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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

☒ Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

For The Quarterly Period Ended: December 31, 2019

 

☐ Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

For The Transition Period From ___________ to _______________

 

Commission File Number: 000-29621

 

XSUNX, INC.

(Exact name of registrant as specified in its charter)

 

Colorado

 

84-1384159

(State of incorporation)

 

(I.R.S. Employer Identification No.)

 

65 Enterprise, Aliso Viejo, CA 92656

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number: (949) 330-8060

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value per share

XSNX

OTC Markets

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer ☐ 

Accelerated filer ☐

Non-accelerated filer ☐ (Do not check if a smaller reporting company) 

Smaller reporting company ☒

Emerging growth company ☐

 

         

If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

 

The number of shares of common stock issued and outstanding as of January 24, 2020 was 1,601,887,744

 

 

 

 

TABLE OF CONTENTS

 

 

 

PAGE

 

PART I - FINANCIAL INFORMATION

 

 

 

 

Item 1. Financial Statements (Unaudited)

 

 3

 

 

 

 

 

Condensed Balance Sheets

 

3

 

 

 

 

 

Condensed Statements of Operations

 

4

 

 

 

 

 

Condensed Statements of Shareholders Deficit

 

5

 

 

 

 

 

Condensed Statements of Cash Flows

 

6

 

 

 

 

 

Notes to Condensed Financial Statements

 

7

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

 

 

 

 

Item 3. Qualitative and Quantitative Disclosures About Market Risk

 

19

 

 

 

 

 

Item 4. Controls and Procedures

 

19

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

Item 1. Legal Proceedings

 

20

 

 

 

 

 

Item 1A. Risk Factors

 

20

 

 

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

20

 

 

 

 

 

Item 3. Defaults upon Senior Securities

 

20

 

 

 

 

 

Item 4. Mine Safety Disclosure

 

20

 

 

 

 

 

Item 5. Other Information

 

20

 

 

 

 

 

Item 6. Exhibits

 

21

 

 

 

 

 

Signatures

 

22

 

 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1.  Financial Statements. 

XSUNX, INC.

CONDENSED BALANCE SHEETS

 

   

December 31, 2019

   

September 30, 2019

 
   

(Unaudited)

         

ASSETS

               
                 

CURRENT ASSETS

               

   Cash

  $ 209,933     $ 7,964  

   Contract receivables

    254,031       198,083  

   Prepaid expenses

    4,673       6,575  
                 

                        Total Current Assets

    468,637       212,622  
                 

PROPERTY & EQUIPMENT

               

   Office & miscellaneous equipment

    1,638       1,638  

   Machinery & equipment

    2,045       2,045  
      3,683       3,683  

     Less accumulated depreciation

    (1,352 )     (1,113 )
                 

                     Net Property & Equipment

    2,331       2,570  
                 

                        TOTAL ASSETS

  $ 470,968     $ 215,192  
                 
                 

LIABILITIES AND SHAREHOLDERS' DEFICIT

               
                 

CURRENT LIABILITIES

               

   Accounts payable

  $ 79,596     $ 129,425  

   Credit card payable

    66,494       67,155  

   Accrued expenses and interest on notes payable

    54,605       54,478  

   Contract liabilities

    430,955       33,138  

   Derivative liability

    1,961,729       1,945,650  

   Promissory note, related party (Note 6)

    -       7,200  

   Convertible promissory note, related party (Note 5)

    12,000       12,000  

   Convertible promissory notes, current portion net of debt discount of $0 and $36,297, respectively (Note 4)

    37,324       36,217  
                 

                        Total Current Liabilities

    2,642,703       2,285,263  
                 

LONG TERM LIABILITIES

               

Convertible promissory notes, net of debt discount of $0 and $12, respectively

    165,880       165,880  
                 

                        Total Long Term Liabilities

    165,880       165,880  
                 

                       TOTAL LIABILITIES

    2,808,583       2,451,143  
                 

SHAREHOLDERS' DEFICIT

               

   Preferred stock 50,000,000 shares authorized, shares issued and outstanding designated as

   follows:

               

      Preferred Stock Series A, $0.01 par value, 10,000 authorized

      5,000 and 5,000 shares issued and outstanding, respectively

    50       50  

   Common stock, no par value;

     2,000,000,000 authorized common shares

     1,601,887,744 and 1,601,887,744 shares issued and outstanding, respectively

    33,369,424       33,369,424  

   Additional paid in capital

    5,335,398       5,335,398  

   Paid in capital, common stock warrants

    3,811,700       3,811,700  

   Accumulated deficit

    (44,854,187 )     (44,752,523 )
                 

