XsunX: Wall Street Analyst Forum Presentation Transcript

| About: XsunX, Inc. (XSNX)

XsunX, Inc. (OTCPK:XSNX)

Wall Street Analyst Forum

February 14, 2007 10:30 am ET


Rachael - Wall Street Analyst Forum

Tom Djokovich - President & CEO



XsunX is focused on lowering the cost of solar power generation and increasing solar energy applications for the development of unique TFPV material designs and manufacturing process. The XsunX vision is that through technical, logical innovation the costs of solar power generation continue to be reduced, while increasing the spectrum of solar energy applications.

Speaking today on behalf of XsunX is President and Chief Executive Officer, Tom M. Djokovich.


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Tom Djokovich

Good morning, everyone. Thank you very much for your time and interest. And let me keep going here.


The up and down button.

Tom Djokovich

Well, I wanted to launch our presentation version, right. Yes, so there you go. (Inaudible) can make it a full screen?


No, doesn't the way that you're thinking of.

Tom Djokovich

Can you just launch -- yes, down here you just launch it, but it doesn't seem to want to work for some reason. Usually, when you click that main button --


Yes, you're right. It does, but it's not.

Tom Djokovich

Well, it's -- one more moment -- it's like the computer is locking actually. Let's try this. Bare with me more while I -- well, can everyone see it. All right. Okay. Let me come on up here. I can't get these slides to move.


I think you've got the up and down button on the right-hand corner -- your right-hand corner.

Tom Djokovich

The ones with the arrows up and down? Because when I touch them what I get is a frozen screen. I think maybe the computer may have locked up. You may want to reboot it.


There you go.

Tom Djokovich

There we go. Here we go. Thank you to Bill Gates again.

So once again thank you very much for your time and interest today. I'd like to describe a little bit about XsunX. We are a publicly held company. We're traded on the over the counter market. Our stock symbol is "XSNX."

We were reorganized in 2003 on a new business direction where we undertook the opportunity to go ahead and acquire three different patents in the solar industry sector. They were for semi-transparent solar cells. Our intended acquisition in use of those patents was to create semi-transparent solar cells for window applications.

Our industry category is, obviously, photovoltaics as a result of that reorganization. Our market category, we specialize in thin film photovoltaics, which I have abbreviated quite a bit through the presentation as TFPV, and also building integrated BI photovoltaics, which is BIPV. It's an area of a lot of growing interest. As a matter of fact, we have someone from the American Green Building Energy Council here today in the audience.

It's an area we think in the next five, ten years we're going to see a lot of exciting changes and growth in building materials, the use of photovoltaics in building materials, the use of photovoltaics in building design, and the use of photovoltaics to create onsite energy production to either increased building efficiencies, which is really where the low hanging fruit is, and secondly, to augment and completely offset the needs for grid supply electricity. It's an area where there's a lot of compelling growth statistics associated with the need for these kinds of technologies.

These are some graphs here that show the growth in demand for oil. And oil isn't necessarily something that drives or is used to produce electricity, but it's something in the context of most individuals' mind they relate the cost of a dollar of gasoline to somehow -- and if the prices is going up -- somehow that also equating increased cost of electricity or lack of access to enough or adequate electrical supply.

In reality, there is a disassociation there. We know that coal, natural gas, nuclear, those were some of the -- coal and natural gas are primary sources. But nonetheless, these are fossil fuels. And if you take a look at this chart here, the Chinese oil demand, fundamentally some time right around in the early '90s, the Chinese went from being a net exporter of oil, hydrocarbon fuel based sources, to an importer, to are now -- just recently in 2006, they're importing millions of gallons of barrels of gasoline per day -- I mean equivalent per day.

This is happening in Asia. It's happening in a lot of third-world developing areas. And it's a trend that really signals the need for society, in general, to start looking in economies. Businesses, governments, for security reasons start looking to methods and means to augment and offset this growing dependency or lack of access to enough adequate supply. I saw a statistic by a presentation from Executive Director of Innowell about two years ago, this was two years ago.

In Las Vegas, Nevada and alternative energy show, renewable energy show. And I really wanted to get my hands on that stat and refining in. It was one of the most compelling graphics I ever saw, they did an analysis on global energy, electrical energy output, all sources.

