As filed with the Securities and Exchange Commission on September 12, 2006.
Registration No. 333-124704
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
(Amendment No. 8)
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XIOM, Corp.
(Name of Small Business Issuer in its Charter)
Delaware 3470 11-3460949
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or organization) Classification Code Number) Identification No.)
68A Lamar Street
West Babylon, New York 11704
(631) 643-4400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Andrew Mazzone, President
78A Lamar Street
West Babylon, New York 11704
(631) 643-4400
(Name, address, including zip code, and telephone number,
Including area code, of agent for service)
Copies of communications to:
Michael S. Krome, Esq.
8 Teak Court
Lake Grove, New York 11755
Telephone No.: (631) 737-8381
Facsimile No.: (631) 737-8382
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Calculation of Registration Fee
Proposed Proposed
Maximum Maximum Amount
Title Amount Offering Aggregate of
Of Securities to be Price Offering Registration
To be Registered Registered Per Share Price (1) Fee (1)
- ---------------- ---------- --------- ---------- ------------
Common Stock,(1) 500,000(2) $3.00 $1,500,000 $176.55
Par value $.0001
Per share
Common Stock,(1) 157,062(3) $3.00 $ 471,186 $ 55.13
Par value $.0001
Per share
Common Stock,(1) 157,062(4) $3.00 $ 471,186 $ 55.13
Par value $.0001
Per share
(1) Estimated pursuant to Rule 457(c) under the Securities Act of 1933 solely
for the purpose of computing the amount of the registration fee.
(2) Representing 500,000 shares of common stock for sale by the Company under
a self-underwriting.
(3) Representing the total of 157,062 shares sold pursuant to a private
placement of the Company between December 1, 2004 through March 18, 2005
(4) Representing the total of 157,062 shares underlying warrants sold as part
of the private placement of the Company between December 1, 2004 through
March 18, 2005.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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ii
The information in this prospectus is not complete and is subject to completion
and may be changed. The selling stockholders may not sell these securities until
the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
Preliminary Prospectus Subject to Completion dated September 12, 2006
XIOM Corp.
814,124 shares of common stock
Total represents 814,124 shares of common stock of the registrant. Of this
amount, 500,000 shares are to be issued and sold directly by the Company, from
time to time. 157,062 represents shares of Selling Shareholders and an
additional 157,062 represents shares underlying certain warrants issued by the
Company to the Selling Shareholders.
The shares offered by the Company are being offered without an underwriter, on a
best efforts basis, with no minimum purchase requirement. There will be no
escrow of funds from the sale of the shares offered by the Company. The shares
offered by the Company are being offered at $3.00 per share. There are no
underwriting discounts. The total maximum amount of the offering by the Company
is $1,500,000 based on 500,000 shares sold at $3.00 per share. This offering
will end one year from the effective date of the Prospectus.
MARKET FOR THE SHARES
No market currently exists for our shares. The price reflected in this
Prospectus of $3.00 per share is the initial offering price of shares upon the
effectiveness of this prospectus. At that time the selling shareholders may
offer the shares for this price, until the shares are traded on the OTC Bulletin
Board, if ever. At that time the price will be determined by the market and may
not reflect the initial price of our shares after the offering. We cannot make
any prediction at what range our shares will trade at, if any.
The securities offered in this prospectus involve a high degree of risk. YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
----
Prospectus Summary ...................................................... 3
The Offering ............................................................ 4
Summary Financial Information ........................................... 5
Risk Factors ............................................................ 5
Use of Proceeds ......................................................... 11
Determination of Offering Price ......................................... 11
Dividends ............................................................... 11
Management's Discussion and Analysis or Plan of Operation ............... 12
Results of Operations ................................................... 16
Business of the Company ................................................. 17
Off-Balance Sheet Arrangements .......................................... 21
Inflation ............................................................... 21
Government Regulation ................................................... 21
Management .............................................................. 22
Executive Compensation .................................................. 23
Description of Property ................................................. 24
Employees ............................................................... 24
Litigation .............................................................. 24
Employment Agreements ................................................... 25
Certain Relationships ................................................... 25
Principal Stockholders .................................................. 25
Dilution ................................................................ 26
Offering by Selling Shareholders ........................................ 27
Shares Eligible for Future Sale ......................................... 28
Description of Securities ............................................... 29
Plan of Distribution .................................................... 29
Certain Provisions of the Certificate of Incorporation and Bylaws
With Respect to Directors and Officers
Regarding Indemnification ............................................. 31
Delaware Business Combination Provisions ................................ 32
Where You Can Find More Information ..................................... 33
Transfer Agent .......................................................... 33
Interest of Named Experts and Counsel ................................... 33
Legal Matters ........................................................... 33
Experts ................................................................. 34
Financial Statements .................................................... 35
2
PROSPECTUS SUMMARY
This prospectus summary highlights selected information contained elsewhere in
this prospectus. You should read the following summary together with the more
detailed information regarding our company and the shares of common stock being
sold in this offering, which information appears elsewhere in this prospectus.
ABOUT OUR COMPANY
How our company is organized
XIOM Corp, formerly Panama Industries, Ltd., ("XIOM"), was incorporated in
Delaware on March 2, 1998. The company formally changed its name to XIOM in
August 2004.
Spin-off from the former parent company
The former parent of XIOM, ThermalTec International, Corp. ("TTI"), now
Accountabilities, Inc. and publicly traded under the symbol "ACTB", was
incorporated in 1994 under the laws of the State of Delaware. XIOM was spun-out
of TTI in July of 2001 to its shareholders of record as of June 22, 2001, upon
which each shareholder of TTI received one (1) share of XIOM common stock for
every three (3) shares of TTI common stock. XIOM was spun-off because it had a
specific technical focus that needed further development and TTI had intended to
focus on specific target merger candidates involved in a totally unrelated
business. In May and June of 2001, TTI was seeking to enter into a series of
transactions to acquire up to eleven separately owned Comprehensive Outpatient
Rehabilitation Facilities ("CORF") that were managed by a Florida based company
named Total Health Care Consulting, Inc. At that time, TTI management decided
that the combination of XIOM and these businesses would have been difficult to
integrate, cause numerous management problems as well as accounting and
financial reporting issues. As such, it was decided by the management of TTI
that XIOM, as a wholly-owned subsidiary, would be better off as a separate stand
alone company, able to focus on its own specific operations and business plan
objectives. XIOM has been, since inception, engaged in the thermal spray coating
industry. Its primary business objective is to continually refine and market
their polymer based thermal spraying coating technology.
Where you can find us
Our corporate offices and manufacturing facility are located at 68A Lamar
Street, West Babylon, New York. The main telephone number is (631) 643- 4400.
Our website is http://www.xiom-corp.com. Any information contained on our
website should not be considered as part of this prospectus. The information
contained on our website is used for disseminating sales and marketing purposes
3
ABILITY OF COMPANY TO CONTINUE AS A GOING CONCERN
XIOM, Corp reported a net loss in both fiscal 2004 and 2005. The independent
auditors' report with respect to XIOM Corp's fiscal 2004 and 2005 financial
statements stated that XIOM, Corp. had recurring losses from operations, a
working capital deficit and limited sources of additional liquidity, all of
which raise substantial doubt about XIOM Corp.'s ability to continue as a going
concern. The financial statements as of and for the years ended September 30,
2004 and 2005, were prepared on a going concern basis, which assumes continuity
of operations and realization of assets and liquidation of liabilities in the
ordinary course of business. Management recognizes that the continuation of XIOM
Corp. as a going concern is dependent upon the achievement of profitability,
positive cash flow from operations and the generation of adequate funds to meet
its ongoing obligations. XIOM Corp. continues to seek additional liquidity to
improve its working capital position through the Self Offering conducted herein,
and the possible exercise of the common stock warrants also contained in this
registration statement. However, no assurance can be given that the Offering
will be successful or that XIOM Corp. will be able to generate net income in the
future. See "Management's Discussion and Analysis and Results of Operations" and
the financial statements and notes thereto presented elsewhere in this
Prospectus.
THE OFFERING
Shares offered in this offering to be sold by Company 500,000 shares
Shares offered by Selling Shareholders 157,062 shares
Shares underlying Warrants 157,062 shares
Shares Outstanding as of September 11, 2006: 6,896,803 shares
Not including shares to be sold by the Company pursuant to
this Registration Statement or issued pursuant to exercise
of warrants
Shares Outstanding after sale of shares to be sold
by the Company and exercise of all warrants 8,097,583 shares
Use of Proceeds
XIOM Corp. will not receive any proceeds from the sale of the shares by the
Selling Shareholders. XIOM Corp. will receive the proceeds of the, 500,000
shares, to be sold in the future directly by the Company, from time to time. The
Company will only receive the proceeds from the sale of the shares by the
Company, if sold and/or the exercise of the warrants held by the Selling
Shareholders, if exercised at a price of $0.75 per share and some at $1.30 per
share. There is no guarantee that the additional shares will be sold or that the
warrants will be exercised.
Our Trading Symbol
The Common Stock of XIOM Corp. does not have a trading symbol at this time.
As of September 11, 2006, there were approximately 590 shareholders of record
for the Company's common stock and options granted.
4
SUMMARY FINANCIAL INFORMATION
June 30, 2006 September 30, 2005 September 30, 2004
------------- ------------------ ------------------
Balance Sheet Data:
Total Assets $ 633,688 $ 213,357 $ 193,163
Total Liabilities $ 715,419 $ 306,133 $ 111,416
Total Stockholders' Equity (Deficit) $ (81,731) $ (92,776) $ 81,747
Statement of Operations:
Revenues $ 365,798 $ 184,445 $ 114,479
Expenses $ 798,022 $ 598,247 $ 369,125
Net Profit (Loss) $ (432,224) $ (413,802) $ (254,646)
Basic and Diluted Income (Loss) Per Share (0.07) (0.07) $ (0.06)
Weighted Average No. Shares Used
In Computing Income (Loss) Per Share 6,171,461 5,715,399 3,935,156
RISK FACTORS
An investment in our common stock is highly speculative and involves a
high degree of risk. Therefore, we are disclosing all material risks herein and
you should consider all of the risk factors discussed below, as well as the
other information contained in this document. You should not invest in our
common stock unless you can afford to lose your entire investment and you are
not dependent on the funds you are investing.
Risk Factors Related to XIOM Corp:
We may continue to lose money, and if we do not achieve profitability, we may
not be able to continue our business.
We have, in our history, generated limited revenues from operations, have
incurred substantial expenses and have sustained losses. In addition, we expect
to continue to incur significant operating expenses. As a result, we will need
to generate significant revenues to achieve profitability, which may not occur.
We expect our operating expenses to increase as a result of our planned
expansion. Even if we do achieve profitability, we may be unable to sustain or
increase profitability on a quarterly or annual basis in the future. We expect
to have quarter-to-quarter fluctuations in revenues, expenses, losses and cash
flow, some of which could be significant. Results of operations will depend upon
numerous factors, some beyond our control, including regulatory actions, market
acceptance of our products and services, new products and service introductions,
and competition.
Our independent registered public accounting firm issued a report for the year
ended September 30, 2005 that contained a "going concern" explanatory paragraph.
Our independent registered public accounting firm issued a report on their audit
of our financial statements as of and for the years ended September 30, 2005 and
2004. Our notes to the financial statements disclose that XIOM Corp.'s cash
flows have been absorbed in operating activities and has incurred net losses for
fiscal 2004 and 2005, and has a working capital deficiency. In the event that
funding from internal sources or from public or private financing is
insufficient to fund the business at current levels, we will have to
substantially cut back our level of spending which could substantially curtail
our operations. The independent registered public accounting firm's report
contains an explanatory paragraph indicating that these factors raise
substantial doubt about our ability to continue as a going concern. Our going
concern uncertainty may affect our ability to raise additional capital, and may
also affect our relationships with suppliers and customers. Investors should
carefully read the independent registered public accounting firm's report and
examine our financial statements.
5
Our technology and products may not be accepted by our targeted customers, which
would cause our business plan to fail.
We provide equipment and material for the onsite spraying of plastic onto
surfaces such as metal, wood and concrete. Our business is dependant upon the
continued need for these types of services. Our equipment has been specifically
developed for the application of the coatings we provide. There is no assurance
that the end users we target will continue to require and seek our services.
While we believe that our process and coating are superior to most, if not all
others available, there is no way to foresee if another process is not developed
by a competitor. In addition, we are dependent upon the continued need for steel
and other substrates to be coated to protect it from weathering, corrosion and
other wear and tear. Currently, our major customers are anticipated to be
governments and municipalities interested in treating exposed steel and other
surfaces, such as bridges, and other support items. It is anticipated, but we
can not be certain that these needs will continue to be required to be met.
Furthermore, while we seek to develop mew uses and applications for our
technology and products, we can not be assured of (a) finding new uses for our
technology and products, and (b) being able to introduce and interest customers
and other industries in our technology and products.
We may not be granted patents to our equipment and processes.
We have a number of patents pending that are important to the success of our
operations. These patents may not be granted. We believe that the loss of any
single patent would not have a material adverse effect on our business as a
whole. We believe that improvement of existing products and processes and a
reliance on trade secrets and unpatented proprietary know-how are as important
as patent protection in establishing and maintaining our competitive position.
At the same time, we continue to seek patent protection for our products and
processes. There can be no assurance, however, that any issued patents will
provide substantial protection or commercial value. We will require our
consultants and employees to agree in writing to maintain the confidentiality of
our information and, within certain limits, to assign to us any inventions, and
any patent or other intellectual property rights, relating to our business.
If we fail to develop new or expand existing customer relationships, our ability
to grow our business will be impaired.
Our growth depends to a significant degree upon our ability to develop new
customer relationships and to expand existing relationships with current
customers. We cannot guarantee that new customers will be found, that any such
new relationships will be successful when they are in place, or that business
with current customers will increase. Failure to develop and expand such
relationships could have a material adverse effect on our business, results of
operations and financial condition.
6
We are dependent on our key personnel for continued research and development of
our technology and Products and the introduction of new uses for them, and if we
lose those personnel, our business would fail.
Our future success depends, in significant part, upon the continued service of
our senior management. Mr. Mazzone and Mr. Gardega are the individuals that have
developed our equipment and processes and continue to develop our technology and
products. The loss of either of these individuals, particularly in the early
stages of our operations and development of new equipment and products, would
significantly hurt our business. We do not maintain key man life insurance
covering either of them. Our future success also depends on our ability to try
and attract and retain highly qualified personnel. Competition for such
personnel is intense, and we may experience difficulties in attracting the
required number and caliber of such individuals. If we were unable to hire and
retain personnel in key positions, our business could fail. As a result, we
might incur substantially more expenses than income and might not have enough
resources to fund growth that may be commercially viable.
Some of our competitors may be able to use their financial strength to dominate
the market, which may affect our ability to generate revenues.
Some of our competitors may be much larger companies than us and very well
capitalized. They could choose to use their greater resources to finance their
continued participation and penetration of this market, which may impede our
ability to generate sufficient revenue to cover our costs. Their better
financial resources could allow them to significantly out spend us on research
and development, as well as marketing and production. We might not be able to
maintain our ability to compete in this circumstance
We will need additional capital to allow us to expand our business plan to
increase capacity to manufacture and market our technology and products and such
financing may be unavailable or too costly.
Our ability to continue research and develop the core technologies and products
that we are planning to utilize is dependent on our ability to secure financing
and allocate sufficient funds required to support our marketing activity.
Additional financing may not be available on favorable terms or even at all. If
we raise additional funds by selling stock, the percentage ownership of our then
current stockholders will be reduced. If we cannot raise adequate funds to
satisfy our capital requirements, we may have to limit our operations
significantly. Our ability to raise additional funds may diminish if the public
equity markets become less supportive of the industry.
Coating Operations
The Coating of Metallic surfaces is a business that is closely tied to the
economic growth of several industries such as highway and transportation,
communications and energy. During recessionary periods in these industries, the
demand for coating can decline which could have a material adverse effect on the
Company's financial condition and results of operations. Profitability in the
coating industry is also dependent to a certain extent on raw material prices
and pricing structures are directly related to the cost of manufacturing.
