UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSSION


WASHINGTON,
      D.C. 20549





FORM
      10-KSB/A-1





x
            
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934:
              For
                the fiscal year ending September 30,
                2007





 ̈
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934:
              For
                the transition period from _________ to
                _________





Commission
      file number: 333-124704





**XIOM
      CORP.**





(Name
      of
      small business issuer in its charter)





Delaware
            
            11-3460949(State
                or other jurisdiction of incorporation
            
            (I.R.S.
                Employeror
                organization)
            
            Identification
                No.)





78
      Lamar
      Street, West Babylon, New York 11704





(Address
      of Principal executive offices) (Zip Code)





Issuer’s
      telephone number: (631) 643-4400





Securities
      registered under Section 12(b) of the “Exchange Act”


Common
      Share, Par Value, $.0001





(Title
      of
      each Class)





Securities
      registered under Section 12(g) of the Exchange Act: None





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such a shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days.     x Yes  ̈ No





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-K is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part II of this Form 10-KSB
      or any amendment to this Form 10-KSB. x





The
      issuer’s revenues for its most recent fiscal year: $ 933,194





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates based on the average bid and asked price of such common equity,
      as of November 4, 2008 was approximately $4,395,000





The
      number of shares of Common Stock outstanding as of November 4, 2008 was:
      10,988,718





Transitional
      Small Business Disclosure Format (check one): Yes  ̈ ;
      No x







**XIOM
      CORP.**


ANNUAL
      REPORT ON FORM 10-KSB





For
      Fiscal Year Ended September 30, 2007





INDEX


Page
                  No:PART
                  IITEM
                  1.
              DESCRIPTION
                  OF BUSINESS
              3Plan
                  of Operations
              7Results
                  of Operations
              8ITEM
                  2.
              DESCRIPTION
                  OF PROPERTY
              9ITEM
                  3.
              LEGAL
                  PROCEEDINGS
              9ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDEDRS
              10PART
                  IIITEM
                  5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS
              10ITEM
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
              11Off
                  Balance Sheet Arrangements
              13ITEM
                  7.
              FINANCIAL
                  STATEMENTS
              F-1ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE
              14ITEM
                  8A.
              CONTROLS
                  AND PROCEDURES
              14ITEM
                  8B.
              OTHER
                  INFORMATION
              14PART
                  IIIITEM
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION
                  16 (a) OF THE EXCHANGE ACT
              14ITEM
                  10
              EXECUTIVE
                  COMPENSATION
              16ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              18ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS
              18ITEM
                  13.
              EXHIBITS
                  AND REPORTS ON FORM 8-K
              19ITEM
                  14.
              PRINCIPAL
                  ACCOUNTING FEES AND SERVICES
              19Signatures
              
              20


2


**XIOM
      CORP.**





**Part
      I**




**Item
      1. Description of Business**





FORWARD
      LOOKING STATEMENTS


The
      following discussion should be read in conjunction with our audited financial
      statements and notes thereto included herein. In connection with, and because
      we
      desire to take advantage of, the “safe harbor” provisions of the Private
      Securities Litigation Reform Act of 1995, we caution readers regarding certain
      forward looking statements in the following discussion and elsewhere in this
      report and in any other statement made by, or on our behalf, whether or not
      in
      future filings with the Securities and Exchange Commission. Forward-looking
      statements are statements not based on historical information and which relate
      to future operations, strategies, financial results or other developments.
      Forward looking statements are necessarily based upon estimates and assumptions
      that are inherently subject to significant business, economic and competitive
      uncertainties and contingencies, many of which are beyond our control and many
      of which, with respect to future business decisions, are subject to change.
      These uncertainties and contingencies can affect actual results and could cause
      actual results to differ materially from those expressed in any forward-looking
      statements made by, or on our behalf. We disclaim any obligation to update
      forward-looking statements.




**ABOUT
      OUR COMPANY**


How
      our
      company is organized


XIOM
      Corp, formerly Panama Industries, Ltd., (“XIOM”, or “the Company”), 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 totally unrelated
      businesses. In May of 2001, TTI management determined 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.





3





**Where
      you can find us**


Our
      corporate offices and manufacturing facility are located at 78 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.





**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.





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.


4


**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.





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 from
      the established liquid coating processes we know as traditional
      painting.





The
      company’s products contain no VOCs . 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
      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.


5


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.





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 mils up to 1 inch as compared
      to
      traditional powder coatings which usually vary from 1 to 4 mils 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.





**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,
      The XIOM 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.


6


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.





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 approximately 20 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 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 up to a 9-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 and can be applied
      thick or thin.





**PLAN
      OF OPERATIONS**





**Liquidity,
      Capital Resources and Operations:**


During
      the fiscal years ended September 30, 2007 and 2006, net cash used by operating
      activities was $941,137 and $513,035 respectively. The Company incurred net
      losses of $2,721,651 and $805,821 for the fiscal years ended September 30,
      2007
      and 2006, respectively. Additionally, at September 30, 2007, the Company had
      a
      Stockholders’ (Deficit) of approximately $930,000.





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.
 However, there is no assurance that any future financing, if successful,
      will be sufficient to allow the Company to operate profitably or
      successfully. It is also the intention of the Company’s management to
      improve profitability by significantly increasing sales of its patented thermal
      spray process in fiscal 2008 while maintaining reasonable levels general and
      administrative expenses as the company grows.




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 the registration statement on Form SB-2.


7


In
      private placement transactions completed subsequent to the filing of our initial
      registration statement, from January 1, 2006 through October 20, 2006 (the
      effective date of the registration statement) we sold a total of 563,718 shares
      of restricted common stock from which we received gross offering proceeds of
      $670,399. These securities were offered and sold in reliance upon claimed
      private placement exemptions from registration. As a result, the purchasers
      of
      the shares may have the right to claim that the purchase transactions 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 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 funds from other sources.
       In that event, we may be forced to cease operations and liquidate our
      available assets to pay our liabilities, including, but not limited to, the rescission claims.





**Results
      of Operations:**


**For
      the Fiscal Years Ended September 30, 2007 vs. September 30,
      2006**




For
      the
      fiscal year ended September 30, 2007, the Company had $933,194 in sales and
      cost
      of sales of $755,380. This is in comparison to total sales of $629,336 and
      cost
      of sales of $423,415 for fiscal year ended September 30, 2006. The increase
      in
      sales and cost of sales in fiscal 2007 results primarily from a significant
      increase in system and powder sales compared to fiscal 2006. Gross profit for
      fiscal 2007 was $177,184, a decrease of $28,737, or 14%, compared to the gross
      profit in fiscal 2006 of $205,921. This decrease in gross profit compared to
      an
      increase in sales from fiscal 2006 to fiscal 2007 is the direct result of
      additional research and development costs incurred to refine different models
      of
      the thermal spray gun that will increase volume through put, thus reducing
      application time and direct labor for the end user.




General
      and administrative expenses increased by approximately $1,503,000 from fiscal
      2006 to fiscal 2007.  This increase was due to additional consulting
      engineering expense to refine the thermal spray process and coatings, as well
      as
      financial consulting related to money raising activities, marketing expenses
      and
      general overhead increases necessary to accommodate the anticipated customer
      demand for the Company’s products.




The
      net
      loss increased from $805,821 ($.13 per share) to $2,721,651($.35 per share)
      from
      2006 to 2007, respectively. This increase of approximately $1,916,000 was
      directly related to the increase in expenses described above as well as the
      write off of the joint venture investments in the amount of $311,044.


8


We
      have,
      in our history, generated limited income 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.





**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.





**Employees:**


As
      of
      December 31, 2007, we employed approximately 12 persons. None of our employees
      are covered by collective bargaining agreements. We believe that our relations
      with or employees are good.





**Item
      2. Description of Property**


XIOM
      leases approximately 7,000 square feet of manufacturing and warehouse facility
      in West Babylon, New York pursuant to a four-year lease at $5,000 per month.
      This location also serves as Corporate Headquarters. In addition, the Company
      leases a 2,000 square foot training and testing facility adjacent to the above
      space on a month-to-month basis for $1,300 per month. Rent expense for fiscal
      2007 and 2006 was approximately $76,500 and $60,000, 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.





**Item
      3. Legal Proceedings**


We
      are
      not aware of any litigation, pending, or threatened at this time.





**Indemnification
      of Officers and Directors**




At
      present we have not entered into individual indemnity agreements with our
      Officer or Director. However, our By-Laws and Certificate of Incorporation
      provide a blanket indemnification that we shall indemnify, to the fullest extent
      under Delaware law, our directors and officers against certain liabilities
      incurred with respect to their service in such capabilities. In addition, the
      Certificate of Incorporation provides that the personal liability of our
      directors and officers and our stockholders for monetary damages will be
      limited.


9


**Item
      4. Submission of Matters to a Vote of Security Holders**





In
      August
      2007, the Board of Directors of XIOM, by written consent of the holders in
      excess of 50% of the voting rights of the shareholders of the Company, approved
      an increase in the number of authorized shares of common stock from 10,000,000
      to 50,000,000. The Certificate of Amendment of Certificate of Incorporation
      of
      XIOM CORP dated August 31, 2007 is attached hereto as part of Exhibit 3(i).





**Part
      II**





**Item
      5. Market for Common Equity and Related Stockholder
      Matters**





**General:**


The
      authorized capital stock consists of 50,000,000 shares of common stock, par
      value $.0001 per share. As of November 4, 2008, there were 10,988,718 shares
      of
      Common Stock issued and outstanding. This does not include shares underlying
      warrants or options yet to be exercised. 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 50,000,000 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.





**Price
      Ranges of XIOM CORP. Common Stock:**




Market
      Information


The
      Company’s Common Stock is traded on the NASD OTC Bulletin Board under the symbol
“XMCP” commencing on or about December 18, 2006.





There
      is
      currently a limited trading market for the Company’s Common Stock with the price
      being very volatile. Inasmuch as the stock has been trading only since December
      18, 2006, there is limited information to indicate with this filing. Since
      that
      time, the price has been between $3.90 and $.30 through November 4,
      2008.


10


**Liquidation:**




In
      the
      event of a liquidation of the Company, all stockholders are entitled to a pro
      rata distribution after payment of any claims.





**Dividend
      Policy:**




The
      Company has never declared or paid cash dividends on its common stock and
      anticipates that all future earnings will be retained for development of its
      business. The payment of any future dividends will be at the discretion of
      the
      Board of Directors and will depend upon, among other things, future earnings,
      capital requirements, the financial condition of the Company and general
      business conditions.