                      TOTAL SHAREHOLDERS' DEFICIT

    (2,337,615 )     (2,235,951 )
                 

                      TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

  $ 470,968     $ 215,192  

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

XSUNX, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018

(Unaudited)

 

   

Three Months Ended

 
   

December 31, 2019

   

December 31, 2018

 
                 

SALES

  $ 200,386     $ 386,736  
                 

COST OF GOODS SOLD

    156,178       235,322  
                 

GROSS PROFIT

    44,208       151,414  
                 
                 

OPERATING EXPENSES

               

    Selling, general and administrative expenses

    121,606       173,736  

    Depreciation and amortization expense

    239       92  
                 

              TOTAL OPERATING EXPENSES

    121,845       173,828  
                 

LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)

    (77,637 )     (22,414 )
                 

OTHER INCOME/(EXPENSES)

               

    Loss on conversion of debt

    -       (13,151 )

    Gain (Loss) on change in derivative liability

    (16,079 )     1,473,057  

    Interest expense

    (7,948 )     (31,406 )
                 

              TOTAL OTHER INCOME/(EXPENSES)

    (24,027 )     1,428,500  
                 

         NET INCOME (LOSS)

  $ (101,664 )   $ 1,406,086  
                 

BASIC INCOME (LOSS) PER SHARE

  $ (0.00 )   $ 0.00  
                 

DILUTED INCOME (LOSS) PER SHARE

  $ (0.00 )   $ 0.00  
                 

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

               

      BASIC

    1,601,887,744       1,493,447,518  

      DILUTED

    1,601,887,744       5,541,683,620  

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

XSUNX, INC.

CONDENSED STATEMENT OF SHAREHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018

 

   

FISCAL THREE MONTH PERIOD ENDED DECEMBER 31, 2018

 
                                   

Additional

Paid-in

Capital

   

Stock Options/

Warrants

Paid-in-Capital

      

Accumulated

Deficit

         
   

Preferred Stock

   

Common Stock

                     
   

Shares

   

Amount

   

Shares

   

Amount

               

Total

 

Balance at September 30, 2018

    5,000       50       1,468,106,819       33,311,674       5,335,398       3,811,700       (47,096,505 )     (4,637,683 )
                                                                 

Common stock issued upon conversion of debt and accrued interest

    -       -       52,990,411       39,401       -       -       -       39,401  
                                                                 

Net Loss

    -       -       -       -       -       -       1,406,086       1,406,086  

Balance at December 31, 2018 (unaudited)

    5,000     $ 50       1,521,097,230     $ 33,351,075     $ 5,335,398     $ 3,811,700     $ (45,690,419 )   $ (3,192,196 )

 

 

   

FISCAL THREE MONTH PERIOD ENDED DECEMBER 31, 2019

 
                                   

Additional

Paid-in

Capital

   

Stock Options/

Warrants

Paid-in-Capital

      

Accumulated

Deficit

         
   

Preferred Stock

   

Common Stock

                     
   

Shares

   

Amount

   

Shares

   

Amount

               

Total

 

Balance at September 30, 2019

    5,000       50       1,601,887,744       33,369,424       5,335,398       3,811,700       (44,752,523 )     (2,235,951 )
                                                                 

Net Income

    -       -       -       -       -       -       (101,664 )     (101,664 )

Balance at December 31, 2019 (unaudited)

    5,000     $ 50       1,601,887,744     $ 33,369,424     $ 5,335,398     $ 3,811,700     $ (44,854,187 )   $ (2,337,615 )

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

XSUNX, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018

(Unaudited)

 

   

For the Three Months Ended

 
   

December 31, 2019

   

December 31, 2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

    Net Income (Loss)

  $ (101,664 )   $ 1,406,086  

    Adjustment to reconcile net income (loss) to net cash

      provided by (used in) operating activities

               

    Depreciation & amortization

    239       92  

    (Gain)/Loss on change in derivative liability

    16,079       (1,473,057 )

    Amortization of debt discount recorded as interest expense

    -       21,947  

    Loss on conversion of debt

    -       13,151  

    (Increase) Decrease in Change in Assets:

               

    Contract receivables

    (55,948 )     (36,950 )

