xsunx, inc. · with pv heading toward increasing its market share in the globally ... comparative...

© RedChip Visibility, a division of RedChip Companies, Inc. | 500 Winderley Place, Suite 100, Maitland, FL 32751 | 1-800-RED-CHIP | www.RedChip.comInformation is obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Copying, faxing, replicating, or quoting from this report without permission is in direct violation of copyright laws.

V i s i b i l i t yV i s i b i l i t y

“DISCOVERING TOMORROW’S BLUE CHIPS TODAY”TM

COMPANY OVERVIE W

XsunX, Inc. (OTC BB: XSNX) was originally incorporated in Colorado on February 25, 1997, as Sun River Mining, Inc. and changed its name to XsunX, Inc. in 2003 after completing a plan of reorganization and asset purchase agreement with Xoptix, Inc., a California corporation. Initially the Company was engaged in developing and marketing proprietary solar cell designs and core solar cell manufacturing systems enabling licensees to manufacture advanced thin, fi lm-based solar devices on various substrates. The Company has spent the last three years focused on research with a photovoltaic material called amorphous silicon (a-Si) to develop an amorphous silicon thin fi lm photovoltaic (TFPV) solar cell manufacturing process to produce TFPV solar modules.

Since early 2007, XSNX has made a shift in its business model, moving away from licensing its solar cell designs and manufacturing technology to using its technology to design a cutting-edge manufacturing system for producing and marketing thin-fi lm amorphous solar modules. To manufacture and deliver its products, XSNX has begun building its multi-megawatt TFPV solar module production facility. XsunX recently completed negotiations for a 90,000 square foot facility lease in Oregon, to house its thin fi lm solar module manufacturing systems. The Company’s initial 25-megawatt (MW) production line is expected to become operational in the fi rst quarter of 2009.

XSNX’s product is the XsunX ASI-120 module, which is a 127.5 peak watt TFPV solar module on a glass substrate using the Company’s proprietary semiconductor manufacturing system. The XsunX ASI-120 module delivers high power output, as well as size and framing that allows for the use of various existing mounting systems. The target markets for XSNX’s TFPV solar modules include solar farms, government agencies, and utility companies.

INVESTMENT HIGHLIGHTS

• Growing demand for solar cell technology. Eventually renewable energies will dominate the world’s energy supply system. There is no real alternative to rising oil prices and depleting fossil fuel resources. The demand for solar energy and solar cell technology continues to increase year-over-year, driven by escalating oil and gas prices and growing global warming concerns. This demand has received an added push from improving solar cell technology and declining costs per watt. According to the European Photovoltaic Industry Association (EPIA), the cost of solar electricity will be reduced by half over the next 10–15 years. Solar power currently represents less than 1% of the world’s energy market. A report by the investment bank Calyon Securities estimates that annual solar equipment sales will exceed 14GW (billion watts), and global revenues will increase nearly fi vefold by 2010. Even attaining grid parity (the point at which the cost of solar PV energy reaches the price of grid power) is near as analysts believe grid parity

RESEARCH ANALY ST Neha Bhargava, MBA1-800-RED-CHIP

AT A GL ANCE

MAY 29, 2008 | TARGET PRICE: $1.28 | RATING: SPECULATIVE BUY

XsunX, Inc.(OTC BB: XSNX)

I N I T I A L R E P O R T

XSUNX Inc.65 EnterpriseAliso Viejo, CA 92656Phone: 949-330-8060www.XsunX.com

S olar P roducts fo r L ife on E arth ©

TICKER XSNX

SECTORRENEWABLE

ENERGY

FISCAL YEAR SEPTEMBER 30

RECENT PRICE $0.41

TARGET PRICE $1.28

MARKET CAP $70.87M

52-WEEK HIGH $0.74

52-WEEK LOW $0.26

2007 REVENUES $6,880

PRICE/EARNINGS (TTM) N/A

PRICE/SALES (TTM) N/A

PRICE/CASH FLOW N/A

PRICE/BOOK (MRQ) 9.71X

BOOK VALUE PS (MRQ) $0.04

OPERATING MARGIN N/A

AVG DAILY VOLUME (3MOS)

468,038

SHARES OUTSTANDING 174.98M

FLOAT 155.70M

INSIDER OWNERSHIP 11.02%

CEO TOM DJOKOVICH

As of March 28, 2008.

RedChip Visibility | 2 | XsunX, Inc.

XsunX, Inc. (XSNX)INITIAL REPORT

will be achieved in the next fi ve to seven years. This puts XSNX on the right path to seize revenue and profi t opportunities in the global solar energy market as the Company is heading toward commercialization of solar cells.

• Rising demand for thin fi lm photovoltaics. With PV heading toward increasing its market share in the globally growing solar energy industry, primarily due to its declining prices compared to conventional energy prices, we believe demand and share of PV will also expand at a fast pace. TFPV cells offer the lowest cost per watt and enjoy a cost advantage over PV cells made from traditional crystalline silicon. The EPIA expects the thin fi lm market share will represent about 20% of PV module production by 2010. We believe XSNX’s focus on TFPV amorphous silicon cell production is in the right direction and will benefi t from growing demand for TFPV cells and lower per watt cost advantage to its customers. Management anticipates per watt production costs will fall from $1.58 in 2009 to approximately $1.19 by 2011. Most analysts believe this pricing will continue to be considerably less than the cost of crystalline silicon solar modules. As XSNX matures and integrates new cell designs and materials, management believes the opportunity exists to drive cell performance above 8% and deliver wholesale costs per watt approaching $1.00 or less.

• Weighing higher on levelized cost of electricity (LCOE) metric. LCOE is the principle industry metric used for comparing electricity generating technologies. Using an LCOE metric, IBIS & Associates recently performed a comparative analysis of solar technologies where the XsunX ASI-120 module was compared with a group of other solar technologies in a one megawatt simulated installation in the Phoenix, Arizona, and Portland, Oregon, areas. IBIS found the XsunX a-Si solar technology, in contrast to conventional silicon wafer and other commercialized TFPV technologies, was much better in terms of cost and performance. This is of signifi cant importance to the Company’s ability to market its TFPV solar modules as a superior solution to other technologies.

• Building a robust sales network. XSNX, heading toward commercialization of solar modules, is on its way to creating a strong platform for developing brand awareness among its target markets, securing more contracts, and enhancing future revenues. The Company recently announced it will promote its XASI-120 thin, amorphous solar module at various conferences in 2008. These efforts will also result in promoting its presales reservation program, which will allow solar system integrators, installers, green fi eld operators, and utilities to specify the amount of solar module capacity they plan to purchase at favorable per watt pricing. To date, the XsunX pre-sales reservation program has secured commitments for approximately 145MW of TFPV solar modules for delivery over the 2009, 2010, and 2011 production years. The Company is working to set up its manufacturing facility to execute the reservations as soon as possible.

