10KSB 1 xerion10ksb123104.txt XERION ECOSOLUTIONS GROUP INC. (Formerly IMMULABS CORP) Filing Type: 10KSB Description: Annual Report Filing Date: April 15, 2004 Period End: December 31, 2004 Primary Exchange: Over the Counter Bulletin Board Ticker: XECO UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-KSB (Markone) X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee required) (Fee required) For the fiscal year ended December 31, 2004 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934 --- For the transition period from ______________ to _____________ Commission File Number: 0-26760 XERION ECOSOLUTIONS GROUP INC. (Formerly IMMULABS CORPORATION ) Colorado 84-1286065 ------------------------ ------------------------ (State of incorporation) (IRS Employer ID Number) Suite 905, 102-4369 Main Street Whistler, BC Canada V0N 1B4 ---------------------------------------- (Address of principal executive offices) (604) 902 0178 --------------------------- (Issuer's telephone number) 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 shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. X State issuer's revenues for its most recent year. (0) --- State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. March 8, 2005 $224,908.05. State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: March 8, 2005, 2,841,523 common stock. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding filings of the Company at http://www.sec.gov. Transitional Small Business Disclosure Format (check one): YES NO X --- --- TABLE OF CONTENTS ITEM NUMBER PAGE PART I 1. Description of Business 3 2. Description of Property 3 3. Legal Proceedings 3 4. Submission of Matters to a Vote of Shareholders 4 PART II 5. Market for Common Equity and Related Stockholder Matters 4 6. Management's Discussion and Analysis or Plan of Operation 6 7. Financial Statements 8 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 20 8A. Controls & Procedures 20 PART III 9. Directors, Executive Officers and Control Persons; Compliance with Section 6(a) of the Exchange Act. 20 10. Executive Compensation 20 11. Security Ownership of Certain Beneficial Owners and Management 21 12. Certain Relationships and Related Transactions 21 13. Exhibits and Reports on Form 8-K 21 14. Principal Accountant Fees & Services 21 Signatures 22 2 PART I Caution Regarding Forward-Looking Information --------------------------------------------- This annual report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Company or management as well as assumptions made by and information currently available to the Company or management. When used in this document, the words "anticipate", "believe", "estimate", "expect" and "intend" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current view of the Company regarding future events and are subject to certain risks, uncertainties and assumptions, including the risks and uncertainties noted. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. In each instance, forward-looking information should be considered in light of the accompanying meaningful cautionary statements herein. ITEM 1 - DESCRIPTION OF BUSINESS (1) General: Xerion EcoSolutions Group Inc. was originally incorporated in Colorado in 1985 as Gemini Ventures, Inc.. The name was changed in 1989 to Solomon Trading Company, Ltd., in 1994 to the Voyageur First, Inc., in 1995 to North American Resorts, Inc., in 2000 to Immulabs Corp. Effective March 28, 2003, as filed with the State of Colorado, the Company changed its name to Xerion EcoSolutions Group Inc. and is currently in the business of developing gold extraction technology for the mining industry. In November 2000, Immulabs acquired the exclusive rights to purchase technologies developed by Quest Research Group, Inc. ("Quest") of Boston, Massachusetts, and to buy up to 100% of that company. Quest's biotech research had resulted in the development of two technologies of interest to the Company, which the Company hoped to commercialize. With the exclusive rights to acquire secured, the Company had been performing its due diligence pursuant to its option contract with Quest in order to evaluate the technology and develop its commercialization strategy. The parties entered into a dispute and the Company contacted Quest to seek mediation or arbitration as provided for in the option agreement. The Company subsequently learned that Quest had insufficient assets to warrant litigation and decided at this time not to pursue further legal action. In October 2002, the Company retained Ben Traub as President of the company. Mr. Traub was to identify new business opportunities on behalf of the Company. On March 17, 2003 the Company purchased 67 mining claims and certain ore and waste processing technologies. In compliance with the purchase agreements, the vendors were obligated to deliver exploration and metallurgical data to support the representations made about the processing technologies and claims. The Vendors neglected to deliver this documentation. The cancellation of the purchase agreements results in a reimbursement of 2.5 million shares to the company, which substantially reduced the issued and outstanding shares of the Company. The Company has been working with Dr. David Dreisinger (1), a specialist consultant in the field of hydrometallurgy. This work has included a research project focused of developing a viable alternative to cyanide for the gold mining industry. As a result of this research project, Dr. Dreisinger has identified specific chemical conditions in the application of certain non-toxic reagents that he believes could lead to a significant breakthrough in the development of a replacement for cyanide. The Company is currently evaluating its options with regard to developing this new technology. The prospects of developing and bringing to market a technology of this magnitude may exceed the company's ability and management is evaluating the possibility of merging with another, more established company with existing operations and cash flow. (1) www.mmat.ubc.ca/units/bioh/people/dreisinger/dreisinger.html ITEM 2 - DESCRIPTION OF PROPERTY The Company does not own any property as of December 31, 2004; but maintains its headquarters at 102-4369 Main St, Suite 905, Whistler, BC Canada V0N 1B4. ITEM 3 - LEGAL PROCEEDINGS: To the best knowledge of the Officers and Directors of the Company, neither the Company nor any of its Officers and Directors are parties to any legal proceeding or litigation other than as described below. Further, the Officers and Directors know of no threatened or contemplated legal proceedings or litigation other than as described below The current Management learned in late 2002 that the Company is in dispute over its purchase of a shuttle bus in 1998. The owners of the bus lost the vehicle in bankruptcy and are looking to recoup $97,508.58 plus associated costs due to their losses, however, the title of the bus was never transferred to the Company and the Company