Increases in these prices lead to increased costs and prices for the coating
materials and decreases in these prices lead to reductions in the coating costs
and prices. The Company may not be able to raise prices to cover adequately
increases in costs due to increases in raw material prices which could have a
material adverse effect on the Company's financial condition and results of
operations.
7
There Is No Assurance That Our Customers Will Utilize Our Products.
Although we will advise users of the unique properties associated with our
specific powder coatings, there are no guarantees that any customers would spray
Xiom system materials through the Xiom system. Xiom powder materials sell at an
average of $6 to $8 per pound. Customers may determine that these prices are too
high for them to buy our materials. Customers may find other materials cheaper
than our materials that may work to use with the Xiom system. This could have an
adverse affect on Xiom's long-term profitability and force the company to cut
its overhead and to ultimately become insolvent.
We Have No Method To Insure Our Products are Purchased.
It is too early for us to calculate an accurate figure on the number of
pounds of powder coating materials we will sell for each system sold. The more
Xiom materials used per gun, the more revenue would be made by the company. The
company however cannot be sure that it can sell the required number of systems
and powder materials each month to help the company remain viable and that the
servicing of each system sold might not become very expensive. If this occurred
it would cause the company to lose profits on those systems' sales. If this
situation occurred and could not be corrected in a timely fashion, the company
could ultimately become insolvent.
Risks Related to Offering:
Management beneficially owns approximately 40% of our common stock and their
interest could conflict with yours.
Our Chairman and President, Andrew B. Mazzone and other management beneficially
own approximately 40% of our outstanding common stock. As a result, Mr. Mazzone
and management may be able to influence all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. Such concentration of ownership may also have the effect
of delaying or preventing a change in control, which may be to the benefit of
the directors and executive officers but not in the interest of the
shareholders.
Our Principal Accounting/Financial Officer lacks meaningful accounting/financial
experience.
Our Principal Accounting/Financial Officer, Andrew Mazzone lacks any meaningful
experience in accounting and in any meaningful experience in dealing with
financial issues in a public company. The lack of meaningful experience can have
a detrimental effect on the ability of the Company to complete or accurately
report its financial status. This lack of meaningful experience can also result
in accounting difficulties and possibly the inability of the Company to comply
with reporting requirements in a timely fashion.
Future sales of common stock by our existing shareholders could adversely affect
our stock price.
As of September 11, 2006, XIOM has 6,896,803 issued and outstanding shares of
Common Stock, not including the assumed exercise of all the warrants and sale of
the stock directly by the Company in this offering. The 500,000 additional
shares are being registered with this offering, including 157,062 shares offered
by Selling Shareholders and 157,062 shares underlying the Warrants. Of the total
shares issued and outstanding as of September 11, 2006, a total of 5,700,043
shares belong to shareholders subject to Rule 144, and are "restricted
securities" as defined under Rule 144, substantially all of which are available
for sale in the public market, subject to the provisions of Rule 144 under the
Securities Act, or pursuant to this Registration Statement. Sales of substantial
amounts of Common Stock in the public market, or the perception that such sales
will occur, could have a materially negative effect on the market price of our
Common Stock. This problem would be exacerbated if we continue to issue Common
Stock in exchange for services.
8
We expect to issue additional stock in the future to finance our business plan
and the potential dilution caused by the issuance of stock in the future may
cause the price of our common stock to drop.
As of September 11, 2006, there were 6,896,803 issued and outstanding shares of
Common Stock, not including the assumed exercise of all the warrants. If all the
shares of stock being offered directly by the Company in this offering were sold
and all warrants were exercised, we would have a total of 8,097,583 shares
issued and outstanding. Subsequent to the effective date of this offering, we
may need to raise additional capital, which may then result in the issuance of
additional shares of common stock, or debt instruments. Shares may be issued
under an available exemption, a later registration statement, or both. If and
when additional shares are issued, it may cause dilution in the value of shares
purchased in this offering and may cause the price of our common stock to drop.
These factors could also make it more difficult to raise funds through future
offerings of common stock.
IF OUR UNREGISTERED OFFERING OF SHARES OF OUR COMMON STOCK AND WARRANTS TO
PURCHASE ADDITIONAL SHARES OF OUR COMMON STOCK FROM JANUARY 1 THROUGH JULY 15
2006 IS INTEGRATED WITH THE OFFERING TO WHICH THIS REGISTRATION STATEMENT
RELATES, WE MAY HAVE LIABILITY UNDER APPLICABLE FEDERAL AND STATE SECURITIES
LAWS, AND THE PURCHASERS OF OUR SECURITIES IN THE JANUARY 1 THROUGH JULY 15 2006
UNREGISTERED OFFERING MAY BE ENTITLED TO RESCIND THEIR PURCHASES AND RECEIVE
FROM US A REFUND OF THE PURCHASE PRICE, PLUS INTEREST.
Under the federal securities laws, any offering of securities must be registered
unless an exemption from registration is available, and, with limited
exceptions, no exemption from registration is generally available for a private
placement transaction which is made concurrently with a public offering. We may
be considered to have commenced a public offering of securities on May 6, 2005,
when we first filed this registration statement on Form SB-2. Subsequent to that
date, from January 1, 2006 through July 15, 2006, we offered and sold 543,718
shares of common stock for a total of $644,399. Although we believe that the
January 1 through July 15 2006, unregistered offering of our Common Stock and
warrants was conducted in accordance with applicable law, one or more investors
might contend that the January 1 through July 15 2006, unregistered offering
should be integrated with the offering to which this registration statement
relates. As a result, we may have potential liability for failure to properly
register our Common Stock under the federal Securities Act of 1933, as amended
(the "Securities Act"), and applicable state blue sky laws, and the purchasers
in the unregistered offerings may be entitled to rescind their purchase of our
Common Stock and warrants and we would be required to refund the aggregate
purchase price of $644,399, plus interest, to the purchasers upon their exercise
of such rescission rights. Even if the purchasers waive their rights, if any, to
rescind the purchase of shares and warrants in the unregistered offerings as a
remedy for our failure to register these securities, the waiver may not be
enforceable in light of the public policy against the unregistered sale of
securities underlying federal and state securities laws. Any such rescission of
sales in January 1 through July 15, 2006 unregistered offering could adversely
affect our cash position.
9
We may not be able to obtain a trading market for your shares.
Trading in our Common Stock, if any, is intended to be conducted on the OTC
Bulletin Board operated by the NASD, if and when, we obtain a listing. We have
made application to the NASD to list these shares on the Over the Counter
Bulletin Board operated by the NASD. Said application is still pending. Because
we may not be able to obtain or maintain a listing on the OTC Bulletin Board,
your shares may be more difficult to sell. However, if we are unable to qualify
for this listing, or if we will become unable to maintain our listing on the OTC
Bulletin Board, we believe that our stock will trade on over-the-counter market
in the so-called "pink sheets". Consequently, selling your Common Stock would be
more difficult because only smaller quantities of stock could be bought and
sold, transactions could be delayed, and security analysts' and news media's
coverage of XIOM may be reduced. These factors could result in lower prices and
larger spreads in the bid and ask prices for our stock.
It is more difficult for our shareholders to sell their shares because we are
not, and may never be, eligible for NASDAQ or any National Stock Exchange.
We are not presently, nor is it likely that for the foreseeable future we will
be, eligible for inclusion in NASDAQ or for listing on any United States
national stock exchange. To be eligible to be included in NASDAQ, a company is
required to have not less than $4,000,000 in net tangible assets, a public float
with a market value of not less than $5,000,000, and a minimum bid price of
$4.00 per share. At the present time, we are unable to state when, if ever, we
will meet the NASDAQ application standards. Unless we are able to increase our
net worth and market valuation substantially, either through the accumulation of
surplus out of earned income or successful capital raising financing activities,
we will never be able to meet the eligibility requirements of NASDAQ. As a
result, it will more difficult for holders of our common stock to resell their
shares to third parties or otherwise, which could have a material adverse effect
on the liquidity and market price of our common stock
We may require additional funds to achieve our current business strategy, which
we may not be able to obtain which would affect our ability to operate.
XIOM is a relatively new business entity with limited capital resources. Its
future plans may require significant capital, which may not be available on an
as needed basis. If the Company's capital is insufficient to reach and impact
their targeted market, they may not be able to achieve the intended goals and
objectives, or succeed in its industry.
Risks of leverage and debt service requirements may hamper our ability to
operate and grow our revenues.
The Company's debt to equity ratio is likely to be high at the commencement of
operations due to the requirement of borrowing funds to continue operations.
High leverage creates risks, including the risk of default as well as operating
and financing constraints likely to be imposed by prospective lenders. The
interest expense associated with the Company's anticipated debt burden may be
substantial and may create a significant drain on the Company's future cash
flow, especially in the early years of operation. Any such operating or
financing constraints imposed by the Company's lenders as well as the interest
expense created by the Company's debt burden could place the Company at a
disadvantage relative to other better capitalized service providers and increase
the impact of competitive pressures within the Company's markets.
10
No assurances that the Company will be successful in implementing its business
plan and we may fail in our marketing efforts.
All investments will be available for use by the Company immediately upon
payment and subscription by the investor and will not be available for refund to
investors if the offering fails to raise sufficient funds to complete the
business plan of the Company. Investors can have no assurances that the Company
will be able to raise funds from other sources to complete its business plan.
Competition may have a material impact on our ability to sell our Technology and
Products.
The Company faces substantial competition from a number of providers of similar
services. Many of the Company's competitors, particularly those competitors who
are large, have substantially greater financial, manufacturing, marketing and
technical resources; have greater name recognition and customer allegiance than
the Company. This may affect our ability to attract business and limit the
opportunities to generate revenues.
Forward Looking Information
Certain statements in this document are forward-looking in nature and relate to
trends and events that may affect the Company's future financial position and
operating results. The words "expect" "anticipate" and similar words or
expressions are to identify forward-looking statements. These statements speak
only as of the date of the document; those statements are based on current
expectations, are inherently uncertain and should be viewed with caution. Actual
results may differ materially from the forward-looking statements as a result of
many factors, including changes in economic conditions and other unanticipated
events and conditions. It is not possible to foresee or to identify all such
factors. The Company makes no commitment, other than as required, to update any
forward-looking statement or to disclose any facts, events or circumstances
after the date of this document that may affect the accuracy of any
forward-looking statement.
Reliance on Management.
The investors will have no rights to participate in the above-described
management decisions of the Company; the shareholder will only have such rights
as other shareholders.
USE OF PROCEEDS
XIOM will not receive any proceeds from the sale of the shares by the Selling
Shareholders. XIOM will receive the proceeds of the 500,000 shares to be sold
directly by the Company, from time to time. There is no guarantee that these
additional shares will be sold.
The following table allocates the proceeds from the sale of shares, at various
levels from a minimum quantity to the maximum quantity, at $3.00 per share and
in priority order as to how such proceeds would be utilized.
50,000 200,000 350,000 500,000
Shares Shares Shares Shares
-------- -------- ---------- ----------
Sales and marketing expenditures $100,000 $200,000 $ 250,000 $ 300,000
Inventory purchases 50,000 175,000 250,000 350,000
Accounts receivable financing 0 125,000 350,000 500,000
Administrative salaries 0 100,000 200,000 350,000
-------- -------- ---------- ----------
Total Use of Proceeds $150,000 $600,000 $1,050,000 $1,500,000
======== ======== ========== ==========
11
DETERMINATION OF OFFERING PRICE
Before this offering, there has been no public market for the shares of our
common stock. Accordingly, the price of the common shares stated in this
prospectus $3.00 was determined by an arbitrary process based upon our internal,
subjective evaluation. Among the factors considered in determining the initial
estimated price of the common shares were:
1. Our history and our prospects;
2. The industry in which we operate;
3. The status and development of our products and services;
4. The previous experience of our executive officers; and
5. The general condition of the securities markets at the time of this
offering.
The offering price stated on the cover page of this prospectus should not be
considered an indication of the actual value of the shares of common stock
offered in this prospectus. That price is subject to change as a result of
market conditions and other factors, and we cannot assure you that the common
stock can be resold at or above the initial public offering price.
DIVIDENDS
We have never paid a cash dividend on our common stock. It is our present policy
to retain earnings, if any, to finance the development and growth of our
business. Accordingly, we do not anticipate that cash dividends will be paid
until our earnings and financial condition justify such dividends, and there can
be no assurance that we can achieve such earnings.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following is our plan of operation for the following 12 months, and should
be read in conjunction with our financial statements and notes thereto appearing
in this prospectus.
XIOM, Corp.'s plans for the next twelve months
Assuming Company is minimally successful in this offering (based upon the sale
of 50,000 shares being sold directly by the Company), we intend to finance a
direct mail campaign to paint contractors and building contractors centered
around major cities. We also intend to demonstrate the products in twelve major
cities at the rate of one per month. Each demonstration will be of the XIOM 1000
and conducted in each city.
The promotional and demonstration expenses are estimated to be approximately
$12,000 per city, as follows:
Advertising: $1,500
Direct Mail $4,000
Demonstration Site Expenses: $2,000
Literature and sample expenses: $2,000
Travel and Accommodation: $1,500
Miscellaneous $1,000
12
The company is pursuing an advertising and promotion expense-to-sales ratio that
would allow it to act profitably. At the present time, the company's operations
expenses are approximately $16,000 a month. With the addition of advertising and
promotion expenditures, these expenses would increase to $19,000 per month.
Other significant recent expenses over and above our daily run rate expenses are
expenses for patents on equipment and materials, and for professional fees
expended during the SB-2 registration process.
Gross profit on each Xiom system is approximately $5,000, which would require us
to sell four systems directly and/or seven systems a month indirectly through
distributors to cover our operating costs. Our expense for patents for the next
6 months is estimated at $15000.
It is too early for us to calculate an accurate figure on the number of pounds
of powder coating materials we will sell for each system sold. The more Xiom
materials used per gun, the more revenue would be made by the company. The
company however cannot be sure that it can sell the required number of systems
and powder materials each month to help the company remain viable and that the
servicing of each system sold might not become very expensive. If this occurred
it would cause the company to lose profits on those systems' sales. If this
situation occurred and could not be corrected in a timely fashion, the company
could ultimately become insolvent.
In addition to a Canadian distributor (Jaddack Creations, Inc.), the company has
two other small distributors in the U.S. The U.S. distributors are located in
Texas and New York. The terms of the Distribution Agreements state that the
distributor has the right to distribute the XIOM products in a certain
territory. The agreements set a price for the product. There are no other
financial terms or minimum amounts that the Distributor is required to meet.
We are currently in preliminary negotiation to launch a distributorship in
Europe, although there are no specific terms or parties agreed upon at this
time. There is no guarantee that these negotiations will be successful. If such
negotiations were successful, there still can be no assurance that a distributor
could sell the company's system successfully in Europe. The company has sold one
system to date in Europe. That sale was unforeseen and not expected by the
company.
It is estimated that the Company will sell from five to twelve systems per city.
If the minimum of five systems are sold per twelve cities, the revenues would be
$40,000 and the cost of the product and promotional expenses would be $23,000
with a profit of $17,000. We also would expect to sell materials for use with
each system. We expect a minimum estimate of 100 pounds of material a month per
new customer. Based upon these estimates, five systems times 100 pounds of
material would be 500 pounds of material shipped each month, selling at $10 per
pound with a cost of manufacture of $5.00 per pound would realize the Company a
profit of $2,500 per month for materials, based on the minimums estimated by the
Company. The raw materials for our systems are readily available and the prices
are relatively stable. The estimate of selling five to twelve systems per city
is based upon the sales experienced to date by the Company, as well as feedback
from potential customers.
13
We have shipped approximately 70 units this fiscal year, and we currently
continue to have a back order of approximately 70 units. With the potential
orders from interested parties and the new Agreement with the Department of the
Navy, we expect that number to increase. Based on the current status of orders
and expected orders we can maintain operations almost indefinitely.
