Dear our valued shareholders,

After careful considerations, our management has decided to raise capital by issuing additional common stocks. We understand that this decision will surprise many of our shareholders. On behalf of our company, I would like to explain the reasons to account for this decision following brief updates on our industry and on our capex plan.

Industry Update

There is a growing preference for nanofibers in the technical textile, filtration, protective wear and consumer product industries. Following are the latest market trends for each industry and how Finetex EnE is positioned to capitalize such trend:

Technical textiles

Waterproof breathable (WPB) market has been dominated by cheap, non-air permeable PU membranes and environmentally hazardous PTFE membranes that has little to zero air permeability. Past few years, both global and local apparel and footwear brands were searching for the ‘next generation material’ that will replace the mentioned two existing technologies. The greatest appeal of nanofiber membrane is its extreme breathability, waterproofness and 4-way stretchability.

Finetex EnE nanofiber membrane has been accepted as the industry standard for new WPB and very recently, one of the largest global brand has launched a new product line with Finetex EnE membranes. This has provided us with great momentum and further exposure in the market.

Filtration

5 years ago, our company had to convince and explain what nanofiber was and why it is needed to the filtration customers. Now in 2017, it is nearly impossible to find industrial air filtration companies that does not offer nanofiber in their product line. In an industry where product replacement cycle can range from 6 – 36 months, business is growing rapidly in industrial applications.

For residential and commercial applications, as pollution becomes a threat to the general public, governmental regulation is strengthened. Alternative technologies are in demand to replace conventional technology such as electrostatic and glassfiber technology. Nanofiber provides unique functionality of high efficiency after discharge and 40% lower pressure drop versus glassfiber that results in cleaner air and high energy savings. New ISO16890 standard that was introduced in 2017 and expected to fully implemented globally in 2018 is heavily favoring the properties of nanofiber.

Protective wear

As benefits of nanofiber membrane incorporated fabrics was introduced and distributed in the technical textile industry, nanofiber’s benefits were noted by industry leaders in this sector as well. This industry’s customer internal development and approval process for products such as coveralls, NBC suits, surgical drapes, surgical masks are wide ranging and specific which takes time to come to fruition. Certain FDA procedures must be met as well, which Finetex EnE is deep in to the process for. This is an industry where successful product development has potential for decades of revenue.

Consumer products

Two flagship Finetex EnE consumer product lines, the face mask and window screen, showed high growth in 2017 and will continue its growth path going forward. There are few driving forces for the growth, which consists of increase in air pollutants, changes in government initiatives and smarter consumers. The last point is critical as consumers, especially in Asia region, are more aware of dangers of PM2.5, starting to understand different types of face mask technology and negative stigma of wearing masks is slowly fading away. Health conscious consumers are starting to realize the benefits of nanofiber window screen, that allows home owners open their window without worry of pollutants entering.

Energy

On the other hand, Finetex EnE’s energy business has struggled from the recession in the construction industry and the decrease oil prices. However, we plan to take advantage of favorable government policies in the development of photovoltaic power plants to generate more revenue in our energy business.

Capital Expenditure

Despite running at full capacity at our Philippines factory, we are struggling to meet increasing market demands. In order to retain our market leading position and to fulfill pending orders, our management has decided to invest in additional production lines. From the current 3 membrane production lines for technical textile, we plan to increase production efficiency by consolidating our capacity in to 2 lines. We will also be expanding our capacity to 8 membrane production lines by the end of June 2018.

For the filtration business, Finetex EnE currently has 4 coating lines. Given the growth in traditional filtration applications such as Air Pollution Control, Gas Turbine and growth in newly developing applications in HVAC, Automotive and Emission Control, we plan to invest in 2 additional coating lines by June 2018. Furthermore, we have 1 coating line in China through our joint venture with our Chinese partner company. As advancement in nanofiber products require multiple different functioning layers, we also plan to invest in additional laminating lines for innovative, high margin filtration products.

