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.

/s/ Michael T. Studer CPA P.C.

Freeport, New York

January 14, 2008

XIOM Corp.

FINANCIAL STATEMENTS

AS OF AND FOR THE FISCAL YEARS ENDED

September 30, 2007 and 2006

and

AS OF AND FOR THE SIX MONTHS ENDED

March 31, 2008

F-1

XIOM Corp.

Balance Sheets

As Of September 30,

	2007			2006
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 of
Accumulated Amortization		401,295			163,445
Retainage Receivable		23,705			22,377
Security Deposits		6,815			6,815

Total Other Assets		431,815			192,637


Total Assets	$	1,307,051		$	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		764			653
Additional Paid-In Capital		3,541,454			1,444,415
Retained Earnings (Deficit)		(4,414,072	)		(1,690,363	)

Total Stockholders' Equity (Deficit)		(871,854	)		(245,295	)

Total Liabilities and
Stockholders' Equity Deficit)	$	1,307,051		$	683,571

See accompanying notes to financial statements

F-2

XIOM Corp.

Statements of Operations

For The Years Ended September 30,

	2007			2006

Sales	$	933,194		$	629,336

Cost of Sales		755,380			423,415

Gross Profit		177,814			205,921

Selling, General and Administrative Expenses		2,511,782			1,007,242

Operating Income (Loss)		(2,333,968	)		(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)		($2,723,709	)		($805,821	)


Basic and Diluted Income (Loss) per Share		($0.35	)		($0.13	)

Weighted Average Number of Shares
Outstanding, Basic and Diluted		7,752,047			6,374,448

See accompanying notes to financial statements

F-3

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

178,287

178,302

Options exercised in exchange for Accrued Compensation, Shareholder Loan and Accrued Consulting Fees

546,666

434,946

435,000

Value of stock options granted during the year

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

661,220

661,266

Issuance of Common Stock for Sales Commissions

8,679

13,018

13,019

Issuance of Common Stock for the purchase of a thermal spray technology

75,000

134,992

135,000

Issuance of Common Stock related to a private

placement agreement penalty

25,000

)

Issuance of Common Stock for equity investments in joint ventures and related stock option

250,000

324,975

325,000

Common Stock Warrants exercised in exchange

for Note Payable

13,334

9,999

10,000

Private placements of Restricted Common Stock

54,889

78,295

78,300

Exercise of Common Stock Warrants

67,301

50,469

50,475

Issuance of Common Stock to repay Notes Payable

30,000

29,997

30,000

Options exercised in exchange for Accrued Compensation, Shareholder Loan and Accrued Consulting Fees

146,667

139,986

140,000

Purchase and retirement of Treasury Shares

(10,000

)

(13,999

)

(14,000

)

Value of stock options granted during the year

286,223

Value of Warrants attached to Convertible Notes

143,672

Beneficial conversion feature of Convertible Notes

238,195

Net (Loss) for the year ended September 30, 2007

(2,723,709

)

(2,723,709

)

Balance, September 30, 2007

7,642,945

764

3,541,454

(4,414,072

)

(871,854

)

See accompanying notes to financial statements.

F-4

XIOM Corp.

Statements of Cash Flow

For The Years Ended September 30,

	2007			2006
Cash Flows from Operating Activities:

Net Income (Loss)		($2,723,709	)		($805,821	)

Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and Amortization		47,449			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		1,782,572			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-5

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	$	135,000		-
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-6

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

Revenues derived from sales of the patented thermal spray technology with terms of less than thirty days are recognized based on the accrual method of accounting.

Revenues from contracts which have terms greater than thirty days, and are fixed-price contracts, are recognized on the percentage-of-completion method, measured by the percentage of actual cost incurred to date, to the estimated total cost for each contract. On those contracts which are not fixed-price in nature and which contractually require the billing of actual costs and expenses incurred during the period, revenue is recognized as the actual amount invoiced during the period.