The company has shipped more than 40 of its spray systems in the last 8 months
since it introduced the Xiom 1000 system, including re-orders for the spray
systems, and is currently receiving orders for slightly more than two systems a
week as well as corresponding orders for the spray powders. There is no
guarantee that the company can continue to make sales in the future; unforeseen
problems could occur and slow or completely halt sales. If after 12 months such
unforeseen problems occurred and the company stopped making sales, the company
would be effectively out of business with no assurance that it could raise new
funds to keep its endeavors going and remain solvent.
The company shipped 15 systems in April, another 12 in May, and another 15 in
June, and continues to receive additional orders. Even though the company
currently has approximately 70 orders to ship, and is optimistic about its
future, it cannot guarantee these results will continue because the company
cannot judge whether customers who are placing orders for its system are
indicative of long term sustained demand. The company can only predict sales
when it actually has an order at this time.
The Company expects that its expenses will be a total of $80,000 for the next
six months, not counting promotional expenses for the selling of the guns or
cost of manufacturing the products. The Company expects that it can cover these
expenses with the revenue for its current contract with New York State. After
six months, the Company would have to depend on system sales to cover the
monthly expenses. The Company expects that selling five systems per month, it
can sustain itself indefinitely.
We are able to manufacture the full line of equipment as evidenced by our
delivery of 20 plus XIOM systems to paying customers and the manufacture and
delivery of XIOM materials to those same customers. The company's planning has
not gone further than this until it could raise working capital for the seminars
planned. Lack of success with the promotional seminars would signal impaired
general viability of the process. If the promotional seminars are a success, the
system would become self-financing without the need of future cash infusions.
The company cannot say with assurance what the results of those intended
seminars might be. Our sale of 20 guns was achieved with promotional revenues of
approximately $10,000. Based on this small and admittedly inconclusive sample,
the company believes that it can generate sustained revenues by means of the
promotional seminars.
The Company expects it has enough cash resources and revenue to cover expenses
for the foreseeable future as long as it continues to slowly make sales and
manufacture the guns and products. However, without increased revenues or
additional capital, it is extremely likely that our marketing plan will not be
able to be completed. This would significantly hamper out efforts to enter into
the product niche as and when we would like.
14
The company strongly believes that it has enough funds to operate for the next
12 months even if it does not sell any systems, the company bases that statement
on the following facts and assumptions: (a) It has a $500,000 New York State
contract to create a sophisticated spray unit that will apply XIOM's
patent-pending powder coatings for printing and paper rolls as well as oil and
gas pipelines. (b) It has received from the U.S. Navy that within the next few
months it will be receiving a U.S. Navy contract, for research to develop spray
systems and powder coatings to finish and re-finish the exteriors and interiors
of vessels.
On May 17, 2006, we received a Phase I contract with option for $100,000 to
explore the technical feasibility of modifying standard Xiom equipment to
operate on propane and air eliminating oxygen; to reduce the weight and physical
size of the system; to simplify the functions; and to increase the spray pattern
up to 9 to 12 inches. The option portion is to effect the lead into the Phase II
contract whereby a deliverable system will be fabricated for the Navy's testing
at its warfare facility in Washington, D.C. The Navy is highly interested in the
use of this system for applying Xiom coatings to the interior of difficult to
reach areas on ship board spaces, hence the reasons for a smaller, lighter, more
portable system.
The Phase II portion of this contract will be up to $750,000, if exercised by
the Navy.
The company acknowledges, however, that it has never had a U.S. Navy contract
before and that it may have to consult with experienced companies whose
expertise is to perform on such government contracts
The source of liquidity would come from two sources. Internally, as we slowly
increase sales, we would be able to increase the acquisition of raw materials
and increase production. This would increase the short-term liquidity of the
Company. Externally, we would gain long-term liquidity from the sale of the
shares being offering in this offering, and from the exercise of the warrants by
the shareholders from the recent private placement.
There are no known trends, events or uncertainties that have or are reasonably
likely to have a material impact on the Company's short-term or long-term
liquidity, other than the inability to sell our products, or the failure to sell
any of the shares offered in this offering or the exercise of the warrants by
the shareholders.
The company does not expect to significantly increase its employees in the next
fiscal year. We do not expect to increase our manufacturing facilities or
purchase equipment, other than raw materials.
The Company's critical accounting policies and estimates are applied only to
contracts which have terms greater than one month and are fixed-price contracts
using the percentage-of-completion method of accounting, measured by the
percentage of actual cost incurred to date, to the estimated total cost for each
contract. Estimated costs and revenues are based upon engineering estimates of
the work performed to date relative to the total work required under the
contract. Changes in contract estimates which result in changes in estimated
profit are applied to the cumulative work accomplished on the project. The
re-calculated gross profit on the contract is applied to the revenues recorded
to date for the entire life of the contract.
15
Results of Operations:
For the Fiscal Years Ended September 30, 2005 vs. September 30, 2004
For the fiscal year ended September 30, 2005, the Company had $184,445 in sales
and cost of sales of $145,601. This is in comparison to total sales of $114,479
and cost of sales of $89,185 for fiscal year ended September 30, 2004. Sales and
cost of sales for both years resulted primarily from the Company's development
contract with NYSERDA. Sales related to the patented thermal spray technology
only began to ramp up in the second half of fiscal 2005. Gross profit for both
years was modest were fiscal 2005 was $38,844 and fiscal 2004 was $25,294.
General and administrative expenses increased by approximately $173,000 from
fiscal 2004 to fiscal 2005. This increase was due to additional consulting
engineering expense to refine the thermal spray process as well as sales
consulting, marketing expenses and general overhead increases necessary to
accommodate the anticipated customer demand from the formal product roll-out
that commenced at the end of the third quarter of fiscal 2005.
The net loss increased from $254,646 ($.06 per share) to $413,802 ($.07 per
share) from 2004 to 2005, respectively. This increase of approximately $159,000
was directly related to the increase in general and administrative expenses
described above.
For the Nine Months Ended June 30, 2006 vs. June 30, 2005
Sales for the nine months ended were $365,798, an increase of $276,694, or 310%,
when compared to sales of $89,104 for the nine months ended June 30, 2005. This
increase is directly related to the roll-out and ramp-up of new system and
related powder sales in the current fiscal year. Cost of sales stayed fairly
consistent at approximately 60% of sales for both fiscal periods. Related gross
profit increase by $110,686 from $35,642 for the nine months ended June 30, 2005
to $146,328 for the nine months ended June 30, 2006.
The net loss for the nine months ended June 30, 2006 was 432,002 ($.07 per
share), an increase of $90,493 when compared to the nine months ended June 30,
2005. This increase was primarily due to the current cost of common shares
issued for services and well as increases in general and administrative expenses
over the comparable periods.
The overall trend has been a slow increase in sales of our thermal spray systems
and powder products. Because of this recent trend, we are able to maintain our
current manufacturing pace and may possibly be able to increase production in
small increments. As such, we do not expect any significant decrease in sales at
this time. Additionally, we expect to continue supporting the systems already
sold and in use with sales of additional powders, while continuing to increase
the manufacture and sale of new systems.
Liquidity and Financial Resources
During the fiscal years ended September 30, 2005 and 2004, net cash used by
operating activities was $146,657 and $31,641, respectively. The Company
incurred net losses of $413,802 and $254,646 for the fiscal years ended
September 30, 2005 and 2004, respectively. Additionally, at September 30, 2005,
the Company's current liabilities exceeded current assets by approximately
$122,000 and it had a Stockholdlers' (Deficit) of approximately $93,000.
16
For the nine months ended June 30, 2006 and June 30, 2005, the Company's net
cash used by operating activities was $393,236 and $151,916, respectively, and
it had net losses of $432,002 and $341,731, respectively. As of June 30, 2006,
the Company's current assets exceed current liabilities by only $56,552 after
considering subscriptions for common stock of $283,799 and it had a
Stockholdlers' (Deficit) of approximately $82,000, exclusive of common shares
sold and issued in March 2006 that are subject to rescission rights as more
fully described below as a contingent liability.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The Company anticipates that in order to fulfill its plan of
operations, it will need to seek financing from outside sources. To this end,
the Company is constantly pursuing private debt and equity sources. It is also
the intention of the Company's management to improve profitability by
significantly increasing sales of its patented thermal spray process for the
balance of fiscal 2006 and into fiscal 2007 while maintaining reasonable levels
general and administrative expenses as the company grows.
As disclosed elsewhere in this filing, the Company completed a private placement
of equity in March 2006 whereby it raised $342,000 of additional financing.
Additionally, the Company eliminated $210,000 of current liabilities and
$135,000 of shareholder loan by exchanging these obligations in lieu of payment
for the exercise of certain stock options in March of 2006. The Company closed
another private placement offering in July where it raised $302,000 of
additional financing. However, there is no assurance that these financings, nor
any future financing, if successful, will be sufficient to allow the Company to
operate profitably or successfully.
In private placement transactions completed subsequent to the filing of our
initial registration statement, from January 1, 2006 through July 15, 2006 we
sold a total of 543,718 shares of common stock from which we received gross
offering proceeds of $644,399. These securities were offered and sold in
reliance upon claimed private placement exemptions from registration. However,
since the transactions were not completed prior to the filing of our
registration statement, the purchasers of the shares may have the right to claim
that the purchase transactions were illegal public offerings which violated the
federal securities laws. If any of these transactions did violate federal
securities laws, the purchasers in those transactions may have claims against us
for damages or for rescission and recovery of their full subscription price,
plus interest. Although none of the purchasers of these shares has made or
threatened any claim against us alleging violation of the federal securities
laws, in the event the purchasers of these securities successfully asserted
claims for rescission it would have a substantial adverse effect on our business
and on our ability to continue to operate. We may not have sufficient funds
available to pay such claims, and there is no assurance that we would be able to
obtain such funds either from the proceeds of this offering, or from other
sources. In that event, it is likely that we would be forced to cease operations
and liquidate our available assets to pay our liabilities, including, but not
limited to, the rescission claims.
BUSINESS OF THE COMPANY - PRINCIPAL PRODUCTS AND SERVICES
Materials used with XIOM 1000 System are produced from various formulas of
plastic powders. The powder mixture is melted and projected onto a substrate via
a mixture of air and flammable gases that produce the actual coating. The air,
flammable gases and powder mixture are brought together through a specialized
and patented gun with a flame nozzle where the powder material is melted and
sprayed forward onto the surface to be coated. The gases and heated coating are
cooled by the surface that it adheres to.
17
The company is a technology business offering delivery of plastic powder
coatings at on-site locations utilizing the XIOM 1000 System. Powder coating
currently is a process in which metal parts are brought into a factory
environment where they are cleaned and prepared to receive a powder coating.
Plastic in powder form is then applied to the various metal parts by means of an
electrostatic charge that causes the powder to adhere to the surface. The coated
part is then heated in an oven for a period of time to cause the plastic to melt
and adhere to the substrate. Our process operates differently. Although we use
plastic powder, we do not electrostatically charge that powder in order for it
to adhere to a substrate. We use a different mechanism which simultaneously
applies and fuses the powder to a substrate. The advantage of this process is
that the coating process is totally portable and can be applied anywhere, not
necessarily in a factory setting, and can be applied without use of an oven to
cure the coating., and can be applied to most substrates in addition to the
metal substrate to which powder coatings are traditionally applied in a factory,
using an oven.
The company's plastic spray technology is unique and has patents pending. The
patents cover technology and processes to apply and deliver powder coatings
through a specialized spray system that allows those coatings to be applied both
on site and in a factory. The patents will last, upon issuance for a period of
17 years, unless other patents are applied for. With our process, the on-site
plastic powder coating process, you can deposit coatings on wood, steal,
fiberglass, concrete and plastic - a variety of substrates not all available to
traditional powder coating. Our process is quick, does not use an expensive oven
for curing and can be used both outside and inside a building.
The technology associated with the XIOM 1000 Thermal Spray system was developed
personally by the two operating officers of the Company, who, in August 2004,
irrevocably transferred all rights title and interest in all current patents,
patents pending and any future intellectual property rights that may be derived
from this technology in exchange for restricted common shares on the Company.
This technology was developed and enhanced over time with funding from contacts
with the New York State Energy Research & Development Authority ("NYSERDA"). The
refinements made to the technology pursuant to these contracts have resulted in
the XIOM 1000 Thermal Spray system that is currently marketed for commercial
sale.
HISTORY OF THE TECHNOLOGY
The history of applying polymer coatings dates back to the early 1950's starting
with the fluidized bed process and then in the 1960's to the Electrostatic
Powder Sprayer (EPS). Today EPS is the standard for applying organic polymer
coatings. It is commonly referred to as "Powder Coating" which to this familiar
with the process means EPS applied plastic powder coatings followed by oven
curing at approximately 400 F, where melting and film formation takes place.
18
EPS is a large business today as polymer coatings, thermoplastic and thermoses
are applied to a variety of substrates. They can be applied to cold surfaces
before being cured to film thickness typically between 1 to 4 mils (50-200
microns). There are little Volatile Organic Compounds (VOC) and reduced
Hazardous Air Pollutants (HAP). For these reasons EPS has captured substantial
business form the established liquid coating processes (Painting).
The company's products contain no VOCs (volatile organic compounds). There is a
current trend by the EPA to ban VOCs for products sold to the public for safety
and health purposes, but there is no guarantee that our VOC-less products,
although safer, will prove to be any more functionally effective than those
alternative coating products such as paints that do have VOCs.
The traditional powder coating industry, directly competitive to the company's
products, usually requires a large investment in ovens and production lines,
sophisticated preparation and cleaning equipment, and in many cases operates
with sophisticated in-line computerized production control systems to manage the
powder coating process. The Xiom system is designed to do powder coating outside
a traditional factory setting. The company's system enables a plastic coating to
be directly sprayed onto a surface, contains no preparation equipment and
requires no oven with which to cure powder coatings. The company's system has no
computerized control whatsoever and, in fact, does not even use electricity but
relies on air, propane and oxygen to achieve a coating result.
Traditional powder coaters who do coating inside a factory environment could
possibly try to re-engineer their systems to prevent the company from selling
its systems. But it would require them to manufacture smaller, more portable
ovens as well as develop more portable production and control systems in order
to compete with the company's on-site coating capability. The company
acknowledges that in the event that enough traditional powder coaters alter
their existing operations and create portable systems and ovens that could be
mounted on mobile units equipped with power systems for operation, might
compromise our ability to sell our $8,000 systems.
There can be no assurance that the company's technology will ever supplant
traditional powder coating technology and become commercially successful.
However, our technical data on our coatings gives us grounds to be optimistic
(see attached test results from an independent laboratory). Because Xiom
coatings are actually solid plastic coatings, they have the possibilities of
being more durable and weather-resistant than conventional painting systems
which are another large alternative to the company's powder coating systems.
The company, believes, but cannot prove that its coatings are superior to paint.
The company would have to conduct long term tests of its solid plastic coatings
versus liquid paints in many environments over a period of many years using an
independent agency to monitor such tests to prove its belief/. The expense to do
so would be extremely high since some plastic coatings are reputed to last many
years. The company would have to continue to pay its overhead during such tests
and possibly not sell anything because customers may want such proof and might
not want to rely on our assertions, or the assertions of other plastic feed
stock manufacturer's as to the efficacy of plastic after it passes through our
system. In that case the company would run out of funds long before such tests
were completed. Investors would be well advised not to invest in the company if
they need the assurance of long term testing on coatings from our process being
able to outlast paint coatings. In this case the company would strongly advise
such investors not to invest in the company.
19
Unlike most painting systems, Xiom's coatings have no dripping and overspray
problems and absolutely no VOCs. Xiom materials cure instantly after being
applied and no curing ovens are needed.
Due to the fact that the entire Xiom system weighs just 70 pounds, the entire
system can be easily used onsite. The company is acting on its belief that there
is a demand for plastic coatings applied outside a factory setting; the company
cannot prove that its belief is accurate.
Xiom coatings can be applied at thicknesses from 3 mls up to 1 inch as compared
to traditional powder coatings which usually vary from 1 to 4 mls thick. The
company believes that thicker coatings generally give greater protection against
corrosion than thin coatings. The company does not have definitive data to
conclusively prove this assertion.
