Axiom Corp.
380 Vansickle Road, Unit 600
St. Catharines, Ontario
Canada, L2S 0B5
June 8, 2015
VIA EDGAR
Division of Corporate Finance
100 F Street N.E.
Washington, D.C. 20549
Attn: Jay Ingram
Re: Axiom Corp.
Amendment No. 2 to Form 8-K Filed April 22, 2015
File No. 333-186078
Dear Mr. Ingram
We are in receipt of your comment letter dated May 18, 2015 regarding the above referenced filing. As requested in your letter, we have provided responses to the questions raised by the Staff. For your convenience, the matters are listed below, followed by the Company’s responses:
General
1. Please include the disclosure called for by Item 304 of Regulation S-K regarding your change in accountants, as reported in your Form 8-K filed May 1, 2015, in your next amendment.
We respectfully submit to the Staff that we have updated our disclosure to include the change of auditors under “Item 4.01 – Changes in Registrant’s Certifying Accountant” as was filed with the Commission by the Company on Form 8-K on May 1, 2015.
Explanatory Note, page 1
2. You state here that this amendment should be read in conjunction with the original 8-K filed February 27, 2015 and the amendment filed March 16, 2015, but the March 16, 2015 amendment states that the original 8-K should not be relied upon and that it has been superseded in its entirety. In addition, your previous filings state that the company’s products have patent protection in 50 countries and list specific patent numbers in conflict with the disclosure in this filing and your Form 8-K filed March 17, 2015 regarding the expiration of your patents. Please reviseto clearly state what disclosure yourinvestorsmay rely upon.
We respectfully submit to the Staff that the 8-K amendment filed on March 16, 2015 which states in the “Explanatory Note” that the information from the original 8-K filed on February 27, 2015 should not be relied upon is inaccurate. The investors may rely on the original 8-K and each supplemental amendment filed thereafter. We have updated the “Explanatory Note” note on our disclosure accordingly. In terms of the patents, we have removed the statement that the Company has patent protections in 50 countries with the specific patent numbers, The investors may rely on this Form 8-K Amendment Number 3, along with Form 8-K Amendment 2, Form 8-K Amendment Number 1, and our original 8-K. The investors may also rely upon our amended Form 10-K which was filed April 30, 2015.
Form10 Disclosure,page 4
Business, page 4
3. Please revise to discuss when your business wasorganized. Please refertoItem
101(h)(1).
We respectfully submit to the Staff that we have revised our disclosure to indicate that PaperNuts Corporation was incorporated in Ontario, Canada on April 8, 2010 as “2239794 Ontario Inc.”. On January 19, 2015, we changed our name to “PaperNuts Corporation”.
4. Please provide enhanceddisclosure regarding your sources andthe availability ofrawmaterials. Please referto Item 101(h)(4)(v) ofRegulation S-K.
We respectfully submit to the Staff that we have revised our disclosure to indicate the sources and availability of raw materials and our principal supplier.
5. Please revise to discuss your dependency onthe customer who provided 66% ofyour sales during the year ended December 31, 2014 and 73% ofyour sales during the year ended December 31, 2013, as disclosedin Note1 to youraudited financial statements. Please refertoItem 101(h)(vi) of RegulationS-K.
We respectfully submit to the Staff that we have revised our disclosure to discuss the dependency of our customer as noted above.
CompanyBackgroundand Opportunity Summary, page 4
6. You state that you “secured theselling andmanufacturing rights of[your] productin over
50 countries.” Pleaseclarify this statement, particularlyin light of the expiration ofyour patents.
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We respectfully submit to the Staff that we have deleted the language “secured the selling and manufacturing rights of [your] product in over 50 countries’ from our disclosure. In addition, we have provided as “Exhibit 10.5” to our disclosure the “Purchase Agreement” between the Company and Devipack Oy dated March 1, 2013.
Machine Fabrication, page 6
7. You state here that youhave selectedGirotti Machine as your “North Americanmanufacturer.” Pleasefile anymaterial contracts that youmay have withGirotti, aswell as with SPFiber Technologies, who you present as your “main” papersupplier, and Niagara College asappropriate. Please referto Item601(b)(10) ofRegulationS-K
We respectfully submit to the Staff that we have revised our disclosure to include the contracts the Company has with Girotti and with SP Fiber Technologies, marked as Exhibits 10.7 and 10.8, respectively. The Company does not have any written contract agreements with Niagara College.
Anticipated Machine Production Costing, page 7
8. Please clarify what thischart and thechart under theheading“Anticipated Timelines” refer to. You state thatyou havereceived revenues and are already producing paper nuts, butthis disclosure appears toindicate that you have yettobegin operations. Ifthis refers tothe “newestmachine model”that you refer toon page 5, pleasemake that clear.
We respectfully submit to the Staff that the charts in question refer to the anticipated machines production costing and anticipated timelines associated with the design and development of our newest machine model. The Company’s existing revenue is derived from operations from our current machine. We have updated our disclosure accordingly.