was looking to recoup some $15,000 in payments made towards the purchase. The Company is now relying on former directors of the Company dba North American Resorts Inc. as well as the estate of the Company's former attorney to cover the costs. These parties have signed a Hold Harmless Agreement indemnifying the Company from any costs arising from previously undisclosed liabilities. An attorney representing a former Director of the Company has informed the Company that they have worked out a potential alternative settlement with the Claimants that would absolve the Company of any liability. That attorney is waiting for his legal fees to be paid to complete these transactions and has advised the Company that a payment of $10,000 will clear the matter within thirty days. The Company has made no payments and no formal demand for payment has been received by the Company and in the event that this occurs the Company will be pursuing former Directors for payment in this matter. If this situation escalates and the Company cannot collect from its indemnifiers, the company may have to pay any money that becomes due. On March 17, 2003 the Company purchased 67 mining claims and certain ore and waste processing technologies. In compliance with the purchase agreements, the vendors were obligated to deliver exploration and metallurgical data to support the representations made about the processing technologies and claims. The Vendors neglected to deliver this documentation. Subsequent to December 31, 2003 the Company has canceled the purchase agreements. 3 ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None PART II ITEM 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED MATTERS: DESCRIPTION OF SECURITIES: General The Registrant's Articles of Incorporation, as amended, authorize the issuance of 300,000,000 shares of common stock of $0.001 par value, with 2,841,523 shares issued and outstanding as of December 31, 2004. There are 50,000,000 authorized shares of Preferred stock of no par value and no issued and outstanding Preferred shares. As at December 31, 2004 there are 191,140 outstanding gold warrants. One Gold Warrant was attached to each common share issued through private placements. The conditions of the warrants are determined according to when the private placement shares were issued: (i) A total of 125,100 common restricted shares were issued through private placements during April, May and July, 2003. One Gold Warrant per share was attached to each common share. This allows each investor the right to purchase 0.03215 oz. of gold for each share purchased from the Company at a 25% discount to the New York spot price calculated on the day the warrant is exercised. The warrant is non-transferable and is a conditional warrant in that the Company must first produce gold in "sufficient" quantities before it can be exercised. The Gold Warrant shall expire sixty months from the date of acceptance of the agreement. "Sufficient" quantities is defined in each contract as the economic recovery of at least 250,000 ounces o f gold which belong solely to the Company, and gold which has been recovered using the Xerion Reaction System (XRS) and that such exercise of the Gold Warrants will not endanger the ability of the Company to finance or support its immediate operational plan. The cancellation of the purchase agreement to acquire the XRS, effectively renders these warrants unexercisable, since it is no longer possible for the Company to extract gold using the XRS. (ii) A total of 17,040 common restricted shares were issued through private placements during August 2003. One Gold Warrant was attached to each common share under the same contractual agreement as above. However, the Gold Warrant allows each investor the right to purchase 0.0643 oz. of gold for each share purchased. The cancellation of the purchase agreement to acquire the XRS, effectively renders these warrants unexercisable, since it is no longer possible for the Company to extract gold using the XRS. (iii) A total of 98,000 common restricted shares were issued through private placements during December 2003. One Gold Warrant was attached to each common share, allowing each investor the right to purchase 0.0643 oz. of gold for each share purchased under similar contractual agreements as above. The use of the Gold Warrant need not be dependent on extracting the gold using the XRS process. A new stock option plan was adopted for 2003 and the following actions taken: a) On March 25, 2003 the Company filed a Form S-8 Registration Statement with the U.S. Securities and Exchange Commission to register 1,000,000 shares of common stock pursuant to the Company's 2003 Nonqualifying Stock Option Plan ("2003 NQPlan"). This 2003 NQPlan is for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interests of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company. The determination of those eligible to receive options under the 2003 NQPlan, and the amount, price, type and timing of each Stock option and the terms and conditions shall rest at the sole discretion of the Company's Board of Directors, subject to the provisions of the 2003 NQPlan; b) All stock options previously issued and valid as of December 31, 2004 expired during 2004. The Registrant's common stock currently trades on the OTC Bulletin Board under the trading symbol XECO. It had previously traded on the OTC Bulletin Board under the trading symbol IMLB until March 2003, and NIAR until February 2000, when it was placed on the Pink sheets for failure to make the necessary SEC filings in a timely manner. Upon completion of the SEC filings, the Company was placed back of the OTC Bulletin Board during May, 2000. 4 The following tables sets forth the range of high and low closing bid prices for the common stock for the periods as reported by Big Charts.com Historical Quotes. Common Stock Calendar year 2004 Low High ------------------ ------- ------- First Quarter $ 1.75 $ 1.75 Second Quarter $ 1.58 $ 1.58 Third Quarter $ 0.68 $ 0.68 Fourth Quarter $ 0.16 $ 0.16 Calendar Year 2003 Low High ------------------ ------- ------- First Quarter $ 0.51 $ 0.55 Second Quarter $ 0.55 $ 5.00 Third Quarter $ 1.01 $ 4.15 Fourth Quarter $ 2.00 $ 5.50 COMMON STOCK Each outstanding share of common stock is fully paid and non-assessable, and the holders thereof are entitled to one vote per share at all meeting of shareholders. All shares are equal to each other with regard to liquidation rights and dividends. The Articles of Incorporation of the Registrant do not include preemptive rights to purchase any additional shares of common stock and do not provide for cumulative voting in the election of directors. In the event of liquidation, dissolution or winding up of the Registrant, holders of common stock will be entitled to receive on a pro rata basis all of the assets of the Registrant after satisfaction of all liabilities, subject to the rights of holders of Preferred stock. PREFERRED STOCK As of December 31, 2004 there were no shares of Preferred stock issued and outstanding. During the year 2000, 482,815 shares of Preferred stock were converted to common stock on the books of the Company, under the terms and conditions of said Preferred stock. Dividends Holders of the common stock are entitled to share equally in dividends when, as and if declared by the Board of Directors of the Registrant, out of funds legally available therefore. No dividend has been paid on common stock since inception, and none is contemplated in the foreseeable future. Transfer Agent The Registrant's Transfer Agent is Signature Stock Transfer, Inc., located at 2301 Ohio Dr., Suite 100, Plano, Texas. 