**Stock
      Transfer Agent:**




Our
      transfer agent and registrar of the Common Stock is Manhattan Transfer Registrar
      Company, P.O. Box 756, Miller Place, NY 11764, (631)
      928-7655 **,** (631)
      928-6171 Fax





**Item
      6. Management’s Discussion and Analysis or Plan of
      Operation.**





**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 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.





**XIOM,
      Corp.’s plans for the next twelve months:**





XIOM
      plans to move strongly into an expansion Phase, in the last two years over
      200
      of XIOM’s spray systems were sold. The sales were primarily to customers in
      North America with 40 systems going to overseas customers.





The
      company is now introducing its XIOM 5000, high speed spray gun (5 times faster
      than the XIOM 1000). This gun is expected to bring the cost per square foot
      of
      spray coating to below $1.00 per square foot.


11


The
      company is planning to offer the XIOM 1000 and XIOM 5000 spray gun in a
      combination package to sell at $15,000 per package. The company is budgeting
      to
      sell 40 of these systems per month worldwide. There can be no assurance that
      the
      company will be able to achieve this ambitious target, since this will entail
      a
      shipping rate 3 times larger than the company has achieved in the past. The
      increase in training and support required for a forty system per month rate
      along with having to supply the requisite materials for spraying that are used
      in the spray systems will be a significant challenge for the
      company.





The
      company’s current expense run rate is $70,000 per month. We have 12 employees,
      and plan to add 3 more this year. We have $500,000 of firm contracts in house.
      Without this contract revenue, the company would need to sell at least 9 of
      its
      combination gun packages per month to cover the $70,000 monthly expenses. The
      company has averaged more than 9 systems per month over the past 12
      months.





The
      company still plans to run patent acquisition expenditures of $12,000 per month
      for the upcoming year. The company has incurred, in the past, significant non
      cash expenses, for stock issuances for services. The company in effect traded
      equity for services rather than cash where it was possible. The company expects
      that it will minimize this strategy on a going forward basis.





The
      company has two joint ventures in the United States whose purpose is to develop
      contract revenues from spraying coatings on ship hulls and ship super
      structures. The joint ventures are with New Bedford Coatings and Atlantic
      Coatings. The ventures have been funded and equipped, and are doing trial
      coatings for their clients at this time. It is anticipated that significant
      spray activity will start in March of this year.





The
      company has formed a European subsidiary. This subsidiary has sold 20 systems
      to
      date and set up 6 independent European distributors to date. The company plans
      to strongly increase its efforts in Europe in the upcoming year.





The
      company 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.
      XIOM
      has received a contract from EMIG to develop and apply thin coatings that attain
      full cure for within the spray cycle. The contract is for $184,000.





b.
      XIOM
      has received a co-funded contract from NYSERDA for $325,000 to install Xiom
      equipment in an industrial powder coating line to reduce energy costs and the
      carbon footprint.





c.
      XIOM
      has been invited to negotiate a Phase II SBIR/Navy contract described
      immediately below.





On
      May
      17, 2006, XIOM received a Phase I Award with SBIR/Navy for $70,000 to explore
      the technical feasibility of modifying the standard XIOM equipment to reduce
      facility inputs (operate on propane and air eliminating oxygen); to reduce
      weight and size, simplify control functions; and increase spray pattern and
      output. XIOM Corp. has been invited to negotiate a Phase II on this project
      that
      will further simplify functions, reduce weight, and enclose the flame.





The
      company is stepping up its efforts in Asia. To that end, it has sold a total
      of
      9 systems in Japan, Korea and China. Sales to these countries were made in
      the
      last 90 days. The company is not in able to accurately forecast sales for the
      next 6 months for these countries.


12


The
      company expects it has enough cash resources and revenue to cover overseas
      expenses for the foreseeable future as long as it continues to make sales
      overseas at the rate of 6 systems per month. However, without increasing
      revenues or acquiring additional capital, it is likely that our current overseas
      marketing plans would have to proceed at a slower rate.





Our
      source of liquidity comes from two sources. Internally, if we increase sales,
      we
      would be able to increase the acquisition of raw materials and increase our
      production. This would in turn increase the short-term liquidity of the Company.
      Externally, we may gain long-term liquidity from the sale of common stock and
      from the exercise of warrants by the shareholders from the recent private
      placements.





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 future
      shares of common stock or the lack of exercise of the warrants by the
      shareholders. Near term the current turmoil in financial markets may make new
      fund raising more difficult than in the recent past.





**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.




13


**Item
      7. Financial Statements**




Index
      To
      Financial Statements





Auditors
                Report





F-1


**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Stockholders of
 XIOM
        Corp.
 
 I
        have
        audited the accompanying balance sheet of XIOM Corp. (the Company) as of
        September 30, 2007 and the related statements of operations, stockholders’
equity (deficit), and cash flows for the year then ended. These financial
        statements are the responsibility of the Company’s management. My responsibility
        is to express an opinion on these financial statements based on my audit.
        The
        financial statements of XIOM Corp. as of September 30, 2006 were audited
        by
        another auditor whose report dated January 10, 2007 included an emphasis
        paragraph relating to a going concern uncertainty.
 
 I
        conducted my audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        I 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
        state 5ments. An audit also includes assessing the accounting principles
        used
        and significant estimates made by management, as well as evaluating the overall
        financial statement presentation. I believe that my audit provides a reasonable
        basis for my opinion.
 
 In
        my
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of XIOM Corp. as of September 30,
        2007
        and the results of its operations and cash flows for the year then ended
        in
        conformity with accounting principles generally accepted in the United
        States.
 
 The
        accompanying financial statements referred to above have been prepared assuming
        that the Company will continue as a going concern. As discussed in Note 18
        to
        the financial statements, the Company has incurred losses for the years ended
        September 30, 2007 and 2006 and has a deficiency in stockholders’ equity at
        September 30, 2007. These factors raise substantial doubt about its ability
        to
        continue as a going concern. Management’s plans in regard to this matter are
        also described in Note 18. The financial statements do not include any
        adjustments that might result from the outcome of this uncertainty.
 
 As
        discussed in Note 20 to the financial statements, the Company restated its
        financial statements for the year ended September 30, 2007.
 
 /s/
        Michael T. Studer CPA P.C.
 
 Freeport,
        New York
 October
        31, 2008
  F-2
  **N.
          Blumenfrucht CPA PC**
 **1040
          East 22** **nd** **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 sheet of XIOM Corp. (formerly known as
          Panama
          Industries, LTD.) as of September 30, 2006 and the related statements of
          operations, stockholders’ equity and cash flows for the year ended September 30,
          2006. 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,
          2006 and the results of its operations and its cash flows for the year
          ended
          September 30, 2006 in conformity with accounting principles generally accepted
          in the United States.
 
 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 $245,000.
          The Company incurred a net loss for the period ended September 30, 2006
          of
          approximately $800,000 and has working capital of approximately $130,000.
          These
          factors raise substantial doubts about its ability to continue as a going
          concern. Management's plans in regard to these matters are also described
          in
          Note 16. The financial statements do not include any adjustments that might
          result from the outcome of this uncertainty.
 
 Brooklyn
          New York
 January
          10, 2007
 
 /s
          / N.
          Blumenfrucht CPA PC
  F-3
  **XIOM
        Corp.**
 **Balance
        Sheets**
 **As
        Of September 30,**
 
 **2007**
              
              **2006****(As
                  Restated)****Assets****Current
                  Assets****Cash
                  and Cash Equivalents**
              
              **$**
              **312,718**
              
              **$**
              **90,495****Accounts
                  Receivable, Net of****Allowance
                  for Doubtful Accounts**
              
              
              **115,854**
              
              
              **126,191****Inventory**
              
              
              **174,234**
              
              
              **54,800****Prepaid
                  Expenses**
              
              
              **13,073**
              
              
              **99,378****Other
                  Current Assets**
              
              
              **55,660**
              
              
              **21,117****Total
                  Current Assets**
              
              
              **671,539**
              
              
              **391,981****Fixed
                  Assets, Net of Accumulated****Depreciation
                  & Amortization**
              
              
              **203,697**
              
              
              **98,953****Other
                  Assets****Intangible
                    Assets, Net ofAccumulated
                    Amortization**
              
              
              **343,353**
              
              
              **163,445****Retainage
                  Receivable**
              
              
              **23,705**
              
              
              **22,377****Security
                  Deposits**
              
              
              **6,815**
              
              
              **6,815****Total
                  Other Assets**
              
              
              **373,873**
              
              
              **192,637****Total
                  Assets**
              
              **$**
              **1,249,109**
              
              **$**
              **683,571****Liabilities
                  and Stockholders' Equity (Deficit)****Current
                  Liabilities****Accounts
                  Payable and****Accrued
                  Expenses**
              
              **$**
              **560,998**
              
              **$**
              **204,889****Convertible
                  Note Payable**
              
              
              **250,000**
              
              
              **-****Notes
                  Payable**
              
              
              **51,143**
              
              
              **53,578****Total
                  Current Liabilities**
              
              **$**
              **862,141**
              
              **$**
              **258,467****Long-Term
                  Liabilities****Convertible
                  Notes Payable, Net of****Unamortized
                  Discounts**
              
              
              **636,590**
              
              
              **-****Shareholder
                  Loan**
              
              
              **9,775**
              
              
              **-****Total
                  Liabilities**
              
              
              **1,508,506**
              
              
              **258,467****Common
                  Stock, Subject To Rescission Rights**
              
              
              **670,399**
              
              
              **670,399****Stockholders'
                  Equity (Deficit)****Common
                  Stock, $.0001 Par Value, authorized****50,000,000
                  and 10,000,000 shares, respectively,****issued
                  and outstanding 7,642,945 and****6,532,255
                  shares, respectively**
              
              
              **764**
              
              
              **653****Additional
                  Paid-In Capital**
              
              
              **3,481,454**
              
              
              **1,444,415****Retained
                  Earnings (Deficit)**
              
              
              **(4,412,014**
              **)**
              
              **(1,690,363**
              **)****Total
                  Stockholders' Equity (Deficit)**
              
              
              **(929,796**
              **)**
              
              **(245,295**
              **)****Total
                  Liabilities and****Stockholders'
                  Equity Deficit)**
              