Efficiency 15 to 20%

Key advantages

Key disadvantages

A comparitive view of materials used in PV

Manufacturing costs and expectations

$2.40 to 2.70 per watt. In time could go down to as little as $1.75. Although some sources suggest that maturity means that cost will not decline.

Currently in the $2.00 per watt range, but could go down to $1.25

Heavy, expensive, physically inflexible, current material shortage

Low efficiency, long term degradation under heavy sun, toxic gases used

Traditional Crystalline Silicon Amorphous Silicon currently used for TFPV

Considerable variations cited, but around 6-10%

Mature technology, Large capacity already built, Stable material

Significant existing commercial activity, relatively low cost, lightweight, potential for use with flexible substrates.



• Financial tie-up in place—vital for business continuity. As a developmental stage company, XSNX will need continued funding for setting up its manufacturing facility and supporting its cash burn until its revenue stream comes online. Recently, the Company secured initial funding commitments totaling $23.5 million and has already drawn $3.5 million from these commitments. The funding will provide assistance to install the initial 25MW base production system for solar module produc tion.

• Manufacturing facility eligible for government incentives. XSNX made the decision to locate the multi-megawatt manufacturing facilities in Oregon after reviewing all other submitted proposals. According to management, Oregon provides low-cost fi nancing opportunities, operating incentives, and operating credits. The Oregon State Senate passed legislation requiring large utilities to generate 25% of their energy from renewable sources by 2025. The area in Oregon where XSNX’s plant is located has been classifi ed as a redevelopment zone, qualifying the Company for additional savings through the elimination of property taxes.

• Experienced management team bodes well for long-term success. XSNX’s top management team has extensive experience in solar energy, especially in developing and commercializing solar energy technologies. In addition to experienced personnel with backgrounds in fi nance and marketing, President and CEO Tom Djokovich has more than 30 years of experience in the high-tech and building in dustries. COO Joseph Grimes has 30 years of experience in high-tech manufacturing with 8 years in thin-fi lm applications. CFO Jeff Huitt has 20 years of fi nancial management executive experience and has worked for both large organizations and start-up companies. Chief Scientist, Dr. Guang Lin has spent over 23 years specializing in thin fi lm amorphous materials and was Senior Project Scientist for BP Solar successfully delivering commercial products. VP of Engineering, Robert Wendt provides over 20 years of thin fi lm development and manufacturing expertise having successfully delivered thin fi lm commercial scale operations for Global Solar. The top management team is also supported by an equally qualifi ed and experienced scientifi c advisory board. Further, the Company continues to add to this pool of experienced resources through new hiring; we believe this will help the long-term growth and success of XSNX.

SOL AR ENERGY MARKET

Global demand and consumption of energy has grown rapidly over the last decade and is forecasted to grow more than 50% between 2004 and 2030, even as electricity generation has already doubled to 17.5 billion kWh between 1980 and 2006. Emerging economies witnessing high economic growth rates, which translates into increasing demand for electricity, are driving this demand, and the non-OECD countries will continue to witness sharp growth in demand for electricity.

At the same time, growing demand and depleting fossil fuel reserves have led to sharp increases in oil and gas prices and affected their availability for power generation. There are indications that rising global demand for fossil fuels may result in supply shortages as early as 2015, while rising prices will make power generation costlier, resulting in higher prices for end-users. This has added to the drive for developing alternate energy sources that include solar, hydro, and nuclear. Demand for alternative energy sources is also being driven by growing concerns about global warming primarily attributed to coal- and oil-based power generation units and further provides impetus for the development of clean and renewable energy sources such as solar, wind, and biomass.

The abundant supply of solar energy can provide a long-term energy alternative. Currently, however, photovoltaic power remains largely untapped, accounting for a mere 0.4% of world energy sources. The International Energy Agency (IEA) estimates that only one-thousandth of the potential solar energy is currently being exploited.



Continued technological advancement and growing photovoltaic capacity have resulted in sharp growth in the PV market in recent years. The consulting fi rm SolarBuzz estimates the global solar market was at $15.6 billion in revenue in 2006 and expects it will grow to $19 billion by 2010. Research and publishing fi rm Clean Edge estimates this market will grow to $70 billion by 2016. The growth in the solar PV market is primarily being driven by increasing installed and production capacity coupled with declining solar module prices. According to the EPIA, the global installed PV capacity has increased from 502 MWp in 1994 to 6,851 MWp in 2006, and this growth trend will continue in coming years. EPIA estimates the global installed capacity will increase to 9100 MWp by 2007 and further to 44,000 MWp by 2012.

Another factor affecting the demand and growth of solar PV-generated electricity is grid parity. Deutsche Bank analysts expect grid parity will be reached in fi ve to seven years, while Calyon Securities anticipates grid parity will be attained within fi ve years. This will provide further impetus for growth in the solar cell market as costs per watt continue to decline in coming years.

Global Cumulative PV Capacity

1.4 1.8 2.2 2.8 3.5 5.3 6.79.1

13.018.0

25.0

33.0

44.0

0

10

20

30

40

50

20 0020 01

20 0220 03

20 0420 05

20 0620 07E

20 08E20 09E

20 10E20 11E

20 12E

GWp

US Renewable Energy Consumption by Fuel Type

Source: US Department of Energy, Energy Information Administration



IBIS LE VELIZED COST OF ELEC TRICIT Y STUDY BACKS XSN X’S CHOICE OF AMORPHOUS SILICON

IBIS Associates issued a report in January 2008 comparing the levelized cost of energy (LCOE) position of XSNX relative to incumbent PV technologies and immediate competing products. LCOE is the principle industry metric used for comparing electricity generating technologies. It is the industry standard for evaluating the cost of any generation method and factors or aspects of a technology’s performance that directly impact power generation capabilities, effi ciency, system costs, and reliability.

This IBIS Associates analysis was initiated and paid for by XSNX with the objective of having a third-party evaluation and validation of its decision to focus on amorphous silicon, large fi eld, and on-grid applications as well as help the Company identify its target markets. For the purpose of analysis, fi ve key competing PV products were chosen representing a diverse range of available and leading fi eld-installation PV products:

• a-Si triple junction (ECD Ovonics)• mc-Si (Schott)• CIGs (Global Solar)• CdTe (First Solar)• X-Si (Sharp)• a-Si tandem junction (XsunX)

The technologies were selected based on their performance in the market and their unique performance characteristics that make them competitive in the markets that XSNX intends to target. The analysis was limited to two U.S. locations, Phoenix, Arizona, and Portland, Oregon, due to their availability of climate and environmental data (that is solar radiance, cloud coverage, temperature), extreme temperatures, and irradiance conditions.