Estimated costs and revenues are based upon engineering estimates of the work performed to date relative to the total work required under the contract. Changes in contract estimates which result in changes in estimated profit are applied to the cumulative work accomplished on the project. The re-calculated gross profit on the contract is applied to the revenues recorded to date for the entire life of the contract and the resulting income or loss is recorded in the current period. The Company has experienced no material contract losses to date.

CASH AND CASH EQUIVALENTS

For the purpose of financial statement presentation, the Company includes cash on deposit, money market funds, amounts held by brokers in cash accounts and funds temporarily held in escrow to be cash equivalents.

ACCOUNTS RECEIVABLE

Accounts receivable have been adjusted for all known uncollectible contracts and customer accounts. An allowance for doubtful contracts has been provided based on such analysis.

INVENTORY

Inventory consists 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.

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.

F-7

XIOM Corp.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006

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 fair value of the shares at the date of issuance. Shares issued for services to be provided to the Company are treated as Prepaid Expenses and the fair value of the shares is amortized over the respective contract term.

RECLASSIFICATIONS

Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company's financial position and results of operations from the adoption of these standards is not expected to be material.

INVENTORY

	As of September 30,
	2007		2006
Inventory consists of the following:

Parts and Supplies	$	73,609	$	32,974
Coating Powders		81,264		21,826
Finished Goods		19,361		-0-

Total Inventory	$	174,234	$	54,800

F-8

XIOM Corp.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006

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. 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.

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

			As of September 30,
	Estimated useful		2007			2006
	Life – years
Machinery and equipment		5-10	$	105,882		$	66,945
Vehicles		3-5		28,411			16,411
Office Equipment		3-5		20,053			11,781
Furniture and Fixtures		5-7		9,254			5,543
Computer Software		5-7		23,859			-
Leasehold improvements		5-31.5		80,414			33,438
				267,873			134,118
Less 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

	As of September 30,
		2007			2006
Intangible assets consist of:

Patents 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		$	122,500
Additional legal fees and expenses		179,777			58,132

Technology related to the high temperature, high speed thermal spray technology acquired from an officer in February 2007		135,000			-

Total acquisition cost		437,277			180,632

Less: Accumulated Amortization		(35,982	)		(17,187	)

Intangible Assets, Net	$	401,295		$	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 $18,795 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 $26,000, 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 high temperature, high speed, thermal spray technology he previously acquired personally from HV Plastic Spray Systems, Inc., for 75,000 restricted common shares of XIOM. These shares were issued based on the fair market value of the spray technology converted at $1.80 per share, which approximated the fair market value of the common stock on the date the shares were issued.

F-9

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.

One principal in the Kentucky joint venture received an option, dated September 1, 2006, 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.

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-10

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	$	1,232,000
Beneficial 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 is as follows:

	Year Ended September 30,
	2007		2006

United States	$	634,519	$	478,237
Other North America		249,272		125,199
Europe		49,403		25,900
Asia		-		-

Total	$	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-11

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

	As of September 30,
	2007		2006
Common Stock is as follows:
Common Stock, $.0001 par value, shares authorized		50,000,000		10,000 000
Shares issued and outstanding, including 563,718 shares subject to rescission rights		8,206,663		7,095,973
Par 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-12

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 issued based on the fair market value of the spray technology converted at $1.80 per share, which approximated the fair market value of the common stock on the date the shares were issued. 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.

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%.

F-13

XIOM Corp.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006

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			2006

Outstanding, beginning of year		670,834			700,000
Granted during the year		930,000			517,500
Exercised during the year		(246,667	)		(546,666	)
Forefeited / expired / cancelled		-			-

Outstanding, end of year		1,354,167			670,834

Exerciseable, end of year		1,354,167			670,834

Stock options outstanding and exercisable at September 30, 2007 (all non-qualified) consist of;

Granted in
Year Ended	Number Outstanding		Exercise		Expiration
September 30,	and Exercisable		Price		Date

2005		80,000	$	0.75		February 28, 2010
2006		67,500	$	0.75		September 30, 2010
2006		276,667	$	1.50		February 28. 2011
2007		350,000	$	1.75		October 14, 2011
2007		250,000	$	1.25		July 5, 2012
2007		300,000	$	1.50		August 14, 2012
2007		30,000	$	1.25		August 30, 2012

Totals		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.