              **$**
              **1,249,109**
              
              **$**
              **683,571**
 
 **See
        accompanying notes to financial statements**
  F-4
 
 **XIOM
        Corp.**
 **Statements
        of Operations**
 
 **For
        The Years Ended September 30,**
 
 **2007**
              
              **2006****(As
                  Restated)****Sales**
              ****
              **$**
              **933,194**
              ****
              **$**
              **629,336**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Cost
                  of Sales**
              ****
              ****
              **755,380**
              ****
              ****
              **423,415**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Gross
                  Profit**
              ****
              ****
              **177,814**
              ****
              ****
              **205,921**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Selling,
                  General and Administrative Expenses**
              ****
              ****
              **2,509,724**
              ****
              ****
              **1,007,242**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Operating
                  Income (Loss)**
              ****
              ****
              **(2,331,910**
              **)**
              ****
              **(801,321**
              **)******
              ****
              ****
              ****
              ****
              ****
              ****
              ******Other
                  Income (Expenses);**
              ****
              ****
              ****
              ****
              ****
              ****
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Loss
                  on Joint Venture Investments**
              ****
              ****
              **(311,044**
              **)**
              ****
              **-**
              ******Interest
                  Expense**
              ****
              ****
              **(78,697**
              **)**
              ****
              **(4,500**
              **)******
              ****
              ****
              
              ****
              ****
              
              ******Total
                  Other Income (Expenses)**
              ****
              ****
              **(389,741**
              **)**
              ****
              **(4,500**
              **)******
              ****
              ****
              ****
              ****
              ****
              ****
              ******Net
                  Income (Loss)**
              ****
              **$**
              **(2,721,651**
              **)**
              **$**
              **(805,821**
              **)******
              ****
              ****
              ****
              ****
              ****
              ****
              ******Basic
                  and Diluted Income (Loss) per Share**
              ****
              **$**
              **(0.35**
              **)**
              **$**
              **(0.13**
              **)******
              ****
              ****
              ****
              ****
              ****
              ****
              ******Weighted
                  Average Number of SharesOutstanding,
                  Basic and Diluted**
              ****
              ****
              **7,752,047**
              ****
              ****
              **6,374,448**
 
 **See
        accompanying notes to financial statements**
  F-5
 
 **XIOM
        Corp.**
 **Statements
        of Stockholders' Equity (Deficit)**
 **For
        The Years Ended September 30, 2007 and 2006**
 
 **Common Stock**
              
              **Additional**
              
              **Retained**
              
              **Total****Number of**
              
              **Par**
              
              **Paid-In**
              
              **Earnings**
              
              **Shareholders'****Shares**
              
              **Value**
              
              **Capital**
              
              **(Deficit)**
              
              **Equity (Deficit)****Balance,
                  September 30, 2005**
              
              
              **5,842,075**
              
              
              **584**
              
              
              **791,182**
              
              
              **(884,542**
              **)**
              
              **(92,776**
              **)****Issuance
                  of Common Stock for Consulting Services**
              
              
              **143,514**
              
              
              **15**
              
              
              **178,287**
              
              
              
              
              
              **178,302****Options
                  exercised in exchange for Accrued Compensation, Shareholder Loan
                  and
                  Accrued Consulting Fees**
              
              
              **546,666**
              
              
              **54**
              
              
              **434,946**
              
              
              
              
              
              **435,000****Value
                  of stock options granted during the year**
              
              
              
              
              
              
              
              
              **40,000**
              
              
              
              
              
              **40,000****Net
                  (Loss) for the year ended September 30, 2006**
              
              
              ****
              
              
              ****
              
              
              
              
              
              **(805,821**
              **)**
              
              **(805,821**
              **)****Balance,
                  September 30, 2006**
              
              
              **6,532,255**
              
              
              **653**
              
              
              **1,444,415**
              
              
              **(1,690,363**
              **)**
              
              **(245,295**
              **)****Issuance
                  of Common Stock for Consulting Services**
              
              
              **449,820**
              
              
              **46**
              
              
              **661,220**
              
              
              
              
              
              **661,266****Issuance
                  of Common Stock for Sales Commissions**
              
              
              **8,679**
              
              
              **1**
              
              
              **13,018**
              
              
              
              
              
              **13,019****Issuance
                  of Common Stock for the purchase of a thermal spray technology
                  (as
                  restated)**
              
              
              **75,000**
              
              
              **8**
              
              
              **74,992**
              
              
              
              
              
              **75,000****Issuance
                  of Common Stock related to a private placement agreement
                  penalty**
              
              
              **25,000**
              
              
              **3**
              
              
              **(3**
              **)**
              
              
              
              
              **-****Issuance
                  of Common Stock for equity investments in joint ventures and related
                  stock
                  option**
              
              
              **250,000**
              
              
              **25**
              
              
              **324,975**
              
              
              
              
              
              **325,000****Common
                  Stock Warrants exercised in exchange for Note
                  Payable**
              
              
              **13,334**
              
              
              **1**
              
              
              **9,999**
              
              
              
              
              
              **10,000****Private
                  placements of Restricted Common Stock**
              
              
              **54,889**
              
              
              **5**
              
              
              **78,295**
              
              
              
              
              
              **78,300****Exercise
                  of Common Stock Warrants**
              
              
              **67,301**
              
              
              **6**
              
              
              **50,469**
              
              
              
              
              
              **50,475****Issuance
                  of Common Stock to repay Notes Payable**
              
              
              **30,000**
              
              
              **3**
              
              
              **29,997**
              
              
              
              
              
              **30,000****Options
                  exercised in exchange for Accrued Compensation, Shareholder Loan
                  and
                  Accrued Consulting Fees**
              
              
              **146,667**
              
              
              **14**
              
              
              **139,986**
              
              
              
              
              
              **140,000****Purchase
                  and retirement of Treasury Shares**
              
              
              **(10,000**
              **)**
              
              **(1**
              **)**
              
              **(13,999**
              **)**
              
              
              
              
              **(14,000**
              **)****Value
                  of stock options granted during the year**
              
              
              
              
              
              
              
              
              **286,223**
              
              
              
              
              
              **286,223****Value
                  of Warrants attached to Convertible Notes**
              
              
              
              
              
              
              
              
              **143,672**
              
              
              
              
              
              **143,672****Beneficial
                  conversion feature of Convertible Notes**
              
              
              
              
              
              
              
              
              **238,195**
              
              
              
              
              
              **238,195****Net
                  (Loss) for the year ended September 30, 2007 (as
                  restated)**
              
              
              
              
              
              
              
              
              
              
              
              **(2,721,651**
              **)**
              
              **(2,721,651**
              **)****Balance,
                  September 30, 2007 (as restated)**
              
              
              **7,642,945**
              
              
              **764**
              
              
              **3,481,454**
              
              
              **(4,412,014**
              **)**
              
              **(929,796**
              **)**
 
 **See
        accompanying notes to financial statements.**
 
  F-6
 
 **XIOM
        Corp.**
 **Statements
        of Cash Flow**
 **For
        The Years Ended September 30,**
 
 **2007**
              
              **2006****(As
                  Restated)****Cash
                  Flows from Operating Activities:**
              ****
              ****
              ****
              ****
              ****
              ****
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Net
                  Income (Loss)**
              ****
              **$**
              **(2,721,651**
              **)**
              **$**
              **(805,821**
              **)****Adjustments
                  to reconcile net income (loss) to net cash used in operating
                  activities:**
              ****
              ****
              ****
              ****
              ****
              ****
              ******Depreciation
                  and Amortization**
              ****
              ****
              **45,391**
              ****
              ****
              **21,530**
              ******Increase
                  in Allowance for Doubtful Accounts**
              ****
              ****
              **35,000**
              ****
              ****
              **-**
              ******Issuance
                  of Shares for Services**
              ****
              ****
              **661,266**
              ****
              ****
              **178,302**
              ******Value
                  of Stock Option Grants**
              ****
              ****
              **286,223**
              ****
              ****
              **40,000**
              ******Amortization
                  of Convertible Note Discounts**
              ****
              ****
              **47,557**
              ****
              ****
              **-**
              ******Loss
                  on Joint Venture Investments**
              ****
              ****
              **311,044**
              ****
              ****
              **-**
              ******Issuance
                  of Shares for Sales Commissions**
              ****
              ****
              **13,019**
              ****
              ****
              **-**
              ******Changes
                  in operating assets and liabilities:**
              ****
              ****
              ****
              ****
              ****
              ****
              ******Accounts
                  Receivable, Net**
              ****
              ****
              **(24,663**
              **)**
              ****
              **(112,309**
              **)****Inventory**
              ****
              ****
              **(119,434**
              **)**
              ****
              **(43,790**
              **)****Prepaid
                  Expenses**
              ****
              ****
              **86,305**
              ****
              ****
              **(99,378**
              **)****Other
                  Current Assets**
              ****
              ****
              **(53,184**
              **)**
              ****
              **(2,476**
              **)****Retainage
                  Receivable**
              ****
              ****
              **(1,328**
              **)**
              ****
              **(16,119**
              **)****Security
                  Deposits**
              ****
              ****
              **-**
              ****
              ****
              **(4,667**
              **)****Accounts
                  Payable and Accrued Expenses**
              ****
              ****
              **393,318**
              ****
              ****
              **211,693**
              ******Accrued
                  Compensation, Before Non-Cash Adjustments**
              ****
              ****
              **100,000**
              ****
              ****
              **120,000**
              ********
              ****
              ****
              
              ****
              ****
              
              ******Total
                  Adjustments**
              ****
              ****
              **1,780,514**
              ****
              ****
              **292,786**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Net
                  cash provided (used) in operating activities**
              ****
              ****
              **(941,137**
              **)**
              ****
              **(513,035**
              **)******
              ****
              ****
              ****
              ****
              ****
              ****
              ******Cash
                  Flows from Investing Activities:**
              ****
              ****
              ****
              ****
              ****
              ****
              ******Purchase
                  of Additional Overseas Patents**
              ****
              ****
              **(121,645**
              **)**
              ****
              **(58,132**
              **)****Purchase
                  of Fixed Assets**
              ****
              ****
              **(133,398**
              **)**
              ****
              **(65,814**
              **)****Additional
                  Investments in Joint Ventures**
              ****
              ****
              **(96,044**
              **)**
              ****
              **-**
              ********
              ****
              ****
              