75093. 5 ITEM 6 - MANAGEMENT DISCUSSION AND PLAN OF OPERATION (1) Caution Regarding Forward-Looking Information This annual report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Company or management as well as assumptions made by and information currently available to the Company or management. When used in this document, the words "anticipate", "believe", "estimate", "expect" and "intend" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current view of the Company regarding future events and are subject to certain risks, uncertainties and assumptions, including the risks and uncertainties noted. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. In each instance, forward-looking information should be considered in light of the accompanying meaningful cautionary statements herein. (2) Results of Operations, Liquidity and Capital Resources On March 1, 2003 the Company purchased 67 mining claims and certain ore and waste processing technologies. In compliance with the purchase agreements, the vendors were obligated to deliver exploration and metallurgical data to support the representations made about the processing technologies and claims. The Vendors neglected to deliver this documentation. Subsequent to December 31, 2003 the Company has canceled the purchase agreements. The cancellation of the purchase agreements results in a reimbursement of 2.5 million shares to the company, which substantially reduced the issued and outstanding shares of the Company. GENERAL BUSINESS OVERVIEW The Company has been working with Dr. David Dreisinger (1), a specialist consultant in the field of hydrometallurgy. This work has included a research project focused of developing a viable alternative to cyanide for the gold mining industry. As a result of this research project, Dr. Dreisinger has identified certain chemical conditions in the application of certain non-toxic reagents that he believes could lead to a significant breakthrough in the development of a replacement for cyanide. The prospects of developing and bringing to market a technology of this magnitude may exceed the company's ability and management is evaluating the possibility of merging with another, more established company with existing operations and cash flow. Cyanide is currently used to extract in excess of 80% of the world's gold production. Cyanide is widely known to be toxic and dangerous to work with (2). Due to many accidental spills of cyanide into lakes, streams and drinking water, the use of cyanide has come under close scrutiny by environmental regulators. Public awareness of the perceived dangers has led to the use of cyanide being banned or severely restricted in some areas of the world, thus providing a commercial opportunity for alternative gold extraction systems. For example, Canyon Resources has a 10.9 million ounce gold deposit that is currently impeded from development by the anti-mining initiative, I-137, which bans development of new gold and silver mines which use open-pit mining and cyanide in the treatment and recovery process in the State of Montana (3). To date, no alternative gold extraction system has found broad commercial success due to associated problems with chemistry and/or economics (4). It is Xerion's goal to develop a less toxic alternative to cyanide for the gold mining industry. There is currently little market for cyanide alternatives due to the wide use of cyanide and its strong market dominance. However, due to the current regulatory climate, it is possible that substantial proof of concept by a less toxic alternative could result in adoption by the mining industry. Dr. Dreisinger has identified and proposed certain chemical conditions under which selected non-toxic reagents could potentially operate economically, at the same time avoid known handicaps previously associated with such chemistry. A substantial review of related literature and existing patents has not revealed any other work that has utilized these proposed chemical conditions. The Company is currently in discussions with Dr. Dreisinger (5) regarding the necessary bench scale lab work to prove out Dr. Dreisinger's hypothesis. If an agreement with Dr. Dreisinger is consummated, research work is anticipated to take place at the University of British Columbia. (1) www.mmat.ubc.ca/units/bioh/people/dreisinger/dreisinger.html (2) www.cyanidecode.org/library/cn_facts_health.html (3) www.canyonresources.com/projects/mcdon.html (4) http://technology.infomine.com/enviromine/publicat/cyanide.pdf (5) www.mmat.ubc.ca/research/groups/hydromet.htm Regardless of whether the Company successfully completes the above contemplated research, Management intends to evaluate merger prospects with privately held companies. 6 RISK FACTORS AND FORWARD LOOKING STATEMENTS Certain statements herein, including those regarding production, plans, joint venture contracts, patents, industry outlooks and realized metals prices constitute "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by those forward looking statements. These risks, uncertainties and other factors include, but are not limited to, difficulties in successfully raising capital (given the Company's lack of operating history, lack of profitable operations and limitations on the market for the Company's securities), in developing and commercializing viable products (including the ability to overcome technical hurdles that may arise), in meeting applicable existing or new regulatory standards, in receiving required regulatory approvals, in obtaining necessary patents and licenses, validating new technologies to industry standards, in defending against third party infringement of patents and licenses, in protecting itself from costly, unforeseen legal disputes, in producing gold and other elements in commercial quantities at reasonable costs, in competing successfully against other companies and in marketing itself successfully. Most importantly at this stage, the Company's success and each step required to achieve such success depends on its ability to raise significant further financing on an ongoing basis and there is no guarantee it will be able to do so. The company has no revenues and is therefore more vulnerable to business failure than other more developed companies. Additionally, funds may be raised through