales • Partial payments to authorized third party installers prior to full installation • New states of operations infrastructure • Expand Small Commercial capabilities • Convert and grow the Company's backlog which at September 30, 2016 was • Residential Segment $ 9,722,000 • Sunetric Segment 2,871,000 • Total Backlog $12,593,000 NASDAQ : RGSE 20

Hypothetical Example - Bridge from Backlog and Future Sales to Break - Even Revenue Target NASDAQ : RGSE 21 Planned Actions While Ramping to Break - Even Revenue Volume • Existing backlog expected to convert faster as better capitalization allows for vendor & integrator payments to increase installations • Anticipated expansion of sales team during 4th quarter and onward; typical onboarding and training time is 90 days before achieving average rep production level • Anticipated marketing spend to support sales team commencing 4 th quarter and onward with typical conversions to closings 30 - 60 days thereafter • Expectation is that above actions of 2016 result in higher sales volumes commencing during 1 st quarter 2017 • Anticipated hiring and training of in - house construction crews, along with expansion of 3 rd party installer network, with resulting anticipated increased construction capability anticipated to be able to install at the break - even level commencing 3 rd quarter 2017 Disclaimer: Above is neither a forecast nor a projection, but a hypothetical example to illustrate interplay of backlog and future sales toward achievement of targeted break even installation revenue Rounded, $000's omitted 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 (actual) (actual) (actual) (example) (example) (example) (example) (example) Beginning Backlog 17,000$ $16,000 $13,000 $13,000 $11,000 $12,000 $14,000 $18,000 New Sales 4,000 1,000 2,000 5,000 10,000 16,000 22,000 24,000 Installation Revenue 5,000 5,000 2,000 6,000 9,000 13,000 18,000 21,000 Ending Backlog 16,000$ 12,000$ 13,000$ 12,000$ 12,000$ 15,000$ 18,000$ 21,000$

2014 $000's omitted Q4* Q1 Q2 Q3 Q4 Q1 Q2 Q3** Loss from Continuing Operations ($13,394) ($3,552) $1,575 ($3,881) ($3,949) ($3,812) ($3,533) ($7,734) Separately Reported Items in the Statement of Operations: Financial Instrument Non-Cash accounting income (expense): Change in valuation of warrants (5,956) (1,755) (4,509) (660) (203) 42 (309) 535 Interest expense for financial instruments 0 0 0 0 0 0 798 1,240 Debt Extinguishment 0 0 0 0 0 0 0 2,831 M&A expense (21) 0 0 0 0 0 0 0 Litigation Expense 0 0 500 1,084 420 24 0 0 Asset Impairment charge 10,400 0 0 0 0 0 0 0 Restructuring expense 252 21 337 66 23 37 0 0 Comparative Loss from Continuing Operations (8,719) (5,286) -2,097 (3,391) (3,709) (3,709) (3,044) (3,128) Discontinued Operations Income/(Loss) (2,784) (182) 133 (397) (260) 161 70 (1) Comparable Net Loss ($11,503) ($5,468) ($1,964) ($3,788) ($3,969) ($3,548) ($2,974) ($3,129) Decrease in Comparable Net Loss From Quarter-to-Quarter 52% 64% Capital Available: Cash & Availability Under Line-of Credit $3,597 $2,765 $6,058 $1,090 $597 $188 $711 $1,780 * Commencement of Turnaround ** Q3 2016 Availaibility under Line-of-Credit based upon October 1, 2016 facility size of $4M 2015 2016 To Execute its Business Turnaround Strategy, RGS Requires Better Capitalization NASDAQ : RGSE 22 When we have greater amounts of cash and availability we believe we are able to execute our turnaround strategy and improve our operating performance Note about Non - GAAP Measures: Comparative Loss from Continuing Operations and Comparable Net Loss are not GAAP measurements of results of operations. The Com pany is presenting these non - GAAP measures, including the reconciliation above to the GAAP measure Loss from Continuing Operations, to provide additional clarity about the results of operations.

Pro Forma Capitalization Table Notes: A. Pro forma exercise price ranging from $12 to $1,400 B. Calculated assuming full conversion of $10 million of Notes at an average exercise price of $0.96. Series G Warrants have an ini tial exercise price of $16.56 with a price reset at 4/1/2017. C. Currently issued options with Pro forma exercise price ranging from $48 to $3,000. D. Warrants have an initial exercise price of $5.50 with a price reset at payoff of Convertible Note. NASDAQ : RGSE 23 Disclaimer: Above is neither a forecast or projection, but a pro forma to illustrate hypothetical future shares outstanding. Ac tual shares will differ and most likely significantly as this analysis does not assume any changes in the company's stock price after July 20, 2016. Common Stock: Issued and Outstanding at September 30, 2016 2,532,210 Non-employee Stock Options and Warrants (note A) 300,000 Proforma to be issued under Convertible Notes (note B): Notes, including accrued interest, converted for common shares 11,085,000 Detachable G Warrants 291,298 Underwriter Warrants 77,000 Employee stock options (note C) 5,840 Issuable for business combinations 911 Detachable H Warrants for September Convertible Preferred Offering (Note D) 248,632 Total actual and estimated shares of Common Stock issued and outstanding or to-be-issued-and- outstanding 14,540,892