The baseline system considered for analysis represented a large 1 MW (AC peak power/year) fi xed-fi eld installation, while land usage was calculated based on the number of modules required to achieve a threshold power level. Also, the analysis considered the high volume module prices and adjusted for volume discounts offered. The XSNX solar module was priced at $3.20 per watt.

The IBIS study inferred that due to its novel material structure, XSNX technology had several key performance attributes that made the Company’s solar module technology and products cost competitive in low light and high temperature conditions. XSNX’s use of amorphous silicon thin fi lm provided distinct competitive advantages over the silicon wafer and other conventional PV technologies. The analysis established that the improved low light and high temperature performance of amorphous silicon resulted in improved overall solar cell performance by nearly 20% for XSNX.

The analysis further established that although amorphous silicon solar cells suffered from lower conversion effi ciency under standard factory test conditions, their performance was outstanding in low light and high temperature conditions. As a result, the amorphous silicon solar cells can outperform crystalline cell products. In addition,

Performance Characteristics mc-si C I G S C dT e X -SiShort Circuit Current (Isc) A 6.5 5.1 4.1 1.066 8.35 1.5Open Circuit V oltage (V oc) V 60 46.2 52 79.58 36.3 58Maximum Power Point Current (Impp) A 5.9 4.1 3.24 0.918 7.53 1.27Maximum Power Point V oltage (V mpp) V 51 33 37 56.78 28.71 100Inverter power rating Wdc/inverter 333,000 333,000 333,000 333,000 333,000 333,000Module efficiency % 12.36% 6.26% 8.16% 7.24% 12.60% 7.90%System degradation %/ year 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%Module lifetime years 20 20 20 20 25 20

a-Si (T r iple

J unction)

Characteristics of various cell and module technologiesa-Si

(T andem J unction)



the relatively low XsunX cell power density makes it best suited for installation where space is not a constraint, that is, non-rooftop or fi eld installations. IBIS Associates stated that while XSNX is expected to target rooftop applications, especially in the niche markets such as low light and high heat climates, XSNX’s ASI-120 is more suited for large fi eld installations and is likely to constitute the majority of the early adaptors of the Company’s product.

SHORTAGE OF POLY SILICON PROVIDES XSN X A COMPETITIVE ADVANTAGE

Polysilicon, a key raw material for conventional non-thin fi lm solar module products, is fast becoming scarce, resulting in sharp price increases. This limited availability is adversely affecting XSNX’s competitors who use polysilicon as a raw material for solar cells production. However, XSNX’s raw materials include low-iron tempered glass; high purity industrial gases such as argon, nitrogen, hydrogen, silane and germane; and extruded aluminum for module framing with polymer materials employed in the encapsulation for weather proofi ng. XSNX believes it has suffi cient sources for its raw material supplies, which provides the Company with an added competitive advantage with little or no impact of polysilicon famine on module production.

PRODUC T LINE

XASI-120 Solar ModulesXSNX has begun to market TFPV solar modules under the brand name XsunX ASI-120. These modules deposit two stacked layers of amorphous silicon, a proven and reliable thin fi lm material on to a glass substrate, to achieve an effi ciency of 7.9% at the solar module level.

Characteristics:

• High power module: Uses thin, amorphous silicon having a capacity to deliver 127.5 watts

• Environmentally friendly: No heavy metals like cadmium or lead

• Certifi cations: UL, TUC, and IEC certifi able

• High voltage: 50V, ideal for use with high-power inverters for on-grid applications

• No expensive solar tracking devices needed and no moving parts

• High performance: In indirect light, shading, high temperature, cloudy/hazy conditions, and in northern latitudes, amorphous modules experience less loss of electrical output than standard silicon wafer solar modules.

PRODUC T PRICING

XSNX’s per watt pricing assumptions are based on integrator interviews, industry publications, and other manufacturing cost assumptions.

Period XsunX Thin Film > 120 watt2009 $2.602010 $2.402011 $2.00Source:10K



TARGET MARKETS

The superior performance of XSNX’s amorphous silicon TFPV in extreme heat and low light conditions coupled with relatively average cell power density make them very suitable for large installations—primarily non-rooftop and fi eld installation applications.

XSNX’s target market is primarily users of large, fi xed installations with high power requirements of at least one MW and above. The target market includes solar system integrators, installers, green fi eld operators, solar farms, government agencies, utility companies, owners and operators of large renewable energy projects, and other large commercial installations.

Some of the target customers for XSNX are:

• Solar farms, including license holders in Germany, Spain, and Canada and U.S. installers servicing commercial and utility scale installations

• Power purchase agreements, renewable ventures

• Utility companies meeting green mandates

• Government agencies, including the Bureau of Land Management and Department of Defense

• Large commercial installations

Interest for XSNX’s product can be gauged from its Solar Module Pre-Sales Reservation Program that has already achieved total reservations of approximately 145 MW for delivery over the 2009, 2010, and 2011 production years.

MULTIMEG AWAT T TFPV SOL AR MODULE PRODUC TION FACILIT Y

On April 27, 2007, XSNX announced plans to build a multi-megawatt thin fi lm photovoltaic (TFPV) solar module production facility in the state of Oregon. This has provided an imperative swing to XSNX’s business model by focusing on the manufacturing and commercializing of TFPV solar cells utilizing amorphous silicon in the growing solar market. XSNX spent three years on the design and use of technologies for the manufacture of TFPV solar cells utilizing the photovoltaic material amorphous silicon, resulting in the development of better technical capabilities and market understanding. The Company also worked to establish a team of highly experienced and competent core personnel. The Company is now engaged in the build-out of its multi-megawatt thin fi lm solar cell and module manufacturing plant in Oregon.

Features. The multi-megawatt system design includes material handling, thin fi lm materials deposition, substrate cleaning, laser segmentation, lamination, and module packaging systems necessary to convert an inexpensive piece of 100cm x 160cm sheet glass into a complete solar module in less than three hours. The process uses only a fraction of the semiconductor material normally needed to produce crystalline silicon solar modules.



Phased production build-out plan. The multi-megawatt TFPV solar module production facility will house a system with an estimated annualized initial module production capacity of approximately 25 MW and plans to grow production capacities of solar modules to more than 100 MW by mid-2010 by executing a phased build-out of manufacturing systems. The production capacity has been estimated on the basis of initial 58% system utilization (the percentage of system utilization in each 7 day, 24-hour period) and 80% yield (the percentage of product meeting saleable stipulations).