EPS applied plastic coatings are further characterized by their wide use in OEM
and production applications for decorative purposes where appearance and
durability are required. While there is some use of functional EPS coatings, by
and large the vast majority of use for decorative applications. Large numbers of
relatively small components can best take advantage of the economic benefits
from EPS powder processing thus conforming to the limits of batch processing and
over size restrictions.
XIOM's UNIQUE THERMAL SPRAY TECHNOLOGY
The XIOM powder spray process uses the rich history of EPS Powder Coatings but
takes the technology a step further to meet the field requirements of on-site
liquid painting, thus bridging the gap between "in house" EPS and "on-site"
liquid painting developing a true portable on-site polymer coating system.
Two major advances account for XIOM's coating technology.
First, XIOM's 1000 Thermal Spray system is currently the Company's only
equipment product for on-site portability. It permits spraying of relatively low
melting point polymer powder without over heating and generation of combustion
(with no VOC's). High deposit rate and efficiency further characterize the XIOM
1000 system.
Second, XIOM plastic powders are designed specifically for Thermal Spraying. New
materials technology utilizing multiplex combinations, blends, additives and
composites, this taking advantage of synergy and covalent bonding to produce
exceptionally high adhesion to most substrates and functional properties
heretofore not possible with polymers (plastic coatings). For instance XIOM is
the first to produce thermal sprayed polymer/zinc primer coats, which deliver
very high quantities of zinc to the substrate for corrosion control. These
polymer/zinc primer coatings not only bond securely to steel substrate, but they
facilitate bonding of sprayed top coatings as well.
20
Many XIOM powders are unique and therefore patentable, with patents pending.
Substrates such as wood, plastic, masonry and fiberglass - not processable via
EPS - are now readily sprayable with the XIOM 1000 system, along with steel,
aluminum and non-ferrous substrates.
The new powder coatings properties produced with the XIOM 1000 system are
manifested in the wide variety of applications both functional and decorative
now solvable.
The Company currently has 15 varied material formulations to create spray
coatings. The Coating functionality includes any-corrosions; wear resistance,
architectural, anti-foul, anti-microbial, anti-graffiti, glow-in-the-dark, and
grip and release. The Company's materials come in over 100 different colors. The
completely portable delivery system consists of a 70 pound combination of a
patent pending spray gun, patent pending powder feeder and control console
retailing for a total of $7,900. Material costs for the powder range from
anywhere from $4 to $18 a pound, depending on their functionality. The Company
can mix ceramics and metals, if desired, for added wear, into its plastic
coatings and can add anti-microbial formulations into the coatings. The system
sprays eight pounds of plastic material an hour using different spray nozzles,
allowing for both round patters and a 4-inch fan spray pattern. The system is
electrically controlled. The fuel system is oxygen and propane with air as a
cooling gas. Preparation of surfaces is the same as for painting. Since these
are plastic coatings, all solids with no hollows and voids, they will last
longer than paint-based coating systems. They can be applied thick or thin and
have no volatile organic compounds as part of their makeup.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.
INFLATION
The amounts presented in the financial statements do not provide for the
effect of inflation on the Company's operations or its financial position.
Amounts shown for machinery, equipment and leasehold improvements and for costs
and expenses reflect historical cost and do not necessarily represent
replacement cost. The net operating losses shown would be greater than reported
if the effects of inflation were reflected either by charging operations with
amounts that represent replacement costs or by using other inflation
adjustments.
GOVERNMENT REGULATIONS
We estimate that there is no material cost to comply with any environmental laws
of the Federal, State or Local governments. Any compliance, we believe that any
cost and/or compliance is the responsibility of the end user.
The cost of compliance with government regulation is embedded in the cost of
environmentally safe equipment. Government inspection requires assistance by
employees and such assistance is not deemed material by the Company.
21
New York State approval pertains to the bridge coating business. We are an
approved vendor by NYS Department of Transportation and if we receive a coating
contract, that contract is monitored daily by NYS inspectors.
The New York State Thruway Authority has approved and is currently using thermal
spray coatings as an acceptable method of corrosion protection of bridge
structural steel. XIOM is an approved applicator for New York State Thruway
Authority Bridge Metallizing Projects.
As part of its specifications for thermal spraying New York State has adopted
specifications established by the Society of Protective Coatings (SSPC) and The
American Society for Testing and Materials (ASTM).
The Company is subject to Workers' Compensation and Safety Laws. XIOM believes
that it has all the necessary licenses from all governmental agencies to conduct
business in the U.S. It has not had any warnings or citations for any
violations. To the best of its knowledge, the Company complies with all
emissions regulations and waste removal regulations. The Company believes its
only exposure would be in the area of Workers' Compensation claims for which it
is insured. The Company doesn't reserve for possible problems in this area
because of its history of not having such problems.
MANAGEMENT
The directors and officers of the Company are listed below with information
about their respective backgrounds. Each Director is elected to serve a one year
term, until the next annual meeting of the shareholders or until their successor
is elected (or appointed) and qualified.
Name Age Position
- ----------------- --- --------
Andrew B. Mazzone 63 Chairman, President, Chief Accounting/Financial
Officer and Promoter
Thomas Gardega 57 Executive Vice President, Director and Promoter
Andrew Mazzone
Mr. Mazzone has been the Chairman and President of the company since its
inception in 1998. Mr. Mazzone was the President of TTI at the time of the
spin-out. He resigned as Sole Officer and Director of TTI on November 1, 2001.
Thereafter, when the targeting merger candidate for TTI fell through, TTI
located a potential new target for acquisition and changed its name to Steam
Clean USA, Inc. on or about August 15, 2002. On July 1, 2003, Steam Clean USA,
Inc. acquired Humana Trans Services Group, Ltd. At this point Mr. Mazzone was
invited to become Chairman of the Board of Directors. He served in that position
until January 2004, when he resigned as Chairman but remained as a Director and
until May 5, 2004, when he resigned from the Board entirely. From 1970 until
February 15, 1995, Mr. Mazzone was employed by Metco, Westbury, NY, a subsidiary
of the Perkin Elmer Corp., a holding company, which subsidiary, Metco, was
engaged in the business of development of metal spraying and metal powders. Mr.
Mazzone, as President, resigned from Sulzer Metco after the acquisition of the
Company in 1995. From 1995 to October, 2001 Mr. Mazzone was President of
Thermaltec International.
At Metco, Mr. Mazzone held various positions, including as Director of
Logistics, Director of Sales and Marketing, Director of Manufacturing, Executive
Vice President and President.
22
Mr. Mazzone has degrees from Babson College, Babson Park, Massachusetts, in
finance and an advanced degree in economics, with a specialty in economic
history. Mr. Mazzone will devote full time to the efforts of the Company (See
"Principal Stockholders"). Mr. Mazzone is also a promoter of the Company as that
term is defined in Rule 405 of Regulation C.
Thomas Gardega
Mr. Gardega is Executive Vice President and has been an employee of the company
since September 24, 1999. Mr. Gardega brings to the Company a vast knowledge in
the heat sprayed plastic coatings industry. Mr. Gardega was responsible as
project manager for all field operations of electrical construction in the State
of South Carolina for Basic Electrical, Inc. from January 1997 until January
1999, including purchasing, manpower acquisition, managing field office, project
management and scheduling, materials, equipment, permits, and meetings.
Mr. Gardega held a position in Perkin Elmer's (a publicly traded company),
division of Metco from 1978 to 1981 as special marketing representative and
field service engineer. His function included training, customer support,
materials, and applicable processes.
Mr. Gardega has held management positions in commercial electrical contracting
projects throughout the United States. He also was President of National Thermal
Spray, Inc., a developer and marketer of thermal coating systems from May 1985
until December 1989. He is an acknowledged expert in large scale installation of
electrical and communications systems. He graduated from Empire State College in
New York majoring in business administration. Mr. Gargega is also a promoter of
the Company as that term is defined in Rule 405 of Regulation C.
EXECUTIVE COMPENSATION
Each operating officer is entitled to an annual base salary of $60,000, plus
reimbursement for documented out-of-pocket expenses. The Board of Directors also
grants non-qualified options annually to each officer as additional future
compensation for services rendered. The timing and extent of such option grants
are made at the sole discretion of the Board of Directors and have an exercise
price equal to the estimated fair-market-value on the date of the grant. There
is no other compensation given beyond the annual base salaries and option
grants. The following Summary Compensation Table sets forth the compensation for
each executive officer for the past three fiscal years ended September 30th;
Summary Compensation Table
Fiscal Annual Long-term Compensation;
Name & Position Year Salary Securities Underlying Options
- -------------------- ------ ------- -----------------------------
Andrew Mazzone, 2003 $60,000 -0-
Chairman & President 2004 $60,000 -0-
2005 $60,000 300,000
Thomas Gardega 2003 $60,000 -0-
Executive VP 2004 $60,000 -0-
2005 $60,000 300,000
23
The following table details options granted to each executive officer in the
last fiscal year ended September 30, 2005;
Option Grants In Last Fiscal Year
Percent of Total Exercise
Number of Shares Options Granted Price Expiration
Name Underlying Options To Employees ($/SH) Date
- -------------------- ------------------ ---------------- -------- -----------------
Andrew Mazzone
Chairman & President 300,000 50% $ .75 February 28, 2010
Thomas Gardega
Executive VP 300,000 50% $ .75 February 28, 2010
There were no options exercised and there was no value of unexercised
"in-the-money" options for the fiscal year ended September 30, 2005.
All directors hold office until the next annual meeting of stockholders and the
election and qualification of their successors. Each executive officer is
elected annually by the Board of Directors to hold their respective office until
the annual meeting of shareholders and until their successors is chosen and
qualified.
DESCRIPTION OF PROPERTY
XIOM leases approximately 13,600 square feet of manufacturing and warehouse
facility in West Babylon, New York pursuant to a four-year lease at $5,700 per
month. This location also serves as Corporate Headquarters. Rent expense, net of
sub-lease income, for fiscal 2005 and 2004 was approximately $29,500 and
$36,500, respectively. The manufacturing and warehouse facility is adequate for
the needs of the Company at this time. However, if it were necessary to expand
the manufacturing and warehouse capacity, the Company would need to relocate its
facilities, at an additional cost per month. Such location would be relatively
easy to locate, however the initial cost of moving might be substantial.
EMPLOYEES
The company has six full time employees, including its operating officers, which
are employed by the Company on a full-time basis. Additionally, there is one
part-time employee. None of the employees are covered by a collective bargaining
or similar agreement. The Company believes it has good relations with all of the
employees.
LITIGATION
The Company is not engaged in any litigation, nor is any litigation pending or
been threatened.
24
EMPLOYMENT AGREEMENTS
As of the date of this filing, we do not have any formal written employment
agreements with any officer or director of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has issued the following shares to affiliates of the Company; the
transactions took place on August 12, 2004:
We issued to our President, Director and Promoter, Andrew Mazzone, a total of
500,000 shares of common stock, in two separate transactions, 125,000 shares for
the repayment of Officer Loans to the Company and 375,000 shares for the
irrevocable transfer of certain patent and technology rights used by the
Company. The shares are valued at $0.10 per share for a total of $50,000. These
rights included the creation of certain proprietary technologies and
applications from Mr. Mazzone's experience in the coating industry which
enhanced the patents pending received by Mr. Gardega.
We issued to our Vice-President, Director and Promoter, Thomas Gardega, a total
of 850,000 shares of common stock, in two separate transactions, 475,000 shares
for the irrevocable transfer of certain technology rights used by the Company,
and 375,000 shares for the irrevocable transfer of certain patent rights to the
Company. The shares are valued at $0.10 per share for a total of $85,000. These
patent rights are as contained in the patent descriptions filed as Exhibits to
the Registration statement and with the United States Patent and Trademark
Office.
We issued 150,000 shares of common stock to DRB Consulting, Inc., for accounting
and consulting services for fiscal 2003 and 2004. The shares are valued at $0.10
per share for a total of $15,000. David Behanna is the control person of DRB
Consulting, Inc. Mr. Behanna is not an officer or director or principal
shareholder of the Company.
We issued 200,000 shares of common stock to James W. Zimbler, a principal
shareholder (through shares beneficial interest with Alpha Advisors, LLC.) for
consulting services related to business organization and financial services
performed by him in fiscal 2004. The shares are valued at $0.10 per share for a
total of $20,000.
We issued 40,000 shares to Michael S. Krome, Esq. a principal shareholder
(through shares beneficial interest with Alpha Advisors, LLC), for legal
services performed and to be performed on behalf of the Company. The shares are
valued at $0.10 per share for a total of $4,000.
PRINCIPAL STOCKHOLDERS
The following table describes, as of September 11, 2006, the beneficial
ownership of our Common Stock by persons known to us to own more than 5% of such
stock and the ownership of Common Stock by our directors, and by all officers
and directors as a group.
Number of Percentage of Percentage of
Shares Beneficially Shares Owned prior Shares Owned after sale
Identity of Stockholder or Group Owned (1) to Offering of Shares in Offering (2)
- -------------------------------------------- ------------------- ------------------ ------------------------
Andrew B. Mazzone 1,539,259 21.5% 19.7%
513 Dryden Street
Westbury, NY 11590
President, Director, Promoter
Thomas Gardega 1,154,786 16.2% 14.7%
200 Landmark Road
Conway, SC 29527
Executive Vice President, Director, Promoter
James Zimbler (3)(4) 728,334(3)(4) 10.2%(3)(4) 9.3%(3)(4)
234 East College Avenue
State College, PA 16801
Michael S. Krome, Esq. (4) 728,334(4) 10.2%(4) 9.3%(4)
8 Teak Court
Lake Grove, NY 11755
All Officers and Directors as 2,694,045 34.5%
A Group (2 Persons)
25
- ----------
* Less than 5%
(1) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of Common Stock that an individual or entity has a
right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purposes of computing the
percentage ownership of such individual or entity, but are not deemed to
be outstanding for the purposes of computing the percentage ownership of
any other person or entity shown in the table.
(2) Assumes sale of 500,000 shares by the Company and exercise of all warrants
(3) Including 200,000 shares owned by JWZ Holding, Inc., which is the
controlled and beneficially owned by James Zimbler.
(4) James Zimbler beneficially owns a total of 413,334 shares of common stock,
which includes 200,000 shares owned by JWZ Holding, Inc. Mr. Zimbler is a
control person, along with another shareholder, Michael S. Krome, Esq.,
who owns 40,000 shares, in Alpha Advisors, LLC. The shares owned by Mr.
Zimbler, JWZ Holding, Inc. and Alpha Advisors, LLC total 688,334 and when
all of the ownership percentages are added, the control percentage is
8.8%, if voted as a block. The shares owned by Michael Krome and Alpha
Advisors, LLC total 315,000 and when the ownership percentages are added,
the control percentage 4.8%, if voted as a block. If Mr. Zimbler, Mr.
Krome's and Alpha Advisors, LLC's beneficial ownerships are pooled,
totaling 728,334 shares, the percentage is 9.3%, if voted as a block.
DILUTION
The tangible net book value as of June 30, 2006 was $(81,731), or $(0.01) per
share of common stock. Tangible net book value per share represents tangible
assets, less liabilities, divided by the number of shares of common stock issued
and outstanding. The following table illustrates the dilution to purchasers of
common stock in this offering at various arbitrarily determined sales levels, at
an assumed public offering price of $ 3 per share. At the sales levels
indicated, the pro forma tangible net book value at June 30, 2006 would have
been $518,269, $818,269, $1,118,269 or $1,418,269, respectively. This represents
an immediate dilution of $2.92, $2.87, $2.83 or $2.78 per share, respectively,
to new investors.
26
Number of Shares of Common Stock Sold in the Offering(1)
--------------------------------------------------------------
200,000 300,000 400,000 500,000
Shares Shares Shares Shares
------------------- ------------ ----------- -----------
Public offering price per share 3.00 3.00 3.00 3.00
---- ---- ---- ----
Net tangible book value before the offering (0.01) (0.01) (0.01) (0.01)
---- ---- ---- ----
Increase in net tangible book value
attributable to new investors 0.09 0.14 0.18 0.23
---- ---- ---- ----
Pro forma net tangible book value per share
after the offering 0.08 0.13 0.17 0.22
---- ---- ---- ----
Dilution per share to new public investors 2.92 2.87 2.83 2.78
(1) The above dilution calculations do not give effect to the outstanding
warrants to purchase up to 157,062 shares of common stock at $.75 per share.