    Contract assets

    -       735  

    Prepaid expenses

    1,902       6,919  

    Increase (Decrease) in Change in Liabilities:

               

    Accounts payable

    (50,490 )     8,535  

    Accrued expenses

    1,234       12,091  

    Contract liabilities

    397,817       85,546  
                 

NET CASH PROVIDED BY OPERATING ACTIVITIES

    209,169       45,095  
                 
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

    Purchase of fixed asset

    -       (647 )
                 

NET CASH USED IN INVESTING ACTIVITIES

    -       (647 )
                 
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

    Payments on related party promissory notes

    (7,200 )     -  
                 

NET CASH USED IN FINANCING ACTIVITIES

    (7,200 )     -  
                 

NET INCREASE IN CASH

    201,969       44,448  
                 

CASH, BEGINNING OF PERIOD

    7,964       41,090  
                 

CASH, END OF PERIOD

  $ 209,933     $ 85,538  
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

               

   Interest paid

  $ 2,479     $ 2,495  

   Taxes paid

  $ -     $ -  
                 

SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS

               

   Issuance of common stock upon conversion of debt and accrued interest

  $ -     $ 39,401  

   Accrued interest capitalized into convertible note

  $ 1,107     $ -  

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

1.     Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the year ended September 30, 2020. For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended September 30, 2019.

 

Going Concern

The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business.  The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern.  The Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern.  

 

The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion.  The Company has obtained funds from its shareholders since its inception through the year ended December 31, 2019. Management believes the existing shareholders and the prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due and will allow the development of its business development efforts in the solar PV industry. 

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

This summary of significant accounting policies of XsunX, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, revenue recognition, the deferred tax valuation allowance, the fair value of stock options, and derivative liabilities. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents include cash in banks and money markets with an original maturity of three months or less.

 

Property and Equipment

Property and equipment are stated at cost, and are depreciated using straight line over its estimated useful lives:

 

Leasehold improvements

Length of the lease

Computer software and equipment

3 Years

Furniture & fixtures

5 Years

Machinery & equipment

5 Years

 

The Company capitalizes property and equipment over $500. Property and equipment under $500 are expensed in the year purchased. The depreciation expense for the three months ended December 31, 2019, and 2018, were $239 and $92, respectively.

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Revenue Recognition

We recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.

 

Revenues and related costs on construction contracts are recognized as the performance obligations for work are satisfied over time in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated profit, will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations). All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is determined.

 

Revisions in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts for the revisions become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements, may result in revisions to costs and income, which are recognized in the period the revisions are determined.

 

Contract receivables are recorded on contracts for amounts currently due based upon progress billings, as well as any retentions, which are collectible upon completion of the contracts. Accounts payable to material suppliers and subcontractors are recorded for amounts currently due based upon work completed or materials received, as are retention due subcontractors, which are payable upon completion of the contract. General and administrative expenses are charged to operations as incurred and are not allocated to contract costs.

 

Contract Receivable

The Company bills its customers in accordance with contractual agreements. The agreements generally require billing to be on a progressive basis as work is completed. Credit is extended based on evaluation of clients’ financial condition and collateral is not required. The Company maintains an allowance for doubtful accounts for estimated losses that may arise if any customer is unable to make required payments. As of December 31, 2019 and September 30, 2019, there was no allowance for doubtful accounts.

 

Management performs a quantitative and qualitative review of the receivables past due from customers on a monthly basis. The Company records an allowance against uncollectible items for each customer after all reasonable means of collection have been exhausted, and the potential for recovery is considered remote. The contract receivable balance was $254,031 and $198,083 at December 31, 2019 and September 30, 2019, respectively.

 

Project Warranties

Customers in our target market of California who purchase solar energy systems are covered by a warranty of up to 10 years in duration for material defects and workmanship. In addition, we provide a pass-through of the major components such as module mounting, inverter and solar panel manufacturers’ warranties to our customers, which generally range from 10 to 25 years. The Company has a limited history of project installations and will access potential warranty costs, and other allowances, based on our experience in servicing warranty claims as they may arise in the future. During the three months ended December 31, 2019, the Company did not experience costs related to warranty claims.

 

Stock-Based Compensation 

Share-based Payment applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. We are required to follow a fair value approach using an option-pricing model, such as the Binomial lattice valuation model, at the date of a stock option grant. The Company has no outstanding warrants or options as of December 31, 2019.