In April 2008, the Company completed lease negotiations for an appropriate building for the establishment of thin fi lm solar module manufacturing facility. In addition, XSNX has instigated placement of orders for the major system components necessary to build its planned solar module manufacturing line such as plasma deposition systems, sputtering systems, and lasers systems, which are expected to be delivered in the latter half of 2008.

With the facility selection completed, XSNX plans to complete the assembly and installation of a small-scale production research and development system and initiate construction of its fi rst full-scale 25 MW system in FY08. The Company anticipates that its fi rst 25 MW system will become operational and begin solar module production in 2QFY09 and is estimated to produce a total of 22 MW in 2009. To bring the capacity to 100 MW by 2010, three additional 25 MW systems are expected to come on-line in November 2009, January 2010, and March 2010. XSNX plans to utilize the rest of 2010 to improve the system utilization and increase module yields.

Manufacturing Facility

1st line 1 190,000 25MW Dec-08Addition of 2nd line 1 190,000 25MW Nov-09Addition of 3rd line 1 190,000 25MW Jan-10Addition of 4th line 1 190,000 25MW Mar-10Total Planned 4 760,000 100MWSource: 10K

Initial Annualized Solar Modules

Initial Annualized Watts

Anticipated System commissioning date

No. of production lines



MANAGEMENT TEAM

Tom M. Djokovich, President and CEO. Mr. Djokovich joined the Company in October 2003 and has more than 30 years of executive management and entrepreneurial experience managing growth and innovation in both the high-tech and building industries. Mr. Djokovich founded TMD Construction and Development in 1979. In 1995, he developed an early Internet-based business-to-business ordering system for the construction industry. From 1995 to 2002, Mr. Djokovich was CEO of Accesspoint Corporation, a vertically integrated provider of electronic transaction processing and e-business solutions for merchants. He now leads XsunX’s efforts to leverage its patented technology to produce solar electric glass to help meet the escalating demand for alternative sources of energy. Mr. Djokovich also has been directly responsible for managing investor relations and compliance with Securities and Exchange Commission regulations.

Joseph Grimes, Chief Operating Offi cer. Mr. Grimes holds a bachelors degree in business economics and environmental studies and a master’s degree in computer modeling and operation research applications, both from the University of California at Santa Barbara. He has more than eight years’ direct experience in thin-fi lm technology and manufacturing. His direct experience in thin-fi lm technology came with Applied Magnetics Corporation from 1985 to 1993 as manager for thin-fi lm prototype assembly. He was Vice President, Defense Solutions, for Envisage Technology Company, where he directed and managed the defense group business development process, acquisition strategies, and vision for next generation applications from October 2005 to March 2006. Earlier, Mr. Grimes was Co-Founder, President, and CEO of ISERA Group, where he established the company infrastructure and guided fi ve development teams, fi nally selling the company to Envisage in 2005.

Jeff Huitt, Chief Financial Offi cer. Mr. Huitt is a CPA and holds a Bachelor of Science degree in Accounting and a masters degree in Business Administration, both from the University of Denver. He has 20 years of experience in leadership positions at both larger organizations and startups, most recently as chief operating offi cer and CFO of a startup defense contractor, guiding the company through high growth rates and recapitalizations. He also has experience in venture capital, technology, and non-technology startups and was Controller of Qwest Wireless. Mr. Huitt’s responsibilities as CFO at XsunX’s Golden, Colorado, research facility include operations management and coordination of resources.

Dr. Guang H. Lin, Chief Scientist. Guang received his PhD in Chemical Physics at the University of Colorado at Boulder in 1985. He has extensive experience in thin fi lm deposition by means of various methods, including PECVD, CVD, PLD, DC & RF sputtering, MOD, and E-Beam deposition. He works in Wronski-free amorphous silicon alloy materials and solar cells, nano-structure optical resonance device fabrication, and hydrogen production using triple junction amorphous silicon solar cells. Prior to XsunX, Dr. Lin was the Principal Engineer and Thin Film Department leader at Paratek Microwave Inc. Here he focused on developing Barium Strontium Titanate based thin fi lm material and processes for microwave communication. He was a Senior Project Staff Scientist and Pilot Solar Module Line Manager at BP Solar where he developed new processes with higher yield, faster throughput and higher stabilized effi ciency. Several of the pilot line processes were successfully transferred to the large scale production line. Dr Lin’s academic excellence includes work as a Research Scientist and Assistant Director at Surface Electrochemistry Laboratories and Assistant Research Scientist and Program Manager at the Center for Electrochemical System and Hydrogen Research at both facilities situated at the Texas A&M University. Dr. Lin has published more than 60 scientifi c papers and holds several patents.

Robert Wendt, Vice President of Engineering. Mr. Wendt holds a B.S. and M.S. in Metallurgical Engineering and Material Science from the Colorado School of Mines. His responsibility encompasses technical specifi cation of the facilities, equipment, and manufacturing processes for XsunX. Prior to joining XsunX, Mr. Wendt was Vice President of Sales, Product Development, and Engineering at Global Solar Energy. At Global Solar, Mr. Wendt has led and directed several areas including copper indium gallium dislelenide (CIGS) technology development, equipment design and integration, facilities design and construction, engineering, production, and operations. Previously, Mr. Wendt was at ITN with responsibility for the development of thin-fi lm deposition technologies, thin-fi lm PV, and development of charge controller/battery systems for portable solar cell powered systems. Prior to joining ITN, Mr. Wendt spent eight years with Lockheed Marietta Astronautics, Denver Division. While in this position, Mr. Wendt was program manager/principal investigator on over 20 material-based programs. During 1994/1995, Mr. Wendt was the technical lead for thin-fi lm PV research at the Denver Division.



SCIENTIFIC ADVISORY BOARD

Dr. John Moore, Chairman, Scientifi c Advisory Board. Dr. Moore is a Material Scientist who currently holds the position of Trustees’ Professor and Head of Department of Metallurgical and Materials Engineering at the Colorado School of Mines. Dr. Moore has over four decades of experience in metallurgical engineering and material sciences and has held many prestigious positions in universities in the United States, Europe, and New Zealand. Dr. Moore has published more than 500 papers in materials science and engineering journals and has been the author or co-author/editor of nine books. He holds 13 patents in his name. Dr. Moore is a Fellow of the Institute of Materials (UK), a Fellow ASM International, a Fellow of the American Ceramic Society, and a Chartered Engineer (C.Eng.) in the UK. Dr. Moore is also an Honorary Professor and has been awarded an Honorary Doctorate from the Moscow State Institute of Steels and Alloys, Russia.