the issuance of equity shares and such securities might have rights, preferences or privileges senior to its common stock and will likely result in dilution to existing shareholders. The Company is therefore subject to a number of known and unknown risks and uncertainties that could cause actual operations or results to differ materially from those that are anticipated. Management recognizes that additional funds through additional private sales of Company stock, capital contributions from existing significant shareholders and/or loans from existing significant shareholders will be required in the future. However, there can be no assurance that the Company will be able to obtain additional funds to support the Company's liquidity requirements or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company. To be successful in implementing its business plan the Company will require the services of numerous other executives with varied technical and professional backgrounds in environmental engineering, ore processing and financial management. The company's ability to recruit such executives is entirely dependant upon its access to working capital and there is no guarantee that such capital will be available. The Registrant is highly dependent upon management and/or significant shareholders to provide sufficient working capital to preserve the integrity of the corporate entity during this phase of early development and there is no assurance that the Registrant will be able to finance its planned operations. The Company may, from time to time, make oral forward-looking statements. The Company strongly advises investors to carefully read the above paragraph and the risk factors described in its Annual Reports and other documents filed with the United States Securities and Exchange Commission for a description of certain factors that could cause the actual results of the Company to materially differ from those in the oral or written forward-looking statements. The Company disclaims any intention or obligation to update or revise any oral or written forward-looking statements whether as a result of new information, future events or otherwise. RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 Revenues. The Company currently has no revenues from operations, and the Company does not anticipate that it will generate any revenues until it can either successfully create, validate and protect a technology. General and Administrative Expense. For the financial year of 2004, we reported general and administrative expense of $102,650, a decrease of $409,524 or 80.0% from $512,174 reported in the prior year. The decrease primarily resulted from a decrease in stock based compensation of issuing shares to newly recruited management and contract consultants. Management Fee Expense. The single largest expense was a management fee of $5,000 per month payable to the Company's President. Although this is on the Company's books, the President has not been paid. Liquidity and Capital Resources: The primary source of the Company's cash has been loans form the Company's president. Our cash decreased $31,352 from $33,685 at December 31, 2003 to an ending balance of $2,333 at December 31, 2004. The primary source of the Company's cash has been loans form the Company's president. The Company believes its current available cash position is sufficient to meet its cash needs on a short-term basis. The Company's ability to continue as a going concern is dependent upon the Company's ability in the near future to (i) raise additional funds through equity financings, and (ii) develop marketable technology in the mining industry. AUDIT COMMITTEE REPORT The audit committee has reviewed and discussed the audited financial statements with management. The audit committee has discussed with the independent auditors the matters required to be discussed by SAS 61, as may be modified or supplemented; The audit committee has received the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees), as may be modified or supplemented, and has discussed with the independent accountant the independent accountant's independence; and Based on the review and discussions referred to in this Item, the audit committee recommended to the Board of Directors that the audited financial statements be included in the company's Annual Report on Form 10-KSB (17 CFR 249.310b) for the last fiscal year for filing with the Commission. The audit committee consists of Ben Traub and Robert Skanes. 7 ITEM 7 - FINANCIAL STATEMENTS: The required accompanying financial statements begin on page F-1 of this document. Xerion EcoSolutions Group Inc. (A Development Stage Company) Index Report of Independent Registered Public Accounting Firm .....................F-1 Balance Sheets...............................................................F-2 Statements of Operations.....................................................F-3 Statements of Cash Flows.....................................................F-4 Statement of Stockholders' Equity............................................F-5 Notes to the Financial Statements............................................F-6 8 Report of Independent Registered Public Accounting Firm ------------------------------------------------------- To The Board of Directors and Stockholders of Xerion EcoSolutions Group Inc. (A Development Stage Company) We have audited the accompanying balance sheets of Xerion EcoSolutions Group Inc. (A Development Stage Company) as of December 31, 2004 and 2003, and the related statements of operations, stockholders' equity and cash flows for the years then ended. 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 audit in accordance with the standards of the Public Company Accounting 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 by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Xerion EcoSolutions Group Inc. (A Development Stage Company), as of December 31, 2004 and 2003, and the related statements of operations, stockholders' equity and cash flows for the years then ended, in conformity with generally accepted accounting principles used in the United States. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has losses from operations since inception, no source of revenues and insufficient working capital available to meet ongoing financial obligations over the next fiscal year. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 1. These financial statements do not include any adjustments, which might result from the outcome of this uncertainty. Chartered Accountants Vancouver, Canada March, 2005 F-1
