On January 5, 2007, the Board of Directors of XsunX resolved to establish the Company’s 2007 Stock Option Plan (the “Plan”) to enable the Company to obtain and retain the services of the types of employees, consultants and directors who could contribute to the Company’s long range success and to provide incentives which are linked directly to increases in share value which will inure to the benefit of all stockholders of the Company. Options granted under the Plan may be either Incentive Options or Nonqualified Options and shall be administered by the Company's Board of Directors ("Board"). Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective Option agreements may provide. Notwithstanding any other provision of the Plan or of any Option agreement, each Option shall expire on the date specified in the Option agreement. A total of 20,000,000 shares of common stock are authorized under the plan, of which 9,500,000 options were issued and outstanding under the Plan at March 31, 2014.

A summary of the Company’s stock option activity and related information follows:

	For the period ended
	03/31/2014
		Weighted
	Number	average
	of	exercise
	Options	price
Outstanding, beginning of the period	9,500,000	$ 0.066
Granted	0	0
Exercised	0	0
Expired	0	0
Outstanding, end of the period	9,500,000	$ 0.066
Exercisable at the end of the period	8,500,000	$ 0.043
Weighted average fair value of
options granted during the period		$ 0

The weighted average remaining contractual life of options outstanding issued under the plan as of March 31, 2014 was as follows:

			Weighted
			Average
	Stock	Stock	Remaining
Exercisable	Options	Options	Contractual
Prices	Outstanding	Exercisable	Life (years)
$ 0.160	2,500,000	2,500,000	0.00 years
$ 0.014	500,000	500,000	1.22 years
$ 0.100	1,000,000	-	1.55 years
$ 0.014	4,000,000	4,000,000	1.98 years
$ 0.045	1,500,000	1,500,000	2.78 years
	9,500,000	8,500,000

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the financial statements of operations during the six months ended March 31, 2014, included compensation expense for the stock-based payment awards granted prior to, but not yet vested, as of March 31, 2014 based on the grant date fair value estimated, and compensation expense for the stock-based payment awards granted subsequent to March 31, 2014, based on the grant date fair value estimated. We account for forfeitures as they occur, and no options were forfeited during the period ended March 31, 2014. There was $0 and $43,140 of stock-based compensation expense recognized in the statement of income during the six months ended March 31, 2014, and 2013 respectively.