Coal, hydrocarbon, photovoltaics, renewable every aspect you can think of that's either currently in use or it's even conceived that, like 20-50, which is only, you know, what are 45 years away. They showed a difference between demand for electrical supply use and the ability for grid supplied electricity, all those different sources to deliver that being a difference of 20 times 24 short change in ability to deliver that power.

That's an enormous difference in the ability to produce it and deliver it. That told us that there are major problems that are building on the horizon associated with the production to every electricity.

So one of the main reasons, one of the most compelling reasons, why I joined this company, when I think thin film photovoltaic, thin film photovoltaic in general really are going to enjoy a tremendous growth over the coming years.

In general, our technologies are focused on thin film photovoltaic, what thin film photovoltaic are a very extremely exactly what it sounds like, very think layers of photovoltaic absorbers that are laid down on various different materials, in our case use rigid and flexible substrates.

They are about 1% of the utilization of silicon, or other materials that are used in conventional silicon wafers. There is not a current shortage of supply in the market for the base materials that are used to fabricate them and these are silicon-based -- thin film photocells and they are, we believe, and I think in general most industry analysts believe, they hold the promise of the next wave of massive reductions in cost per watt for producing a watt from a photocell -- from a solar cell.

What we've done is, we're focusing on different kinds of new solar cells, thin solar cells that are semi-transparent or solar cells that overcomes some of the deficiencies of current thin film design. In doing that we also have to come up and invent new manufacturing systems to actually produce these solar cells. And I'll discuss these just shortly.

Now revenue model, is really instead of -- over the two years, two-and-a-half years, we've been developing these products and technology, we're the luxury of being in R&D. We were in the sales mode. We received lots of phone calls, emails, and direct increase from number, hundreds and hundreds, actually thousands of companies on an international basis.

The trend I began to see was that the model that's been in place for last 30 years. The typical solar cell manufacturing company is going to change. Right now there is kind of a put-and-take situation. They have a facility. They pour $10 million into research development and infrastructure, they built solar cells.

In the last five years the demand for solar cells is increased so rapidly that it's out paced supply. Every single existing manufacturer now is reaping the benefit of being in the right place at the right time. Not because they've in the last two years got to market faster anyone, but because typically anywhere from the last ten to twenty years they've invested tens and millions if not hundreds and millions dollars in infrastructure.

In many instances we believe they may have inferior technology. But none the less they've been only people on the block right now. There is demand for it and there filling demand. They oversell capacity. They are force to go back on and reinvest a lot of capital expenditures to either double or triple that capacity. They over sell that capacity again and they find themselves perpetually in the never ending cycle of reinvestment.

And I think forcing there shareholders to chase the wholly drill of eventual profitability. So where -- we believe the market opportunity exists is to go regional product manufacturers a start-up and existing solar manufacturers and offer licensing opportunities to our technology.

In other words a power plant is set in California is not going to compete with the power plant in Maine. They are just not going to be able to produce enough electricity typically to offset to be able to shift that power that far away. We believe that same situation opportunity exists in the solar. We knew the sector now.

Now our manufacturers in Germany there's 27 different players in the solar economy, all right. If you take that same principle – same metric and you apply it globally to all the different regions that use electricity. In other words the entire planet the opportunity for new entrance, existing companies to retools themselves to enter into this market is extraordinary.

We felt that the ability to introduce our technology, get it adopted and ramp-up 12 megawatts of production without over taxing, over burning our hard investors with the continuous reinvestment of capital. The best message that would essentially go in to acquire that franchising method, where we would simply license out the technology and we generate revenues on the inception license revenue on the sale and the delivery of equipment in many instances.

We don't want to become applied materials. We're not looking to become a machine. Supply none the less the need to actually deliver the solar cell comes in the embodiment of the machine. So machine has to show up. We -- I'll explain here surely how we're working with other companies to help us to deliver those machines.

That's more of there business model than ours. Once these machines are in placed we look to charge royalty based on the efficiencies that our solar technologies provide over other technologies.

Primary benefits of what we're going to do is create higher couplet and higher yields, which return and maximize return on investments. And in this slide we'll go over all that. We focus on different kinds of new solar cells that have interesting new kinds of diverse applications such as semi transparent solar cell opens up huge markets. I think everyone can realize what kind of opportunity exists in there.

