News

Good Morning,

Recently we entered the last phase of preparing the CIGSolar® evaporator for customer demonstrations with the start of CIS (Copper Indium and Selenium) film processing. This represents a major step forward and allows us to then move to CIGS (Copper Indium Gallium and Selenium) films and the completion of the system's readiness. Getting to the milestone where every aspect of the system process is "dialed in" requires repetitive testing and adjustments, but once the process has been established, the tool's operation can be as easy as just hitting the "start process" button on our computer display.

With the start of 2013 and the approaching completion of our start-up efforts, we wanted to respond to some of the questions we have received from investors. We hope that today's newsletter helps you to better understand our technology and business.

Probably the question we receive most often is "How long will this calibration phase take?" Obviously, we are working to complete this process as quickly as possible and we anticipate completion in about a month. Every company that has ever developed thin films has gone through this process, it is tedious, and there are no short cuts. An example was First Solar:  they started their CdTe thin film process development in 1990 and in 2002 they began limited commercial production. 

Another question we receive is "What kind of sales are you planning for?" A marketable aspect of our CIGSolar® system is that it is modular and scalable. This enables the licensee to initially start with one CIGSolar® evaporator or install a load balanced 40MW system which, depending on configuration, is priced at between $25 to $30 million USD. Our goal is to make three sales in the first twelve months of sales - a manageable transition from development. License manufacturing royalties would provide additional revenues once these lines were installed and operating.

We also have received questions related to "How does CIGSolar® differ or compare to other thin film technologies?" This is a complex question and could take pages to detail, but we will try and boil it down as much as possible.

First, rather than develop a product that attempts to compete with assemblers of silicon solar modules, which is a business path that has seen the demise of numerous thin film companies such as Solyndra, CIGSolar® is designed to offer pre-existing silicon module assemblers a lower cost replacement to silicon. Our business objective is to leverage the many GW of existing assembly capacity in the market - not compete with it.

Second, our system is modular and since each phase of a CIGS process requires different process times, a modular system can be configured to minimize the effects of rate limiting steps (when one process takes longer than another does). The freedom to add more capacity to process areas that require more time provides a key to avoiding process limitations - over the years we have seen and read about systems designs that contained unfortunate bottlenecks leading to higher production costs or failure.

Third, our systems use thermal coevaporation as compared to sputtering or other techniques. While the coevaporation process can be more difficult to manage, the fact is that the efficiency records, and scientific data, point to coevaporation delivering the highest conversion efficiencies for CIGS - an estimated upper threshold nearing 30%.  In today's competitive environment, this is an essential sales advantage for XsunX - CIGS potential to deliver higher solar energy conversion efficiencies.

Fourth, our use of multiple small area thermal coevaporation crucibles provides better control to the critical CIGS deposition process. This is an important benefit and we continue to emphasize this. It cannot be over-stated how important this aspect is to managing the heat energies and in producing the best films. While there are other firms that use coevaporation, the trend has been to use large or linear evaporators that can result in poor heat management and inconsistent films. Managing thermal energy and the gas structure becomes more difficult as the size of the deposition area increases so the unfortunate result is that most thin film manufacturers produce solar modules as much as half the size of their silicon counterparts.     

Our customers have noted other differences and advantages of CIGSolar®. For instance, stainless steel substrates do not break like silicon cells do, which provides immediate improvements in assembly yields.

We are working hard to ready the system for demonstrations so that we can share these advantages with our future licensees, and put them to use in the marketplace.

Thanks for your time and support.

Tom Djokovich, CEO

To learn more about XsunX's' breakthrough technology please visit https://xsunx.com.

Safe Harbor Statement: Matters discussed in this shareholder newsletter contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this shareholder newsletter, 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.