OFFERING BY SELLING SHAREHOLDERS
The following tables set forth certain information concerning each of the
selling shareholders. The shares are being registered to permit the selling
shareholders and their transferees or other successors in interest to offer the
shares in compliance with Rule 415(a)(1)(ix), at a price of $3.00 per share
until the shares are quoted on the Over the Counter Bulletin Board, if ever.
Selling shareholders are under no obligation to sell all or any portion of
their shares. Particular selling shareholders may not have a present intention
of selling their shares and may sell less than the number of shares indicated.
The following table assumes that the selling shareholders will sell all of their
shares.
None of the Selling Shareholders are broker-dealers or affiliates of
broker-dealers.
Total number Number of % of Beneficial
Of shares owned shares included Ownership at
Selling Shareholder prior to offering in offering completion of Offering (1)
- ------------------------------------------- ----------------- --------------- --------------------------
Andrew Tarabelli 18,667 18,667 *
Shirley V Fox & Raymond A Fox, Jr. 1,000 1,000 *
Heather Sides 800 800 *
Devon Rae Sides 65 65 *
Rian Grey Sides 65 65 *
Leslie C. Fox 6,667 6,667 *
Ann G. Travers Revocable Trust (3) 8,000 8,000 *
Kevin M. Petrone 1,300 1,300 *
Alfred Zefara 6,667 6,667 *
Robert Fredricks 7,333 7,333 *
Patric Sellitti 7,333 7,333 *
William T. Rooker & Iman Rooker, 1,500 1,500 *
Martin Murray & Susanna Murray 2,500 2,500 *
Ryan Michael Byson 500 500 *
Stephanie Nicole Murray 100 100 *
Martin Douglas Murray 100 100 *
Joseph Pileri 2,667 2,667 *
Donald B. Stevenson 10,000 10,000 *
James W. Zimbler (2) 213,334 13,334(2) 9.3(2)
Robert Fox 1,000 1,000 *
Linda Steinkamp 3,000 3,000 *
Theresa Steinkamp 3,000 3,000 *
Carole S. Daddona 6,667 6,667 *
Kevin Duckman 6,667 6,667 *
Irving Schwab 13,333 13,333 *
Albino L. Sellitti 4,000 4,000 *
John Mirabella 1,333 1,333 *
Vincent J. Dixon 1,333 1,333 *
Ralph Dente 1,333 1,333 *
Brain E. Rooney 1,333 1,333 *
Richard Carter 13,334 13,334 *
Stefeno Buscarnea 1,333 1,333 *
Marc Regan 1,333 1,333 *
James G. Petrone & Thelma A. Petrone 133 133 *
Michael V. Della Fave 1,333 1,333 *
Carmine S. Marcello, Jr. 1,333 1,333 *
Kevin D. Canterman 1,333 1,333 *
Jeanne Kirk 4,000 4,000 *
Michael S. Krome 488,334(2) -- 9.3(2)
Total 157,062
27
Total Shares and shares underlying warrants included in registration
statement: 314,124
(*) Less than 1% of the issued and outstanding shares.
(1) Assuming exercise of all warrants and sale of all shares offered by
the Company.
(2) James Zimbler beneficially owns a total of 413,334 shares of common
stock, which includes 200,000 shares owned by JWZ Holding, Inc. Mr.
Zimbler is a control person, along with another shareholder, Michael
S. Krome, Esq., who owns 40,000 shares, in Alpha Advisors, LLC. The
shares owned by Mr. Zimbler, JWZ Holding, Inc. and Alpha Advisors,
LLC total 688,334 and when all of the ownership percentages are
added, the control percentage is 10.6%, if voted as a block. The
shares owned by Michael Krome and Alpha Advisors, LLC total 315,000
and when the ownership percentages are added, the control percentage
4.8%, if voted as a block. If Mr. Zimbler, Mr. Krome's and Alpha
Advisors, LLC's beneficial ownerships are pooled, totaling 728,334
shares, the percentage is 9.3%, if voted as a block.
(3) Ann G. Travers has voting or investment control for the Ann G.
Travers Revocable Trust.
Changes in the Selling Shareholders will be provided by post-effective
amendments filed with the Securities and Exchange Commission.
SHARES ELIGIBLE FOR FUTURE SALE
As of September 11, 2006, XIOM, Corp. has 6,896,803 issued and outstanding
shares of Common Stock with an estimated book value of $387,000 or $.06 per
share. Assuming the 500,000 shares to be sold by the Company are sold and the
exercise of the 157,062 shares underlying the warrants, there will be a total of
8,097,583 shares issued and outstanding. The shares held by the officers and
directors and other entities holding more than 5% of the issued and outstanding
shares of the Company will be subject to the volume selling requirements of Rule
144.
28
In general, under Rule 144 as currently in effect, a person or persons
whose shares are aggregated, including an Affiliate, who has beneficially owned
Restricted Shares for at least one year is entitled to sell, within any
three-month period, a number of such shares that does not exceed the greater of:
(i) One percent of the outstanding shares of Common Stock; or
(ii) The average weekly trading volume in the Common Stock during the four
calendar weeks preceding the date on which notice of such sale is filed with the
Securities and Exchange Commission.
Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about XIOM, Corp. In addition, a person who is not an Affiliate and has not been
an Affiliate for at least three months prior to the sale and who has
beneficially owned Restricted Shares for at least two years may resell such
shares without regard to the requirements described above. XIOM, Corp. is unable
to estimate the number of Restricted Shares that ultimately will be sold under
Rule 144 because the number of shares will depend in part on the market price
for the Common Stock, the personal circumstances of the sellers and other
factors. See "Risk Factors--Shares Eligible for Future Sale" and "Risk
Factors--Possible Volatility of Stock Price."
DESCRIPTION OF SECURITIES
The authorized capital stock consists of 10,000,000 shares of common
stock, par value $.0001 per share. As of April 30, 2006, there were 6,896,803
shares of Common Stock issued and outstanding. This does not include the 500,000
shares being registered in this Registration Statement to be sold by the
Company, if possible, from time to time, and the 157,062 shares underlying the
warrants. The following summary description of the Common Stock is qualified in
its entirety by reference to the Company's Certificate of Incorporation and all
amendments thereto.
Common Stock
Our authorized capital stock consists of 10,000,000 shares of common
stock, par value $.0001 per share. Each share of Common Stock entitles its
holder to one non-cumulative vote per share and, the holders of more than fifty
percent (50%) of the shares voting for the election of directors can elect all
the directors if they choose to do so, and in such event the holders of the
remaining shares will not be able to elect a single director. Holders of shares
of Common Stock are entitled to receive such dividends, as the board of
directors may, from time to time, declare out of Company funds legally available
for the payment of dividends. Upon any liquidation, dissolution or winding up of
the Company, holders of shares of Common Stock are entitled to receive pro rata
all of the assets of the Company available for distribution to stockholders.
Stockholders do not have any pre-emptive rights to subscribe for or
purchase any stock, warrants or other securities of the Company. The Common
Stock is not convertible or redeemable. Neither the Company's Certificate of
Incorporation nor its By-Laws provide for pre-emptive rights.
PLAN OF DISTRIBUTION
No market currently exists for our shares. The price reflected in this
Prospectus of $3.00 per share is the initial offering price of shares upon the
effectiveness of this prospectus. At that time the selling shareholders may
offer the shares for this price, until the shares are traded on the OTC Bulletin
Board, if ever. At that time the price will be determined by the market and may
not reflect the initial price of our shares after the offering. We cannot make
any prediction at what range our shares will trade at, if any.
29
The shares may be sold or distributed from time to time by the selling
stockholders or by pledges, donees or transferees of, or successors in interest
to, the selling stockholders, directly to one or more purchasers (including
pledges) or through brokers, dealers or underwriters who may act solely as
agents or may acquire shares as principals, prior to trading this price will be
$3.00, after the shares are trading, if ever, it will be at market prices
prevailing at the time of sale. After the shares are traded, if this happens,
the distribution of the shares may be effected in one or more of the following
methods:
o ordinary brokers transactions, which may include long or short
sales,
o transactions involving cross or block trades on any securities or
market where our common stock is trading,
o purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this
prospectus,
o "at the market" to or through market makers or into an existing
market for the common stock,
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents,
o through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
o any combination of the foregoing, or by any other legally available
means.
Brokers, dealers, underwriters or agents participating in the distribution of
the shares may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they may sell as principal,
or both (which compensation as to a particular broker-dealer may be in excess of
customary commissions). The selling stockholders and any broker-dealers acting
in connection with the sale of the shares hereunder may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act of 1933,
and any commissions received by them and any profit realized by them on the
resale of shares as principals may be deemed underwriting compensation under the
Securities Act of 1933. Neither the selling stockholders nor we can presently
estimate the amount of such compensation. We know of no existing arrangements
between the selling stockholders and any other stockholder, broker, dealer,
underwriter or agent relating to the sale or distribution of the shares. Because
the selling stockholders may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act of 1933.
Each selling stockholder has advised us that the stockholder has not yet entered
into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares.
At the time a particular offer is made by or on the behalf of the selling
security holders, a prospectus, including any necessary supplement thereto, will
be distributed which will set forth the number of shares of common stock, and
the terms of the offering, including the name or names of any underwriters,
dealers, or agents, the purchase price paid by any underwriter for the shares
purchased from the selling security holders, any discounts, commissions and
other items constituting compensation from the selling security holders, any
discounts, commissions, or concessions allowed, re-allowed, or paid to dealers,
and the proposed selling price to the public.
30
XIOM Corp. will receive the proceeds of the 500,000 shares to be sold in the
future directly by the Company, from time to time and the 157,062 shares
underlying the warrants. The Company will only receive the proceeds from the
sale of the shares by the Company, if sold and/or the warrants are exercised.
There is no guarantee that the shares will be sold or the warrants exercised.
It is the intention of the Company to sell the shares being offered for sale by
the Company only by its Officers and Directors, that being only Mr. Mazzone and
Mr. Gardega. No other person or entity is expected, at this point in time, to be
permitted to offer these shares for sale to investors. With respect to Rule
3a4-1, each element of subsection (a) is satisfied as follows:
(1) Neither person is subject to any statutory disqualification at the
time of the participation;
(2) Neither person is being compensated in connections with his
participation by the payment of commissions or other remuneration
based either directly or indirectly on transaction in the
securities;
(3) Neither person at the time of his participation an associated person
of a broker or dealer; and
(4) Each person meets the requirements of (a)4(i), (ii) or (iii) in as
much as (ii) the associated person meets all of the following
conditions:
A. The associated person primarily performs, or is intended
primarily to perform at the end of the intended offering,
substantial duties for or on behalf of the issuer other wise in
connection with transactions in securities; and
B. The associated person was not a broker or dealer, or an
associated person of a broker or dealer, within the preceding 12
months; and
C. The associated person does not participate in selling an
offering of securities for any issuer more than once every 12
months.
Each of the persons mentioned complies with the requirements set forth
above.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS REGARDING
INDEMIFICATION OF DIRECTORS AND OFFICERS REGARDING INDEMNIFICATION The
Certificate of Incorporation of the Company provides indemnification to the
fullest extent permitted by Delaware law for any person whom the Company may
indemnify thereunder, including directors, officers, employees and agents of the
Company. In addition, the Certificate of Incorporation, as permitted under the
Delaware General Corporation Law, eliminates the personal liability of the
directors to the Company or any of its stockholders for damages for breaches of
their fiduciary duty as directors. As a result of the inclusion of such
provision, stockholders may be unable to recover damages against directors for
actions taken by directors which constitute negligence or gross negligence or
that are in violation of their fiduciary duties. The inclusion of this provision
in the Company's Certificate of Incorporation may reduce the likelihood of
derivative litigation against directors and other types of stockholder
litigation, even though such action, if successful, might otherwise benefit the
Company and its stockholders
31
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. The Company's Certificate
of Incorporation provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director except as limited by Delaware law. The Company's
Bylaws provide that the Company shall indemnify to the full extent authorized by
law each of its directors and officers against expenses incurred in connection
with any proceeding arising by reason of the fact that such person is or was an
agent of the corporation.
Insofar as indemnification for liabilities may be invoked to disclaim liability
for damages arising under the Securities Act of 1933, as amended, or the
Securities Act of 1934, (collectively, the "Acts") as amended, it is the
position of the Securities and Exchange Commission that such indemnification is
against public policy as expressed in the Acts and are therefore, unenforceable.
DELAWARE ANTI-TAKEOVER LAW AND OUR CERTIFICATE OF INCORPORATION AND BY-LAW
PROVISIONS
Provisions of Delaware law and our Certificate of Incorporation and
By-Laws could make more difficult our acquisition by a third party and the
removal of our incumbent officers and directors. These provisions, summarized
below, are expected to discourage coercive takeover practices and inadequate
takeover bids and to encourage persons seeking to acquire control of the Company
to first negotiate with us. We believe that the benefits of increased protection
of our ability to negotiate with proponent of an unfriendly or unsolicited
acquisition proposal outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation could result in an improvement of their
terms.
We are subject to Section 203 of the Delaware General Corporation Law,
which regulates corporate acquisitions. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the date
the person became an interested stockholder, unless:
(i) The Board of Directors approved the transaction in which such
stockholder became an interested stockholder prior to the date the
interested stockholder attained such status;
(ii) Upon consummation of the transaction that resulted in the
stockholder's becoming an interested stockholder, he or she owned at
least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding shares owned by persons
who are directors and also officers; or
(iii) On subsequent to such date the business combination is approved by
the Board of Directors and authorized at an annual or special
meeting of stockholders.
A "business combination" generally includes a merger, asset or stock sale,
or other transaction resulting in a financial benefit to the interested
stockholder. In general, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of the
corporation's voting stock.
32
WHERE YOU CAN FIND MORE INFORMATION
Upon effectiveness of this registration statement we will commence filing
reports, proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any report, proxy statement or other
information we file with the Commission at the Public Reference Room at 100 F
Street, N.E., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. In addition, we will file electronic versions of these documents
on the Commission's Electronic Data Gathering Analysis and Retrieval, or EDGAR,
System. The Commission maintains a website at http://www.sec.gov that contains
reports, proxy statements and other information filed with the Commission.
We have filed a registration statement on Form SB-2 with the Commission to
register shares of our common stock issued and issuable upon exercise of
warrants to be sold by the selling stockholders. This prospectus is part of that
registration statement and, as permitted by the Commission's rules, does not
contain all of the information set forth in the registration statement. For
further information with respect to us, or our common stock, you may refer to
the registration statement and to the exhibits and schedules filed as part of
the registration statement. You can review a copy of the registration statement
and its exhibits and schedules at the public reference room maintained by the
Commission, and on the Commission's web site, as described above. You should
note that statements contained in this prospectus that refer to the contents of
any contract or other document are not necessarily complete. Such statements are
qualified by reference to the copy of such contract or other document filed as
an exhibit to the registration statement.
TRANSFER AGENT
The Transfer Agent and Registrar for the common stock is Manhattan Stock
Transfer Registrar Company, 1 West Street, Suite 3402, New York, NY 10004,
212-425-2750,
INTEREST OF NAMED EXPERTS AND COUNSEL
None of the experts named herein was or is a promoter, underwriter, voting
trustee, director, officer or employee of XIOM, Corp. Michael S. Krome, Esq., is
the holder of a total of 40,000 shares of common stock, part of which is a
portion of his legal fee. As a partner in Alpha Advisors, LLC, Mr. Krome has
beneficial control over an additional 275,000 shares of common stock.
Furthermore, none of the experts was hired on a contingent basis and none of the
other experts named herein will receive a direct or indirect interest in XIOM,
Corp., other than Mr. Krome.
LEGAL MATTERS
The validity of the shares of common stock offered in this prospectus has been
passed upon for us by Michael S. Krome, Esq., 8 Teak Court, Lake Grove, New York
11755, (631) 737-8381.