Dr. Richard K. Ahrenkiel, Member Scientifi c Advisory Board. Richard K. Ahrenkiel’s area of specialization is the measurement and characterization of photovoltaic cells and materials. He is a Research Professor of Metallurgical and Materials Engineering at the Colorado School of Mines in Golden, Colorado. He is one of the world experts in the area of carrier recombination and carrier lifetime who also works in photovoltaic device design and modeling. He became a Research Fellow at NREL in 2000. He was awarded a B.S. degree in Engineering Physics and M.S. and Ph.D. degrees in Physics at the University of Illinois, Urbana.

Dr. Edward T. Yu, Member Scientifi c Advisory Board. Edward T. Yu is currently Professor of Electrical and Computer Engineering at the University of California, San Diego (UCSD). He has been serving his current appointment since 1998. At UCSD Professor Yu directs a research laboratory concerned with the characterization, understanding, and application of physical phenomena and of solid-state material and device properties at nanometer to atomic length scales. The results of his research have been reported in more than 120 refereed journal publications and more than 175 conference and seminar presentations. He was awarded his A.B. and A.M. degrees in Physics from Harvard University in 1986, and his Ph.D. in Applied Physics from the California Institute of Technology in 1991.

Dr. Michael A. Russak, Member Scientifi c Advisory Board. Dr. Russak, with industrial experience of more than 30 years, is currently Executive Director of IDEMA-US, the trade association for the Hard Disk Drive Industry. He has more than 12 years’ experience at the executive management level of public companies with signifi cant offshore development and manufacturing functions. He has published more than 90 technical papers and holds 23 U.S. patents. He has expertise in thin fi lm materials and devices for magnetic recording, photovoltaic, solar thermal applications, and semiconductor devices as well as glass, glass-ceramic, and ceramic materials. He received his B.S. in Ceramic Engineering in 1968 and Ph.D. in Materials Science in 1971, both from Rutgers University in New Brunswick, New Jersey.

RECENT FINANCIAL PERFORMANCE

XSNX recently released its fi nancial statements for the second quarter ended March 31, 2008. After having spent more than three years in the research and development of its cutting edge amorphous silicon-based technology for photovoltaic solar cell modules, the Company is now focusing on the implementation phase for setting up its own manufacturing capacity. Accordingly, XSNX reported no sales for 2QFY08 and thereby no associated cost of goods sold. The Company reported a net loss of $801,059 in 2QFY08, compared to a net loss of $447,949 in 2QFY07. For the six months ended March 31, 2008, the net loss was reported at $2.6 million, compared to $1.0 million reported for the same period last year.

There has been an increase in operating expenses as the Company is heading toward commercialization through the setup of its own manufacturing facilities. Operating expenses for 2QFY08 were reported at $722,425, compared to $505,980 in 2QFY07, refl ecting an increase of $216,445. There were no expenses associated with options and warrants reported under the operating expenses incurred in 2QFY08 as they were reported in the fi rst quarter of FY08. In 1QFY08, the operating expenses included $1.31 million non-cash expenses associated with the issuance of options and warrants, primarily due to the Company’s adoption of SFAS No. 123(R).



XSNX reported a year-over-year increase of 37% in its research and development spending in 2QFY08 due to the transformation of production prototype machine under the assembly to inventory for sale. Research and development expenses increased to $149,295 in 2QFY08 from $109,236 in 2QFY07. But for the six-month period ending March 31, 2008, the Company reported a decline of $164,630 in research and development spending from the spending reported during same period a year earlier. We believe such a decline in research and development spending refl ects the completion of efforts relating to designing and planning the implementation phase to commercialize its technology.

Expenses relating to salaries and wages increased to $285,366 in 2QFY08, compared to $216,105 in 2QFY07. The increase has been experienced due to the hiring and retaining of several key persons in marketing, fi nance, and engineering and technical functions for carrying out plans for establishing the manufacturing set up. By taking such steps, XSNX plans to enhance its own technical and scientifi c capabilities and reduce its dependency on outside sources.

XSNX had $3.5 million cash on its balance sheet as of March 31, 2008, with net working capital of $4.9 million through which the Company has met its capital needs. As XSNX is not expected to generate any revenue for the next few quarters, the Company will be required to tap new fi nancing facilities to meet its planned operational activities. Continued access to additional fi nancing is vital for XSNX to successfully implement its business strategy and its manufacturing facility. On January 16, 2008, Cumorah Capital, a Nevada corporation and an Accredited Investor, purchased 8,650,000 shares of the Company’s restricted common stock in a private transaction for total proceeds of $2.5 million. XSNX has agreed to register the 8,650,000 shares purchased by Cumorah Capital.

COMPETITIVE ANALY SIS

XSNX competes with various players in the related industry. Here we discuss some of the Company’s competitors.

Suntech Power Holdings Co. Ltd. (STP), with headquarters in Wuxi, China, designs, develops, manufactures, and markets a variety of photovoltaic cells and modules. Providing PV system integration services in China, STP sells its products to solar distributors, engineering and design fi rms, and other energy product distributors, as well as installers, system integrators, property developers, and value-added resellers. STP constructs its PV cells mostly using processed silicon which, when exposed to sunlight, generates electric current. Interconnected PV cells are packaged into PV modules, which protect the PV cells and collect the electricity generated. The Company produces a variety of monocrystalline and multicrystalline silicon PV cells.

SunPower Corporation (SPWR), a majority owned subsidiary of Cypress Semiconductor Corporation, is engaged in designing, developing, manufacturing, marketing, and selling solar electric power products, systems, and services. Its solar products include solar cells, solar panels, and inverters, which convert sunlight to electricity compatible with the utility network. The Company also sells products for multi-megawatt solar power plant applications. For medical imaging applications, SPWR offers imaging detectors based on its solar power technology.

Energy Conversion Devices, Inc. (ENER), with headquarters in Rochester Hills, Michigan, commercializes materials, products, and production processes for the alternative energy generation, energy storage, and information

EPS EPSSales Sales 2008E 2009E P/E P/E

2008E 2009E (per shr.) (per shr.) FY 08E FY 09EXsunX Inc XSNX $0.35 $60.69 M $58.50 M $1.30 $57.2 ($0.02) $0.10 NA 3.5Day Star Technologies DSTI $2.60 $84.81 M $23.8 M $0.00 $9.0 ($0.54) NA NA NAAscent Solar Technologies ASTI $10.37 $117.00 M $74.92 M $1.90 NA ($0.54) NA NA NAEvergreen Solar ESLR $7.78 $941.28 M $931.58 M $115.40 $368.1 ($0.27) $0.54 NA 14.41First Solar FSLR $193.90 $15.25 B $14.69 B $926.10 $1,651.2 $2.34 $4.94 82.86 39.25SunPower Corp. SPWR $54.95 $4.64 B $4.67 B $1,273.12 $1,892.9 $1.29 $2.56 42.60 21.46LDK Solar LDK $25.10 $2.66 B $2.87 B $1,054.61 $1,679.0 $1.75 $3.91 14.34 6.42Source: Reuters & RedChip estimates

Market Cap EVPrice

03/17/08Company Ticker



technology markets. The company also engages in pre-commercialization activities for various emerging technologies, such as Ovonic solid hydrogen storage technologies, Ovonic metal hydride fuel cell technologies, and Ovonic biofuel reformation technologies. ENER operates in two segments: United Solar Ovonic and Ovonic Materials. The United Solar Ovonic segment designs, develops, manufactures, and sells proprietary thin-fi lm solar (photovoltaic or PV) modules. The Ovonic Materials segment invents, designs and develops materials and products based on its materials science technology, principally amorphous and disordered materials. Through this segment, ENER is also commercializing NiMH materials and consumer battery technology.