And then also in efficient solar cell, now a lot of times people talk about efficiency in solar cell about the amount of sunlight gets converted. In thin films that's still applicable, but there's a lot of deficiencies in current thin film solar cells design. They cause degradation and instability, and we will also focus on trying to cure those problems.

Through all of these apparatus, we think we offer licensees the ability to rely on us in the core technology infrastructure provider and continuously provide these upgrades to them. And we're doing all these, is kind of an integrated product delivery approach. And what I mean by that is once again, rather than taxing our shareholders we'd build out an infrastructure of $10, $20 million with those machinery, equipment and personnel.

We are leveraging on a qualified third party sources overdone companies, private companies, academia and a whole host of consultant that are capable and qualified to go ahead and work with. In number of instances we're finding in companies very smart people, wonderful technology, very exciting technology that may never get them to market.

So we're finding some of these technologies, we'll show here in couple of minutes and we're bringing those into our full or either financing the development of those technologies and getting licensing or simply acquiring those technologies. We also and that's part of our aggressively leveraging these third party and development partners that I showed in the slide.

We're also leveraging, I say we don't want be implied materials. We don't want to be a machine or tool manufacturer. So we're also working with proven automation and optimization companies. We just recently announced actually NICO up and Kevin announced an agreement with us, working relationship in, which we're working with them to help us design and improve the automation and optimization of our tools.

And one of the things I found in working with some of these wonderful or smart people in companies over last several years. The number of instance is this industry is being somewhat of a boot camp industry for years in a number of areas. What I mean by that is a lot of players are been forced to become the butcher, the baker and candlestick maker.

They focus they're experts in process development, and they also have to become machine builders. Where they're experts in the area of solar cell design, but they also have to now become experts in process development. They can't experts in everything. So what we're doing is, we're focusing on key attributes of key players and what we found in the machine side they're some great entities such as NICO to come in and help us automate process, enhance returnability, reduce the amount of moving parts, increase the uptime, and create superior delivery systems for our thin film solar cells.

I mentioned earlier, one of our first products here, Power Glass. It's a semi-transparent solar cell. It can be manufactured either directly on a piece of glass or on a piece of flexible inexpensive plastic. This is a low temperature process. It's about 150 degree C, 140 degree C. We think we might be able to bring that temperature down in further and utilize even less expensive plastics.

It's about 70% transmissive, which means about 70% of sunlight travels through it. And it has about a 3% to 4% peak electrical conversion efficiency. It doesn't seem much. Sometimes I get hammered by various people when they save only 3% to 4% efficiency, what good is that?

The realities are -- is Power Glass applied at a site of a building enhances efficiency of that building substantially. Okay? It's not going to satisfy all the power needs, but it becomes an integral and very important part of the overall energy efficiency improvement -- reduction of that building.

US government past year -- it was last year, one of their bills -- for the New Energy Bill was that if a building can improve or reduce its energy dependency by 50% over baseline, then the government matches 100% investment dollars. So if a local building -- if a building owner here -- of this building, spend, let's say, $18 million retrofitting this building to achieve those kinds of efficiencies, looking again the check from the government to that effect.

And this is occurring in a number of different regions internationally. All different kind of governments are moving forward with these kinds of incentives. China recently one of the largest to announce that -- those kinds of incentives. Those are very important incentives for building owners when they start looking at technologies such as Power Glass to go ahead and integrate in their buildings.

Now what we do here is we are looking for third-party manufacturers who license these technologies from us and integrate these Power Glass films into their products. We are currently talking with glass manufactures about [moving forward] licenses and adopting the technology and integrate it in the marketplace with us.

This particular solar cell is a patent pending. It's a hybrid type of solar cell. Earlier I mentioned improving the efficiency of the solar cell in terms of it's -- how stable it is and how it delivers power. Thin films have traditionally experienced or suffered a stigma of being unreliable, expensive and reliable.

One of the reason for that is one of the most common designs of the solar cell today -- solar cells that are delivered today in thin films is called a tandem junction solar cell, where they layer different amounts -- different kinds of absorbers on top of each other, kind of building a battery, you know, different cells in a battery. And what happens is these different layers have to be current matched. So to match the current producing power of one layer, they have to maybe increase the thickness of another layer or reduce the thickness of another layer.