33
EXPERTS
Our audited financial statements as of September 30, 2005 and 2004 and for the
years then ended, have been included in this prospectus and in the registration
statement filed with the Securities and Exchange Commission in reliance upon the
report of independent auditors, dated May 3, 2006 upon authority as experts in
accounting and auditing. N. Blumenfrucht, CPA, PC's report on the financial
statements can be found at the end of this prospectus and in the registration
statement.
34
XIOM, Corp.
FINANCIAL STATEMENTS
AS OF AND FOR THE FISCAL YEARS ENDED
September 30, 2005 and 2004
AND
AS OF AND FOR THE NINE MONTHS ENDED
June 30, 2006
35
N. Blumenfrucht CPA PC
1040 East 22nd Street
Brooklyn New York 11210
Tel.- 718-692-2743
Fax -718-692-2203
To The Board of Directors and Stockholders of XIOM Corp.
We have audited the accompanying balance sheets of XIOM Corp. (formerly known as
Panama Industries, LTD.) as of September 30, 2005 and 2004 and the related
statements of operations, stockholders' equity and cash flows for the years
ended September 30, 2005 and 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of XIOM Corp., as of the September
30, 2005 and 2004 and the results of its operations and its cash flows for the
years ended September 30, 2005 and 2004 in conformity with accounting principles
generally accepted in the United States.
As more fully disclosed in Note 15, the financial statements have been restated
for the above referenced periods.
The accompanying financial statements have been prepared assuming that XIOM
Corp. will continue as a going concern. As discussed in Note 16 to the financial
statements, the Company has an accumulated deficit of approximately $885,000.
Additionally, the Company incurred a net loss for the fiscal year ended
September 30, 2005 of approximately $414,000 and has negative working capital of
approximately $121,000. These factors raise substantial doubts about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are more fully disclosed in Note 16. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ N. Blumenfrucht CPA PC
Brooklyn, New York
May 3, 2006
F-2
XIOM, Corp.
Balance Sheets
As Of September 30,
(Restated)
2005 2004
--------- ---------
Assets
Current Assets
Cash and Cash Equivalents $ 20,077 $ 3,326
Accounts Receivable, Net of
Allowance for Doubtful Accounts 13,882 11,880
Inventory 11,010 2,086
Prepaid Expenses 0 1,316
--------- ---------
Total Current Assets 44,969 18,608
--------- ---------
Fixed Assets, Net of Accumulated
Depreciation & Amortization 45,882 24,773
--------- ---------
Other Assets
Patents Pending, Net of
Accumulated Amortization 114,100 121,300
Retainage Receivable 6,258 26,334
Security Deposits 2,148 2,148
--------- ---------
Total Other Assets 122,506 149,782
--------- ---------
Total Assets $ 213,357 $ 193,163
========= =========
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts Payable and
Accrued Expenses $ 33,196 $ 23,715
Accrued Compensation 120,000 0
Notes Payable 14,000 0
--------- ---------
Total Current Liabilities 167,196 23,715
Long-Term Liabilities
Shareholder Loan 138,937 87,701
--------- ---------
Total Liabilities 306,133 111,416
--------- ---------
Stockholders' Equity (Deficit)
Common Stock 584 557
Additional Paid-In Capital 791,182 551,930
Retained Earnings (Deficit) (884,542) (470,740)
--------- ---------
Total Stockholders' Equity (Deficit) (92,776) 81,747
--------- ---------
Total Liabilities and
Stockholders' Equity Deficit) $ 213,357 $ 193,163
========= =========
See accompanying notes to financial statements
F-3
XIOM, Corp.
Statements of Operations
For The Years Ended September 30,
(Restated)
2005 2004
----------- -----------
Sales $ 184,445 $ 114,479
Cost of Sales 145,601 89,185
---------- ----------
Gross Profit 38,844 25,294
General and Administrative Expenses 452,646 279,940
---------- ----------
Operating Income (Loss) (413,802) (254,646)
Other Income (Expenses) 0 0
---------- ----------
Net Income (Loss) ($413,802) ($254,646)
========== ==========
Basic and Diluted Income (Loss) per Share ($0.07) ($0.06)
========== ==========
Weighted Average Number of Shares Outstanding 5,715,399 3,935,156
========== ==========
See accompanying notes to financial statements
F-4
XIOM, Corp.
Statements of Stockholders' Equity (Deficit)
For The Years Ended September 30, 2005 and 2004
(Restated)
Common Stock Total
----------------------------- Additional Retained Shareholders'
Per Share Number of Par Paid-In Earnings Equity
Amount Shares Value Capital (Deficit) (Deficit)
--------- --------- ----- ---------- --------- -------------
Balance, September 30, 2003 3,632,973 $363 $237,784 ($216,094) $ 22,053
Shares issued in August 2004 to purchase
Patent Technology Rights $0.10 1,225,000 123 122,377 122,500
Shares issued in August 2004 to repay
Notes Payable $0.10 120,000 12 11,988 12,000
Shares issued in August 2004 to repay
Shareholder Loan $0.10 125,000 12 12,488 12,500
Shares issued for services during the year
ended September 30, 2004 $0.10 473,400 47 47,293 47,340
Officers' Compensation Incurred, Not Paid 120,000 120,000
Net (Loss) for the year ended September 30, 2004 (254,646) (254,646)
--------- ---- -------- --------- ---------
Balance, September 30, 2004 5,576,373 $557 $551,930 ($470,740) $ 81,747
Shares issued pursuant to a private placement
of restricted common stock in March 2005 $0.75 157,062 16 117,783 117,799
Non-employee option grant in March 2005 40,000 40,000
Shares issued for services during the year
ended September 30, 2005 $0.75 98,640 10 73,970 73,980
Shares issued to purchase fixed assets
in July 2005 $0.75 10,000 1 7,499 7,500
Net (Loss) for the year ended September 30, 2005 (413,802) (413,802)
--------- ---- -------- --------- ---------
Balance, September 30, 2005 5,842,075 $584 $791,182 ($884,542) ($92,776)
========= ==== ======== ========= =========
See accompanying notes to financial statements.
F-5
XIOM, Corp.
Statements of Cash Flow
For The Years Ended September 30,
(Restated)
2005 2004
--------- ----------
Cash Flows from Operating Activities:
Net Income (Loss) ($413,802) ($254,646)
--------- ---------
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and Amortization 13,218 3,943
Issuance of Shares for Services 73,980 47,340
Non-employee option grant 40,000 0
Officers' Compensation 0 120,000
(Increase) decrease in:
Accounts Receivable, Net (2,002) 13,228
Inventory (8,924) 1,316
Other Current Assets 1,316 1,000
Retainage Receivable 20,076 24,494
Accounts Payable and Accrued Expenses 9,481 11,684
Accrued Compensation 120,000 0
--------- ---------
Total Adjustments 267,145 223,005
--------- ---------
Net cash provided (used) in operating activities (146,657) (31,641)
--------- ---------
Cash Flows from Investing Activities:
Purchase of Fixed Assets (19,627) (16,411)
--------- ---------
Net cash provided (used) by investing activities (19,627) (16,411)
--------- ---------
Cash Flows from Financing Activities:
Sale of Restricted Common Stock 117,799 0
Increase in Notes Payable 14,000 0
Proceeds from Shareholder Loan 51,236 42,121
--------- ---------
Net cash provided (used) by financing activities 183,035 42,121
--------- ---------
Net increase (decrease) in cash and cash equivalents 16,751 (5,931)
Cash & Cash Equivalents, Beginning of Period 3,326 9,257
--------- ---------
Cash & Cash Equivalents, End of Period $ 20,077 $ 3,326
========= =========
Supplemental Disclosures
Non-Cash Financing and Investing Activities
Issuance of Shares for Services $ 73,980 $ 47,340
========= =========
Issuance of Shares to Purchase Fixed Assets $ 7,500 $ 0
========= =========
Non-employee option grant $ 40,000 $ 0
========= =========
Officers' Compensation $ 0 $ 120,000
========= =========
Issuance of Shares for Patent and Technology Rights $ 0 $ 122,500
========= =========
Issuance of Shares in Exchange for Notes Payable $ 0 $ 12,000
========= =========
Issuance of Shares in Exchange for Shareholder Loan $ 0 $ 12,500
========= =========
See accompanying notes to financial statements
F-6
XIOM, Corp.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ENTITY AND ORGANIZATION
XIOM, Corp., formerly Panama Industries, Ltd., ("XIOM or "the Company")
was incorporated in March 1998, but was inactive until May 1999. At that
time, all operating assets and liabilities of Thermaltec International
Corp. ("Thermaltec"), the previous parent company, were transferred into
XIOM. In June 2001, XIOM was spun out from Thermaltec upon which the
shareholders of Thermaltec received one common share of XIOM for every
three common shares of Thermaltec. During fiscal 2003 and 2004, XIOM
developed a patented industrial based thermal spray coating technology
which will sold directly to commercial customers and coating contractors.
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 and
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.
REVENUE RECOGNITION
Revenues from contracts which have terms greater than one month and are
fixed-price contracts are recognized on the percentage-of-completion
method, measured by the percentage of actual cost incurred to date, to the
estimated total cost for each contract. On those contracts which are not
fixed-price in nature and which contractually require the billing of
actual costs and expenses incurred during the period, revenue is
recognized as the actual amount invoiced during the period. Revenues from
the patented industrial thermal spray technology is currently being
generated from both long-term and short-term contracts, as defined.
Estimated costs and revenues are based upon engineering estimates of the
work performed to date relative to the total work required under the
contract. Changes in contract estimates which result in changes in
estimated profit are applied to the cumulative work accomplished on the
project. The re-calculated gross profit on the contract is applied to the
revenues recorded to date for the entire life of the contract and the
resulting income or loss is recorded in the current period. The Company
has experienced no material contract losses to date.
CASH AND CASH EQUIVALENTS
For the purpose of financial statement presentation, the Company includes
cash on deposit, money market funds, amounts held by brokers in cash
accounts and funds temporarily held in escrow to be cash equivalents.
ACCOUNTS RECEIVABLE
Accounts receivable have been adjusted for all known uncollectible
contracts and customer accounts. An allowance for doubtful contracts has
been provided based on such analysis.
INVENTORY
Inventory consists of various parts, materials and supplies utilized in
the assembly, and the operation, of thermal spray coating system and is
valued at the lower of cost (first-in, first-out) or market.
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment is stated at cost. Major expenditures for property
and those that substantially increase useful lives, are capitalized.
Maintenance, repairs, and minor renewals are expensed as incurred. When
assets are retired or otherwise disposed of, their costs and related
accumulated depreciation are removed from the accounts and resulting gains
or losses are included in income. Depreciation is provided by utilizing
the straight-line method over the estimated useful lives of the assets.
F-7
XIOM, Corp.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
EARNINGS (LOSS) PER SHARE
The Company has adopted SFAS No. 128, "Earnings per Share", which requires
presentation of basic earnings per share ("Basic EPS") and diluted
earnings per share ("Diluted EPS") by all publicly traded entities, as
well as entities that have made a filing or are in the process of filing
with a regulatory agency in preparation for the sale of securities in a
public market.
Basic EPS is computed by dividing net income or loss available to common
shareholders by the weighted average number of common shares outstanding
during the period. The computation of Diluted EPS gives effect to all
potentially dilutive common shares during the period. The computation of
Diluted EPS does not assume conversion, exercise or contingent exercise of
securities that would have an antidilutive effect on earnings.
INCOME TAXES
The Company has adopted Financial Accounting Standards Board Statement No.
109, "Accounting for Income Taxes".
DEFERRED INCOME TAXES
Deferred tax assets arise principally from net operating losses and
capital losses available for carryforward against future years' taxable
income.
RECLASSIFICATIONS
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform to the presentation in
the current-year financial statements.
RECENTLY ISSUED ACCOUTING PRONOUNCEMENTS
There are no recently issued accounting standards that would have a
material impact on these financial statements.
2. INVENTORY
As of
September 30,
----------------
2005 2004
------- ------
Inventory consists of the following:
Parts, Materials and Supplies $11,010 $2,086
3. FIXED ASSETS
As of September 30,
Estimated useful --------------------
Life - years 2005 2004
---------------- -------- ---------
Machinery and equipment 5-10 $ 40,873 $ 14,646
Vehicles 3-5 16,411 16,411
Computer Equipment 3-5 900 -0-
Leasehold improvements 5-31.5 10,120 10,120
------ ------
68,304 41,177
Less accumulated depreciation
and amortization (22,422) (16,404)
-------- --------
Net property and equipment $ 45,882 $ 24,773
======== ========
Fixed asset depreciation and amortization for the years ended September
30, 2005 and 2004 was $6,018 and $2,743, respectively.
F-8
XIOM, Corp.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
4. PATENTS PENDING
In August 2004, the two operating officers of XIOM, who are also
shareholders, irrevocably transferred to the Company all current and
future rights, title and interest in all technology and process patents
pending related to the low temperature thermal spray gun, modular control
unit and material powder feeder. In exchange for transferring their
individual ownerships, one of the officers received 375,000 shares of
restricted common stock and the other officer, who is also the inventor of
record, received 850,000 shares of restricted common stock. These shares
were valued at $.10 per share, which approximated the fair market value of
the common stock on the date of the exchange. As such, the gross carrying
value of these patents is $122,500. These patents are being amortized on a
straight-line basis over their stated terms, which is seventeen (17) years
for each. Amortization expense for fiscal 2005 and 2004 was $7,200 and
$1,200, respectively. Estimated amortization expense related to these
patents will be approximately $7,200 per year for fiscal 2006 through
fiscal 2010.
5. RETAINAGE RECEIVABLE
Retainage receivable represents the cumulative amount held-back from each
percentage-of-completion billing pursuant to long-term contracts. Such
amounts will be paid to the Company upon the completion of each contract
and final customer approval. The net increase (decrease) in Retainage
Receivable for fiscal 2005 and 2004 was ($20,076) and ($24,494),
respectively. As of September 30, 2005, the Retainage Receivable balance
of $6,258 is not expected to be collected in the coming fiscal year.
6. ACCRUED COMPENSATION
Accrued Compensation at September 30, 2005 represents compensation that
has been accrued for each of the two operating officers of the Company.
The value of their services was determined to be $60,000 each for fiscal
2005. For fiscal 2004, the value of such services was also determined to
be $60,000 each and was recorded as Additional Paid-in Capital because, at
that time, the Company did not expect to have the financial resources
necessary to formally pay for these services.
7. NOTES PAYABLE
Notes Payable at September 30, 2005 represents several non-interest
bearing demand notes payable to certain individuals in varying amounts.
8. SALES TO MAJOR CUSTOMERS
For the fiscal years ending September 30, 2005 and 2004, the Company had
one major customer who accounted for approximately 40% and 100%,
respectively, of total sales and 0% of trade accounts receivable for both
fiscal years.
9. COMMITMENTS AND CONTINGENCIES
LEASES
XIOM leases office space on a month-to-month basis for $1,300 per month.
In addition, the Company leases a separate manufacturing and warehouse
facility on a month-to-month basis for $2,500 per month. Rent expense, net
of sub-lease income, for fiscal 2005 and 2004 was approximately $29,500
and $35,600, respectively.
F-9
XIOM, Corp.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
10. COMMON STOCK
As of September 30,
-----------------------
2005 2004
---------- ----------
Common stock is as follows:
Common stock, $.0001 par value, 10,000,000 shares
authorized.
Shares issued and outstanding 5,842,075 5,576,373
Par Value $ 584 $ 557
In August 2004, the Company issued 473,400 share of restricted common
stock to several vendors as consideration for various accounting, legal
and consulting services provided during the fiscal year. These shares were
issued based on the fair market value of the services provided converted
at $.10 per share, the estimated fair market value of the common stock on
the date of issuance.
In March 2005, the Company completed a private placement offering in which
it sold and issued 157,062 shares of restricted common stock at a price of
$.75 per share. In addition, the stockholders that purchased these shares
also received a warrant to purchase one share of common stock for each
share they purchased. Each warrant has an exercise price of $.75 per share
and a term of one year.
During fiscal 2005, the Company issued 98,640 share of restricted common
stock to several vendors as consideration for consulting services provided
during the fiscal year. These shares were issued based on the fair market
value of the services provided converted at $.75 per share, the estimated
fair market value of the common stock on the date of each issuance.