9. Please clarify what CSA and ESA approvals areand what the processfor acquiring them is. Referto Item 101(h)(4)(viii) ofRegulationS-K.
We respectfully submit to the Staff that we have updated our disclosure to designate that “CSA” refers to “Canadian Standards Association” and ESA refers to “Electrical Safety Authority”. We have updated our disclosure to indicate the process for acquiring approval from each of these entities.
Anticipated Timelines, page 7
10. Please update yourtimeline toreflect the current state of your company. You refer to conducting research anddevelopment costing $70,000 inthe fourth quarter of2014, but you do not discuss whether thisresearch was completed. We note that onpage 12 you state that you spentonly $23,372 on research anddevelopment in 2014.
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We respectfully submit to the Staff that we have updated our disclosure in our timeline to indicate that the above referenced cost of research and development has since been updated and will not occur until the second quarter of 2015.
Research & Innovation Division, Niagara College, page 7
11. Please elaborate asto the nature of your collaboration with Niagara College, as well as what the first and secondprojects you refer to here consistedof. Please also detail any intellectual property arrangements between yourself andNiagara College.
We respectfully submit to the Staff that we have updated our disclosure to address the issues listed in the above comment. In addition, the Company has no intellectual property arrangements with Niagara College.
Marketing, page 7
12. Please disclose thedistributionmethods that youanticipateusing for yourproducts.
Please refertoItem 101(h)(4)(ii) ofRegulation S-K.
We respectfully submit to the Staff that we have updated our disclosure to indicate the distribution methods of our products.
Risk Factors, page 8
Our business issubject to risks associated with manufacturing processes,page 8
13. You refer here tointernallymanufacturing yourown productsat yourproduction facilities. Please reconcile thisstatement with yourreference tohaving yourmachinesmanufactured by Girotti, and your statement under Properties, below, that you only lease office spaceand not production facilities.
We respectfully submit to the Staff that we are not manufacturing new machines at our facility. Our machines are manufactured by Girotti. What we meant by “internally manufacturing” is that we are actual manufacturing the product PaperNuts for our customers who buy retail ready product by the bag. We have two machines on site that make “retail ready” PaperNuts by the bag which are distributed to local customers. It is a low volume business to help offset our existing burn rate.
Management ’s Discussion and Analysis of Financial Condition and Results of Operations, page 11
14. Please remove your referenceshere to forward-looking statements withinthemeaning of Section 27Aof the Securities Act andSection 21Eof the Securities Exchange Act. As an issuer of penny stock youare notallowed to relyon the safeharborsprovided by these sections.
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We respectfully submit to the Staff that we have updated our disclosure to remove the references cited in the above comment.
Results ofOperations, page 11
15. You state that in 2014 you recorded an impairment of assets of$90,140. Your audited financialstatements indicate that you recorded impairment charges of $38,988for your patent, $57,795for yourdistribution rights, theamounts originally paidforthem, aswell asimpairments of $52,613 withrespect toequipment and $37,527 with respect to obsolete inventory. These impairmentstotal $186,923. Please revise, and pleaseprovide clarifying disclosure regarding thenature of theimpairments.
We respectfully submit to the Staff that we have updated our disclosure to indicate that the impairment of $90,140 in 2014 included $52,613 with respect to equipment impairment in 2014 and $37,527 with respect to obsolete inventory in 2014. The impairment of $38,988 and $57,795 relating to the patent and distribution rights, respectively, relates to the year ended December 31, 2013.
16. Please provide the trendsdisclosurecalled for byItem 303(a)(3)(ii) ofRegulationS-K, including management’s views regardingthe impact of the expiration ofyour distribution rights andpatent.
We respectfully submit to the Staff that we have updated our disclosure to indicate that the Company maintains that all patents which have recently expired can be extended based on noticeable improvements to the machine/apparatus as well as the finished product itself. Furthermore, the Company is actively working on an entirely new generation of a PaperNut machine that is being designed to service a variety of large retail channels/outlets across North America and ultimately abroad. We are actively engaged with our patent lawyers to file provisional patents on these new machines and the associated intellectual property.
Liquidity and CapitalResources, page 13
17. You state that you believe you willhave sufficient capital tofund your operations for the nexttwelve months. Please discuss the company’s capital needs over that period, what the capital willbe used for, and whatsources ofcapital and liquiditymanagement believes ithas access to. Pleaserefer to Item303(a)(1) of RegulationS-K and Item
303(a)(2)(i) of RegulationS-K.
We respectfully submit to the Staff that the Company has updated our disclosure to address the issues raised in the above comment.
Security Ownership ofCertain Beneficial Owners and Management, page 14
18. Please revise to providebeneficialownershipinformation as of themostrecent practicabledate. Pleaserefer toItem 403 of RegulationS-K.
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We respectfully submit to the Staff that we have revised our disclosure to provide beneficial ownership information as of June 4, 2015.
Directors and ExecutiveOfficers, page 15
19. Please revise to disclose the skills,qualifications, experience,or attributesthat led tothe conclusion that eachmember of your board of directors should serve as a director. Please refer toItem 401(e)(1) of RegulationS-K.