One of the primary materials used is amorphous silicon. We also use amorphous silicon. But we use it in a very thin fashion. The balance of the industry puts down about 4,000 angstroms of amorphous silicon. Amorphous silicon at that point becomes unstable, and it begins to -- second, it's exposed to sunlight, literally within the first 50 hours, you can see up to 15% reduction in power conversion efficiency.

This is a nonlinear reduction curve. Eventually, there is loss of efficiency, because they really minute over a very long period of time. But literally, in the first 50, 100, 1,000 hours, you see massive reductions. As that layer reduces the current and that layer is reduced, that inefficiency -- the efficiency loss transmits across the entire solar cell.

So you can see a solar cell. But at the time it’s manufactured and when it will be shipped out at the back of the plant, it maybe be running on a thin zone. You must say it’s running 7%. A year later, you might have a solar cell that’s producing 6% or less. That -- but you paid 7 watts, you paid roughly -- installed 5-something per watt for the time it’s 7 watts a power that was shipped out at the back of the factory.

That is a stigma. It’s a problem, not a stigma that’s caused difficultly in penetrating the market with thin films. This particular solar cell design, it’s patent-pending, eliminates that problem. Essentially, we’ve put an insulator between each one of these layers. We’re then free to go ahead and put a very powerful absorber on one layer and maybe our semitransparent within amorphous silicon and solar cell on the top.

And we now get the power producing benefits of both layers with long-term stability. That’s important so that when you ship a solar cell out of the back of your facility, and it’s got a rating of 7%, 8%, 9%, 10% whatever it is, a year down the line, it’s going to have very close to that same amount of efficiency. And that's important to consumer. And that’s what they are seeing in silicon wafer market right now.

This thicker solar cell also is eliminated. We are currently developing this with an amorphous top layer, our semi-transparent Power Glass product. We’re also using, what’s called, the nanocrystal in bottom there. But you’re free to actually create different kinds of the zones.

You could CIGS on the bottom, which is something some other manufacturers such as Daystar are working on. And the famous [Nanosaur] is also working on, and other kinds of top layers such as amorphous silicon. So this is something that we can go move in the future with a new kind of solar cell designs or possibly this design to third-party manufacturers.

Another area of important work, and I think this probably going to be more of the key aspects of this presentation. Thin films have not enjoyed the same degree of investment for cost reduction purposes as silicon wafer manufacturing technology have. Right now, almost every single thin film solar cell designed out there is some kind of a variant of a pervious body at work. Other than that, let's say, our 4 Terminal. I'd like to think that's unique and different and we're cutting edge on that.

Where are the politics currently lie are in the manufacturing, in the delivering method. Thin films -- manufacturing thin film is kind of like spraying paint on a wall, if you will. You have this big machine and inside the different absorbers are put down. The rate at which that observer is deposited really dictates how many watts of power you are going to produce everyday

The Plasma source, we believe, is the key bottleneck in this whole scenario. Recently, we entered into a licensing deal and with a company out of North Carolina, a group of very innovative people with a long track record of proven commercializing success of other product in the semiconductor industry.

It developed what's called high density plasma source. It's not that unique. There has been other high density plasma sources developed in terms of high density. But what their does, how did they assemble it, exactly how to operate is very unique. It uniformly excites the plasma over very large areas with the minimum ion bombardment, which reduces some of the problems that exist inside the deposition chamber.

The rates are 10 to 15 times of deposition rates of current technologies, and they're scalable. Fundamentally, these type of sources are scalable to very large areas. One of the glass manufactures we are talking to is asking for a 3-meter wide deposition capability. This plasma source could fundamentally be changed -- ramped up to 3 meters.

It's really just a matter of creating the power source for it -- the power supply. You know, that's something we can turn to electric engineers to produce source. The plasma source is itself fundamentally linear. It produces a very uniformed deposition area -- minimal amount of energy in the zone in terms of resistance energy that causes other kinds of problems.

We've done analysis of this. And relying on only four times, one-fourth rather of what their projected capability is over what their actual capability is in terms of tests that have been run. We believe that the cost of an integrated, monolithically integrated solar cell using this particular plasma source could come into way below a dollar. As a matter of fact, down in the $0.60 per watt. That's extraordinary in the thin films area. So this plasma source is something we're very, very excited about.