              ****
              ****
              
              ******Net
                  cash provided (used) by investing activities**
              ****
              ****
              **(351,087**
              **)**
              ****
              **(123,946**
              **)******
              ****
              ****
              ****
              ****
              ****
              ****
              ******Cash
                  Flows from Financing Activities:**
              ****
              ****
              ****
              ****
              ****
              ****
              ******Common
                  Stock, Subject to Rescission Rights**
              ****
              ****
              **-**
              ****
              ****
              **670,399**
              ******Sale
                  of Restricted Common Stock**
              ****
              ****
              **78,300**
              ****
              ****
              **-**
              ******Exercise
                  of Common Stock Warrants**
              ****
              ****
              **50,475**
              ****
              ****
              **-**
              ******Proceeds
                  from Convertible Notes**
              ****
              ****
              **1,220,900**
              ****
              ****
              **-**
              ******Proceeds
                  from Notes Payable, Net**
              ****
              ****
              **37,565**
              ****
              ****
              **39,578**
              ******Proceeds
                  from exercise of Stock Option**
              ****
              ****
              **110,000**
              ****
              ****
              **-**
              ******Purchase
                  of Treasury Shares**
              ****
              ****
              **(14,000**
              **)**
              ****
              **-**
              ******Proceeds
                  from (repayment of) Shareholder Loan, Before Non-Cash
                  Adjustments**
              
              
              **31,207**
              
              
              **(2,578**
              **)******
              ****
              ****
              ****
              ****
              ****
              ****
              ******Net
                  cash provided (used) by financing activities**
              ****
              ****
              **1,514,447**
              ****
              ****
              **707,399**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Net
                  increase (decrease) in cash and cash equivalents**
              ****
              ****
              **222,223**
              ****
              ****
              **70,418**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Cash
                  & Cash Equivalents, Beginning of Period**
              ****
              ****
              **90,495**
              ****
              ****
              **20,077**
              ********
              ****
              ****
              ****
              ****
              ****
              ****
              ******Cash
                  & Cash Equivalents, End of Period**
              ****
              **$**
              **312,718**
              ****
              **$**
              **90,495**
  (Continued)
  F-7
  **XIOM,
        Corp.**
 **Statements
        of Cash Flow**
 **For
        The Years Ended September 30,**
 **(Continued)**
 
 **2007**
              
              **2006****Supplemental
                  Disclosures****Non-Cash
                  Financing and Investing Activities:****Issuance
                  of shares for equity in Joint Ventures**
              
              **$**
              **215,000**
              
              
              **-****Issuance
                  of shares to repay Notes Payable**
              
              **$**
              **30,000**
              
              
              **-****Issuance
                  of shares for Sales Commissions**
              
              **$**
              **13,019**
              
              
              **-****Issuance
                  of shares for purchase of Thermal Spray
                  Technology**
              
              **$**
              **75,000**
              
              
              **-****Note
                  payable as consideration for warrants exercised**
              
              **$**
              **10,000**
              
              
              **-****Options
                  exercised in exchange for Accrued Compensation, Shareholder Loan
                  and
                  Accrued Professional Fees**
              
              **$**
              **140,000**
              
              **$**
              **435,000****Issuance
                  of Shares for Services**
              
              **$**
              **661,266**
              
              **$**
              **178,302****Value
                  of Stock Option Grants**
              
              **$**
              **286,223**
              
              **$**
              **40,000****Interest
                  and Taxes Paid:****Interest
                  Expense**
              
              
              **-**
              
              **$**
              **4,500****Income
                  Taxes**
              
              
              **-**
              
              
              **-**
 
 **See
        accompanying notes to financial statements**
  F-8
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 1.
              SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
  ENTITY
        AND ORGANIZATION
 
 XIOM
        Corp. (“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. Through fiscal 2007, XIOM has continually
        developed and refined its patented industrial based thermal spray coating
        technology which is 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
 
 Revenue
        from product sales (thermal spray systems and powders) is recognized when
        all of
        the following criteria are met: (1) persuasive evidence of an arrangement
        exists, (2) the price is fixed or determinable, (3) collectibility is reasonably
        assured, and (4) delivery has occurred. Persuasive evidence of an arrangement
        and fixed price criteria are satisfied through sales orders. Collectibility
        criteria is satisfied through credit approvals. Delivery criteria is satisfied
        when the products are shipped to a customer and title, and risk of loss,
        pass to
        the customer in accordance with the terms of sale. The Company has no obligation
        to accept the return of products sold other than for replacement of damaged
        products. Other than quantity price discounts negotiated with customers prior
        to
        billing and delivery (which are reflected as a reduction in sales), the Company
        does not offer any sales incentives or other rebate arrangements to customers
 
 Revenues
        from long-term 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. 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
        percentage of revenues derived from sales orders and long-term contracts
        for
        fiscal 2007 and 2006 was 88% and 12%, respectively, and 64% and 36%,
        respectively.
  Revenue
        derived from the sale of spray systems and powders for fiscal 2007 and 2006
        was
        $687,269 and $134,088, respectively, and $302,291 and $102,951, respectively.
  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 primarily of various parts, materials and supplies utilized in the
        assembly and the operation of the thermal spray coating system and is valued
        at
        the lower of cost (first-in, first-out) or market.
  F-9
 XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 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.
 
 EQUITY
        INVESTMENTS
 
 Equity
        investments of 20% to 50% ownership are accounted for using the Equity Method
        of
        accounting. Equity investments of less than 20% ownership are accounted for
        using the Cost Method of accounting and equity investments of greater than
        50%
        ownership are consolidated with the financials of the Company, as appropriate.
 
 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.
 
 FOREIGN
        CURRENCY TRANSLATION
 
 For
        future foreign subsidiaries, where the functional currency is other than
        the
        U.S. Dollar, revenue and expense accounts will be translated at the average
        rates during the period, and the balance sheet items will be translated at
        period end rates. Translation adjustments arising from the use of differing
        exchange rates from period to period will be included as a component of
        Stockholders’ Equity. Gains and losses from foreign currency transactions are
        included in Net Income. In the years ended September 30, 2007 and 2006, all
        foreign sales were transacted in U.S. dollars.
 
 SHARE
        BASED PAYMENTS
 
 Share
        based payments are made primarily to outside consultants and other professional
        service providers, from time to time, subject to current cash flow conditions
        and at the discretion of the Board of Directors. The compensation cost is
        determined based on the estimated fair value of the shares at the measurement
        date, which is the earlier of (a) the date at which a commitment for performance
        by the counterparty to earn the shares is reached (generally the contract
        date),or (b) the date at which the counterparty’s performance is complete. These
        compensation costs are capitalized as prepaid expenses and expensed over
        the
        remaining term of the respective contracts.
 
 Common
        stock options granted to employees are issued for past services from time
        to
        time, at the discretion of the Board of Directors, and the value of each
        option
        is recorded as compensation expense as of the grant date. The related excess
        tax
        benefit received upon the exercise of stock options has not been recognized
        because, in the opinion of management, it is more likely than not, that such
        tax
        benefit will not be utilized in the future.
  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.
  F-10
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 RECENTLY
        ISSUED ACCOUNTING PRONOUNCEMENTS
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
        clarifies the principle that fair value should be used on the assumptions
        market
        participants would use when pricing an asset or liability, and establishes
        a
        fair value hierarchy that prioritizes the information used to develop those
        assumptions. The Company does not expect the adoption of this statement,
        which
        will be effective for the fiscal year beginning October 1, 2008, to have
        a
        material effect in its financial statements.
  Staff
        Accounting Bulletin (“SAB”) No. 108 issued in September 2006 expresses the
        staff’s views regarding the process of quantifying financial statement
        misstatement. Specifically, the staff is concerned about prior year errors
        on
        current year financial statements, thereby allowing improper assets, or
        liabilities, to remain unadjusted. While these errors may not be material
        if
        considered only in relation to the balance sheet, correcting the errors could
        be
        material to the current year income statement. The Company has considered
        the
        staff’s views regarding this bulletin, which will be effective for the fiscal
        year beginning October 1, 2007, and determined that its impact on future
        financial statements will not be material.
  In
        June
        2006, the FASB issued Interpretation No. 48 (“FIN 48”), Accounting for
        Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109,
        which
        prescribes a recognition threshold and measurement attribute for the financial
        statement impact of a tax position taken, or expected to be taken, in a tax
        return. This interpretation, which will be effective for the fiscal year
        beginning October 1, 2007, requires the affirmative evaluation that it is
        more
        likely than not, based on the technical merits of a tax position, that the
        Company is entitled to economic benefits from positions taken in the income
        tax
        returns. As of September 30, 2007, the Company has not recognized any income
        tax
        benefit in the financial statements for positions taken in the income tax
        returns.
  In
        September 2006, the FASB issued SFAS No.158, “Employers’ Accounting for Defined
        Benefit Pension and Other Post Retirement Plans,” which requires the Company to
        measure plan assets and liabilities as of the fiscal year end report date.
        The
        Company will be required to adopt this provision September 30, 2009. The
        Company
        does not expect the adoption of this statement to have a material effect
        on its
        financial statements.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Liabilities,” which allows reporting entities to choose to
        measure many financial instruments and certain other items at fair value.
        The
        objective is to improve financial reporting by providing entities with the
        opportunity to reduce volatility in reported earnings that result from measuring
        related assets and liabilities differently without having to apply complex
        hedge
        accounting provisions, using the guidance in SFAS No. 133 (as amended),
“Accounting for Derivative Instruments and Hedging Activities,” The Company does
        not expect the adoption of this statement, which will be effective for the
        fiscal year beginning October 1, 2008, to have a material effect on its
        financial statements.
 
 In
        December 2007, The FASB issued SFAS No. 160, “Non-Controlling Interests in
        Consolidated Financial Statements,” that amends ARB 51, “Consolidated Financial
        Statements,” to establish accounting and reporting standards for the
        non-controlling interest in a subsidiary and for the deconsolidation of a
        subsidiary. It clarifies that a non-controlling interest in a subsidiary
        is an
        ownership interest in the consolidated entity that should be reported as
        equity
        in the consolidated financial statements. The Company has not yet determined
        what impact the adoption of this requirement, which becomes effective October
        1,
        2009, will have on its financial statements.
 