Xerion EcoSolutions Group Inc. (A Development Stage Company) Balance Sheets (expressed in U.S. dollars) As at As at December 31, December 31, 2004 2003 $ $ ASSETS Current Assets Cash 1,576 33,685 Prepaid expenses -- 2,636 -------------------------------------------------------------------------------------------- Total Current Assets 1,576 36,321 Property and Equipment (Note 3) 4,629 24,771 -------------------------------------------------------------------------------------------- Total Assets 6,205 61,092 ============================================================================================ LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable (Note 6(b)) 138,021 92,754 Accrued liabilities 3,442 5,000 Due to a related party (Note 6(c)) 2,122 1,014 -------------------------------------------------------------------------------------------- Total Current Liabilities 143,585 98,768 -------------------------------------------------------------------------------------------- Stockholders' Deficit Preferred stock, 50,000,000 shares authorized, no par value; none issued -- -- Common Stock (Note 7), 300,000,000 shares authorized, $0.001 par value 5,341,523 and 392,133 shares issued and outstanding respectively 2,842 5,342 Additional Paid-in Capital 10,014,413 10,011,913 Donated Capital (Note 6(b)) 126,000 126,000 Deficit Accumulated During the Development Stage (10,280,635) (10,180,931) -------------------------------------------------------------------------------------------- Total Stockholders' Deficit (137,380) (37,676) -------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Deficit 6,205 61,092 ============================================================================================
(The Accompanying Notes are an Integral Part of These Financial Statements) F-2
Xerion EcoSolutions Group Inc. (A Development Stage Company) Statements of Operations (expressed in U.S. dollars) Accumulated from November 1, 1985 For the Years (Date of Inception) Ended to December 31, December 31, 2004 2004 2003 $ $ $ Revenue -- -- -- ---------------------------------------------------------------------------------------------------------------- Expenses Depreciation 9,558 3,276 3,449 Impairment of intangible asset 20,000 -- 20,000 Loss on disposal of property and equipment 7,866 7,866 -- Management services (Note 6(a)) 1,009,000 60,000 183,000 Mining exploration 54,427 48 54,379 Professional fees 1,090,233 10,087 36,464 Selling, general and administrative 881,619 18,427 287,744 Stock-based compensation 1,955,651 -- 81,836 ---------------------------------------------------------------------------------------------------------------- Total Expenses 5,028,354 99,704 666,872 ---------------------------------------------------------------------------------------------------------------- Loss from Continuing Operations (5,028,354) (99,704) (666,872) Loss from Discontinued Operations (5,252,281) -- -- ---------------------------------------------------------------------------------------------------------------- Net Loss (10,280,635) (99,704) (666,872) ================================================================================================================ Net Loss Per Share - Basic and Diluted (0.02) (0.13) ================================================================================================================ Weighted Average Shares Outstanding 4,842,000 5,342,000 ================================================================================================================
F-3
Xerion EcoSolutions Group Inc. (A Development Stage Company) Statements of Cash Flows (expressed in U.S. dollars) Accumulated from November 1, 1985 (Date of Inception) For the years ended to December 31, December 31, 2004 2004 2003 $ $ $ Cash Flows from Operating Activities Net loss (10,280,635) (99,704) (666,872) Adjustments to reconcile net loss to net cash used in operating activities Shares issued for technology rights 5,000 -- 5,000 Depreciation 9,558 3,276 3,449 Donated services 126,000 -- 123,000 Stock-based compensation 5,873,545 -- 81,836 Option agreement written-off 15,000 -- -- Discontinued operations 468,835 -- -- Shares issued for mining claims 20,000 -- 20,000 Changes in operating assets and liabilities Prepaid expenses -- 2,636 (2,636) Accounts payable and accrued liabilities 880,133 43,708 71,767 ------------------------------------------------------------------------------------------------------------------- Net Cash Used in Operating Activities (2,882,564) (50,083) (364,456) ------------------------------------------------------------------------------------------------------------------- Cash Flows to Investing Activities Laboratory Equipment 35,879 35,879 Purchase of property and equipment (47,233) (19,013) (28,220) ------------------------------------------------------------------------------------------------------------------- Net Cash Used in Investing Activities (11,354) 16,866 (28,220) ------------------------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities Advances from a related party 28,022 1,107 (86) Proceeds from shares issued 2,867,472 -- 423,450 ------------------------------------------------------------------------------------------------------------------- Net Cash From Financing Activities 2,895,494 1,107 423,364 ------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Cash 1,576 (32,110 30,688 Cash - Beginning of Year -- 33,685 2,997 ------------------------------------------------------------------------------------------------------------------- Cash - End of Year 1,576 1,576 33,685 =================================================================================================================== Non-cash Investing and Financing Activities Extinguishment of debt 862,520 -- 18,500 Shares issued for services rendered 3,997,374 -- 79,480 Shares issued pursuant to asset acquisitions 486,668 -- 5,000 Shares issued for mining claims 20,000 -- 20,000 =================================================================================================================== Supplemental Disclosures Interest paid 2,785 -- -- Income tax paid -- -- -- ===================================================================================================================
(The accompanying notes are an integral part of the financial statements) F-4
Xerion EcoSolutions Group Inc. (A Development Stage Company) Statement of Stockholders' Equity (expressed in U.S. dollars) Additional Common Stock Paid-in Donated Accumulated Shares Amount Capital Capital Deficit Total # $ $ $ $ $ Balance at December 31, 2002 2,392,133 392 9,468,077 3,000 (9,514,059) (42,590) Issuance of common stock for cash 240,140 240 313,210 -- -- 313,450 Issuance of common stock for services 59,250 59 79,420 -- -- 79,479 Issuance of common stock for mining claims 500,000 500 4,500 -- -- 5,000 Issuance of common stock for technology rights 2,000,000 2,000 18,000 -- -- 20,000 Proceeds received for shares issued in prior years -- 2,000 18,000 -- -- 20,000 Exercise of options 150,000 150 89,850 -- -- 90,000 Extinguishment of debt -- -- 18,500 -- -- 18,500 Stock-based compensation -- -- 2,356 -- -- 2,356 Donated services -- -- -- 123,000 -- 123,000 Net loss for the year -- -- -- -- (666,872) (666,872) ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 2003 5,341,523 5,342 10,011,913 126,000 (10,180,931) (37,676) Cancellation of common stock for mining claims (Note 6) (500,000) (500) 500 -- -- -- Cancellation of common stock for technology rights (2,000,000) (2,000) 2,000 -- -- -- Net loss for the year -- -- -- -- -- (99,704) ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 2004 2,841,523 4,842 10,012,413 126,000 (10,280,635) (137,380) =========== =========== =========== =========== =========== ===========