Dennis Lacey* CEO Seth Wiggins* Vice President of Sales & Operations Alan Fine* Principal Financial Officer & Treasurer Thomas Mannik Principal Accounting Officer & Controller • Track record of successful business turnarounds in diverse industries including equipment leasing, quick service restaurants and global customer care service industries • C - level experience with public companies as CEO and CFO, including a NYSE listed commercial bank, and with a private investment firm • Career started in public accounting rising to rank of audit partner with a Big 8 accounting firm • Built the Company’s call center which consists of two divisions, lead generation and inside sales. His teams have generated over 3,000 new sales orders (+20MW) and sold over $100M in residential solar • Served as Director of Sales at Syndicated Solar, Inc. and grew the sales team from $2M to $20M in under two years • Accredited by the North American Board of Certified Energy Practitioners (NABCEP Certified Solar Installer) • Previously served as Principal Accounting Officer at RGS Energy • Prior experience as CFO, principal accounting officer and director of operations for several public and private companies • Licensed CPA • Prior experience as CFO and Controller for several public and private companies • BA degree in accounting from James Madison University; Masters of Taxation from the University of Denver; licensed CPA RGS Senior Management Team - Leading the RGS Energy Turnaround NASDAQ : RGSE 24 *Team member of Turnaround Management commencing 4th quarter 2014 Russell Bunce* Vice President of Customer Service Brad Bentzen * Director of Operations Tyler Clarke* Director, Corporate Risk & Development Karen Rainone * Human Resources Director • Manages the Company’s customer service and RGS Financing departments • Understands the RGS product having run sales offices and sales operations • Held senior management positions at KB Home and D.E. McNabb • Manages the Company’s engineering, procurement and in - house construction departments • Served as a project manager for Forrester Construction Company, a general contractor • Professional engineering licensees & accredited LEED AP by the U.S. Green Building Counsel • Focused on expanding corporate opportunities and controlling risk • Understands RGS, having run sales and operational support, customer service, and 3 rd party construction partners • Leadership and operations experience in a variety of business settings; start - up’s, legal, public sector & small business • Extensive experience in leading Human Resources departments in the medical office and medical devices field • Served as Human Resources Manager at Roomlinx , as well as Payroll and Benefits Manager at Clinica Family Health Services

Key Takeaways ▪ Operates in a Large & Growing Market with Favorable Macro Dynamics — increasing utility rates and decreasing PV system costs, along with extension of ITC for 5 years, results in a favorable customer value proposition ▪ 38 - years in Solar Industry — proven performance with both residential & small commercial customer installations ▪ Nationwide Platform that is Scalable — strategically located in key U.S. solar regions, a re - tooled business model that is “capital light” in that expansion in existing markets, and into new territories, can be accomplished via the Company’s established call center and network of third party integrators ▪ Viable Plan for Break - Even and Better Future Results — Turnaround Management has: (i) “right sized” the business for a lower targeted break - even revenue; and (ii) a demonstrated history of improving financial performance ▪ Opportunities to Improve Results ▪ Proceeds from 2016 capital raises position the company to execute its turnaround plan and achieve break - even or better results for the future ▪ Ancillary product sales, such as water heaters & energy storage (test marketing in HI) ▪ Supply chain improvements negotiated – expect higher margins ▪ Management team with a demonstrated record of reducing operating costs ▪ Enter new territories ▪ Grow small commercial business NASDAQ : RGSE 25

Contact Us RGS Energy 833 West South Boulder Road Louisville, CO 80027 Tel 303.222.8400 Dennis Lacey, CEO Investor Relations Liolios Group, Inc. Ron Both Tel 949.574.3860 RGSE@liolios.com NASDAQ : RGSE 26 RGS Energy (NASDAQ: RGSE) is a residential and small commercial solar Company since 1978, which has installed more than 25,000 solar power systems. RGS Energy makes it very convenient for customers to save on their energy bill by providing turnkey solar solutions - from system design, construction planning, customer financing assistance, installation, to interconnection and warranty. For more information, visit RGSEnergy.com, on Facebook at www.facebook.com/rgsenergy and on Twitter at www.twitter.com/rgsenergy. Information on such websites is not incorporated by reference into this presentation. RGS Energy is the Company’s registered trade name. The Company files periodic and other reports with the Securities and Exchange Commission under its official name “Real Goods Solar, Inc.” NASDAQ: RGSE www.rgsenergy.com