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Earnings Per Share

 

(a)

Basic

Basic loss per share is calculated of basic earnings by dividing the net profit (loss) for the three months by the weighted average number of ordinary shares outstanding during the financial periods held by the Company.

 

   

For the Three Months Ended

 
   

December 31,

 
   

2019

   

2018

 
                 

Profit (Loss) to common shareholders (Numerator)

  $ (101,664 )   $ 1,406,086  
                 

Weighted average number of common shares outstanding (Denominator)

    1,601,887,744       1,493,447,518  

Effect of convertible notes

    -       -  

Weighted average number of ordinary shares in issue

    1,601,887,744       1,493,447,518  
                 

Basic earnings (loss) per share

  $ (0.00 )   $ 0.00  

 

 

(b)

Diluted

For the purpose of calculating diluted earnings per share, the profit attributable to equity holders and the weighted average number of ordinary shares outstanding during the financial period have been adjusted for the dilutive effects of all potential ordinary shares and shares issuable upon conversion of convertible notes. The dilutive earnings per share is calculated by dividing the profit attributable to equity holders by the weighted average number of shares that would have been issued upon full conversion of the remaining convertible debt (Note 5), adjusted by the number of such shares that would have been issued at fair value as follows:

 

   

For the Three Months Ended

 
   

December 31,

 
   

2019

   

2018

 
                 

Profit (Loss) to common shareholders (Numerator)

  $ (101,664 )   $ 1,406,086  
                 

Weighted average number of common shares outstanding (Denominator)

    1,601,887,744       1,493,447,518  

Effect of convertible notes

    -       4,048,236,102  

Weighted average number of ordinary shares in issue

    1,601,887,744       5,541,683,620  
                 

Diluted earnings (loss) per share

  $ (0.00 )   $ 0.00  

 

The Company has excluded shares issuable from convertible debt of $214,097 for the period ended December 31, 2019, because their impact on the loss per share is anti-dilutive.

 

The Company has included shares issuable from convertible debt of $220,913 for the period ended December 31, 2018, because their impact on the earnings per share is dilutive.

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Fair Value of Financial Instruments

Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2019, the balances reported for cash, prepaid expenses, accounts payable, accrued expenses approximate the fair value because of their short maturities.

 

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

 

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

We measure certain financial instruments at fair value on a recurring basis. The Company had no assets that are required to be valued on a recurring basis as of December 31, 2019 and 2018. The Company had liabilities that are required to be measured at fair value on a recurring basis as follows at December 31, 2019 and 2018:

 

   

Total

   

(Level 1)

   

(Level 2)

   

(Level 3)

 
                                 

Assets:

  $ -     $ -     $ -     $ -  
                                 

Liabilities:

                               
                                 

Derivative Liability at fair value as of December 31, 2019

  $ 1,961,729     $ -     $ -     $ 1,961,729  
                                 

Derivative Liability at fair value as of September 30, 2019

  $ 1,945,650     $ -     $ -     $ 1,945,650  

 

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

 

Balance as of September 30, 2019

  $ 1,945,650  

Net Loss on change in derivative liability 

    16,079  

Ending balance as of December 31, 2019

  $ 1,961,729  

 

Recent Accounting Pronouncements

In August 2016, FASB issued accounting standards update ASU-2016-15, “Statement of Cash Flows” (Topic 230) – Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2018, and interim periods with fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company has evaluated the impact of the adoption of ASU 2016-15, which had no effect on the Company’s financial statements. 

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Recent Accounting Pronouncements (Continued)

In August 2017, FASB issued accounting standards update ASU-2017-12, “D” (Topic 815) – “Targeted Improvements to Accounting for Hedging Activities”, to require an entity to present the earnings effect of the hedging instrument in the same statement line item in which the earnings effect of the hedged item is reported. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods with the fiscal years beginning after December 15, 2020. Early adoption is permitted in any interim period after issuance of the update. The Company is currently evaluating the impact of the adoption of ASU 2017-12 on the Company’s financial statements.

 

In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU 2018-07 to have a material impact on its financial statements.

 

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this Update modify certain disclosure requirements of fair value measurements and are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

 

3.     CAPITAL STOCK

 

At December 31, 2019, the Company’s authorized stock consisted of 2,000,000,000 shares of common stock, with no par value. The Company is also authorized to issue 50,000,000 shares of preferred stock with a par value of $0.01 per share of which 10,000 shares have been designated as Series A Preferred Stock. The rights, preferences and privileges of the holders of the preferred stock are determined by the Board of Directors prior to issuance of such shares.