(The accompanying notes are an integral part of the financial statements) F-5 1. Nature of Operations and Continuance of Business Xerion EcoSolutions Group Inc., formerly Immulabs Corporation (the "Company"), was initially incorporated as Gemini Ventures, Inc. on November 1, 1985 under the laws of the State of Colorado. The Company changed its name to Solomon Trading Company, Limited in July 1989; The Voyageur, Inc. in November 1994; The Voyageur First, Inc. in December 1994; North American Resorts, Inc. in March 1995; and Immulabs Corporation in September 2000. Effective March 28, 2003, the Company changed its name to Xerion EcoSolutions Group Inc. The shares of the Company currently trade on the Over the Counter Bulletin Board under the ticker symbol "XECO". The Company had entered the business of mine reclamation and environmental remediation which had focused on serving the mining and coal fired power plant industries. Refer to Notes 4 and 5. On March 17, 2003 the Company purchased 67 mining claims and certain ore and waste processing technologies. In compliance with the purchase agreements, the vendors were obligated to deliver exploration and metallurgical data to support the representations made about the processing technologies and claims. The Vendors neglected to deliver this documentation. In February 2004 the Company cancelled the purchase agreements. The cancellation of the purchase agreements results in a reimbursement of 2.5 million shares to the Company, which substantially reduced the issued and outstanding shares of the Company. The Company has been working with a specialist consultant in the field of hydrometallurgy. This work has included a research project focused of developing a viable alternative to cyanide for the gold mining industry. The results of this research project have identified specific chemical conditions in the application of certain non-toxic reagents that could lead to a significant breakthrough in the development of a replacement for cyanide. The Company is currently evaluating its options with regard to developing this new technology. These financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues needed to cover its operating costs and to allow it to continue as a going concern. The Company has ongoing overhead expenses and will require significant capital to execute its business plan. The Company's ability to meet those obligations and continue as a going concern is dependent upon raising new capital through issuing debt and/or equity securities and then to generate revenues and profits. Until these funding sources materialize the controlling shareholders intend to continue the funding of necessary expenses to sustain operations. 2. Summary of Significant Accounting Policies a) Basis of Accounting and Year End These financial statements are prepared in conformity with accounting principles generally accepted in the United States and are presented in U.S. dollars. The Company's fiscal year end is December 31. b) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 periods. Actual results could differ from those estimates. F-6 2. Summary of Significant Accounting Policies (continued) c) Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. d) Property and Equipment Property and equipment consists of laboratory and computer equipment recorded at cost and decpreciated on a straight-line basis over the estimated useful life of three years. e) Long-lived Assets In accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes an impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. f) Financial Instruments Financial instruments which include cash, accounts payable, accrued liabilities and due to related party were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. g) Mineral Property Costs The Company is engaged in the acquisition, exploration and development of mining properties. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. h) Income Taxes Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109, "Accounting for Income Taxes", as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. i) Foreign Currency Transactions The Company's functional and reporting currency is the United States dollar. Occasional transactions occur in Canadian currency, and management has adopted SFAS No. 52, "Foreign Currency Translation". Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at rates of exchange in effect at the balance sheet date. Non-monetary assets, liabilities and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. F-7 2. Summary of Significant Accounting Policies (continued) j) Stock-based Compensation The Company has adopted SFAS No. 123 "Accounting for Stock Based Compensation" which requires that stock awards granted to employees and non-employees are recognized as compensation expense based on the fair market value of the stock award or fair market value of the goods and services received whichever is more reliably measurable. k) Basic and Diluted Net Income (Loss) per Share The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Loss per share information does not include the effect of any potential common shares, as their effect would be anti-dilutive. l) Comprehensive Loss SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2004 and 2003, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements. m) Recent Accounting Pronouncements In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (Revised 2004) ("SFAS No. 123R"), "Share-Based Payment." SFAS No. 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R represents the culmination of a two-year effort to respond to requests from investors and many others that the FASB improve the accounting for share-based payment arrangements with employees. The scope of SFAS No. 123R includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. SFAS No. 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS No. 