F-14

XIOM Corp.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006

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.

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 $872,000 and has working capital deficit of approximately $191,000. Additionally, the Company incurred a Net Loss of approximately $2,724,000 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

F-15

XIOM, Corp.

Balance Sheet

As Of March 31, 2008

Assets
Current Assets
Cash and Cash Equivalents	$	403,815
Accounts Receivable, Net of Allowance for Doubtful Accounts		224,761
Inventory		262,332
Prepaid Expenses		366,505
Other Current Assets		73,709

Total Current Assets		1,331,122

Fixed Assets, Net of Accumulated
Depreciation & Amortization		212,081

Other Assets
Intangible Assets, Net of Accumulated Amortization		444,680
Equity Investment		208,000
Retainage Receivable		23,705
Security Deposits		6,815

Total Other Assets		683,200

Total Assets	$	2,226,403

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts Payable and Accrued Expenses	$	628,324
Officers' Convertible Notes Payable		535,964
Notes Payable		25,874

Total Current Liabilities		1,190,162

Long-Term Liabilities
Convertible Notes Payable, Net of Unamortized Discounts		702,746
Shareholder Loan		17,223

Total Liabilities		1,910,131

Common Stock, Subject To Rescission Rights		670,399

Stockholders' Equity (Deficit)
Common Stock, $.0001 par value, 50,000,000 shares authorized, 9,300,305 shares issued and outstanding (excluding 563,718 shares subject to rescission rights)		930
Additional Paid-In Capital		5,582,035
Retained Earnings (Deficit)		(5,937,092	)

Total Stockholders' Equity (Deficit)		(354,127	)

Total Liabilities and Stockholders' Equity Deficit)	$	2,226,403

See accompanying notes to financial statements

F-16

XIOM, Corp.

Statements of Operations

For The Six Months Ended

For The Three Months Ended

March 31,

2008

2007

2008

2007

Sales

918,973

356,314

609,692

166,139

Cost of Sales

656,399

298,784

410,123

135,559

Gross Profit

262,574

57,530

199,569

30,580

General and Administrative Expenses

1,668,360

843,116

969,169

484,786

Operating Income (Loss)

(1,405,786

)

(785,586

)

(769,600

)

(454,206

)

Other Income (Expenses);

Interest Expense

(117,234

)

(61,823

)

Net Income (Loss)

(1,523,020

)

(785,586

)

(831,423

)

(454,206

)

Basic and Diluted Income (Loss) per Share

(0.18

)

(0.11

)

(0.09

)

(0.06

)

Weighted Average Number of Shares Outstanding, Basic and Diluted

8,615,776

7,461,765

8,766,556

7,708,261

See accompanying notes to financial statements

F-17

XIOM, Corp.

Statement of Stockholders' Equity (Deficit)

For The Six Months Ended March 31, 2008

Common Stock

Additional

Retained

Total

Number of

Par

Paid-In

Earnings

Shareholders'

Shares

Value

Capital

(Deficit)

Equity (Deficit)

Balance, September 30, 2007

7,642,945

764

3,541,454

(4,414,072

)

(871,854

)

Option grants in October 2007

123,917

Shares issued for services during the quarter

ended December 31, 2007

250,000

299,975

300,000

Shares issued for Accrued Expenses

48,000

71,995

72,000

Options exercised against Accrued Compensation

and Accrued Accounting Fees

82,000

77,992

78,000

Shares issued for Convertible Note

269,791

249,973

250,000

Shares issued for services during the quarter

ended March 31, 2008

433,000

431,707

431,750

Shares issued for Accrued Expenses

5,000

7,499

7,500

Option grants in February 2008

226,080

Shares issued to buy out distributor contract

25,000

24,997

25,000

Shares issued for equity investment

156,433

132,485

132,500

Private placements of common stock

388,136

418,961

419,000

Subscription for common stock

(25,000

)

(25,000

)

Net (Loss) for the six months ended

March 31, 2008

(1,523,020

)

(1,523,020

)

Balance, March 31, 2008

9,300,305

930

5,582,035

(5,937,092

)

(354,127

)

See accompanying notes to financial statements

F-18

XIOM, Corp.