 

Preferred Stock

As of December 31, 2019 and 2018, the Company had 5,000 shares of issued and outstanding Series A Preferred Stock issued to the Company’s Chief Executive Officer and Director, Tom M. Djokovich. The shares were issued in consideration for the contribution of services by Mr. Djokovich to the Company valued at fifty dollars, which the Board deemed full and fair consideration. As a result of such issuance, Mr. Djokovich has the ability to influence and determine stockholder votes.

 

Common Stock

During the period ended December 31, 2019, the Company had no issuance of shares of common stock.

 

During the period ended December 31, 2018, the Company issued 52,990,411 shares of common stock upon conversion of principal in the amount of $25,000, plus accrued interest of $1,250, with an aggregate fair value loss on settlement of debt of $13,151.

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

4.     CONVERTIBLE PROMISSORY NOTES

 

As of December 31, 2019, the outstanding convertible promissory notes are summarized as follows:

 

Convertible Promissory Notes

  $ 203,204  

Less current portion

    37,324  

Total long-term liabilities

  $ 165,880  

 

Maturities of long-term debt for the next three years are as follows:

 

Period Ending

       

December 31,

       

2020

  $ 37,324  

2021

    50,880  

2022

    115,000  
    $ 203,204  

 

At December 31, 2019, the Company had $203,204 in convertible promissory notes.

 

On October 20, 2015, the Company entered into a third extension of the Note originally issued September 30, 2013. The extension terms included mandatory payments of $10,000 per month beginning November 1, 2015 until the note in the amount of $143,033 is paid in full. The Note bears interest at 12% annum, and a conversion price of 60% of the lowest volume weighted average price (“VWAP”) occurring during the twenty trading days preceding any conversion date by Holder. The balance of the provisions of the Note remained substantially the same. As of December 31, 2019, the remaining balance of the Note is $37,324, which includes capitalized interest of $24,291. As of December 31, 2019, the Note has matured, and the Company and the Holder have entered into discussions for the repayment of the Note.

 

On November 20, 2014, the Company issued a 10% unsecured convertible promissory note (the “November Note”) for the principal sum of up to $400,000 plus accrued interest on any advanced principal funds. The November Note matures eighteen months from each advance. The November Note may be converted by the lender into shares of common stock of the Company at the lesser of $.0125 per share or (b) fifty percent (50%) of the lowest trade prices following issuance of the November Note or (c) the lowest effective price per share granted to any person or entity. On November 20, 2014, the lender advanced $50,000 to the Company under the November Note at inception. On various dates from February 18, 2015 through September 30, 2016, the lender advanced an additional $350,000 under the November Note. As of December 31, 2019, there remains an aggregate outstanding principal balance of $50,880.

 

On May 10, 2017, the Company issued a 10% unsecured convertible promissory note (the “May Note”) for the principal sum of up to $150,000 plus accrued interest on any advanced principal funds. The Lender may pay additional consideration at the Lenders discretion. The Company received a tranche in the amount of $25,000 upon execution of the May Note. On various dates, the Company received additional tranches in the aggregate sum of $90,000. The May Note matured twelve months from each tranche. Within thirty (30) days prior to the maturity date, the Lender may extend the maturity date to sixty (60) months. The May Note may be converted by the lender into shares of common stock of the Company at the lesser of $.01 per share or (b) fifty percent (50%) of the lowest trade price of common stock recorded on any trade day after the effective date, or (c) the lowest effective price per share granted to any person or entity. As of December 31, 2019, the balance remaining on the May Note was $115,000.

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

4.     CONVERTIBLE PROMISSORY NOTES (Continued)

 

We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically according to the stock price fluctuations based upon the Binomial lattice model calculation.

 

The convertible notes issued and described in Note 4 above, do not have fixed settlement provisions because their conversion prices are not fixed. The conversion feature has been characterized as a derivative liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

We record the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the Notes.

 

At December 31, 2019, the fair value of the derivative liability was $1,961,729.