 In
        December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,” a
        replacement of SFAS No. 141, “Business Combinations.” The objective of this
        Statement is to improve the relevance, representational faithfulness and
        comparability of the information that a reporting entity provides in its
        financial reports about a business combination and its effects. This Statement
        establishes principles and requirements for how the acquirer recognizes and
        measures the identifiable assets acquired and liabilities assumed, measures
        goodwill acquired or gain from a bargain purchase, and determines what
        information to disclose. The Company has not yet determined what impact the
        adoption of this requirement, which becomes effective October 1, 2009, will
        have
        on its financial statements with respect to future acquisitions.
  2.
              INVENTORY
 Inventory
          consists of the following:
 As
                  of September 30,2007
              
              2006Parts
                  and Supplies
              
              $
              73,609
              
              $
              32,974Coating
                  Powders
              
              
              81,264
              
              
              21,826Finished
                  Goods
              
              
              19,361
              
              
              -0-Total
                  Inventory
              
              $
              174,234
              
              $
              54,800
  The
        Company has determined that a reserve for obsolete, or slow moving, inventory
        is
        not required because the assembly of the spray system and the blending of
        powders is done based on actual sales orders and not for the shelf. As of
        September 30, 2007, there were approximately 40 days inventory of Part and
        Supplies necessary to build the spray system and approximately 220 days
        inventory of unblended Coating Powders based on sales for fiscal 2007. The
        level
        of unblended Coating Powder inventory was determined necessary in order to
        meet
        the demand
        related to spray system sold in fiscal 2007 and prior, as well as anticipated
        powder sales related to new system sales in fiscal 2008. The Finished Goods
        inventory at the respective balance sheet dates represents completed systems
        and
        blended powders related to specific sales orders that were shipped subsequent
        to
        the balance sheet dates.
  F-11
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 3.
              PREPAID
                  EXPENSES
  Prepaid
        Expenses at September 30, 2006 represents the net balance remaining to be
        written-off in fiscal 2007 related to advance payments made for two separate
        agreements that commenced in July 2006; one for marketing services in Asia
        and
        the other for merger and acquisition services. Both contracts, which are
        with
        two separate groups, have a one year term and are not renewable. Payment
        for one
        contract was made in restricted common stock and the other was made in both
        cash
        and restricted common stock. Shares were issued based on the fair market
        value
        of the services to be provided, converted at $1.30 per share, the estimated
        fair
        market value of the common stock on the date of both issuances.
 
 4.
              FIXED
                  ASSETS
  Estimated useful
              
              As
                  of September 30,Life
                  – years
              
              2007
              
              2006Machinery
                  and equipment
              
              
              5-10
              
              $
              105,882
              
              $
              66,945Vehicles
              
              
              3-5
              
              
              28,411
              
              
              16,411Office
                  Equipment
              
              
              3-5
              
              
              20,053
              
              
              11,781Furniture
                  and Fixtures
              
              
              5-7
              
              
              9,254
              
              
              5,543Computer
                  Software
              
              
              5-7
              
              
              23,859
              
              
              -Leasehold
                  improvements
              
              
              5-31.5
              
              
              80,414
              
              
              33,438267,873
              
              
              134,118Less
                  accumulated depreciation and amortization
              
              
              
              
              
              (64,176
              )
              
              (35,165
              )Net
                  property and equipment
              
              
              
              
              $
              203,697
              
              $
              98,953
  Fixed
        asset depreciation and amortization for the years ended September 30, 2007
        and
        2006 was $28,654 and $12,743, respectively.
 
 5.
                  INTANGIBLE
                      ASSETS
 
 Intangible
        assets consist of:
 
 As
                  of September 30,2007
              
              2006Patents
                  pending related to the low temperature, low speed,
                thermal
                  spray gun, control unit and powder feeder;Acquisition
                  cost of technology in August of 2004
              
              $
              122,500
              
              $
              122,500Additional
                  legal fees and expenses
              
              
              179,777
              
              
              58,132Technology
                  related to the high temperature, high speed thermal spray technology
                  acquired from an officer in February 2007
              
              
              75,000
              
              
              -Total
                  acquisition cost
              
              
              377,277
              
              
              180,632Less:
                  Accumulated Amortization
              
              
              (35,982
              )
              
              (17,187
              )Intangible
                  Assets, Net
              
              $
              343,353
              
              $
              163,445
 
 The
        patents pending and technology acquired are amortized using the straight-line
        method over their estimated economic life of seventeen (17) years
 
 Amortization
        expense for the years ended September 30, 2007 and 2006 was $16,737 and $8,787,
        respectively. Amortization expense for each of the succeeding five fiscal
        years
        ending September 30, 2008 through 2012 is expected to be approximately $24,000,
        which will increase as additional patent expenses are incurred in the future.
 
 During
        fiscal 2007 and 2006, the Company applied for, and received, additional domestic
        and overseas patents pending for the thermal spray technology and process
        related to the low temperature, low speed, thermal spray gun, modular control
        unit and material powder feeder. Legal fees and expenses incurred to obtain
        these patents totaled $121,645 and $58,132 in fiscal 2007 and 2006,
        respectively.
 
 In
        February 2007, one of the officers, who is also a shareholder, sold his entire
        interest in a certain spray technology he previously acquired personally
        from HV
        Plastic Spray Systems, Inc., for 75,000 restricted common shares of XIOM.
        These
        shares were valued based on the officer’s historical cost basis in the spray
        technology, which was $75,000.
  F-12
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 6.
              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 2007 and 2006 was $1,328 and 16,119, respectively. As of September
        30,
        2007, the Retainage Receivable balance is $23,705.
 
 7.
              INVESTMENTS
                  IN JOINT VENTURES
 
 During
        the first six months of fiscal 2007, XIOM established several separate equity
        interests with joint venture partners in China, Europe, Massachusetts and
        Kentucky. The Company’s equity interests range from 35% to 45% of the entire
        legal business entity depending on several factors, including the level of
        technology to be deployed, the related geography and size of the potential
        marketplace. The equity interests were acquired by the Company in exchange
        for a
        total of 150,000 shares of restricted common stock, incurring certain direct
        costs to establish the joint ventures and by providing its patented thermal
        spray technology pursuant to separate master licensing and master operating
        agreements with each joint venture partner. The Company’s pro-rata share of net
        income, or loss, from each joint venture is recorded in the books and records
        utilizing the Equity Method of accounting.
 
 Except
        for the Massachusetts joint venture, these joint ventures were substantially
        non-operational as of September 30, 2007, and had no reportable operating
        results for fiscal 2007. The Company has recognized a loss to the extent
        that
        the total investment in each joint venture exceeds its pro-rata share of
        the net
        book value of each joint venture at September 30, 2007. This evaluation resulted
        in the Company recognizing a loss of $311,044 and the establishment of a
        corresponding reserve for each joint venture investment totaling this amount.
 
 8.
              ACCRUED
                  COMPENSATION
 
 Accrued
        Compensation 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 annually for both fiscal 2007 and 2006. During fiscal 2007
        and
        2006, $120,000 of Accrued Compensation was used by the two operating officers
        as
        consideration for the exercise of certain non-qualified stock options granted
        to
        them in March 2005 and March 2006 (See Note 14.).
 
 9.
              NOTES
                  PAYABLE
 
 At
        September 30, 2006, Notes Payable included thirty $1,000 convertible discounted
        notes, with redemption rights, dated October 1, 2005. These notes each had
        a one
        year term and a 15% discount, which yielded a 17.6% rate of return, and were
        convertible into 1,000 shares of restricted common stock for each $1,000
        note at
        any time, by the holder, from month one through month twelve. The Company
        can
        redeem the notes at any time during the first eleven months by paying the
        face
        amount of the notes. The holders elected to convert these notes in the twelfth
        month and, as a result, 30,000 shares of restricted common stock were issued
        to
        them. Interest expense related to these notes was $4,500 for fiscal 2006.
 
 During
        fiscal 2007, one note holder, who is also a shareholder, elected to exchange
        $10,000 owed by the Company as consideration for the exercise of certain
        common
        stock warrants held by the note holder (See Note 11).
 
 In
        September 2007, the Company obtained a discounted note from a private lender
        with a face value of $30,000 and net proceeds of $25,800. Payments of $2,500,
        including interest, are due monthly for one year.
 
 The
        balance of Notes Payable at September 30, 2007 is approximately $25,000,
        which
        represents several non-interest bearing demand notes payable to certain
        individuals in varying amounts.
 
 10.
              CONVERTIBLE
                  NOTES PAYABLE
 
 In
        April
        2007, XIOM obtained bridge financing from an investment fund in the amount
        of
        $250,000. The Company and the fund subsequently agreed to convert this note,
        at
        the option of the holder, into 260,417 shares of common stock at a conversion
        price of $.96 per share. This note has a term of one year, is non-interest
        bearing and has “piggy back” registration rights.
  F-13
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 The
        Company entered into an investment banking relationship with one of its
        management and financial consultants in early April of 2007 (See Note 13.).
        It
        was decided that Convertible Exchangeable Notes (“Notes”) with interest at 7%
        per annum paid semi-annually due April 1, 2012 would be sold via a Confidential
        Private Offering Memorandum (Offering”), with a minimum of $500,000 and a
        maximum of $3,000,000 to be raised. Each note has a face value of $30,000
        and is
        convertible into 20,000 shares of common stock at a conversion price of $1.50.
        In addition, each Note holder will receive 20,000 Warrants with an exercise
        price of $2.00 per share and 20,000 Warrants with an exercise
        price of $2.50 per share. Each Warrant is exercisable for one share of the
        Company’s common stock at its stated exercise price at any time prior to the
        five year anniversary of its issuance, or is callable by the Company in the
        event that the Company’s common stock trades at a $5.00 “Bid Price”, or above,
        for 20 consecutive trading days. Each Note will convert automatically upon
        the
        effectiveness of the SEC Registration Statement registering the underlying
        common shares of the Notes and Warrants. If a Registration Statement is not
        declared effective within one year from the final closing date of the Offering,
        then the Note holders may elect to accelerate the maturity date and, in default
        of payment, shall accrue interest at a default rate of 15% per annum until
        payment is made. By early May,
        the
        Broker had raised gross proceeds of $735,000 and escrow was closed on this
        initial round of financing. The Company received net proceeds of $635,950,
        after
        considering investment banking fees and related costs of $99,050. In addition,
        the Company issued $73,500 worth of Notes to the Broker as additional
        consideration as per their agreement with the Company. The second, and final,
        round of financing closed in early June with net proceeds of $334,950, after
        considering investment banking fees and related costs of $50,050. In addition,
        the Company issued $38,500 worth of Notes to the Broker as additional
        consideration as per their agreement with the Company. On June 15, 2007,
        XIOM
        formally closed the Offering and, as required, proceeded to commence the
        registration of the common shares related to the Notes and the underlying
        Warrants.
  At
        September 30, 2007, the Convertible Notes consists of;
 
 Face
                  Value of Convertible Notes
              
              $
              1,232,000Beneficial
                  Conversion Feature Discount,
                Net
                  of accumulated amortization of $17,596
              
              
              (220,599
              )Value
                  Attributable to Warrants Issued,
                Net
                  of accumulated amortization of $10,463
              
              
              (133,209
              )Placement
                  Costs and Fees Paid To Broker,
                Net
                  of accumulated amortization of $19,498
              
              
              (241,602
              )Convertible
                  Notes, Net of Unamortized Discounts
              
              $
              636,590
 
 In
        accordance with Emerging Issues Task Force (“ETIF”) 98-5, XIOM recognized an
        imbedded beneficial conversion feature present in these notes. The Company
        measured an aggregate of $238,195 of the proceeds, which is equal to the
        intrinsic value of the imbedded beneficial conversion feature, and recognized
        it
        as Additional Paid-In Capital and a
        discount against the Convertible Notes. This discount is being amortized
        as
        Interest Expense over the five year maturity period of the Convertible
        Notes.
  In
        accordance with ETIF 00-27, XIOM recognized the value attributable to the
        Warrants in the amount of $143,672 as Additional Paid-In Capital and a discount
        against the Convertible Notes. The Company valued the Warrants using the
        Black-Scholes pricing model. Assumptions used in the calculation included
        the
        contractual term of the Warrants (five years) as the expected term, a risk
        free
        rate of 3.5% and a market price volatility factor of 20%. The debt discount
        attributable to these Warrants is being amortized as Interest Expense over
        the
        five year maturity period of the Convertible Notes.
 