DayStar Technologies, Inc. (DSTI), with headquarters in Santa Clara, California, is engaged in the development, manufacturing, and marketing of photovoltaic products based upon CIGS thin fi lm semiconductor technology. The company’s fi rst 25 megawatt manufacturing line, producing CIGS on glass modules, is being designed and built around its unique and proprietary one-step sputtering deposition process, which the company claims to be highly scaleable and will achieve cost and performance metrics that, when operating at commercial volumes, will provide CIGS products such as the thin fi lm photovoltaic products aimed toward cost parity with fossil fuel electricity generation.

Ascent Solar Technologies, Inc. (ASTI), a Littleton, Colorado-based, development stage company, was formed by ITN Energy Systems, Inc., to commercialize fl exible CIGS Photovoltaic technology and modules using a proprietary manufacturing process that deposits multiple layers of materials, including a thin fi lm of highly effi cient copper-indium-gallium-diselenide (CIGS) semiconductor material, on a fl exible, lightweight, plastic substrate and then laser patterns the layers to create interconnected PV cells, or PV modules, in a process known as monolithic integration. The company is currently on schedule to begin limited commercial production of its PV modules in 2Q08 and plans to expand its rated production capacity to approximately 30 MW by the end of 2009.

RECENT DE VELOPMENTS

Update on manufacturing facility. The Company is making continuous efforts to place its TFPV manufacturing operations as soon as possible at the 90,000 square foot manufacturing facility in the City of Wood Village just east of Portland, Oregon, sub-leased by the Company in the fi rst week of April 2008. Since then, the Company has reported the following developments:

• For the industrial gas supply needed for TFPV manufacturing facility, XSNX signed an agreement on May 19, 2008 with Praxair Inc., the largest industrial gases company in North and South America.

• The sub-leased manufacturing facility in the greater Portland, Oregon area has been approved by the Wood Village city council on May 12, 2008 to be included in the Columbia Cascade Enterprise Zone. This inclusion makes XSNX eligible for availing tax benefi ts.

• In early May 2008, the Company started the demolition work on the manufacturing facility to make it suitable for XSNX’s TFPV manufacturing processes. The improvement work is expected to begin after the completion of demolition work in July 2008.

Solar comparative analysis. On January 29, 2008, the Company released the report enclosing the IBIS study analyzing the Company’s competitive position relative to incumbent PV technologies and immediate competing products. The

Rank Company MWs % Share

1 Sharp 434 17%2 Q-Cells 253 10%3 Kyocera 180 7%4 Suntech 158 6%5 Sanyo 155 6%6 Mitsubishi 111 4%7 Motech 110 4%8 Schott Solar 96 4%9 Deutsche/Shell 86 3%10 BP Solar 86 3%11 SunPower 63 2%12 Isofoton 61 2%13 First Solar 60 2%14 CEEG Nanjing 60 2%15 Ersol 40 2%

Others 568 23%

World Total 2,521 100%Source: Prometheus Institute

2006 Top 15 Solar PV Cell Producers



report was positive for XSNX, as it found cost and performance advantages in the use of the XsunX’s amorphous solar technology in contrast to conventional silicon wafer and other commercialized TFPV technologies.

Increasing pre-sales reservation program. In January 2008, the signing of an additional 36 MW of module purchase commitments into its Solar Module Pre-Sales Reservation Program brought the total reservations to approximately 145 MW, thereby increasing the reservation program.

Additions to experienced management team. XSNX has retained an on-site Facilities Manager who is intimately familiar with the existing facilities and former operations of the leased building. The Facility Manager will be an invaluable resource in supervising the preparation and subsequent operation of the Company’s manufacturing operations. The Company has also retained an on-site Human Resource Specialist to prepare and initiate hiring plans for adding a large number of employees to the XsunX team. The Company has also begun working with local community colleges to establish training programs with plans to announce on-site job fairs as work progresses.

In December, Oz Fundingsland joined the Company’s board of directors. In the last week of November 2007, XSNX announced the appointment of Dr. Michael A. Russak to the Company’s board.

Financing commitment with Fusion. In November 2007, the Company announced a fi nancing tie-up with Fusion Capital Fund II, LLC, a Chicago-based institutional investor, thereby securing $21 million.

RISK FAC TORS

Limited operating history. Since the Company is a development stage company with a limited operating history and limited revenues to date, risk exists in achieving profi tability. From inception through December 31, 2007, XSNX had an accumulated a defi cit of $13,426,778.

Volatile stock price. The market price of XSNX common stock is likely to be highly volatile and fl uctuate due to factors such as industrial developments, technological innovations, and additions or exits of key employees. Also, there is only a limited public market for the Company’s common stock.

Risk from competition. There might be intricacy in pursuing patent litigation to its conclusion as the Company currently does not generate revenue and may not have suffi cient cash availability. There is no assurance that a competitor may not infringe on XSNX’s intellectual property rights as the Company’s patents may not contain claims that will permit the Company to stop competitors from using similar technology.

There is no assurance of market acceptance of products based on the technology that XSNX is employing. There can be other competing products using the same technology being offered at lower market prices than those offered by XSNX. Thus, uncertainty lies in customer acceptance of XSNX’s products as cost effective.

Needs continued access to fi nancing. Additional fi nancing is necessary to operate the business and provide for capital expenditures needed to install the planned production capacity. Again, there is uncertainty as to whether additional fi nancing will be available on terms and conditions acceptable to XSNX or whether fi nancing will be unavailable as XSNX is experiencing losses and negative cash fl ow from operations.

Dependence on outside vendors for critical components. Outside vendors provide components and subsystems for the production system. Any delay on the part of these vendors will hamper the scheduled plans causing considerable delays in production.



OUTLOOK FOR 3QFY08

For the third quarter ending June 30, 2008, we do not expect XSNX to generate revenue. On a sequential base, we anticipate expenses relating to salaries and wages to increase slightly but not at a greater pace as many important appointments have already been made in marketing, fi nance, and the engineering and technical functions. We also expect research and development expenses to be lower as the Company completes various tasks relating to the commercialization process.