 

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Binomial lattice valuation model. The significant assumptions used in the Black Scholes valuation of the derivatives are as follows:

 

Risk free interest rate

 

Between 1.48% and 1.62%

Stock volatility factor   Between 117.0% and 143.0%

Months to Maturity

 

0 - 5 years

Expected dividend yield

 

None

 

5.     CONVERTIBLE PROMISSORY NOTES – RELATED PARTY

 

Issuance of Convertible Promissory Notes for Services to Related Party

As of March 31, 2016, the remaining unsecured Convertible Promissory Notes (the “Notes”) in the amount of $12,000 to a Board member (the “Holder”) in exchange for retention as a director during the fiscal year ending September 30, 2014. The Note can be converted into shares of common stock by the Holder for $0.0045 per share. The Note matured on October 1, 2015 and bore a one-time interest charge of $1,200 which was applied to the principal on October 1, 2014. So long as any shares issuable under a conversion are subject to transfer and sale restrictions imposed pursuant to SEC Rule 144 of the Rules promulgated under the Securities Act of 1933, the Company shall, upon written request by Holder, file Form S-8, if applicable, with the U.S. Securities and Exchange commission to register the issued. The convertible note has a fixed settlement provision and does not qualify as a derivative.

 

6.     NOTE PAYABLE-RELATED PARTY

 

On August 5, 2014 the Company issued a 10% unsecured promissory note (the “Note”) to a related party in the aggregate principal amount of up to $80,000, plus accrued interest on any advanced principal funds. The principal use of the proceeds from any advance under the Note are intended to assist in the purchase of materials, and services for the solar PV systems that we sell and install. Consideration advanced under the Note matures twenty-four (24) months from each advance. The balance of the Note as of September 30, 2019 was $7,200. During the period ended December 31, 2019, the Company paid the principal balance of $7,200 in full. There remains the accrued interest in the amount of $7,903.

 

 

XSUNX, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2019

 

7.     REVENUE FROM CONTRACTS WITH CUSTOMERS

 

Revenues and related costs on construction contracts are recognized as the performance obligations for work are satisfied over time in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated profit, will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations). The cost of uninstalled materials or equipment will generally be excluded from our recognition of profit, unless specifically produced or manufactured for a project, because such costs are not considered to be a measure of progress.

 

The following table represents a disaggregation of revenue by type of good or service from contracts with customers for the period ended December 31, 2019 and 2018. 

 

   

Three Months Ended

 
   

December 31,

 
   

2019

   

2018

 

Commercial

  $ 181,816     $ 357,936  

Residential

    18,570       21,800  

Management fees

    -       7,000  
    $ 200,386     $ 386,736  

 

Contract assets represents revenues recognized in excess of amounts billed on contracts in progress. Contract liabilities represents billings in excess of revenues recognized on contracts in progress. Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying balance sheets, as they will be liquidated in the normal course of the contract completion. The contract asset for the period ending December 31, 2019 and September 30, 2019 was $0, respectively. The contract liability for the periods ending December 31, 2019 and September 30, 2019, was $430,955 and $33,138, respectively.

 

8.     ACCOUNTS PAYABLE AND ACCRUED LIABILITIES     

 

Accounts payable and accrued liabilities consisted of the following at December 31, 2019 and September 30, 2019:

 

   

12/31/2019

   

9/30/2019

 

Trade accounts payable

  $ 79,596     $ 129,425  

Credit cards payable

    66,494       67,155  

Accrued liabilities

    54,605       54,478  
      200,695       251,058  

 

9.     SUBSEQUENT EVENTS

 

Management has evaluated subsequent events as of the financial statement date according to the requirements of ASC TOPIC 855 and had no subsequent events to report.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

CAUTIONARY AND FORWARD LOOKING STATEMENTS

 

In addition to statements of historical fact, this Quarterly Report on Form 10-Q contains forward-looking statements. The presentation of future aspects of XsunX, Inc. (“XsunX”, the “Company” or “issuer”) found in these statements is subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. Without limiting the generality of the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “intend”, or “could” or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors, including those discussed under “Item 1A: Risk Factors” in the Company’s Annual Report on Form 10-K.

 

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause XsunX’s actual results to be materially different from any future results expressed or implied by XsunX in those statements. Important facts that could prevent XsunX from achieving any stated goals include, but are not limited to, the following:

 

Some of these risks might include, but are not limited to, the following:

 

(a) volatility or decline of the Company’s stock price;

 

(b) potential fluctuation in quarterly results;

 

(c) failure of the Company to earn revenues or profits;

 

(d) inadequate capital to continue or expand its business, inability to raise additional capital or financing to implement its    business plans;

 

(e) failure to commercialize its technology or to make sales;

 

(f) rapid and significant changes in markets;

 

(g) litigation with or legal claims and allegations by outside parties;

 

(h) insufficient revenues to cover operating costs.

