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XSunX Inc. (OTCBB: XSNX) is Today’s Top Stock to Watch from Beacon Equity Research


XSunX Inc. (OTCBB: XSNX) is Today’s Top Stock to Watch from Beacon Equity Research

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In the report, the analyst writes, “XsunX, Inc. was created in 2003 to develop and commercialize advanced, thin-film photovoltaic (TFPV) solar cell technologies and manufacturing processes. Over the past year, the Company has shifted its focus from licensing its technologies to using its technologies to design cutting-edge manufacturing systems for producing and marketing thin-film amorphous solar modules. The Company owns three patented technologies relating to photovoltaic technology design, manufacturing processes, and technology development. The Company has begun work on a multi-megawatt solar module production facility in the US.”

Investment Highlights

Increasing demand for solar energy

Exploding worldwide energy demand, depleted fossil fuel resource and soaring oil and gas prices are fueling demand for clean alternative energy sources such as wind and solar energy. The solar energy technology sector currently generates $10 billion in annualized revenues and has been growing 35-40% annually as a result of significant investments in new production facilities and technologies in Europe, the US, China and Japan. Financial incentives from governments around the world are encouraging the deployment of clean, renewable energy technologies. Some experts believe the PV market will reach $25 billion by 2011.

Although the solar photovoltaic (PV) industry potentially addresses a trillion dollar worldwide market, solar energy system deployment has been limited by the fact that solar energy is not yet economically viable in the absence of government tax and other incentives. This is expected to change over the next five to seven years as per watt costs of PV technology are reduced to a level competitive with conventional electricity sources.

Government incentives encourage solar deployment

Germany has established relatively aggressive incentive programs for solar energy and other European nations have followed suit. In the US, the California Solar Initiative provides for $2.9 billion in incentives over ten years. In Oregon, where XSNX is locating its production facility, the Oregon State Senate has 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 classified as a redevelopment zone, qualifying the Company for additional savings through the elimination of property taxes.

Increasing market share for thin film technologies

Thin film technologies, such as the technology deployed by XSNX, offer the lowest cost per watt at the module level. As a result, thin film’s share of the overall solar photovoltaic market is expected to increase from around 5% currently to as much as 20% in five years and deployment of thin film technologies will grow much faster than the overall PV market.

Competitive advantages of XSNX’s cutting-edge technology

XSNX has an advantage over other solar cell manufacturers because of its cutting-edge technology, which enables the conversion of an inexpensive sheet of 100cm X 160cm glass into a complete solar module in less than three hours. The Company’s thin film PV technology uses only a fraction of the semiconductor material that is required to produce traditional crystalline silicon solar modules. Given the high cost and supply constraints on semiconductor materials, using less silicon gives XSNX a huge cost advantage. In addition, the power conversion properties of the Company’s amorphous solar cells exhibit near 100% conversion potential at temperatures of 65C while other thin film and conventional silicon wafer technologies lose around 20% of conversion potential. Amorphous silicon solar cell technologies also outperform crystalline silicon solar modules on an average and total wattage basis over a complete 24-hour cycle and provide superior performance in cloudy and indirect sunlight conditions.

XSNX has strong research and development capabilities

XSNX has a research and development facility in Colorado and a portfolio of proprietary intellectual properties and processes relating to amorphous thin-film silicon design and manufacturing. Since its inception, XSNX has compiled an impressive list of accomplishments, which include internally developing its key technologies, licensing its intellectual properties and successfully completing proof of concept demonstrations. During its development phase, XSNX focused on developing and refining thin-film solar cell technologies that can more efficiently convert sunlight to electricity, are adaptable across a broad range of applications and temperature conditions, and can be manufactured inexpensively in large scale quantities.

The Company is rapidly advancing towards commercial production

XSNX has commissioned a baseline production system which will serve as a blueprint for the 25 MW production system it is also building. The 25 MW system is expected to commence commercial production in late 2008. The Company anticipates having a full 100 MW system in place by February 2010. XSNX has already contracted with vendors to build key parts of the production line components and sub-systems and has already pre-sold more than 100 MW of reserved capacity.

$21 million financing commitment supports production system plans

The Company recently secured a $21 million financing commitment from a Chicago-based institutional investor, Fusion Capital Fund II, LLC. These funds are being utilized to purchase the major components and parts of the sub-systems, beginning with components having the longest lead times. Having work on the sub-systems underway now will enable the Company to quickly and efficiently bring its new production system on-line next year.

XSNX has a seasoned management team

The Company’s management team has decades of experience in developing and commercializing thin-film solar energy technologies. President/CEO Tom Djokovich has over 30 years experience in the high-tech and building industries. He is a veteran manager of public companies and has successfully attracted millions of dollars of investment capital to his companies. Joseph Grimes, COO, has more than eight years direct experience in thin-film technology and manufacturing. Jeff Huitt, CFO, has 20 years financial management executive experience and has worked for both large organizations and start-ups. Vice-President of Engineering Robert Wendt has over 20 years experience in thin film solar technologies, most recently as VP of Sales and Operations for Global Solar Energy, Inc. a major producer of thin film photovoltaics.

Beacon Equity Research Gainers are Microsoft Corp. (Nasdaq: MSFT), Comcast (Nasdaq: CMCSA), Research In Motion (Nasdaq: RIMM), Evergreen Solar (Nasdaq: ESLR), Rigel Pharma (Nasdaq: RIGL), Dendreo Corp. (Nasdaq: DNDN) and Force Protection (Nasdaq: FPRT).

Beacon Equity Research Decliners are Intel Corp (Nasdaq: INTC), Oracle Corp. (Nasdaq: ORCL), Apple Inc. (Nasdaq: AAPL), Amgen (Nasdaq: AMGN), Yahoo Inc. (Nasdaq: YHOO), Applied Materials (Nasdaq: AMAT) and Ebay Inc. (Nasdaq: EBAY).

Beacon Equity Research Disclosure

The analysts contributing to this report do not hold any shares of XSunX Inc. (XSNX) Additionally the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts’ personal views as to the subject securities and issuers. The analyst(s) writing this report recognize and aspire to all of the CFA Institute Guidelines for Independent Research. Beacon Equity Research (“Beacon”) certifies that no part of the analysts’ compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analysts in the report. Beacon Equity Research and its affiliates have been directly compensated a total of fifteen thousand dollars directly from the company for enrollment of XSNX in its research program and other services. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. As such, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change.


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