We are presenting today an interesting business profile that has recently released astonishing stock returns to the shareholders. We are referring to XsunX Inc (OTCMKTS:XSNX), the solar and energy saving technologies provider.
From trading at $0.0004, the share price spiked up to cross the six-months highs of $0.004. These are astonishing results that seemed to be shared by many in the market. We formed this impression after getting to know that more than 100 million shares changed hands some days.
We believe that the share price action should be drawing the attention of many market participants right now. Therefore, our readers also needed to know about this name. Have a look at the following stock chart:
History of XSNX
Before we explain what created the recent share price spike, we will provide company background very briefly. XsunX, Inc. is a Colorado corporation founded on February 25, 1997. It is headquartered in Aliso Viejo, California, and specializes in the sale, design, and installation of solar photovoltaic power generation besides the energy-saving technologies to provide predictability, and control of their energy costs.
The company seems to have accumulated a large amount of expertise of operating in the industry. It operates as a licensed contractor in California, and the executive management has over 30 years of extensive experience in all aspects of construction and project assembly. The market usually appreciates shares of companies with experienced managers and know-how accumulated like this one, as they tend to pay off in the long term. We needed to point that out in this old timer.
In the year 2017, the company expanded the range of products offered and included energy storage systems comprising of lithium batteries, charge/discharge control, and demand charge management software. The reason behind this change was that using energy storage can increase project returns significantly. The new systems can be used on commercial facilities and can be placed as a stand-alone technology or with a commercial solar rooftop, carport, truck port, and covered storage canopy systems.
There is more.In 2017, XSNX also commenced offering the company’s solar car, truck, and storage area solar canopy design/build capabilities to other external contractors. The company believes that its in-house designs will facilitate the work of other third parties, and it is a great opportunity to expand sales. We appreciate the initiative, but don’t understand why it did not commence before. We will be ready to check the next revenues figures in 2018 as they may surprise.
For the readers thinking that the solar industry is not anymore a buoyant business, please read the following carefully.
The United States International Trade Commission has announced that the amount of crystalline silicon photovoltaic cells imported was causing serious injuries to the domestic industry and several recommendations were being prepared. XsunX, Inc. and other players in the solar industry feared that the new measures could harm their business. If they are forced to use a large number of cells manufactured in the U.S., their profitability would decline, and the shareholders would lose money.
The market and the industry seemed to be discounting the worst; finally, the recommendations are not so restrictive. This is what XSNX released on November 2, 2017. Check the following words:
“After the trade commission’s recommendations were released Tuesday, we reached out to some of our vendors who were elated by the news. While the recommendations now need to be finalized by the current administration, we see the commission’s opinion as a validation that the solar industry represents a diverse and large sector for job growth important to the US economy,” said Mr. Djokovich, CEO of XsunX, Inc.
There is even more. Mr. Djokovich, CEO of XsunX, Inc., also said that the balance of system costs has continued to decline, which is expected to offer “advantageous investment options to our customers.” It is a great announcement. We will need to revise the quarterly earnings reports in 2018. The company could send surprises to the market.
In November 2017, more news was received by the market regarding the increase in the number of products offered. The company stated that it has decided to include Demand Charge Management software from Geli at no extra cost with each 30kW/60kWh. The opportunity was very interesting for clients, as Geli’s ITC reporting capabilities provide clients access to the Federal 30% investment tax credit and the California Self Generation Incentive Program rebate. Promotions like this one usually increase the top of the P&L. Thus, we celebrated the announcement.
On December 13, 2017, the company released something that interested market participants even more. It noted that it was receiving inquiries for its solar + energy storage solutions for use in commercial cannabis grow operations. It was also noted that this interest from commercial cannabis growers was created as a result of the legalization of recreational cannabis use in California. The fact that the legalization was effective on January 1, 2017, means that the company may be able to make a lot of revenues in the Q1 2018. We, as well as the CEO of the company, will be expecting these financial figures. Have a look at what was said in this regard:
“We believe that we can help indoor grow operations to generate superior returns through maximizing solar and utility resources with our solar + energy storage managed solutions. We look forward to servicing what we anticipate will be a growing interest for these solutions in 2018,” said Mr. Djokovich.
2018 new tax plan benefits commercial solar installations
The year 2017 ended well in the solar sector. In the new tax plan passed by Congress in December 2017, there was an increase in the depreciation allowances and reduction in the corporate tax rate. The new measures will help the company pay less taxes, which will help shareholders as well as clients, who will be able to get even greater economic benefits. As a result, sales could increase:
“A 14-point reduction to the corporate tax rate significantly increases the attractiveness of going solar regardless if clients choose to bank the savings or reinvest in their companies,” concluded Mr. Djokovich, CEO of XsunX, Inc.
The Share price increase and Conclusion
On December 21, 2017, the company released its new financial statements for the fiscal year ended September 30, 2017. We believe that the jump in the amount of revenues reported was the most significant. In our opinion, it was what created the share price spike. Regarding the net income, the company reported losses of $0.49 million, but we believe that they were widely expected.
Check the following numbers:
|Period Ending (Values in 000s | USD)||Sep 30, 2017||Sep 30, 2016||Sep 30, 2015||Sep 30, 2014|
|Cost of Revenue||791||474||912||283|
Currently trading with a market cap of $1.8 million, XSNX is an interesting story among small cap. We believe that if the company is able to refinance its balance sheet and increase the number of assets, more market participants will be interested in the stock.
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Disclosure: We have no position in XSNX and have not been compensated for this article.
Image courtesy of Monday’s Socks via Flickr