Statements of Cash Flow

For The Six Months Ended March, 31

	2008			2007
Cash Flows from Operating Activities:

Net Income (Loss)	$	(1,523,020	)	$	(785,586	)

Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and Amortization		34,408			18,405
Issuance of Shares for Services		469,583			216,557
Allowance for Doubtful Accounts		-			35,000
Value of Stock Option Grants		349,997			40,000
Amortization of Convertible Note Discounts		66,156			-
Changes in Operating Assets and Liabilities:
Accounts Receivable, Net		(108,907	)		13,576
Inventory		(88,098	)		(15,190	)
Prepaid Expenses		(5,515	)		66,252
Other Current Assets		(18,049	)		2,476
Retainage Receivable		-			(1,328	)
Accounts Payable and
Accrued Expenses		164,076			242,138

Total Adjustments		863,651			617,886

Net cash provided (used) in operating activities		(659,369	)		(167,700	)

Cash Flows from Investing Activities:
Purchase of Additional Patents		(56,740	)		(68,989	)
Purchase of Fixed Assets		(29,437	)		(33,338	)
Additional Investments In Joint Ventures		-			(40,137	)
Equity Investment		(75,500	)		-

Net cash provided (used) by investing activities		(161,677	)		(142,464	)

Cash Flows from Financing Activities:
Proceeds From Exercise of Joint Venture Related Stock Option		-			110,000
Proceeds From Exercise of Stock Warrants		-			50,475
Sales of Restricted Common Stock		394,000			78,300
Proceeds From Officers' Convertible Notes		535,964			-
Proceeds From (Repayment of) Notes Payable		(25,269	)		15,431
Proceeds From (Repayment of) Shareholder Loan,
Before Non-Cash Adjustments		7,448			1,632

Net cash provided (used) by financing activities		912,143			255,838

Net increase (decrease) in cash and cash equivalents		91,097			(54,326	)

Cash & Cash Equivalents, Beginning of Period		312,718			90,495

Cash & Cash Equivalents, End of Period	$	403,815		$	36,169

(Continued)

F-19

XIOM, Corp.

Statements of Cash Flow

For The Six Months Ended March 31,

(Continued)

	2008		2007

Supplemental Disclosures

Non-Cash Financing and Investing Activities:
Issuance of shares for Equity Investments	$	132,500	$	215,000
Options exercised in exchange for Accrued Compensation,
Shareholder Loan and Accrued Professional Fees	$	78,000	$	55,000
Issuance of shares for services	$	469,583	$	216,557
Value of Stock Option Grants	$	349,997		-
Issuance of shares upon coversion of Convertible Note	$	250,000		-
Issuance of shares for Accrued Expenses	$	77,500		-
Issuance of shares to buy-out distributor contract	$	25,000		-
Issuance of shares to repay Notes Payable		-	$	30,000
Note Payable as consideration for warrants exercised		-	$	10,000
Issuance of shares for purchase of HV Spray Technology		-	$	135,000

Interest and Taxes Paid:
Interest Expense	$	18,806		-
Income Taxes		-		-

See accompanying notes to financial statements

F-20

XIOM Corp.

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED MARCH 31, 2008

(Unaudited)

1.	BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America. However, in the opinion of management, the accompanying unaudited financial statements contain all normal and recurring adjustments necessary to present fairly the financial position of XIOM Corp. ("XIOM", or the "Company") as of March 31, 2008 and the related statements of operations, of stockholders equity(deficit) and of cash flows for the six months then ended. For further information, refer to the audited financial statements and related disclosures that were filed by the Company with the Securities and Exchange Commission on Form 10-KSB for the fiscal year ended September 30, 2007, Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934, File No. 333-71748.