This is a chart pertaining to that particular plasma source. It shows you some of its deposition capability on the micro-crystalline inside 15 times current CVD technology capabilities. This is extraordinary. I mean, this is a quantum change in deposition technologies. And that equates into a quantum change in the reduction opportunity on the cost per watt to produce electricity or solar electricity from a solar cell.

One of our other -- one of our patented technologies. This is currently under license is a cassette system. It's kind of like it says right here a film cartridge in the camera. It simply winds up all the flex of materials. This is a process called roll-to-roll that's currently used in thin film to increase throughput to take care of the, you know -- and silicon wafers, they essentially produce all these individual separate wafers and then have to connect them all together. It's called tabbing and stringing. It's an operation that has about -- converting to cell and tabbing-stringing adds a little bit close to $1 to little bit over $1 per watt or produce power for silicon wafer.

With roll-to-roll, essentially you're using 1000-foot rolls or more of material. You're running at through a continuous process. You’re monolithically integrating a solar cell as go along. It brings a lot of efficiencies to the manufacturing process. The problem is it also brings a lot of contamination.

The way they do it nowadays, as they run and if you look at this red in the upper graph there, they run this continuous roll through all these different deposition zones, all these different materials are being deposited. And because the material is continuous they can’t really delineate between the different chambers.

So use a vacuum current walls or actually gas paper walls things like, that we try to separate between the chambers, but contamination occurs, both from outside particles and also cross contamination. That reduces the efficiencies of solar cell significantly.

By moving with the cap we are able to do, to look an autographic essentially put these materials on the rolls still maintain efficiencies and scalability of throughput of roll-to-roll manufacturing but moved those cassettes individually from chamber-to-chamber, chamber without breaking vacuum, without creating cross contamination.

Thereby, increasing or maintaining the efficiency of the manufacturing process, and increasing the potential efficiency conversion of solar cell with regular degradation. We think this is a technology that offers, once again, increased throughput and higher yields, as I described earlier.

It's a -- last June, we decided to go ahead and open up a small R&D and technical marketing facilities in Golden Colorado adjacent to one of our primary third party subcontractors that, there’s lot of R&D for us. In there we have this machine being assembled. It's like a quarter megawatt machine. And there is really no need to make it any bigger because what I -- we intend to produce film for retail for commercial sale.

We intend to use these to further R&D and also we’re using this machine as a demonstration unit with our potential licensees that are coming to Golden and they’re visiting the facilities and looking technologies. You know, in other words compulsory try to make sales to. So it's been a very valuable opportunity for us to go ahead and take a lot of the technologies and ideas and put them in the reality herein the bottom of this particular machine.

We've now moved into a design. We have a particular vendor and our vendor and potential client is interested in the in-line machine, which we think is going to bring more scalability improvement to our technologies.

We're working with conjunction with some of the third party vendors I described earlier. We're designing this particular in-line machine that we think, fundamentally on paper right now, base system is a 5 megawatt base system and it's scalable to 50 megawatts very quickly.

It offers a module delivery or module footprint for clients, and allows them to start with the 5 megawatt system and simply add-on all the way to a 100 megawatt if necessary. I kind of stopped at 50 megawatts, because that tends to be, believe it or not most of our clients except for the potential clients in China most people are asking for 25 to 50 megawatts systems. In China they ask for 500 megawatts system. But, you know, that's if and when those comes through it will be substantial.

What do all of these technologies I just described mean to cost of per watts, because that's really the bottomline here. It has been forever, the cost of watt that produces solar – a water electricity using solar power. On the figure graph I show the black line is deposition rates.

We believe that is the bottleneck, the single largest bottleneck in production, in creating -- in driving the costs of solar energy down, this thin films primarily. As that rates go up using these new plasma sources that we're working on. You could see the different kind of technologies that XSUNX is working on, are aim more for silicon power glass, the cost of that per watt is being driven down between 2006 and 2008.

Our full terminal product in the blue line coming down a way below $1 and our Micro-crystalline which is a new technology it's really derivative of the four terminals. It's just a single junction Micro-crystalline and Solar cells where you see that particular technology coming down from here around $2.20 to substantially all of course to $0.50 per watt.