We estimate a net loss of $846,366, or EPS of $(0.005), in 3QFY08. For FY08E, we estimate a net loss of $4.37 million, or EPS of $(0.02), compared to a net loss of $1.29 million and an EPS of $(0.01) in FY07.

INVESTMENT CONCLUSION AND VALUATION

We initiate coverage of XSNX with a “Speculative Buy” recommendation.

We believe XSNX’s stock will gain as the Company progresses toward commercial production of solar cells and modules. The Company is moving in the right direction exploiting the opportunities in the thin film solar PV market, which we believe will rapidly grow as it offers the lowest manufacturing cost per watt at the module level and will likely maintain a cost per watt advantage over the more dominant crystalline silicon-based modules. Even the current shortage of polysilicon is providing a competitive edge to XSNX. Backed by a qualified and experienced management team, we believe XSNX will be able to successfully place itself on the path of business growth and revenue generation.

We expect XSNX will be on a revenue-generating platform in 2QFY09 as the Company plans to initiate commercial production of thin-film solar modules in 2QFY09. Thus, no revenues are expected for full-year FY08. For FY09, we anticipate XSNX to generate $57 million in revenue, assuming revenue at $2.60 per watt.

At a recent market price of $0.44, XSNX’s stock trades at a P/S multiple of 1.38x of our estimated FY09 per share revenue of $0.32. We initiate coverage of XSNX with a “Speculative Buy” rating and a 12-month target price of $1.28, which is 4x P/S multiple of our FY09 sales estimate $0.32 per share. We believe there is ample opportunity available for further expansion with the Company marching from the development stage to commercialization of thin-film solar modules in 2QFY09.

12MONTH PRICE CHART


XsunX, Inc. (XSNX)INITIAL REPORTFINANCIAL STATMENT

Income Statement

All Figures in US$, except share data

FY Ending September 30, 3QFY07 4QFY07 FY07 1QFY08 2QFY08

Total revenues - - 6,880 - -

Cost of revenues - - - - -

Gross Profi t - - 6,880 - -

Depreciation 16,826 16,661 77,248 129,958 (106,328)

Research and development 15,313 101,040 435,534 6,406 149,295

Salaries & wages 220,736 251,255 828,711 235,585 285,366

Option / Warrant Expense - - - 1,308,865 -

Other general & administrative costs 313,929 590,096 1,306,866 221,273 394,092

Total operating expenses 566,804 959,052 2,648,359 1,902,087 722,425

Operating income (loss) (566,804) (959,052) (2,641,479) (1,902,087) (722,425)

Interest income 71,820 97,001 253,179 106,854 (78,239)

Interest expense 651 182 1,197 395 395

Income before income taxes (495,635) 237,767 (1,289,497) (1,795,628) (801,059)

Income taxes - - - - -

Net income (loss) (495,635) 237,767 (1,289,497) (1,795,628) (801,059)

Net income (loss) per share- basic and diluted (0.00) 0.00 (0.01) (0.01) (0.00)

Weighted Average Shares Outstanding (basic and diluted) 157,169,856 156,680,076 156,680,076 163,724,263 172,206,449

Balance Sheet

All Figures in US$

FY Ending September 30, 3QFY07 4QFY07 1QFY08 2QFY08

Assets:

Current Assets

Cash and equivalents 1,363,815 1,773,748 2,188,260 3,467,130

Inventory Held for Sale - Marketable Prototype 0 1,720,875 0 1,632,625

Prepaid Expenses 316,255 54,377 41,481 54,686

Total current assets 1,680,070 3,549,000 2,229,741 5,154,441

Property and equipment, net 482,484 543,993 604,410 1,093,130

Patents/Trade Marks 40,000 - - -

Security Deposit 5,815 5,815 5,815 5,815

Accrued Interest Receivable 68,493 143,452 234,192 141,223

Note Receivable 1,225,000 1,500,000 1,500,000 1,500,000

Marketable Prototype 1,765,000 - 1,632,625 -

Total assets 5,266,862 5,742,260 6,206,783 7,894,609


XsunX, Inc. (XSNX)INITIAL REPORTFINANCIAL STATMENT CONTINUED

Balance Sheet Continued

All Figures in US$


Liabilities and Shareholders’ Equity:

Current Liabilities

Accounts payable 497,919 259,652 238,897 244,365

Accrued Expenses 38,350 53,036 55,077 59,498

Current Portion of Note Payable - - - -

Total current liabilities 536,269 312,688 293,974 303,863

Long-term debt - - - -

Total liabilities 536,269 312,688 293,974 303,863

Common stock 13,278,869 13,563,869 15,669,169 18,169,169

Paid in Capital — Common Stock Warrants 2,151,250 2,326,553 3,635,418 3,635,418

Deferred Stock Compensation - - (1,135,300) (1,155,300)

Defi cit accumulated during the development stage (10,699,526) (10,460,850) (12,256,478) (13,058,541)

Total stockholders’ equity (defi cit) 4,730,593 5,429,572 5,912,809 7,590,746

Income Statement


FY Ending September 30, FY06 FY07

Total revenues 8,000 6,880

Cost of revenues - -

Gross Profi t 8,000 6,880

Depreciation 82,941 77,248

Research and development 949,472 435,534

Salaries & wages 275,089 828,711

Option / Warrant Expense - -

Other general & administrative costs 2,072,585 1,306,866

Total operating expenses 3,380,087 2,648,359

Operating income (loss) (3,372,087) (2,641,479)

Interest income 88,480 253,179

Interest expense (158,333) (1,197)

Income before income taxes (3,441,940) (1,289,497)

Income taxes - -

Net income (loss) (3,441,940) (1,289,497)

Net income (loss) per share- basic and diluted (0.02) (0.01)

Weighted Average Shares Outstanding (basic and diluted) 138,005,964 156,680,076



Cash Flow Statement

All Figures in US$


Cash Flow From Operating Activities

Net income (801,059) (1,795,628) 237,767 (495,635)

Issuance of Common Stock for Services - - - -

Issuance of Common Stock for Loan - - - -

Option/Warrant Expense - 1,308,865 325,303 (364)

Amortization of Common Stock for Commitment Fee - - - -

Issuance of Stock for Interest - - - -

Depreciation (9,814) 129,958 16,661 16,826

Trade receivables - - - -

Security Deposit - - - (1,500)

Prepaid Expense 16,795 (17,104) 265,077 (16,918)

Trade payables 5,468 (20,755) (238,267) (97,926)

Accrued Liabilities 4,421 2,041 54,686 133,088

Net cash fl ows from operating activities (785,180) (392,623) 661,227 (462,429)