 11.
              SALES
                  TO MAJOR CUSTOMERS AND BY CUSTOMER GEOGRAPHIC
                  AREA
  For
        the
        fiscal years ending September 30, 2007 and 2006, the Company had one major
        customer in each year that accounted for approximately 15% and 25%,
        respectively, of total sales. Each customer represented approximately 16%
        and
        50% of trade accounts receivable as of September 30, 2007 and 2006,
        respectively.
 
 Sales
        by
        customer geographic area, determined by the customer’s country of origin, are as
        follows:
 
 Year
                  EndedSeptember
                  30,2007
              
              2006United
                  States
              
              $
              634,519
              
              $
              478,237Canada
              
              
              249,272
              
              
              125,199United
                  Kingdom
              
              
              49,403
              
              
              25,900Total
              
              $
              933,194
              
              $
              629,336
  As
        of
        September 30, 2007, there are no long-lived assets in any foreign operation
        outside of the United States.
  F-14
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 12.
              COMMITMENTS
                  AND CONTINGENCIES
 
 LEASES
 
 The
        Company leases office, manufacturing and warehouse space pursuant to a four
        year
        lease that expires May, 31 2010 for approximately $5,000 per month. In addition,
        the Company leases a training and testing facility adjacent to the above
        space
        on a month-to-month basis for $1,300 per month. Rent expense for fiscal 2007
        and
        2006 was approximately $76,500 and $60,000, respectively.
 
 CONSULTING
        AGREEMENTS
 
 The
        Company had an agreement with a consulting engineer who provided technical
        support and testing services directly related to the thermal spray coating
        technology and the powder formulas utilized in the application process. This
        agreement called for a base ten hours of work per week at $50 per hour plus
        reimbursement for out-of-pocket expenses, as well as 8,400 shares of restricted
        common stock due in advance of each contract term. Any time incurred beyond
        the
        base weekly hours was payable at $50 per hour, plus 70 shares of restricted
        common stock for each hour worked above the ten base hours, valued at the
        estimated fair market value of the common stock on the date such shares are
        earned. This contract automatically renewed each May, but was terminated
        by
        mutual agreement between the Company and the engineer effective December
        31,
        2006.
 
 XIOM
        has
        an agreement with a consulting group that provides merger, acquisition and
        related services to the Company for a monthly retainer of $4,000 commencing
        September 2005. This monthly retainer was increased to $6,000 upon the initial
        annual renewal in September 2006. After the initial annual renewal, this
        agreement renews year to year by written agreement between both the Company
        and
        the consulting group.
 
 The
        Company has an agreement with a consultant to provide recurring accounting,
        tax
        and financial management services. Compensation is based on one third (33%)
        of
        any and all compensation paid to the President of XIOM. Such compensation
        can be
        in the form of cash, common stock or options, or any combination thereof,
        and is
        paid in like kind at the same time said compensation is paid to the President.
        This agreement may be terminated by either party upon ninety days written
        notice
        to the other party.
 
 13.
              COMMON
                  STOCK
 Common
          Stock is as follows:
 As
                  of September 30,2007
              
              2006Common
                  Stock, $.0001 par value, shares authorized
              
              
              50,000,000
              
              
              10,000
                  000Shares
                  issued and outstanding, including 563,718 shares subject to rescission
                  rights
              
              
              8,206,663
              
              
              7,095,973Par
                  Value
              
              $
              821
              
              $
              710
 
 In
        August
        2007, the Board of Directors of XIOM, by the written consent of the holders
        in
        excess of 50% of the voting rights of the shareholders of the Company, approved
        an increase in the number of authorized shares of common stock from 10,000,000
        to 50,000,000 shares.
 
 In
        January 2007, the Company issued 25,000 and 100,000 shares of restricted
        common
        stock related to two separate consulting agreements for management and financial
        consulting services. Both agreements are for twelve months and are not
        renewable. The agreements also require that 75,000 shares and 300,000 shares,
        respectively, be held in escrow, pursuant to separate escrow agreements,
        and
        that such shares be issued by the escrow agent at intervals
        of three months, six months and nine months from the date of the consulting
        agreements. Either, or both, contracts may be cancelled by the Company upon
        written notice to the consultant(s) prior to the end of each quarterly release
        of shares from escrow. In addition, the Company has granted “piggy back”
registration rights to register the consulting shares, whether or not released
        from escrow, in any subsequent registration statement filed by the Company,
        at
        the cost and expense of the Company. In the event the Company enters into
        an
        investment banking agreement with the first consultant during the term of
        the
        consulting agreement, then the consultant will waive its due-diligence fee
        and
        limit its compensation on any money raise up to no greater than a 10%
        commission, a 3% non-accountable expense allowance, a $3,500 placement agent’s
        counsel fee and 10% of like kind securities as those sold in any offering
        (See
        Note 10.). On June 15, 2007, XIOM formally cancelled both consulting agreements
        and 50,000 shares and 200,000 shares, respectively, were returned from escrow
        to
        the Company, cancelled and returned to treasury.
 
 During
        fiscal 2006 and 2007, the Company issued 143,514 shares and 458,499 shares,
        respectively, of restricted common stock to several vendors as consideration
        for
        engineering consulting, merger and acquisition consulting, marketing services,
        management services and sales commissions provided during each fiscal year.
        These shares were issued based on the fair market value of the services provided
        and converted at the estimated fair market value of the common stock on the
        date
        of each issuance.
 
 Pursuant
        to an agreement with an investment fund in June 2006, XIOM is responsible
        to pay
        a penalty, in the form of common stock and warrants, equal to 2% of the total
        investment per month beginning 90 days after the investment and until
        notification is received confirming their effectiveness as a publicly traded
        company. The agreement also requires
        that XIOM exchange the 192,307 restricted common shares that the fund purchased
        in June for registered shares upon the effectiveness of the registration
        statement, which included 500,000 shares for sale to the public.
  F-15
 XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 As
        a
        result of the effective date being October 20, 2006, the Company issued 25,000
        shares of restricted common stock and 25,000 warrants, with an exercise price
        of
        $1.30, in December 2006 as satisfaction for the penalty. These additional
        restricted common shares were also exchanged for registered common shares
        at
        that time.
 
 In
        December 2006 and February 2007, the Company completed separate private
        placement offerings in which it sold and issued 41,000 shares and 13,889
        shares,
        respectively, of restricted common stock at a price of $1.30 per share and
        $1.80
        per share, respectively, which approximated the fair market value on the
        date of
        each issuance. 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 $1.30 per share and $1.80
        per
        share, respectively, and a term of one year.
 
 During
        the first two quarters of fiscal 2007, the Company issued 80,635 shares of
        registered common stock from the exercise of various warrants originally
        issued
        and included in the SB-2 Registration Statement that became effective in
        October
        2006. The exercise price of these warrants was $.75 per share. One of the
        shareholders that exercised his warrant for 13,334 shares used part of a
        Note
        Payable due him from the Company as consideration for his exercise
        price.
 
 In
        February 2007, one of the officers, who is also a shareholder, sold his entire
        interest in a certain spray technology he previously acquired personally
        from HV
        Plastic Spray Systems, Inc., for 75,000 restricted common shares of XIOM.
        These
        shares were valued based on the officer’s historical cost basis in the spray
        technology, which was $75,000. This technology has been classified as an
        Intangible Asset and is being amortized on a straight-line basis over its
        estimated useful life, which is seventeen (17) years.
 
 During
        fiscal 2006, the company sold and issued, in two separate private placements,
        563,718 shares of restricted common stock for a total of $670,399. Because
        these
        shares were issued during, but not included in, the Company’s SB-2 registration
        statement that became effective in October 2006, such shares are subject
        to
        rescission rights by the shareholders who purchased these shares. Common
        stock,
        subject to rescission rights, has not been included in Stockholders’ Equity, but
        has been disclosed separately on the face of the balance sheet (See Note
        17.).
 
 14.
              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.
 
 On
        March
        1, 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. The value of the options 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 option pricing formula,
        which
        produced a value of approximately $.14 per option share. This resulted in
        the
        Company recording additional compensation and consulting expense of
        approximately $49,000 that was treated as Additional Paid-In Capital.
        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.
 
 On
        September 1, 2006, one principal in the Kentucky joint venture received an
        option to purchase 100,000 shares of restricted common stock at $1.10 per
        share
        as consideration for his services in establishing and setting up a separate
        corporation as a master licensee of XIOM. The option is fully vested and
        is
        exercisable, in whole or in part, at the sole discretion of the grantee through
        August 31, 2008 and may not be assigned, or otherwise transferred. The value
        of
        this 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
        option-pricing formula, which produced a value of $.16 per option share.
        This
        resulted in the Company recording an additional investment in the Kentucky
        joint
        venture of $16,000 for fiscal 2006 that was treated as Additional Paid-In
        Capital. 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%. This option was exercised in full and 100,000 shares
        of restricted common stock were issued in December 2006 in exchange for the
        entire exercise price of $110,000.
  F-16
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 In
        September 2006, the two operating officers, who are also shareholders, partially
        exercised their March 2005 and March 2006 options, and purchased 40,000 shares
        of restricted common stock at $.75 per share and 33,333 shares of restricted
        common stock at $1.50 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 13,333 shares of restricted common stock at $.75 per share. Accrued
        professional fees were off-set and used as consideration for acquiring these
        option shares.
  On
        October 15, 2006, XIOM granted three separate options to purchase a total
        of
        350,000 shares of restricted common stock at a price of $1.75 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
        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 2007. The options are fully vested and are
        exercisable, in whole or in part, at the sole discretion of the grantee through
        October 14, 2011 and may not be assigned, or otherwise transferred. The value
        of
        the options 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 option-pricing
        formula, which produced a value of approximately $.17 per option share. This
        resulted in the Company recording an additional compensation and consulting
        expense of approximately $60,000 that was treated as Additional Paid-In Capital.
        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%.
 