We respectfully submit to the Staff that we have revised our disclosure to address the concerns raised in the above comment.
20. Please disclose when Mr. Hilton joined your company andin what capacity.
We respectfully submit to the Staff that we have updated our disclosure to indicate that Mr. Hilton joined the Company in September 2014 to perform accounting services, and was appointed Chief Financial Officer of the Company in February, 2015.
Certain Relationships andRelated Party Transactions, andDirector Independence, page 19
21. Please revise to disclose the identityof each of the related parties that you refer to here.
See Item404(a)(1) of RegulationS-K. With regard to your debt transactions, pleasealso revise toinclude all ofthe disclosure calledfor byItem 404(a)(5) ofRegulationS-K.
We respectfully submit to the Staff what we have revised our disclosure to provide the information requested in the above comment.
22. Please disclose what thecommissions you refer to in thethird paragraphunder this heading were for. Please see Item404(a)(6) of RegulationS-K.
We respectfully submit to the Staff that the commissions referred to were earned sales commissions. We have updated our disclosure accordingly.
Market Price of and Dividends on theRegistrant’s Common Equity andRelate Stockholder
Matters, page 20
23. Please disclose howmany holdersof your common equity thereare as ofthe latest practicabledate. Pleaserefer toItem 201(b)(1)of RegulationS-K.
We respectfully submit to the Staff that as of the date of this filing, we had 54 holders of our common stock. We have updated our disclosure accordingly.
24. Please notethat thedisclosure calledfor by Item201(a) of Regulation S-K should be disclosedfor PaperNuts, not Axiom. Please revise the disclosure underthe heading “Market ForCommonEquity”accordingly.
We respectfully submit to the Staff that the above comment is duly noted and we have updated our disclosure accordingly.
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Description of the Registrant’s Securities, page 21
25. Please update your disclosure here to reflect the issuance ofpreferredstock and cancellationof common stock disclosedin yourForm 8-K filed April 15, 2015.
We respectfully submit to the Staff that the Company has updated our disclosure to include information regarding the issuance of preferred stock and the cancellation of common stock as disclosed in our Form 8-K filing on April 15, 2015.
UnregisteredSales of Equity Securities,page 22
26. Please revise to include a discussion of the 50,000 shares ofcommon stock issued April
2, 2014, as well as the170,165 shares issued at$3 per share fromJuly through Octoberof
2014, both disclosed inNote 9 to your audited financial statements. Please notethat if intend toincorporate the disclosurecalled for byItem 701 of Regulation S-Kwith regard to PaperNuts’recent unregisteredplacements ofsecurities byreference to this heading,as you state onpage 21,thatItem 701looks backthree years and is not limited to equity securities.
We respectfully submit to the Staff that the Company has updated our disclosure to list the sale of all securities pursuant to Item 701 of Regulation S-K for the past three (3) years.
Item 5.03, Amendments to Articlesof Incorporation orBylaws; Changein Fiscal Year, page 23
27. Please disclose when your directors approved the change infiscal yearand the report that thetransition period willbe filed on.Please refertoItem 5.03(b) ofForm8-K.
We respectfully submit to the Staff that the board approved the change in fiscal year on March 11, 2015 and that the time period for which a transition period would have been filed is incorporated in the Company’s 10-Q for the period ending March 31, 2015 which was filed with the Commission on May 18, 2015.
Exhibits, page 24
28. Please filethe acquisition agreementforthe Papernuts trademark, described in Note 5 to your audited financial statements, as an exhibitto your next amendment. Please referto Item 601(b)(10) ofRegulationS-K.
We respectfully submit to the Staff that the Company has submitted the acquisition agreement for the PaperNuts trademark as Exhibit 10.6 to our filing.
Exhibit 99.1
Note 12. Subsequent Events, page15
29. Pleasedisclosethe date through which subsequent events were evaluated asrequired by
FASB ASC 855-10-50-1.
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We respectfully submit to the Staff that the date through which the subsequent events were evaluated is March 20, 2015.
Exhibit 99.2
General
30. Please revise your document toinclude a pro forma consolidated statement of operations for theinterim period ended March31, 2015. Refer to Article 11-02(c)(2)(i) of Regulation S-X.
We respectfully submit to the Staff that the pro forma consolidated statement of operations for the interim period ended March 31, 2015 has been added to the amended pro forma financial exhibit submitted as Exhibit 99.2.
Pro Forma Adjustment (c)
31. Itdoes not appearto usthat pro forma adjustment (c) is directly attributable to the transaction. Please revise your pro forma financial statements toremove thisadjustment ortell us how this adjustment complies with Article 11-02(b)(6).
We respectfully submit to the Staff that Pro forma adjustment (c) has been removed from the amended pro forma financial exhibit submitted as Exhibit 99.2.
The Company acknowledges that:
| should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing; | |
| the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and | |
| the company may not assert staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
Sincerely,
Axiom Corp.
By: | /s/ Tyler Pearson |
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Name: Tyler Pearson |
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Title: Chief Executive Officer and Director |
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