Cash Flow From Investing Activities

Capital expenditures (net of eff ect of acquisitions) (524,461) (102,125) (35,952) (113,837)

Purchase of Marktable Prototype and Patent - - - -

Note Receivable - - (275,000) (412,500)

Accrued Interest earned 88,511 (90,740) (74,959) (49,205)

Net cash fl ows from investing activities (435,950) (192,865) (385,911) (575,542)

Cash Flow From Financing Activities

Proceeds from Warrant Conversion - - - -

Procceds from Debenture Conversion - - - -

Procceds from Debt raising/(repayment) - - - -

Issuance of Common Stock for cash 2,500,000 1,000,000 - -

Issuance of Common Stock for Warrants - - 135,000 -

Net cash fl ows from fi nancing activities 2,500,000 1,000,000 135,000 -

Net increase (decrease) in cash & cash equivalents 1,278,870 414,512 410,316 (1,037,971)

Cash & cash equivalents, beginning of period 2,188,260 1,773,748 1,363,432 2,401,403

Cash & cash equivalents, end of period 3,467,130 2,188,260 1,773,748 1,363,432



Cash Flow Statement

All Figures in US$

FY Ending September 30, FY06 FY07

Cash Flows From Operating Activities

Net income (3,441,940) (1,289,497)

Issuance of Common Stock for Services 31,500 (12,000)

Issuance of Common Stock for Loan - -

Option/Warrant Expense 951,250 325,303

Amortization of Common Stock for Commitment Fee - -

Issuance of Stock for Interest 241,383 -

Depreciation 82,941 77,248

Trade receivables - -

Security Deposit (2,615) (3,200)

Prepaid Expense (269,133) 294,741

Trade payables 503,784 (322,509)

Accrued Liabilities (39,448) 86,498

Net cash fl ows from operating activities (1,942,278) (843,416)

Cash Flows From Investing Activities

Capital expenditures (net of eff ect of acquisitions) (314,736) (179,490)

Purchase of Marktable Prototype and Patent (1,785,000) -

Note Receivable - (1,500,000)

Accrued Interest earned - (143,452)

Net cash fl ows from investing activities (2,099,736) (1,822,942)

Cash Flows From Financing Activities

Proceeds from Warrant Conversion 3,171,250 -

Procceds from Debenture Conversion 5,000,000 -

Procceds from Debt raising/(repayment) - -

Issuance of Common Stock for cash - -

Issuance of Common Stock for Warrants - 135,000

Net cash fl ows from fi nancing activities 8,171,250 135,000

Net increase (decrease) in cash & equivalents 4,129,236 (2,531,358)

Cash & cash equivalents, beginning of year 175,869 4,305,105

Cash & cash equivalents, end of year 4,305,105 1,773,747



Projected Income Statement 2008


FY Ending September 30, 1QFY08 2QFY08 3QFY08E 4QFY08E FY08E

Total revenues - - - - -

Cost of revenues - - - - -

Gross Profi t - - - - -

Depreciation 129,958 (106,328) 185,832 259,236 468,698


Salaries & wages 235,585 285,366 299,634 314,616 1,135,201

Option / Warrant Expense 1,308,865 - - - 1,308,865

Other general & administrative costs 221,273 394,092 413,797 438,624 1,467,786

Total operating expenses 1,902,087 722,425 914,193 1,019,194 4,557,899

Operating income (loss) (1,902,087) (722,425) (914,193) (1,019,194) (4,557,899)

Interest income 106,854 (78,239) 68,229 92,151 188,995

Interest expense 395 395 403 411 1,604

Income before income taxes (1,795,628) (801,059) (846,366) (927,454) (4,370,508)


Net income (loss) (1,795,628) (801,059) (846,366) (927,454) (4,370,508)

Net income (loss) per share- basic and diluted (0.01) (0.00) (0.00) (0.01) (0.02)


Projected Income Statement 2009


FY Ending September 30, 1QFY09E 2QFY09E 3QFY09E 4QFY09E FY09E

Total revenues - 13,000,000 18,200,000 26,000,000 57,200,000

Cost of revenues - 7,900,000 11,060,000 15,800,000 34,760,000

Gross Profi t - 5,100,000 7,140,000 10,200,000 22,440,000

Depreciation 361,634 520,753 749,884 1,046,088 2,678,359


Salaries & wages 322,481 370,854 383,834 397,268 1,474,436

Option / Warrant Expense - - - - -

Other general & administrative costs 482,487 578,984 665,832 765,707 2,493,009

Total operating expenses 1,173,247 1,477,169 1,806,062 2,215,510 6,671,986

Operating income (loss) (1,173,247) 3,622,831 5,333,938 7,984,490 15,768,014

Interest income 98,602 105,504 112,889 120,791 437,785

Interest expense 423 436 449 463 1,771

Income before income taxes (1,075,068) 3,727,899 5,446,378 8,104,819 16,204,028


Net income (loss) (1,075,068) 3,727,899 5,446,378 8,104,819 16,204,028

Net income (loss) per share- basic and diluted (0.01) 0.02 0.03 0.05 0.09




REDCHIP VISIBILITY DISCLOSURE

Information is obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Copying, faxing, replicating, or quoting from this report without permission is in direct violation of copyrights laws. RedChip Companies, Inc. employees and affi liates may have positions and eff ect transactions in the securities or options of the issuers mentioned herein.

None of the profi les issued by RedChip Companies, Inc. constitutes a recommendation for any investor to purchase or sell any particular security or that any security is suitable for any investor. Any investor should determine whether a particular security is suitable based on the investor’s objectives, other securities holdings, fi nancial situation needs, and tax status. RedChip Visibility, a division of RedChip Companies, Inc., was paid $30,000 to prepare this equity research report.

RedChip Companies, Inc. was engaged by this company to provide investor awareness services from January 14, 2008 to February 13, 2008. Investor awareness services and programs are designed to help small-cap companies communicate their investment characteristics. Client Companies have agreed to pay RedChip Companies, Inc. a fee of $12,500 in cash for these services.

ALL INFORMATION IN THIS REPORT IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, REDCHIP COMPANIES, INC. WILL NOT BE LIABLE TO YOU OR ANYONE ELSE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDED, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, REDCHIP COMPANIES, INC. WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

This report was prepared for informational purposes only and was paid for by the company portrayed in the report. This report is not a recommendation of a solicitation to purchase or sell any security, nor does it constitute investment advice. Securities have an inherent risk and are not suitable for all investors. Before making an investment decision, you should consider, whether this company or security is appropriate for your investment goals. This report does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned.

xsunx, inc. · with pv heading toward increasing its market share in the globally ... comparative...

Documents