Now we believe by later 2008 these -- this is all going to be possible because of a) we believe the solar cell designs first, b) the delivery technologies such as the roll-to-roll cassette system, and the enhanced plasma source. These areas we think that we have significant advantage over other players in the market, as this will allow us to drive these costs down.

Our current business development status. We are in discussions with a number of different parties in different regions that are looking for to adopt our technologies. Now these systems are complex, the technologies -- the applications in number of instances our clients are looking for specificity such as one of the glass manufacturers we're talking to want just to be able to go ahead and show them fundamentally we can create a two meter wide plasma source for them.

At that point I think we're going to enter into an extremely large licensing deal. But that particular kind of sales process takes months if not the better part of the year to currency make because of all the additional engineering back and forth, and flashing out the technology that has to occur. In other instances, clients are simply looking for entry-level machines, 1 to 5 Mega Watts. Those machines, we have proposal on the table and we’re currently in discussion what we -- we could close the deal in the near future.

We are offering incentive packages to early adopters. And this is something I think everyone does in the inception of the business when you first transition from R&D into sales. We are offering our early adopters significant and aggressive pricing in long-term ongoing support commitments.

Technology upgrades, I mentioned earlier the assistance are modular. One of the advantages to the message that we are taking. If a licensee buys in on a system that today will they produces a 7.6% efficient source, okay. There is about 99.9% chance that to our continued R&D and development. We are going to enhance the design of that Solar cell and its manufacturing method. And in most instances that’s going to be a software upgrade. Taking the existing system and changing the parameters on which the temperature of the gas is the vacuum and the how the plasma reacts in depositing materials.

We can then fundamentally say, you now can create a 9% Solar cell after the software upgrade offering. So we would do -- in the future we see that as a continuous revenue opportunity for us both in the software and the upgrade, so this improves efficiencies and also in a return to royalties to the company.

With these early adopters, we are offering these kinds of upgrades as part of our continuing package to intensify them to move on. We think these kind of packages are really going to or it appeared to be really spring people to make decision sooner the later.

I have a little graph on here I talked about the payback of different kind of Solar technologies. Multi crystalline down at the bottom about four years. I know this to be a fact. Lot of times people say, it’s a seven or fifteen years payback on Solar. The reality is, there are number of producers the Silicon Wafer Panels, right now in US. These panels were install in commercial application have the design for four to five year payback. That’s all is. And that’s the reality what’s going on right now.

This graph is in far off the board on there. Thin films currently, they are planning about a -- in this -- from this xenograph are claiming about a three year payback. By working on technology such as where we’re with thin films. We think that the opportunity when you drive these cars and thin films is down below a $1 all over the same year in a one year payback scenario. These are compelling statistics that we believe are driving all ours interest with these potential early adopters that we have at up the bubble in this slide.

Our value proposition, we have multiple device in manufacturing and IP patents. We continue to expand these patents. We’re aggressively searching and interveiling new technologies on a monthly basis. We plan to always continue to develop and acquire new technologies.

We think thin film is going to undergo radical changes in the next three to five years, and we want to be a key player in there. And we want to be assistance to a number of companies that we believe that we can assist in getting their technologies to market by partnering with us.

Our production systems provide scalability and adaptability to new technologies. I talked about how increasing -- you know, in many instances changing from a 7% to 10% efficiency module opportunity. It’s simply a software upgrade, once we roll that process. It’s not out with the old and in with a new $50 million worth of equipment.

Well, in business conclusion here for XsunX, you know, we believe and I think most industry analysts believe too that lower manufacturing costs, they favor a thin film photovoltaic over traditional silicon wafers. I have looked at a number of silicon wafer manufacturers. It’s really about the scale there.

The way you drive down the price either by silicon cheaper or increasing the size of the facility to a point at which their fixed overhead is consumed in the first 50 megawatts, and the next 200 megawatts of production simply increases the potential for profit.

Thin film offers tremendous opportunity now by simply improving manufacturing techniques, taking these manufacturing costs way down below $1 per watt. Flexible thin film voltaic, it’s a real technology. There is a number of companies who are already producing it.

We think we’ve got solutions that provide better -- actually better solutions to what they’re delivering right now. It works, and the demand is outstripping supply. It’s a tremendous opportunity for XsunX and its potential future licenses to entering this market and become a part of this opportunity.