 

There is no assurance that the Company will be profitable, the Company may not be able to successfully develop, manage or market its products and services. The Company may not be able to attract or retain qualified executives and technology personnel, the Company’s products and services may become obsolete, government regulation may hinder the Company’s business, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of warrants and stock options, and other risks inherent in the Company’s businesses.

 

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents the Company files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K and Form 10-K/A filed by the Company and any Current Reports on Form 8-K filed by the Company.

 

Management believes the summary data presented herein is a fair presentation of the Company’s results of operations for the periods presented. Due to the Company’s change in primary business focus and new business opportunities these historical results may not necessarily be indicative of results to be expected for any future period. As such, future results of the Company may differ significantly from previous periods.

 

Organization

 

XsunX, Inc. (“XsunX,” the “Company” or the “issuer”) is a Colorado corporation formerly known as Sun River Mining Inc. “Sun River”). The Company was originally incorporated in Colorado on February 25, 1997. Effective September 24, 2003, the Company completed a plan of reorganization and name change to XsunX, Inc.

 

 

Business Overview/Summary

 

XsunX specializes in the sale, design, and installation of solar photovoltaic power generation (PV), energy storage in the form of managed battery systems (ESS), and energy use management technologies to provide our clients long term savings, predictability, and control of their energy costs. Making solar and managed energy solutions a sound investment for our clients is our mission.

 

We service the commercial self-generation energy market in California, and to a lesser extent the residential solar PV market marketplace. We provide project assessment and installation services to our customers including technology selection, system engineering, procurement, permitting, construction, grid connection, warranty service, system monitoring and maintenance. We offer a wide variety of energy production and management technologies, design our systems in-house to ensure that the performance of the systems we deliver match the financial projections, and our full-time project management and licensed assembly crews ensure a seamless process, from start to finish.

 

The Company operates as licensed contractor in California, and our executive management provides over 30 years of extensive experience in all aspects of construction and project assembly to ensure the accuracy and quality of systems, the continued integrity of the improved building or site, and compliance with all construction codes.

 

We guide our performance by striving to deliver consistently on the following core objectives:

 

● Commitment – to keeping the customer’s best interests at the forefront at all times; and,

 

● Value – through a focus on performance and follow through that meets or exceeds customer expectations.

 

Critical Accounting Policies

 

The Securities and Exchange Commission (“SEC”) defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. However, the following policies could be deemed to be critical within the SEC definition.

 

Revenue Recognition

 

We recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.

 

Revenues and related costs on construction contracts are recognized as the performance obligations for work are satisfied over time in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated profit, will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations). All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is determined. 

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, valuations of non-cash capital stock issuances and the valuation allowance on deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

 

Fair Value of Financial Instruments

 

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2019, the amounts reported for cash, prepaid expenses, accounts payable and accrued expenses approximate the fair value because of their short maturities.

 

Recently Issued Accounting Pronouncements

  

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2018.

 

Revenue and Cost of Sales:

 

The Company generated revenues in the three months ended December 31, 2019 and 2018 of $200,386 and $386,736 respectively. The decrease in revenue of $186,350 during the three months ended December 31, 2019 was attributable to delays in procuring permits for the installation of sold commercial projects in the period. We anticipate that through our marketing efforts that purchase interest, and sales, for our solar carport and energy storage systems will continue to improve and provide us with increased project flow that may result in more consistent period to period revenue growth results.

 

The costs of goods sold for the three months ended December 31, 2019 and 2018 was $156,178 and $235,322, respectively. The Company to date has had minimal revenue and cost of sales and anticipates continuing to generate revenues while working to increase sales volumes as it matures the scope of the Company’s capabilities and brand awareness.

 

Selling, General and Administrative Expenses:

 

Selling, General and Administrative (SG&A) expenses decreased by $52,130 during the three months ended December 31, 2019 to $121,606 as compared to $173,736 for the three months ended December 31, 2018. The decrease in SG&A expenses was related primarily due to the Company experiencing a decrease in administrative costs. Management expects SG&A expenses to increase in future periods as the Company continues to expand its marketing, sales, and service efforts.

 

Depreciation Expense:

 

Depreciation expense for the three months ended December 31, 2019 was $239, compared to $92 for the three months ended December 31, 2018.