11. STOCK OPTIONS
On March 1, 2005, XIOM granted three separate non-qualified options to
purchase a total of 700,000 shares of restricted common stock at a price
of $.75 per share, which approximates the fair market value on the date of
the grant. The two operating officers, who are also shareholders, each
received an option to purchase 300,000 restricted common shares and a
consultant to the company received an option to purchase 100,000
restricted common shares as partial consideration for providing accounting
services for fiscal 2005. The options are fully vested and are
exercisable, in whole or in part, at the sole discretion of the grantee
through February 28, 2010 and may not be assigned or otherwise
transferred. As of September 30, 2005, the fair market value of the
Company's common stock was estimated at approximately $.75 per share,
which approximated the fair market value on March 1, 2005, the date of the
grant. The value of the non-employee option was determined based on a
calculated value method using the historical volatility of the industry
sector index related to the small-cap version of the Industrial Suppliers
sub-sector, within Support Services for Industrial Goods and Services.
Specifically, the Company used the Black-Scholes-Merton option-pricing
formula, which produced a value of $.40 per option share. This resulted in
total compensation of $40,000 for fiscal year ended September 30, 2005.
Assumptions used in the calculation included the contractual life of the
option as the expected term and a risk free rate of 3.5%.
12. INCOME TAXES
For the fiscal years ended September 30, 2005 and September 30, 2004, the
Company had net operating and capital loss carryforwards of approximately
$886,000 and $533,000, respectively, which expire in 2015 and 2010,
respectively.
At September 30, 2005 and 2004, the Company provided a full valuation
allowance against the gross deferred tax asset arising from the net
operating and capital loss carryforwards because, in management's opinion
at this time, it is more likely than not, such benefits will not be
realized during the respective carryforward periods.
13. SUBSEQUENT EVENTS
On October 1, 2005, XIOM granted non-qualified options to several
employees of the Company to purchase a total of 67,500 shares of
restricted common stock at a price of $.75 per share, which approximates
the fair market value on the date of the grant. The options are fully
vested and are exercisable, in whole or in part, at the sole discretion of
the grantee through September 30, 2010 and may not be assigned or
otherwise transferred.
F-10
XIOM, Corp.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
14. RELATED PARTY TRANSACTIONS
The Shareholder Loan balance represents the net amount owed to one
officer/shareholder for monies advanced from time to time to cover the
Company's short-term cash flow needs. This loan is unsecured, non-interest
bearing and has no specific term for repayment. During August 2004, the
company converted $12,500 of Shareholder Loan to common stock by issuing
125,000 restricted shares at $.10 per share, the estimated fair market
value of the common stock on the date of conversion.
In August 2004, two separate consultants and legal counsel, who are also
shareholders of the Company, were issued 150,000, 200,000 and 40,000
restricted common shares, respectively. These shares were issued at $.10
per share, the approximated fair market value of the common stock on the
date of issuance, as consideration for the fair market value of the
accounting, financial consulting and legal services, respectively, which
they provided during the fiscal year. As a result of these common stock
issuances, the Company recognized an expense of $15,000 for accounting
services, $20,000 for consulting services and $4,000 for legal services
for fiscal 2004.
15. RESTATED FINANCIAL STATEMENTS
The financial statements have been restated.
For the year ended September 30, 2005, the change was due to an increase
in general and administrative expenses resulting from an option issued to
an outside consultant for accounting services rendered. The resulting
change increased the loss by $40,000 on the Statement of Operations and
increased Additional Paid-In Capital on the Balance Sheet and the
Statement of Stockholders' Equity. The effect of this change on the loss
per share was insignificant.
For the year ended September 30, 2004, the change was mainly due to an
increase in officers' compensation of $120,000 and a $20,000 accrual due
to an outside consultant for accounting services rendered. The resulting
change increased the loss by approximately $140, 000 on the Statement of
Operations and increased the Accrued Expenses and Additional Paid-In
Capital on the Balance Sheet and the Statement of Stockholders' Equity.
The effect of this change increased the loss per share by $.03
16. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial
statements, the Company has an accumulated deficit of approximately
$885,000 and has negative working capital of approximately $121,000.
Additionally, the Company incurred a Net Loss of approximately $414,000
for the year ended September 30, 2005 and a Net Loss of approximately
$255,000, for the year ended September 30, 2004. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the
event the Company cannot continue in existence. However, the Company has
seen an increase in sales orders for the patented industrial thermal spray
technology during the second quarter of fiscal 2006. As such, the Company
plans to raise sufficient working capital through a private placement
offering of restricted common stock by the end of the second fiscal
quarter in order to meet customer demand for products and support. As a
result of these factors, management believes it will have sufficient
resources to meet the Company's cash flow requirements for at least twelve
months following the date of these financial statements.
F-11
XIOM, Corp.
Balance Sheet
As Of June 30, 2006
(Unaudited)
Assets
Current Assets
Cash and Cash Equivalents $ 242,007
Accounts Receivable, Net of
Allowance for Doubtful Accounts 113,619
Inventory 66,099
Shareholder Loan 8,146
-----------
Total Current Assets 429,871
-----------
Fixed Assets, Net of Accumulated
Depreciation & Amortization 40,105
Other Assets
Patents Pending, Net of
Accumulated Amortization 137,771
Retainage Receivable 23,523
Security Deposits 2,418
-----------
Total Other Assets 163,712
-----------
Total Assets $ 633,688
===========
Liabilities and Stockholders' Equity(Deficit)
Current Liabilities
Accounts Payable and
Accrued Expenses $ 12,750
Accrued Compensation 30,000
Subscriptions For Common Stock 283,799
Notes Payable 46,770
-----------
Total Current Liabilities 373,319
-----------
Long-Term Liabilities
Shareholder Loan 0
-----------
Total Liabilities 373,319
-----------
Common Stock, Subject To Rescission Rights 342,100
-----------
Stockholders' Equity(Deficit)
Common Stock 636
Additional Paid-In Capital 1,234,177
Retained Earnings (Deficit) (1,316,544)
-----------
Total Stockholders' Equity(Deficit) (81,731)
-----------
Total Liabilities and
Stockholders' Equity(Deficit) $ 633,688
===========
See accompanying notes to financial statements
F-12
XIOM, Corp.
Statement of Operations
For The Nine Months Ended June 30,
(Unaudited)
2006 2005
----------- -----------
Sales $ 365,798 $ 89,104
Cost of Sales 219,470 53,462
---------- ----------
Gross Profit 146,328 35,642
General and Administrative Expenses 578,552 377,373
---------- ----------
Operating Income (Loss) (432,224) (341,731)
Other Income (Expenses) 222
---------- ----------
Net Income (Loss) ($432,002) ($341,731)
========== ==========
Basic and Diluted Income (Loss) per Share ($0.07) ($0.06)
========== ==========
Weighted Average Number of Shares Outstanding 6,171,461 5,676,776
========== ==========
See accompanying notes to financial statements
F-13
XIOM, Corp.
Statement of Stockholders' Equity
For The Nine Months Ended June 30, 2006
(Unaudited)
Common Stock
----------------------------- Additional Retained Total
Per Share Number of Par Paid-In Earnings Shareholders'
Amount Shares Value Capital (Deficit) Equity (Deficit)
--------- --------- ----- ----------- ----------- ----------------
Balance, September 30, 2005 5,842,075 $584 $ 791,182 ($884,542) ($92,776)
Issuance of shares for services $0.75 15,030 2 11,271 11,273
Issuance of shares for services $1.30 35,980 4 46,770 46,774
Exercise of non-quaified options $0.75 460,000 46 344,954 345,000
Non-employee option grant
in March 2006 40,000 40,000
Net (Loss) for the nine months (432,002) (432,002)
ended June 30, 2006
--------- ---- ---------- ----------- --------
Balance, June 30, 2006 6,353,085 $636 $1,234,177 ($1,316,544) ($81,731)
========= ==== ========== =========== ========
See accompanying notes to financial statements
F-14
XIOM, Corp.
Statements of Cash Flow
For The Nine Months Ended June 30,
(Unaudited)
2006 2005
--------- ---------
Cash Flows from Operating Activities:
Net Income (Loss) ($432,002) ($341,731)
--------- ---------
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and Amortization 13,529 10,056
Issuance of shares for services 58,047 50,617
Non-employee option grant 40,000 40,000
(Increase) decrease in:
Accounts Receivable (99,737) 3,203
Inventory (55,089) (5,799)
Retainage Receivable (17,265) (1,167)
Accounts Payable and Accrued Expenses 9,281 2,905
Accrued Compensation 90,000 90,000
--------- ---------
Total Adjustments 38,766 189,815
--------- ---------
Net cash provided (used) in operating activities ($393,236) ($151,916)
--------- ---------
Cash Flows from Investing Activities:
Purchase of Additional Overseas Patents (29,707) 0
Purchase of Fixed Assets (1,713) (5,557)
--------- ---------
Net cash provided (used) by investing activities (31,420) (5,557)
--------- ---------
Cash Flows from Financing Activities:
Common Stock, Subject to Rescission Rights 342,100 117,796
Subscriptions For Common Stock 283,799 0
Proceeds from Notes Payable 32,770 6,000
Proceeds from (repayment of) Shareholder Loan (12,083) 38,246
--------- ---------
Net cash provided (used) by financing activities 646,586 162,042
--------- ---------
Net increase (decrease) in cash and cash equivalents 221,930 4,569
Cash & Cash Equivalents, Beginning of Period $ 20,077 3,326
--------- ---------
Cash & Cash Equivalents, End of Period $ 242,007 $ 7,895
========= =========
Supplemental Disclosures
Non-Cash Financing and Investing Activities
Options exercised in exchange for Accrued Compensation,
Shareholder Loan and Accrued Professional Fees 345,000 0
========= =========
Issuances of shares for services 58,047 50,617
========= =========
Non-employee option grant 40,000 40,000
========= =========
See accompanying notes to financial statements
F-15
XIOM, Corp.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2006
1. BASIS OF PRESENTATION
The interim financial statements presented have not been audited or
reviewed, but were compiled from the books and records of the Company.
They have been prepared using the accrual method of accounting and, in the
opinion of management, include all adjustments necessary in order to make
the financial statements not misleading. The interim financial statements
do not include all of the disclosures required for complete financial
statements prepared in accordance with generally accepted accounting
principals.
2. WARRANTS
In February 2006, the Board of Directors of XIOM, Corp approved to extend
the exercise period of the warrants issued with the private placement
offering in March 2005 for an additional twelve months, through February
2007. The Black-Scholes-Merton pricing model was utilized to determine the
incremental value of these warrants on the modification date.
Specifically, the assumptions used in the calculation included the
expected term of eleven months, a risk free rate of 3.5% and a market
price volatility factor of approximately 5%. The increase to the fair
value, equal to the excess of the fair value of the revalued warrants over
the fair value of the original warrants on the date of modification, of
approximately $8,000 was determined not to be material. As such, there was
no additional accounting treatment required as a result of extending the
exercise period.
3. STOCK OPTIONS
On October 1, 2005, XIOM granted non-qualified options to several
employees of the Company to purchase a total of 67,500 shares of
restricted common stock at a price of $.75 per share, which approximates
the fair market value on the date of the grant. The options are fully
vested and are exercisable, in whole or in part, at the sole discretion of
the grantee through September 30, 2010 and may not be assigned or
otherwise transferred.
In March 2006, XIOM granted three separate options to purchase a total of
350,000 shares of restricted common stock at a price of $1.50 per share,
which approximates the fair market value on the date of the grant. The two
operating officers, who are also shareholders, each received an option to
purchase 150,000 restricted common shares and a consultant to the company
received an option to purchase 50,000 restricted common shares as partial
consideration for providing accounting services for fiscal 2006. The
options are fully vested and are exercisable, in whole or in part, at the
sole discretion of the grantee through February 28, 2011 and may not be
assigned or otherwise transferred. As of March 31, 2006, the fair market
value of the Company's common stock was estimated at approximately $1.50
per share, which approximated the fair market value on March 1, 2006, the
date of the grant. The value of the non-employee option was determined
based on a calculated value method using the historical volatility of the
industry sector index related to the small-cap version of the Industrial
Suppliers sub-sector, within Support Services for Industrial Goods and
Services. Specifically, the Company used the Black-Scholes-Merton
option-pricing formula, which produced a value of $.80 per option share.
This resulted in the Company recording an additional consulting expense of
$40,000. Assumptions used in the calculation included the contractual life
of the option as the expected term, a risk free rate of 3.5% and a market
price volatility factor of 20%.
In March 2006, the two operating officers, who are also shareholders,
partially exercised their March 2005 options and purchased 420,000 shares
of restricted common stock at $.75 per share. Accrued Compensation and the
Shareholder Loan were off-set and used as consideration for acquiring
these option shares. A consultant to the company also partially exercised
his March 2005 options and purchased 40,000 shares of restricted common
stock at $.75 per share. Accrued professional fees were off-set and used
as consideration for acquiring these option shares.
4. ISSUANCES OF COMMON STOCK
In March 2006, XIOM completed a private placement offering in which it
sold and issued 311,180 shares of restricted common stock at a price of
$1.10 per share for a total of $342,100. In addition, the stockholders
that purchased these shares also received a warrant to purchase one share
of restricted common stock for each common share they purchased. These
warrants do not carry any registration rights and have an exercise price
of $1.10 per share and a term of one year (See Note 5).
F-16
In April 2006, the Company commenced another private placement offering
whereby it sold an issued 232,538 shares of restricted common stock at a
price of $1.30 per share for a total of $302,299. In addition, the
stockholders that purchased these shares also received a warrant to
purchase one share of restricted common stock for each common share they
purchased. These warrants do not carry any registration rights and have an
exercise price of $1.30 per share and a term of one year. This offering
formally closed and the restricted common shares issued on July 15, 2006.
As of June 30, 2006 the Company had collected subscriptions for common
stock totaling $283,799 related to this offering and such amount has been
classified as a current liability on the balance sheet (See Note 5).
5. COMMON STOCK, SUBJECT TO RESCISSION RIGHTS
Under the federal securities laws, any offering of securities must be
registered unless an exemption from registration is available, and, with
limited exceptions, no exemption from registration is generally available
for a private placement transaction which is made concurrently with a
public offering. We may be considered to have commenced a public offering
of securities on May 6, 2005, when we first filed this registration
statement on Form SB-2. Subsequent to that date, from January 1, 2006
through July 15, 2006, we offered and sold 543,718 shares of common stock
for a total of $644,399. Although we made these transactions in reliance
upon claimed exemptions from registration that we believed were valid, the
purchasers may claim that the transactions violated federal securities
laws. If any of these transactions did violate federal securities laws,
the purchasers in those transactions may have claims against us for
damages or for rescission of their purchase transaction and recovery of
the full subscription price paid, which would be a total of $644,399, plus
interest. As of the date of this registration statement, none of the
purchasers has made or threatened any claim against us alleging violation
of the federal securities laws. In the event the purchasers of these
securities successfully asserted claims for rescission it would have a
substantial adverse effect on our business and on our ability to continue
to operate. We may not have sufficient funds available to pay such claims,
and there is no assurance that we would be able to obtain such funds
either from the proceeds of this offering, or from other sources. In that
event, it is likely that we would be forced to cease operations and
liquidate our available assets to pay our liabilities, including, but not
limited to, the rescission claims.
F-17
================================================================================
XIOM, Corp.
814,124 Shares
Common Stock
PROSPECTUS
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This prospectus is not an offer to sell common
stock and is not soliciting an offer to buy common stock in any state where the
offer or sale is not permitted.
Until ______________, 2005, all dealers that effect transactions in these
securities, whether or not participating in the offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
____________, 2006
================================================================================
37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors, Officers, Employees and Agents.
The Registrant's certificate of incorporation limits the liability of the
Registrant's directors to the maximum extent permitted by Delaware law. Delaware
law provides that a director of a corporation will not be personally liable for
monetary damages for breach of that individual's fiduciary duties as a director
except for liability for (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) any act or omission not in good faith or
that involves intentional misconduct or a knowing violation of the law, (3)
unlawful payments of dividends or unlawful stock repurchases or redemptions, or
(4) any transaction from which the director derived an improper personal
benefit.