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, that statement permitted entities the option of continuing to apply the guidance in APB Opinion No. 25, as long as the footnotes to the financial statements disclosed what net income would have been had the preferable fair-value-based method been used. Although those disclosures helped to mitigate the problems associated with accounting under APB Opinion No. 25, many investors and other users of financial statements believed that the failure to include employee compensation costs in the income statement impaired the transparency, comparability, and credibility of financial statements. Public entities that file as small business issuers will be required to apply Statement 123R in the first interim or annual reporting period that begins after December 15, 2005. The adoption of this standard is not expected to have a material impact on the Company's results of operations or financial position. F-8 2. Summary of Significant Accounting Policies (continued) m) Recent Accounting Pronouncements (continued) In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29". SFAS No. 153 is the result of a broader effort by the FASB to improve financial reporting by eliminating differences between GAAP in the United States and GAAP developed by the International Accounting Standards Board (IASB). As part of this effort, the FASB and the IASB identified opportunities to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. SFAS No. 153 amends APB Opinion No. 29, "Accounting for Nonmonetary Transactions", that was issued in 1973. The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." Previously, APB Opinion No. 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. The provisions in SFAS No.153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early application is permitted and companies must apply the standard prospectively. The effect of adoption of this standard is not expected to have a material impact on the Company's results of operations and financial position. The FASB has also issued SFAS No. 151 and 152, but they will not have any relationship to the operations of the Company. Therefore, a description and its impact for each on the Company's operations and financial position have not been disclosed. n) Reclassifications Certain reclassifications have been made to the prior year's financial statements to conform to the current year's presentation. F-9 3. Property and Equipment 2004 2003 Accumulated Net Book Net Book Cost Depreciation Value Value $ $ $ $ Computer equipment 9,207 4,578 4,629 7,905 Laboratory equipment -- -- -- 16,866 ----------------------------------------------------- 9,207 4,578 4,629 24,771 ===================================================== 4. Mining Claims On March 17, 2003 and subsequently amended on September 4, 2003, the Company had entered into an agreement to acquire 67 mining claims located in California from an arms-length vendor. Consideration was $20,000 and 500,000 shares of the Company valued at $0.01 per share. These shares were issued on March 21, 2003. On February 2, 2004, the Company cancelled the agreement with the vendors. The 500,000 shares issued to the vendors were returned to treasury and cancelled. 5. Technology Rights The Company entered into an agreement to acquire an option-to-purchase certain ore and waste processing technologies (the "Technologies") from the President of the Company for $1. The Company subsequently exercised that option-to-purchase and issued 2,000,000 common shares of the Company in total consideration to the three original arms-length owners of the Technologies. The 2,000,000 shares issued by the Company have been valued at $0.01 per share or $20,000 in total. These shares were issued on March 21, 2003. On February 2, 2004 the Company cancelled this agreement with the vendors. The 2,000,000 shares issued to the vendors were returned to treasury and cancelled. As a result, the Company made an impairment loss provision of $20,000 in fiscal 2003. 6. Related Party Transactions a) The Company paid/accrued $60,000 (2003 - $60,000) to the President of the Company for management services rendered. b) Included in accounts payable is a balance of $122,122 (2003 - $61,470) payable to the President of the Company. c) The amount of $2,122 (2003 - $1,014) due to the President of the Company is non-interest bearing, unsecured and due on demand. d) In 2003 the Company recognized $123,000 of donated services received from the President of the Company. e) In 2003, the President of the Company forgave $18,500 in debt owed to him by the Company. This amount was recorded as additional paid-in capital. f) In 2003, the Company paid fees of $41,079, to a company controlled by the spouse of the President of the Company, for marketing consultation, including logo design, website strategy, concept and brochure design, and printing of collateral marketing materials. 7. Common Stock a) Private Placements i) On March 17, 2003, the Company received $20,000 and released 2,000,000 shares at $0.01 per share to the President of the Company. ii) On April 15, 2003, the Company issued 89,000 shares of common stock at a price of $1.00 per share to net the Company proceeds of $89,000. iii) On May 15, 2003, the Company issued 21,100 shares of common stock at a price of $2.50 per share to net the Company proceeds of $52,750. iv) On July 15, 2003, the Company issued 15,000 shares of common stock at a price of $2.50 per share to net the Company proceeds of $37,500. F-10 7. Common Stock (continued) a) Private Placements (continued) v) In April, May and July 2003, a total of 125,100 common restricted shares were issued through private placements. One Gold Warrant per share was attached to each common share. This allows each investor the right to purchase 0.03215 oz. of gold for each share purchased from the Company at a 25% discount to the New York spot price calculated on the day the warrant is exercised. The warrant is non-transferable and is a conditional warrant in that the Company must first produce gold in "sufficient" quantities before it can be exercised. The Gold Warrant shall expire sixty months from the date of acceptance of the agreement. "Sufficient" quantities is defined in each contract as the economic recovery of at least 250,000 ounces of gold which belong solely to the Company, and gold which has been recovered using the Xerion Reaction System (XRS) and that such exercise of the Gold Warrants will not endanger the ability of the Company to finance or support its immediate operational plan. The cancellation of the purchase agreement to acquire the XRS, effectively renders these warrants unexercisable, since it is no longer possible for the Company to extract gold using the XRS. vi) In August 2003, a total of 17,040 common restricted shares were issued through private placements. One Gold Warrant was attached to each common share under the same contractual agreement as above. However, the Gold Warrant allows each investor the right to purchase 0.0643 oz. of gold for each share purchased. The cancellation of the purchase agreement to acquire the XRS, effectively renders these warrants unexercisable, since it is no longer possible for the Company to extract gold using the XRS. vii) On August 31, 2003, the Company issued 17,040 shares of common stock at a price of $5.00 per share to net the Company proceeds of $85,200. viii)In December 2003, a total of 98,000 common restricted shares were issued through private placements. One Gold Warrant was attached to each common share, allowing each investor the right to purchase 0.0643 oz. of gold for each share purchased under similar