 

Other Income/(Expenses):

 

Other income and (expenses) decreased by $1,452,527 to $(24,027) for the three months ended December 31, 2019, compared to $1,428,500 for the three months ended December 31, 2018. The decrease was the result of a decrease in non-cash gain on change of fair value of the derivative instruments of $1,489,136, a decrease in loss on conversion of debt in the amount of $13,151, and a decrease in interest expense of $23,458, which included a decrease in non-cash amortization of debt discount in the amount of $21,947.

 

Net Income (Loss):

 

For the three months ended December 31, 2019, our net loss was $(101,664) as compared to net income of $1,406,086 for the three months ended December 31, 2018. The majority of the decrease in net income of was due primarily to an increase in other (expenses) associated with the net change in derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price, volatility, variable conversion prices based on market prices defined in the respective agreements and probabilities of certain outcomes based on managements’ estimates. These inputs are subject to significant changes from period to period, therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. While management is working to increase sales and revenues as it matures the scope of the Company’s capabilities and brand awareness for its commercial and residential solar PV systems, the Company anticipates there is no assurance that any continued trend in sales growth will continue.

 

 

Liquidity and Capital Resources

 

We had a working capital deficit at December 31, 2019 of $2,174,066, as compared to a working capital deficit of $2,072,641 as of September 30, 2019. The decrease in working capital deficit was the result of an increase in cash, contract receivables, accrued expenses, contract liabilities, convertible notes payable with a decrease in prepaid expenses, accounts payable, derivative liability.

 

Cash flow provided by operating activities was $209,169 for the three months ended December 31, 2019, as compared to cash flows provided by operating activities of $45,095 for the three months ended December 31, 2018. The increase in cash flow provided by operating activities was due to an increase in contract liabilities.

 

Cash flow used in investing activities for the three months ended December 31, 2019 and 2018 were $0 and $647, respectively. The decrease was due to purchase of fixed assets in the prior period.

 

Cash used in financing activities for the three months ended December 31, 2019 and 2018, was $7,200 and $0, respectively. Our capital needs have primarily been met from the proceeds of private placements, convertible notes, and initial revenues resulting from our change in business operations focused on the sale, design, and installation of Solar Photovoltaic (PV), and managed Energy Storage Systems (ESS) for commercial and industrial real-estate in in the period.

 

Our financial statements as of December 31, 2019 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued their report dated December 20, 2019, that included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern ultimately is dependent on our ability to generate a profit which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

For the three months ended December 31, 2019, the Company’s capital needs have been met from the use of working capital provided by the proceeds from revenues in the amount of $200,386.

 

Capital Resources

 

We have only common and preferred stock as our capital resources. We have no material commitments for capital expenditures within the next year, however as we work to market and make sales of our commercial solar PV system services, substantial capital may be needed to expand and pay for these activities.

 

Need for Additional Financing

 

We do not have capital sufficient to meet our cash needs.  We will have to seek loans or equity placements to cover such cash needs. No commitments to provide additional funds have been made by our management or other stockholders.  Accordingly, there can be no assurance that any additional funds will be available to us to allow it to cover our expenses as they may be incurred.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity or capital expenditures.

 

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

 

We do not have any market risk sensitive instruments. Since all operations are in U.S. dollar denominated accounts, we do not have foreign currency risk. Our operating costs are reported in U.S. dollars.

 

The Company does not invest in term financial products or instruments or derivatives involving risk other than money market accounts, which fluctuate with interest rates at market.

 

Item 4.  Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  

 

Changes in Internal Control over Financial Reporting

 

There was no change to our internal control over financial reporting that occurred during our second fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

 

 

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

 

None

 

Item 1A.  Risk Factors

 

There are no material changes from the risk factors previously disclosed in the Registrant’s Form 10-K filed with the Securities and Exchange Commission dated December 20, 2019. 

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3.  Defaults Upon Senior Securities

 

None.

 

Item 4.  Mining and Safety Disclosures

 

None.

 

Item 5.  Other information

 

None

 

 

 

Item 6.  Exhibits

 

The following is a complete list of exhibits filed as part of this Form 10-Q.  Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

 

Exhibit

 

Description

 

 

 

31.1

 

Certification of Chief Financial Officer and Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act (1)

32.1

 

Certification of Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act (1)

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Label Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

(1)

Filed Herewith

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

XSUNX, INC.

 

 

 

Dated: January 24, 2020

By:

/s/ Tom M. Djokovich

 

 

Tom M. Djokovich,

Principal Executive and Accounting Officer

 

 

 

 

 

 

22