Lastly, we are aiming to diversify our product lines to include surgical masks and protective wears. We will further explain about our expected capital expenditure through our IR meeting and securities report.

Expected Impact on Revenue through Capital Expenditure

We expect technical textile, filtration and consumer products to be our major revenue streams in the near future. It is difficult to estimate the effect of capital expenditure on our industrial and automotive full filter businesses because there is a diverse range of products. However, we expect each nanofiber membrane production line to generate at least US$4-6M in revenue. This implies that the membrane lines will be able to generate approximately US$32-48M when in full operation with 8 production lines.

That being said, our technical textile has two business models, where we supply membrane alone to customers and where we supply fully laminated fabric. Higher total revenue figures can be expected as fully laminated fabric sales increase with increased membrane capacity.

Financial Position

As aforementioned, we are issuing additional common stocks to invest in capital necessary to further expand our business by June 2018. The remaining fund from the raised capital will be held under working capital.

When we initially raised US$30M by issuing a BW last year, our management had expected that our business would generate between US$8M and US$10M in cash within 18 months from the issue. This would have allowed Finetex EnE to prepare for the possible earlier redemption (exercising put option) that may be exercised by our BW holders later this year. However, our predicted growth in revenue was delayed. Furthermore, we had to invest in additional capital as we expected rapid growth in demand for our products. Nevertheless, our management should have executed investments and expenditures with more foresight with the funds that were raised through our investors. We sincerely apologize for the way we managed our funds.

Our company’s outstanding warrants are expected to be exercised over the course of the next 20 months to 13 May 2019 and that would help bring in approximately US$26.5M of capital to Finetex EnE’s account by this date.  Our management plans to use this cash to buy treasury stock when it is legally feasible. The purpose of buying treasury stock is to protect shareholder value by cancelling the outstanding shares. In addition, the management has decided to buy back 35% of the outstanding stocks in the future. Furthermore, our management will devise ways and introduce systems to keep this promise in an official and transparent way.

Business Strategy

Finetex EnE will concentrate more in near future and medium term future to the commercially most advanced areas of nanofiber applications such as technical textiles, consumer goods and protective wear, protective filtration such as face masks and window screens and all other filtration industries like industrial filtration to cut emissions and reduce industrial dust in various manufacturing areas, automotive filtrations and residential and commercial building filtration.

Finetex EnE will actively seek to find the best business model and best business partners in each segment to continue and ensure the increasing adoption of electrospun nanofiber containing products. We have progressed very well to establish our products with the main global players in each of our main business areas and we are expecting to engage with a growing number of business partners to spread our business further.

Although the focus will be in increasing the business in these areas, Finetex EnE will allocate funds to continue in participation on the development of more advanced applications for the nanofibers, energy conservation and medical applications in order to secure company’s long term success in all the possible application areas for nanofiber products.

IR Policy

Our management team would like to apologize for the slow progress in creating an IR platform that bridges the gap between Finetex EnE and our investors. We are aware that there has been a growing need to renovate our IR. Our management has been struggling to find the appropriate individual to lead our IR tasks. Nevertheless, Finetex EnE will proactively update our investors in a timely manner through periodic IR meetings, news postings on our company website and other appropriate communication channels. We hope that these efforts to communicate and increase transparency will further help our investors decision making process.

I would like to wrap up this letter with some personal messages. As the CEO of Finetex EnE, over the past 20 years, I have devoted my life to commercializing the our nanofiber technology. I am confident that Finetex EnE will be able to achieve significant progress in its businesses. In hindsight, I should have raised sufficient capital for a long-term strategy. This would have allowed our firm to carefully plan our capital expenditures and manage our operational funds. Nevertheless, I promise that this will be the last time I depend on our shareholders for raising capital. I sincerely apologize for the events that have recently taken place. I will also strive to improve Finetex EnE’s financial performance to provide opportunities to reward our investors for their patience and perseverance throughout our firm’s difficult times.

Sincerely,

JC Park

Founder and CEO

Finetex EnE, Inc.

September 2017