Dated: July 13, 2009
To Our Valued Shareholders,
I am pleased to share with you XsunXs expanded business development plan, the launch of our new web site, and to provide details about our exciting new plan to commercialize a revolutionary, cross-industry solar manufacturing technology.
This new direction will result in significant changes to our operations, which we believe you will welcome. It is our belief that the manufacturing processes from the Hard Disk Drive (HDD) industry can be adapted to thin-film solar technologies to bring the cost per watt for solar to below $1 per watt, thereby making solar a viable alternative in the energy field. Furthermore, our solar expertise, experience and proprietary technology allows us to create joint ventures with larger companies so we can generate revenue streams through licensing fees and royalties, without the need for substantial capital expenditures as previously planned.
Please permit me to share with you a more detailed overview of the reason for the change and describe the opportunities we believe exist for building a successful solar company.
As you know, XsunX has been actively engaged in an effort to build and operate thin-film amorphous silicon manufacturing facilities. These plans were developed in 2007 and launched in the first quarter of 2008. While we made significant progress in this effort, including developing our sales channel in the first quarter of 2008, the ever-present need to raise additional funds to complete our manufacturing system became increasingly difficult under the collapsing global economic conditions. Added to this very difficult capital market, an unprecedented tightening of credit occurred simultaneously so that the normal options for banks and other lenders to provide capital to complete our facility simply dried up. Without the necessary bulk of the capital, we were unable to qualify for tax credit financing in Oregon and complete the Oregon operations. We are not alone in this challenging market, as many other solar technology companies have found themselves with the need to scale back, sell off, or close their doors.
During this difficult period, we evaluated our plans, systems and products and determined that we were in a unique position to pursue joint venture manufacturing relationships. Interested parties looking to work with us to leverage our existing investments and technology have approached us to build thin-film manufacturing operations. During the time we were engaged in this process, we developed significant insight into the global opportunities that exist in joint venture manufacturing relationships. Well-funded organizations from within the energy sector and other large manufacturing industries with well established sales and distribution channels have begun to seek opportunities to expand into the solar industry.
Our re-vitalized focus on our core strengths of technology development, marketing and sales and establishment of a manufacturing partner channel is in direct response to what we learned during the past months. What appeared initially as a set back several months ago has now become a springboard to tremendous new market opportunities. Fundamentally, we believe that technology and its development is and will continue to be the engine that drives success in the solar industry. Companies that focus on core strengths and leverage these strengths with their partners can develop superior products at attractive price points. This strategic change dramatically reduces our capital requirements and lessens the need for potentially dilutive financing.
As we faced financing challenges over the past several quarters, we re-evaluated our business. The breakthrough technology opportunity for the manufacture of Copper Indium Gallium (di) Selenide (CIGS) thin films, which we describe in detail at our new web site, was developed from an idea, validated, and has matured to a reality that we are working to rapidly commercialize with our strategic partners. We believe that through these efforts we have the opportunity to revolutionize the solar industry.
We see this opportunity as a step forward for our company at a time when many solar companies are struggling to differentiate themselves within a market that has become increasingly filled with status quo technologies. Our approach to CIGS offers XsunX an opportunity to differentiate itself by providing significant performance improvements and cost reductions for the use of solar power. As outlined above, we are already working to establish manufacturing partnerships to deploy this technology upon its completion. To many long-time XsunX shareholders this represents a change in our direction. However, I believe that you will agree that, in light of the current economic climate, we have reduced our operating risks, while at the same time initiated what we believe to be is a tremendous opportunity for future growth.
Thank you for your continued support and belief in XsunX. We remain committed to building a successful solar company and look forward to sharing our progress with you in the future.
Tom M. Djokovich, CEO
Safe Harbor Statement: Matters discussed in this shareholder news letter contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this shareholder news letter, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.