contractual agreements as above. The use of the Gold Warrant need not be dependent on extracting the gold using the XRS process. b) Non-cash Consideration All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. i) On July 17, 2003, the Company issued a total of 15,000 common restricted shares, distributed to three of its contracting consultants. These shares were valued at $0.34 per share based on a 30-day average rate with a 60% discount rate. ii) On August 12, 2003, the Company issued 50,000 common restricted shares, as a signing bonus paid to its Director of Business Development. These shares were valued at $0.85 per share based on a 30-day average rate with a 60% discount rate. iii) On August 27, 2003, the Company issue a total of 8,500 common restricted shares, distributed to three of its contracting consultants. These shares were valued at $1.63 per share based on a 30-day average rate with a 60% discount rate. F-11 7. Common Stock (continued) b) Non-cash Consideration (continued) iv) On September 12, 2003, the Company issued 15,000 common restricted shares, as a signing bonus paid to its Director of Management Systems. These shares were valued at $2.38 per share based on a 30-day average rate with a 60% discount rate. v) On November 30, 2003, the Company issued 500 common restricted shares, in lieu of consulting fees to a consultant. These shares were valued at $1.20 per share based on a 30-day average rate with a 60% discount rate. vi) In 2003, the Company paid director's fees of $12,000 by issuing 10,000 shares at $1.20 per share. c) Stock Options On March 24, 2003, the Company filed a Form S8 Registration Statement with the U.S. Securities and Exchange Commission to register 1,000,000 shares of common stock pursuant to the Company's 2003 Nonqualifying Stock Option Plan (the "Plan"). This Plan is for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interests of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company. The determination of those eligible to receive options under the Plan, and the amount, price, type and timing of each Stock option and the terms and conditions shall rest at the sole discretion of the Company's Board of Directors, subject to the provisions of the Plan. A summary of the Company's stock option activity is as follows: Weighted Average Exercise Number of Price Shares $ Balance, December 31, 2002 -- -- Granted 475,000 2.93 Exercised (150,000) 0.65 Cancelled (200,000) 4.00 --------------------------------------------------------------------------- Balance, December 31, 2003 125,000 4.00 Expired (125,000) 4.00 --------------------------------------------------------------------------- Balance, December 31, 2004 -- -- =========================================================================== F-12 9. Income Taxes The Company has adopted the provisions of Financial Accounting Standards Board Statement No. 109 (SFAS 109), Accounting for Income Taxes. Pursuant to SFAS 109 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in the financial statements because the Company cannot be assured that it is more likely than not that it will utilize the net operating losses carried forward in future years. The Company has tax losses of $499,000 and $380,000 to offset future years taxable income expiring in fiscal 2017 and 2018 respectively. The components of the net deferred tax asset, the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are scheduled below: 2004 2003 $ $ Net Operating Loss 99,704 499,000 Statutory Tax Rate 34% 34% Effective Tax Rate -- -- Deferred Tax Asset 33,899 169,660 Valuation Allowance (33,899) (169,660) --------------------- Net Deferred Tax Asset -- -- ===================== ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There was no change in nor disagreements with accountants during the year 200 Manning Elliott, Chartered Accountants continues to serve as the Company auditors. ITEM 8A - CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. The issuer's principal executive officer and principal financial officer have concluded that the effectiveness of the issuer's controls and procedures (as defined in ss.ss.240.13a-14(c) and 240.15d-14(c)), as of March 30, 2004, are sufficient. (b) There have been no changes in internal controls in the previous year. ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT The current officers and directors of Registrant are as follows: Name Position Ben Traub* President, Chief Executive Officer and Director Robert Skanes Secretary-Treasurer, Chief Financial Officer and Director Warren C. Gacsi Director As of December 20, 2003, Richard Hewlett, Chief Scientific Officer; Ryan Jones, Vice President, Operations and Byron Knelson, Vice President, Corporate Development were all relieved of their duties as officers of the Company. Mr. Bruce Deildal*** served as President, Chief Executive Officer and Director of the Company until October, 2002 the date of Ben Traub's appointment. The issuer does not have a financial expert serving on its audit committee at this time, however, it has made arrangements for such an expert to serve on the committee as soon as revenues are imminent. ITEM 10 - EXECUTIVE COMPENSATION o Mr Traub earned $5000 per month which has not been paid to him. All stock options previously issued and valid as of December 31, 2004 expired during 2004. ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth, as of March 8, 2005 the outstanding common stock owned of record or beneficially by each Executive Officer and Director and by each person who owned of record, or was known by us to own beneficially, more than 5% of common stock, and the shareholdings of all Executive Officers and Directors as a group on a fully diluted basis. Number of Shares Name owned Class Percent ------------ --------- --------- --------- Ben Traub 1,336,800 Common 47% Officer and Director Warren C. Gacsi Director 5,336 Common 0.2% 0.01% Group Total: 1,342,136 CODE OF ETHICS The issuer has not adopted a code of ethics that applies to the small business issuer's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. It has not done so yet, however, plans to do so during the next year of operations if and as required by SEC and/or NASD regulations. ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. NONE ITEM 13 - EXHIBITS AND REPORTS ON FROM 8-K (DOCUMENTS INCORPORATED BY REFERENCE) (a) Reports on Form 8-K: NONE ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES 2004 2003 ------- ------- Audit Fees $9,367 $ 11,197 Audit-Related Fees -- -- Tax Fees -- -- All Other Fees -- -- SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Xerion EcoSolutions Group Inc. By Ben Traub /s/ "Ben Traub" ---------------------- Ben Traub, President Dated: April 14, 2005 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By Ben Traub /s/ Ben Traub ------------------------ Ben Traub, President Dated: April 14, 2005 By Robert Skanes /s/ Robert Skanes ------------------------ Robert Skanes, Secretary Dated: April 14, 2005