 During
        fiscal 2007, the two operating officers, who are also shareholders, partially
        exercised their March 2005 and March 2006 options, and purchased 80,000 shares
        of restricted common stock at $.75 per share and 40,000 shares of restricted
        common stock at $1.50 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 26,667 shares of restricted common stock at $.75 per share. Accrued
        professional fees were off-set and used as consideration for acquiring these
        option shares.
 
 On
        July
        6, 2007, XIOM granted four separate options to purchase a total of 250,000
        shares of restricted common stock at a price of $1.25 per share, which
        approximates the fair market value on the date of the grant. The two operating
        officers, who are also shareholders, and a consultant, who provides engineering
        services, each received an option to purchase 75,000 restricted common shares
        and another consultant to the company received an option to purchase 25,000
        restricted common shares as partial consideration for providing accounting
        services for fiscal 2007. The options are fully vested and are exercisable,
        in
        whole or in part, at the sole discretion of the grantee through July 5, 2012
        and
        may not be assigned, or otherwise transferred. The Company used the
        Black-Scholes option-pricing formula, which produced a value of approximately
        $.37 per option share. This resulted in the Company recording an additional
        compensation and consulting expense of approximately $91,000 that was treated
        as
        Additional Paid-In Capital. 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 76%.
 
 In
        August, 2007, XIOM granted three separate options to purchase a total of
        330,000
        shares of restricted common stock at a price of $1.25 per share for 30,000
        options for two employees and $1.50 for 300,000 options to a consultant,
        which
        approximated the fair market value on the date of the grants. The options
        are
        fully vested and are exercisable, in whole or in part, at the sole discretion
        of
        the grantee through August 2012 and may not be assigned, or otherwise
        transferred. The Company used the Black-Scholes option-pricing formula, which
        produced a value of approximately $.41 per option share. This resulted in
        the
        Company recording an additional compensation and consulting expense of
        approximately $135,000 that was treated as Additional Paid-In Capital.
        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 76%.
 
 The
        following is a summary of the stock option activity for the fiscal years
        ended
        September 30,
 2007
                
                2006Outstanding,
                    beginning of year
                
                
                670,834
                
                
                700,000Granted
                    during the year
                
                
                930,000
                
                
                517,500Exercised
                    during the year
                
                
                (246,667
                )
                
                (546,666
                )Forefeited
                    / expired / cancelled
                
                
                -
                
                
                -Outstanding,
                    end of year
                
                
                1,354,167
                
                
                670,834Vested
                    and exercisable, end of year
                
                
                1,354,167
                
                
                670,834Assumptions
                    used to value stock option grants;Expected
                    volatility
                
                
                20%-76
                %
                
                20
                %Weighted
                    average volatility
                
                
                59
                %
                
                20
                %Expected
                    term (in years)
                
                
                5.0
                
                
                5.0Risk
                    free rate
                
                
                3.5
                %
                
                3.5
                %Aggregate
                    intrinsic value of vested and exercisable options, end of
                    year
                
                $
                44,250Total
                    intrinsic value of options exercised during the year
                
                $
                96,000
  F-17
 XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
  Stock
        options outstanding and exercisable at September 30, 2007 (all non-qualified)
        consist of;
 
 Granted in
                Year Ended
                September 30,
              
              Number Outstanding
                and Exercisable
              
              Exercise
                Price
              
              Expiration
                Date2005
              
              
              80,000
              
              $
              0.75
              
              
              February
                  28, 20102006
              
              
              67,500
              
              $
              0.75
              
              
              September 30, 20102006
              
              
              276,667
              
              $
              1.50
              
              
              February
                  28. 20112007
              
              
              350,000
              
              $
              1.75
              
              
              October
                  14, 20112007
              
              
              250,000
              
              $
              1.25
              
              
              July
                  5, 20122007
              
              
              300,000
              
              $
              1.50
              
              
              August
                  14, 20122007
              
              
              30,000
              
              $
              1.25
              
              
              August
                  30, 2012Totals
              
              
              1,354,167
  15.
              INCOME
                  TAXES
 
 As
        of
        September 30, 2007, the Company had net operating and capital loss carryforwards
        of approximately $2,800,000 and $533,000, respectively, which expire in 2017
        and
        2011, respectively.
 
 At
        September 30, 2007 and 2006, the Company provided a full valuation allowance
        against the gross deferred tax asset arising from the net operating and capital
        loss carry forwards 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.
 
 16.
              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 fiscal 2007, the Company converted
        $20,000 of Shareholder Loan as partial consideration for purchasing 40,000
        restricted shares of common stock upon the exercise of certain stock options
        held by the officer/shareholder.
 
 17.
              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. XIOM may be
        considered to have commenced a public offering of securities on May 6, 2005,
        when they first filed their registration statement on Form SB-2.
 Subsequent to that date, from January 1, 2006 through October 20, 2006
        (the effective date of their registration statement), the Company offered
        and
        sold 563,718 restricted shares of common stock for a total of $670,399. Although
        XIOM made these transactions in reliance upon claimed exemptions from
        registration that the Company 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 XIOM for damages or for rescission of their
        purchase transaction and recovery of the full subscription price paid, which
        would be a total of $670,399, plus interest.  As of the date of these
        financial statements, none of the purchasers has made or threatened any claim
        against the Company 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 the business and on the ability to continue
        to operate. XIOM may not have sufficient funds available to pay such claims,
        and
        there is no assurance that the Company would be able to obtain such funds
        either
        from the proceeds of any offering, or from other sources.  In that event,
        the Company may be forced to cease operations and liquidate our available
        assets
        to pay our liabilities, including, but not limited to, the rescission claims.
  F-18
  XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
 
 18.
              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 as
        of
        September 30, 2007, the Company  has
        a
        total Stockholders’ Deficit of approximately $930,000  and
        has
        working capital deficit of approximately $191,000 . Additionally, the Company incurred a Net Loss of approximately $2,722,000
        for
        the year ended September 30, 2007 and a Net Loss of approximately $806,000,
        for
        the year ended September 30, 2006. 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 a significant increase in sales orders for the patented
        industrial thermal spray technology since October 2007. This has resulted
        from
        recently expanded domestic marketing efforts to attract both commercial and
        governmental customers as well as the further development of several joint
        ventures and strategic alliance relationships. XIOM also plans to significantly
        reduce the number of shares issued for services related to engineering
        consulting, merger and acquisition consulting and marketing services, thereby
        reducing the related expenses. The Company will also continue seeking to
        raise
        money through a series of equity and debt transactions in fiscal 2008. 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.
 
 19.
              SUBSEQUENT
                  EVENTS
  In
        October 2007, XIOM granted five separate options to purchase a total of 525,000
        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, and a consultant, who provides engineering
        services, each received an option to purchase 150,000 restricted common shares,
        a consultant to the company received an option to purchase 50,000 restricted
        common shares as partial consideration for providing accounting services
        for
        fiscal 2008 and another consultant received an option to purchase 25,000
        restricted common shares as partial consideration for providing coating
        application services for fiscal 2008. The options are fully vested and are
        exercisable, in whole or in part, at the sole discretion of the grantee through
        October 2012 and may not be assigned, or otherwise transferred.
 
 In
        October 2008, several holders of an aggregate principal amount of $720,000
        of
        the 7% Convertible Notes (see Note. 10) demanded immediate payment thereof
        as a
        result of the Registration Statement not being declared effective within
        one
        year from the final closing date of the Offering, which was in early June
        2007.
        Pursuant to the Note Agreement, these Note holders have elected to accelerate
        the maturity date and, in default of payment, shall accrue interest at a
        default
        rate of 15% per annum from the date of notice until payment of principal
        and
        accrued interest is paid in full.
 
 20.
              RESTATEMENT
                  OF PREVIOUSLY ISSUED FINANCIAL
                  STATEMENTS
 
 The
        Company has restated its financial statements at September 30, 2007 and for
        the
        year then ended (which were previously included in the Company’s Form 10-KSB
        filed with the Securities and Exchange Commission (“SEC”) on January 15, 2008)
        in order to correct an error relating to the accounting for the February
        2007
        acquisition of a certain thermal spray technology from the Company’s Chief
        Executive Officer in exchange for 75,000 shares of the Company’s common stock
        (see Note. 5)
 
 As
        previously reported, the Company recorded the acquisition at an estimated
        fair
        value of $135,000 for the 75,000 shares of common stock issued at the date
        of
        acquisition. As restated, pursuant to SEC Staff Accounting Bulletin Topic
        5G,
        the Company recorded the acquisition at the $75,000 transferor cost of the
        technology.
 
 The
        effect of the restatement adjustments on the Balance Sheet at September 30,
        2007
        is as follows;
 As
                    PreviouslyReported
                
                Adjustments
                
                As
                    RestatedTotal
                    Current Assets
                
                $
                671,539
                
                $
                -
                
                $
                671,539Fixed
                    Assets, Net
                
                
                203,697
                
                
                -
                
                
                203,697Intangible
                    Assets, Net
                
                
                401,295
                
                
                (57,942
                )
                
                343,353Other
                    Other Assets
                
                
                30,520
                
                
                -
                
                
                30,520Total
                    Assets
                
                $
                1,307,051
                
                $
                (57,942
                )
                $
                1,249,109Total
                    Liabilities
                
                $
                1,508,506
                
                
                -
                
                $
                1,508,506Common
                    Stock, Subject To Rescission Rights
                
                
                670,399
                
                
                -
                
                
                670,399Common
                    Stock
                
                
                764
                
                
                -
                
                
                764Additional
                    Paid-in Capital
                
                
                3,541,454
                
                
                (60,000
                )
                
                3,481,454Retained
                    Earnings (Deficit)
                
                
                (4,414,072
                )
                
                2,058
                
                
                (4,412,014
                )Total
                    Stockholders’ Equity (Deficit)
                
                
                (871,854
                )
                
                (57,942
                )
                
                (929,796
                )Total
                    Liabilities and Stockholders’ Equity (Deficit)
                
                $
                1,307,051
                
                $
                (57,942
                )
                $
                1,249,109
  F-19
 XIOM
        Corp.
 NOTES
        TO
        FINANCIAL STATEMENTS
 F OR
        THE
        YEARS ENDED SEPTEMBER 30, 2007 AND 2006
  The
        effect of the restatement adjustments on the Statement of Operations for
        the
        fiscal year ended September 30, 2007 is as follows;
 
 As PreviouslyReported
              
              Adjustments
              
              As
                  RestatedGross
                  Profit
              
              $
              177,814
              
              $
              -
              
              $
              177,817Selling,
                  General and Administrative Expenses
              
              
              2,511,782
              
              
              (2,058
              )
              
              2,509,724Operating
                  Income (Loss)
              
              
              (2,333,968
              )
              
              (2,058
              )
              
              (2,331,910
              )Other
                  Income (Expense)
              
              
              (389,741
              )
              
              -
              
              
              (389,741
              )Net
                  Income (Loss)
              
              $
              (2,723,709
              )
              $
              (2,058
              )
              $
              (2,721,651
              )Basic
                  and Diluted Income (Loss) Per Share
              
              $
              (0.35
              )
              $
              (0.00
              )
              $
              (0.35
              )
  F-20


**Item
      8. Changes In and Disagreements with Accountants on Accounting and Financial
      Disclosure**





The
      Form
      8-K filed with the Securities and Exchange Commission on November 7, 2007 is
      hereby incorporated by reference.