We are really poised because of the technologies we put together and the integrated product delivery team. They have to sell that. We can just poise to go ahead and deliver this and become a major force in global -- rather a global presence, supporting, like I said, existing and new entrants, OEMs into this market space.

We have the technology, business model, processes and manufacturing units in place to execute and, we believe, succeed in this thin film business.

Thank you very much. Any questions? Yes.


Unidentified Audience Member

[Question Inaudible]

Tom Djokovich

Well, the question was who are the manufacturers that we’re targeting? Well, realistically, the way things are occurring right now, although we are working on expanding marketing model. We’re going to go out and actually start targeting people. Right now, people are coming to us. They have been for some time. To give you an idea, one particular in Europe is scheduled to open up a plant with a base 25 megawatts of production, they are going to scale to 100 megawatts of silicon wafer production, then, in discussions just on a base 5 megawatts system.

Really what you are looking at here is because of the module aspects people are entering the market 5 megawatts and then, looking if it would be able to grow. So they improve their business model and then grow by simple adding additional systems in the future.

If the modular aspects of this, I think allow people a potential licensees to go ahead and take a look at baby steps rather than making a $100 million investment up front. They don't need to do that with our particular kind of things from technology.

Unidentified Audience Member

[Question Inaudible]

Tom Djokovich

No, we have not, I did not include any financials, as we're public company, it's listed. We do not include any projections and I didn't discuss any projections because we've not include them in the path for being a Public company and for disclose any one who…

Unidentified Audience Member

[Question Inaudible]

Tom Djokovich

Well, right now, we're in the last K -- our last most recent K. I believe we're a little bit over $4 million in the bank. Our planner operations for 2007 was also about $4.5 million. We've been successful in raising capital in the past. We think that we'll be able to go ahead and continue to raise capital as necessary.

As we transition now, we started marketing in the fall, so we're in the process of transitioning from the R&D in the business development. We believe in 2007, it's going to be a -- which were going to realize revenues. The cost of realizing those revenues -- there is going to be a cost realizing those revenues. That mainly necessitate even though we say, we book a $5 million or $ 25 million deal, it's going to prior require us raising more capital go ahead and get those equip -- those systems built and deliver into the marketplace.

Unidentified Audience Member

I have two questions. When you deposit all those layers on the film and then you put the film on a window, what happens to the clarity at the window?

Tom Djokovich

Well, the question was when we create all the different layers on those film, then, you put the film on a window, what happens to the clarity?

Our powered last film is a single layer of amorphous silicon, that's about 1.5 -- I'm sorry 0.5 microns I believe. And it's about -- it's very, very thin. It's at or near, what's call it's maximum depletion width, which means stable amorphous silicon. It's about 70% transmissive. It would put it on the inside of this window here it would not look this similar to any other window tinting.

As a matter of fact, in offices it already -- we tinted window. We put up the film. In order to change the perception, the only real change is in order to the color. Because it's amorphous silicon the color that's produced through the absorption of sunlight, the spectrum that results in anywhere from a brown -- dark brown, black or way up into red and yellows.

So you're not going to see grays, typical blues that you see in a lot of exterior offices side. You're looking at colors that are more of earth tones and -- but that we believe working with some of the glass manufacturing maybe it will model that a bit by using different color based glass or different color anti-reflective coatings.

Unidentified Audience Member

My second question, when you are manufacturing in-house, you have control over the manufacturing process and so on. If you're going to license these routines in all over the country, yields for these licensees are not going to be as good as they would be if you were doing it in-house and does that going to discourage them?

Tom Djokovich

Well, the question is when you license and distribute systems to multiple different manufacturers, it becomes more difficult to control the process and then may reduce their yields.

Fundamentally, your question is absolutely correct. This is the same problem that exists currently, or did exist in the semiconductor industry. You know if supply materials have their problem with their large machines for producing TFTs, they won’t be selling any machines. It's really a part process development that controls software, beginning to continue to offer support on those systems and having supportive staff in the field. One of the reasons why we have engaged Nico, because of their international abilities to go ahead and support technologies.

Unidentified Audience Member


Tom Djokovich

You're welcome. Thank you very much.


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