This limitation of liability does not apply to liabilities arising under federal
securities laws and does not affect the availability of equitable remedies such
as injunctive relief or rescission.
The Delaware General Corporation Law provides that a corporation may indemnify
directors and officers, as well as other employees and individuals, against
attorneys' fees and other expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
any threatened, pending or completed actions, suits or proceedings in which such
person was or is a party or is threatened to be made a party by reason of such
person being or having been a director, officer, employee or agent of the
corporation. The Delaware General Corporation Law provides that this is not
exclusive of other rights to which those seeking indemnification may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
The Registrant's certificate of incorporation and bylaws provide that the
Registrant is required to indemnify its directors and officers to the maximum
extent permitted by law. The Registrant's bylaws also require the Registrant to
advance expenses incurred by an officer or director in connection with the
defense of any action or proceeding arising out of that party's status or
service as a director or officer of the Registrant or as a director, officer,
employee benefit plan or other enterprise, if serving as such at the
Registrant's request. The Registrant's by-laws also permit the Registrant to
secure insurance on behalf of any director or officer for any liability arising
out of his or her actions in a representative capacity. The Registrant intends
to enter into indemnification agreements with its directors and some of its
officers containing provisions that (1) indemnify, to the maximum extent
permitted by Delaware law, those directors and officers against liabilities that
may arise by reason of their status or service as directors or officers except
liabilities arising from willful misconduct of a culpable nature, (2) to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and (3) to obtain directors' and officers' liability
insurance if maintained for other directors or officers.
38
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the
issuance and distribution of the securities being registered hereby. All such
expenses will be borne by the registrant; none shall be borne by any selling
stockholders.
Securities and Exchange
Commission registration fee $ 286.81
Legal fees and expenses (1) $ 5,000.00
Accounting fees and expenses $10,000.00
Miscellaneous (1) $ 5,000.00
----------
Total (1) $20,286.81
- ----------
(1) Estimated.
Item 26. Recent Sales of Unregistered Securities.
We have issued shares for services or other reasons as indicated as follows:
On May 17, 2002 we issued 650,000 shares to Diversified Capital Holdings, LLC
for management consulting services. The agreement with Diversified Capital
Holdings, LLC has been terminated by the parties.
On May 23, 2002 we issued 350,000 shares to our Chairman and President, Andrew
B. Mazzone as compensation for services to XIOM, Corp.
On May 23, 2002, we issued 150,000 shares to JWZ Holdings, Inc. as compensation
for services provided to XIOM Corp. James W. Zimbler is the control person of
JWZ Holdings, Inc.
On May 20, 2002, we issued 25,000 shares to Thomas Gardega as compensation for
services provided to XIOM Corp. We also issued 20,000 shares to Thomas Klein for
consulting services related to accounting and finance provided to XIOM Corp.
On May 20, 2002, we issued 50,000 shares each to Dean Rhodes and James Dahike.
The shares were additional shares owed to the two shareholders for a previous
investment into XIOM Corp.
On July 11, 2002, we issued 2,000 shares, 2,500 shares and 2,500 shares to Lois
F. Venegas and Rossanne Venegas Sanco and Javier Murillo Uilloe, respectively,
as repayment of funds loaned to XIOM Corp.
On February 5, 2005, we issued 50,000 shares to Henry Weber as payment for
consulting services provided to XIOM Corp.
On February 8, 2005, we issued 10,000 shares to Dr. Edward Betz as compensation
for consulting services related to biocidal information related to coatings.
39
On July 27, 2005, we issued 10,000 shares of stock to Alexander Gardega for the
purchase of a powder blender for use in preparing the products of the Company.
On February 8, 2005 and August 3, 2005 we issued 7,490 and 31,150 shares of
stock, respectively, to Frank Longo as compensation for consulting services for
engineering issues related to our technology and products.
The Company has issued the following shares to affiliates of the Company; the
transactions took place on August 4, 2004:
We issued to our President, Andrew Mazzone, a total of 500,000 shares of common
stock, in two separate transaction 125,000 shares for the repayment of Officer
Loans to the Company and 375,000 shares for the transfer of certain technology
rights used by the Company. These certain rights included the creation of
certain proprietary technologies and applications from Mr. Mazzone's experience
in the coating industry which enhanced the patents received from Mr. Gardega.
We issued to our Vice-President, Thomas Gardega, a total of 850,000 shares of
common stock, in two separate transactions, 475,000 shares for the transfer of
certain technology rights used by the Company, and 375,000 shares for the
transfer of certain Patent Rights to the Company. These patent rights are as
contained in the patent descriptions filed as Exhibits to the Registration
statement and with the United States Patent and Trademark Office.
We issued 150,000 shares of common stock to DRB Consulting, Inc., for accounting
and consulting services for the fiscal years of 2003 and 2004. David Behanna is
the control person of DRB Consulting, Inc.
We issued 200,000 shares of common stock to James W. Zimbler for consulting
services performed by him in the 2004 fiscal year.
We issued 40,000 shares to Michael S. Krome, Esq., for legal services performed
and to be performed on behalf of the Company.
Also on August 4, 2004, we issued the following shares, to the persons
indicated:
Name Shares Purpose
- ---- ------ -------
William Mazzone 5,000 Repayment of loan from May 2002
Dean Rhoads 50,000 Repayment of loan from March 2002
Toni Jane Gillis 10,000 Repayment of loan from May 2002
Jerry Rukin 15,000 Consulting services on technical issues from June
2004
Earl Richard Brown 6,000 Repayment of loan
Dorothy Brown 5,000 Repayment of loan
Arlene Beecher 3,000 Repayment of loan
Thomas O'Dea 6,000 Repayment of loan
Jean Rossi 6,000 Repayment of loan
Mary Bianchi 3,000 Repayment of loan
Walter Pansuk 3,000 Repayment of loan
Kenneth Desroches 6,000 Repayment of loan
Andrew Tarabelli 3,000 Repayment of loan
Frank Longo 8,400 Compensation for June 2004 services
40
For the period December 1, 2004 through March 18, 2005, XIOM Corp. sold,
pursuant to a private placement, 157,062 shares of common stock at $0.75 per
share with a warrant to purchase another share of the company at $0.75 per
share, and raised a total of $117,795.50, pursuant to the private placement as
follows:
A chart of the shares issued pursuant to the above transaction follows:
Number of Shares Percentage of
Identity of Stockholder or Group beneficially owned (1) Shares Owned
- ----------------------------------- ---------------------- -------------
Andrew Tarabelli 18,667 *
Shirley V Fox and Raymond A Fox, Jr. 1,000 *
Heather Sides 800 *
Devon Rae Sides 65 *
Rian Grey Sides 65 *
Leslie C. Fox 6,667 *
Ann G, Travers Revocable Trust 8,000 *
Kevin M. Petrone 1,300 *
Alfred Zefara 6,667 *
Robert Fredricks 7,333 *
Patric Sellitti 7,333 *
William T. Rooker &
Iman Rooker, 1,500 *
Martin Murray & Susanna Murrya 2,500 *
Ryan Michael Byson 500 *
Stephanie Nicole Murray 100 *
Martin Gouglas Murray 100 *
Joseph Pileri 2,667 *
Donald B. Stevenson 10,000 *
James W. Zimbler (2) 13,334 (2)
Robert Fox 1,000 *
Linda Steinkamp 3,000 *
Theresa Steinkamp 3,000 *
Carole S. Daddona 6,667 *
Kevin Duckman 6,667 *
Irving Schwab 13,333 *
Albino L. Sellitti 4,000 *
John Mirabella 1,333 *
Vincent J. Dixon 1,333 *
Ralph Dente 1,333 *
Brain E. Rooney 1,333 *
Richard Carter 13,334 *
Stefeno Buscarnea 1,333 *
Marc Regan 1,333 *
James G. Petrone & Thelma A Petrone 133 *
Michael V. Della Fave 1,333 *
Caarmine S. Marcello, Jr. 1,333 *
Kevin D. Canterman 1,333 *
Jeanne Kirk 4,000 *
(1) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of Common Stock that an individual or entity has
a right to acquire within 60 days pursuant to the exercise of
options or warrants are deemed to be outstanding for the purposes of
computing the percentage ownership of such individual or entity, but
are not deemed to be outstanding for the purposes of computing the
percentage ownership of any other person or entity shown in the
table.
41
(2) James Zimbler beneficially owns a total of 413,334 shares of common
stock, which includes 200,000 shares owned by JWZ Holding, Inc. Mr.
Zimbler is a control person, along with another shareholder, Michael
S. Krome, Esq., who owns 40,000 shares, in Alpha Advisors, LLC. The
shares owned by Mr. Zimbler, JWZ Holding, Inc. and Alpha Advisors,
LLC total 688,334 and when all of the ownership percentages are
added, the control percentage is 10.6%, if voted as a block. The
shares owned by Michael Krome and Alpha Advisors, LLC total 315,000
and when the ownership percentages are added, the control percentage
4.8%, if voted as a block. If Mr. Zimbler, Mr. Krome's and Alpha
Advisors, LLC's beneficial ownerships are pooled, totaling 728,334
shares, the percentage is 11.2%, if voted as a block.
For the period January 1, 2006 through March 31, 2006, XIOM Corp. sold, pursuant
to a private placement, 311,180 shares of common stock at $1.10 per share with a
warrant to purchase another share of the company at $1.10 per share, and raised
a total of $342,100, pursuant to the private placement as follows:
A chart of the shares issued pursuant to the above transaction follows:
Number of Shares Percentage of
Identity of Stockholder or Group beneficially owned (1) Shares Owned
- ---------------------------------- ---------------------- -------------
Beacon Global Private Equity Fund,
Ltd. (2) 91,000
David Rubis 45,500
Mitz Family Trust (3) 10,000
Hollingsworth Trust (4) 68,180
James O'Rourke 10,000
Ernie Ferla 10,000
Mark Zilisko Revocable Trust (5) 20,000
William S. Meith 10,000
Richard Kunz 5,000
Lonnie R. Bailey 10,000
Cal-Logic LLC (6) 10,000
Prendiville Revocable Trust (7) 11,500
Helen Hix 10,000
(1) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of Common Stock that an individual or entity has
a right to acquire within 60 days pursuant to the exercise of
options or warrants are deemed to be outstanding for the purposes of
computing the percentage ownership of such individual or entity, but
are not deemed to be outstanding for the purposes of computing the
percentage ownership of any other person or entity shown in the
table.
(2) John Groth is the control person for Beacon Global Private Equity
Fund
(3) Trustee is Arthur M. Mintz
(4) Trustee is Vern N. Hollingsworth
(5) Trustee is Mark Zelisko
(6) William E. Anderson is the control person for Cal-Logic LLC
(7) Trustee is Kevin Prediville
For the period April, 1, 2006 through July 15, 2006, XIOM Corp. sold, pursuant
to a private placement, 232,538 shares of common stock at $1.30 per share with a
warrant to purchase another share of the company at $1.30 per share, and raised
a total of $302,299, pursuant to the private placement as follows:
42
A chart of the shares issued pursuant to the above transaction follows:
Number of Shares Percentage of
Identity of Stockholder or Group beneficially owned (1) Shares Owned
- -------------------------------- ---------------------- -------------
Insiders Trend Fund LP (2) 192,307
Michael Musella 1,000
Irene Karp 5,000
Leslie J. Tafarella 4,231
Fred Dahl 10,000
Matthew S. Gimaldi 10,000
David Rumbold 10,000
(1) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of Common Stock that an individual or entity has
a right to acquire within 60 days pursuant to the exercise of
options or warrants are deemed to be outstanding for the purposes of
computing the percentage ownership of such individual or entity, but
are not deemed to be outstanding for the purposes of computing the
percentage ownership of any other person or entity shown in the
table.
(2) Anthony Marchese is the control person for Insiders Trend Fund LP
With respect to the private placements, XIOM Corp. relied upon Section
4(2) of the Act and Rule 506 of Regulation D for these transactions regarding
the issuance of its unregistered securities. In each instance, such reliance was
based upon the fact that (i) the issuance of the shares did not involve a public
offering, (ii) there were no more than 35 investors (excluding "accredited
investors"), (iii) each investor who was not an accredited investor either alone
or with his purchaser representative(s) has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment, or the issuer reasonably believes
immediately prior to making any sale that such purchaser comes within this
description, (iv) the offers and sales were made in compliance with Rules 501
and 502, (v) the securities were subject to Rule 144 limitation on resale and
(vi) each of the parties is a sophisticated purchaser and had full access to the
information on Xiom Corp. necessary to make an informed investment decision by
virtue of the due diligence conducted by the purchaser or available to the
purchaser prior to the transaction.
Neither the offer nor the sale of any of the securities was accomplished
by the publication of any advertisement. Each investor received copies of
disclosure documents.
Item 27. Exhibits and Financial Statement Schedules.
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
Exhibit Description of Exhibit
-------- ----------------------
3.1 (2) Certificate of Incorporation of XIOM Corp.
3.2 (2) Certificate of Amendment to Certificate of Incorporation
3.3 (2) By-laws of XIOM Corp.
4.1 (2) Form of Warrant
4.2 (1) Form of Subscription Agreement
5.1 (1) Opinion of Michael S. Krome, Esq.
23.1 (1) Consent of N. Blumenfrucht, CPA, PC., Independent Auditor
23.2 (1) Consent of Michael S. Krome, Esq. (included in Exhibit 5.1)
43
99.1 (3) Patent Rights and Technology Rights transferred to the Company
by Thomas Gardega
99.2 (3) Agreement dated June 22, 2005 between New York State Energy
Research and Development Authority and Xiom Corp.
99.3 (3) Sample Distribution Agreement
99.4 (3) Agreement between Xiom Corp. and Department of the Navy, dated
May 17, 2006
99.5 (4) Technical Data on Coatings done by Independent Testing Agency
99.6 (1) Lease, dated June 1, 2006 by and Between Lamar Street Realty
Corp and Xiom Corp.
- ---------
(1) Filed herewith
(2) Previously filed with Registration Statement on Form SB-2 on May 6, 2006
(3) Previously filed with Registration Statement on Form SB-2 on May 26, 2006
(4) Previously filed with Registration Statement on Form SB-2 on July 13, 2006
Item 28. Undertakings.
The undersigned registrant hereby undertakes to:
(a)(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) Include any additional or changed material information on the plan
of distribution.
(2) For determining liability under the Securities Act, each post-effective
amendment shall be deemed to be a new registration statement of the securities
offered, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining liability of the undersigned registrant under the Securities
Act to any purchaser in the initial distribution of the securities, the
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
44
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant;
and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) That, for the purpose of determining liability under the Securities Act to
any purchaser:
(1) If the registrant is relying on Rule 430B:
(i) Each prospectus filed by the undersigned registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of
the date the filed prospectus was deemed part of and included in the
registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule
430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or
(x) for the purpose of providing the information required by section 10(a)
of the Securities Act shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective date; or
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(2) If the registrant is subject to Rule 430C,
Each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no statement made
in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned; thereunto duly authorized, in the Town of West Babylon, State of
New York, on September 12, 2006.
XIOM Corp.
By: /s/ Andrew B. Mazzone
-------------------------------------
President and Principal
Accounting/Financial Officer and Director
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POWER OF ATTORNEY
The undersigned directors and officers of XIOM Corp., hereby constitute and
appoint Andrew Mazzone and Thomas Gardega, each of them, with full power to act
without the other and with full power of substitution and re-substitution, our
true and lawful attorneys-in-fact with full power to execute in our name and
behalf in the capacities indicated below any and all amendments (including
post-effective amendments and amendments thereto) to this registration statement
under the Securities Act of 1933 and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and hereby ratify and confirm each and every act and thing that such
attorneys-in-fact, or any them, or their substitutes, shall lawfully do or cause
to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Andrew Mazzone President Principal September 12, 2006
- --------------------------- Accounting/Financial Officer
Andrew Mazzone and Director
/s/ Thomas Gardega Executive Vice President September 12, 2006
- --------------------------- Director
Thomas Gardega
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