**Item
      8a. Controls and Procedures** **Disclosure
      Controls and Procedures**


As
      of the
      end of the period covered by this report, our management conducted an
      evaluation, under the supervision and with the participation of our chief
      executive officer and chief financial officer of the effectiveness of our
      disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
      under the Securities Exchange Act of 1934). Based on this evaluation, the
      officers concluded that our disclosure controls and procedures needed
      improvement in order to be effective to ensure that information required to
      be
      disclosed by our company in reports that we file or submit under the Securities
      Exchange Act of 1934 is recorded, processed, summarized and reported within
      the
      time periods specified in Commission rules and forms. As a result, we have
      instituted additional levels of review and are currently looking to retain
      a
      financial professional with the requisite background and experience that will
      coordinate and be responsible for our disclosure controls and procedures with
      the assistance of our independent accounting firm.





**Changes
      in Internal Controls over Financial Reporting**


Our
      management, with the participation of the chief executive officer and chief
      financial officer, performed an evaluation as to whether any change in the
      internal controls over financial reporting (as defined in Rules 13a-15 and
      15d-15 under the Securities Exchange Act of 1934) occurred during the period
      covered by this report. Based on that evaluation, the chief executive officer
      and chief financial officer concluded that no change occurred in the internal
      controls over financial reporting during the period covered by this report
      that
      materially affected, or is reasonably likely to materially affect, the internal
      controls over financial reporting.





**Item
      8b. Other Information**





None




**Part
      III**





**Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      With
      Section 16(a) of the Exchange Act.**





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
            
            68
            
            Chairman,
                President, Chief Accounting/Financial Officer and
                PromoterThomas
                Gardega
            
            60
            
            Executive
                Vice President, Director and
                Promoter




14


**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,
      TTI acquired 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.





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”).





**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.





**Code
      of Ethics**


Our
      board
      of directors had adopted a code of ethics applicable to persons at our company
      who are responsible for financial management. A copy of the code of ethics
      is
      attached to this Annual Report as Exhibit 14.1.


15


**Audit
      Committee and Audit Committee Financial Expert**


Our
      board
      of directors acts as our audit committee. No member of our board of directors
      is
      an “audit committee financial expert,” as that term is defined in Item 401(e) of
      Regulation S-B promulgated under the Securities Act. To date, we have conducted
      limited operations and generated only minimal revenue since inception. In light
      of the foregoing, and on evaluating our internal controls, our board of
      directors determined that our internal controls are adequate to insure that
      financial information is recorded, processed, summarized, and reported in a
      timely and accurate manner in accordance with applicable rules and regulations
      of the Securities and Exchange Commission. Accordingly, our board of directors
      concluded that the benefits of retaining an individual who qualifies as an
      “audit committee financial expert” would be outweighed by the costs of retaining
      such a person.





Section
      16(A) Beneficial Ownership Reporting Compliance


Under
      section 16 of the Exchange Act, our directors and executive officers and
      beneficial owners of more than 10% of the our common stock are required to
      file
      certain reports, within specified time periods, indicating their holdings of
      and
      transactions in our common stock and derivative securities.








**Item
      10. Executive Compensation**


For
      the
      fiscal year ended September 30, 2007, the Officers/Directors have been
      compensated with salaries and other forms of remuneration as set forth
      below:





**Officer/Director
      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
      30;





Summary Compensation TableFiscal
            
            Annual
            
            Long-term Compensation;Name & Position
            
            Year
            
            Salary
            
            Securities Underlying OptionsAndrew
                Mazzone,
            
            
            2005
            
            $
            60,000
            
            
            300,000Chairman
                & President
            
            
            2006
            
            $
            60,000
            
            
            150,0002007
            
            $
            60,000
            
            
            225,000Thomas
                Gardega
            
            
            2005
            
            $
            60,000
            
            
            300,000Executive
                VP
            
            
            2006
            
            $
            60,000
            
            
            150,0002007
            
            $
            60,000
            
            
            225,000




16


The
      following table details options granted to each executive officer in the last
      fiscal year ended September 30, 2007;




Option Grants In Last Fiscal YearNumber of Shares
            
            Percent of Total
            
            Exercise
            
            ExpirationName
            
            Underlying Options
            
            Options Granted
            
            Price
            
            DateTo Employees
            
            ($/SH)Andrew Mazzone
            
            
            150,000
            
            
            
            
            $
            1.75
            
            
            October
                14, 2011Chairman
                & President
            
            
            75,000
            
            
            50
            %
            $
            1.25
            
            
            July
                5, 2012Thomas
                Gardega
            
            
            150,000
            
            
            
            
            $
            1.75
            
            
            October
                14, 2011Executive
                VP
            
            
            75,000
            
            
            50
            %
            $
            1.25
            
            
            July
                5, 2012





Option Exercised In Last Fiscal YearNumber of Options
            
            Exercise
            
            Unexercised
            
            Value of UnexercisedName
            
            Exercised
            
            Price
            
            Options
            
            Options($/SH)
            
            
            
            ($)Andrew
                Mazzone
            
            
            40,000
            
            $
            1.50
            
            
            76,667
            
            
            -0-Chairman
                & President
            
            
            -0-
            
            $
            1.75
            
            
            150,000
            
            
            -0--0-
            
            $
            1.25
            
            
            75,000
            
            
            -0-Thomas
                Gardega
            
            
            80,000
            
            $
            0.75
            
            
            60,000
            
            $
            18,000Executive
                VP
            
            
            -0-
            
            $
            1.50
            
            
            150,000
            
            
            -0--0-
            
            $
            1.75
            
            
            150,000
            
            
            -0--0-
            
            $
            1.25
            
            
            75,000
            
            
            -0-





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.





**Director
      and Officer Insurance:**





The
      Company does not have directors and officers (“D & O”) liability insurance
      at this time.


17


**Item
      11. Security Ownership of Certain Beneficial Owners and Management**


The
      following table sets forth information as of November 4, 2008 with respect
      to
      the beneficial ownership of the 10,988,718 outstanding shares of the Company's
      Common Stock by (i) each person known by the Company to beneficially own five
      percent or more of the outstanding shares; (ii) the Company's officers and
      directors; and (iii) the Company's officers and directors as a group. A person
      is deemed to be a beneficial owner of any securities of which that person has
      the right to acquire beneficial ownership within sixty (60) days.





Percentage ofIdentity of Shareholder
            
            Number of Shares
            
            Beneficial OwnershipAndrew
                B. Mazzone
            
            
            1,614,364
            
            
            14.7
            %513
                Dryden StreetWestbury,
                NY 11590President
                and DirectorThomas
                Gardega
            
            
            1,003,258
            
            
            9.1
            %200
                Landmark RoadConway,
                SC 29527Executive
                VP and Director_____________________All
                Officers and Directors as
            
            
            2,617,622
            
            
            23.8
            %A
                Group (2 Persons)





*
            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.





**Item
      12. Certain Relationships and Related Transactions and Director
      Independence.**




None




**Director
      Independence**


None
      of
      our current directors are considered independent at this time.




18




**Item
      13. Exhibits**




**Index
      to Exhibits:**





SEC REFERENCENUMBER
            
            TITLE
                OF DOCUMENT3.1
            
            Articles
                of Incorporation of the Registrant, as amended (1)3.2
            
            By-laws
                of the Registrant, as amended (1)14.1
            
            Code
                of Ethics (2)31.1
            
            Certification
                of President Officer pursuant to 18 U.S.C. Section 1350, as adopted,
                Pursuant to section 906 of the Sarbanes-Oxley act of 2002
                (2)32.1
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted,
                Pursuant to section 906 of the Sarbanes-Oxley act of 2002
                (2)





(1)
            Previously
                filed as an exhibit to the Company’s Form SB-2, as amended and filed on
                May 6, 2005, and subsequent
                filings.


(2)
            Filed
                herewith.





**Reports
      on Form 8-K:**





The
      Form
      8-K filed with the Securities and Exchange Commission on November 7, 2007 is
      hereby incorporated by reference.





**Item
      14. Principal Accounting Fees and Services.**


Audit
      Fees. The aggregate fees billed for professional services rendered by our
      principal accountants for the audit of our annual financial statements and
      review of our quarterly financial statements were $25,000 and $10,000 for fiscal
      years 2007 and 2006, respectively.





Audit
      Related Fees. None.





Tax
      Fees.
      None





All
      Other
      Fees. None.





During
      the fiscal year ended September 30, 2007, the Registrant did not have an audit
      committee.


19


SIGNATURES


Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, XIOM CORP. has duly caused this Report to be signed on behalf of the
      undersigned thereunto duly authorized on November 5, 2008.





XIOM
                CORP.By:
            /s/
                Andrew MazzoneAndrew
                Mazzone, President and CEO





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed by the following persons in the capacities indicate;





Signature
            
            Title
            
            Date/s/
                Andrew Mazzone
            
            President,
                Principal
            
            November
                5, 2008Andrew
                Mazzone
            
            Accounting/Financial
                Officer andDirector/s/
                Thomas Gardega
            
            Executive
                Vice President and
            
            November
                5, 2008Thomas
                Gardega
            
            Director




20