2.	PREPAID EXPENSES

Prepaid Expenses at March 31, 2008 includes approximately $348,000 related to three separate consulting agreements for various financial and business development services to be provided to the Company during fiscal 2008. During the first six months of fiscal 2008, XIOM issued 620,000 restricted common shares for a combined value of $650,000 related to these agreements. As a result, the amount expensed for consulting services for the six months ended March 31, 2008 was approximately $275,000.

3.	EQUITY INVESTMENT

In late March 2008, XIOM completed an investment in XIOM - Europe Corp., a Delaware corporation, whereby the Company issued 156,433 restricted shares of common stock, valued at $132,500, and paid $75,500 to the shareholders of XIOM - Europe Corp in exchange for 100% of the issued and outstanding shares held by them. As of March 31, 2008, XIOM - Europe Corp. is a wholly-owned subsidiary of XIOM with no operating activity post acquisition. XIOM plans to use this entity to continue its business development activity in England and Europe.

4.	OFFICERS' CONVERTIBLE NOTES

During the quarter ended March 31, 2008, the two officers of XIOM sold unregistered shares of common stock that they owned personally in a series of private transactions. Upon completion of these transactions, each officer had sold 240,682 shares for combined gross proceeds of $529,500 that were loaned to the Company. Legal fees for escrow services related to these transactions of approximately $8,700 were incurred by the company. As a result, each officer received a separate Promissory Note ("Note") in the amount of $264,750. These Notes are payable on demand, including accrued interest at 7% per annum, in shares of restricted common stock of XIOM at a 50% discount to the average closing share price for the three trading days prior to the demand.

5.	COMMON STOCK

During October 2007, the Company issued 298,000 shares of restricted common stock to several vendors as consideration for financial and business development services, marketing services, management services and equipment purchased. These shares were issued based on the fair market value of the services to be provided, or equipment purchased, and converted at the estimated fair market value of the common stock on the date of each issuance.

During the quarter ended March 31, 2008, XIOM issued 343,000 shares of restricted common stock to several vendors as consideration for financial and business development services, management services, manufacturing services, equipment purchased and to buy-out an exclusive distributor agreement. These shares were issued based on the fair market value of the services to be provided, equipment purchased or contract value, and converted at the estimated fair market value of the common stock on the date of each issuance.

In March 2008, the Company agreed to issue 120,000 shares of restricted common stock to one vendor that provided financial and business development services as consideration for unpaid fees in the amount of $27,500 and the balance of their agreement through August 2008 valued at $72,500.

On March 25, 2008, XIOM elected to convert the Convertible Note with a face value of $250,000 into 269,791 shares of restricted common stock as per the agreement.

F-21

XIOM Corp.

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED MARCH 31, 2008

(Unaudited)

In March 2008, the Company sold and issued 388,136 shares of restricted common stock in separate private placement offerings at a price between $.94 and $1.05 per share, which approximated the fair market value on the date of each issuance. At March 31, 2008, there is a Subscription Receivable balance of $25,000 related to one of the private placements that was off-set against Additional Paid-in Capital.

6.	STOCK OPTIONS

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. The Company used the Black-Scholes option-pricing formula, which produced a value of approximately $.24 per share for 500,000 option shares and approximately $.18 per share for 25,000 option shares. This resulted in the Company recording additional compensation and consulting expenses totaling approximately $124,000 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 41%.

On February 19, 2008, XIOM granted an option to a financial consultant to purchase a total of 300,000 shares of restricted common stock at a price of $1.05 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 February 18, 2013 and may not be assigned, or otherwise transferred. The Company used the Black-Scholes option-pricing formula, which produced a value of approximately $.28 per option share. This resulted in the Company recording an additional consulting expense of approximately $85,000 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 64%.

On February 29, 2008, XIOM granted four separate options to purchase a total of 500,000 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 150,000 restricted common shares and another consultant to the company received an option to purchase 50,000 restricted common shares as partial consideration for providing accounting 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 February 28, 2013 and may not be assigned, or otherwise transferred. The Company used the Black-Scholes option-pricing formula, which produced a value of approximately $.28 per option share. This resulted in the Company recording an additional compensation and consulting expense of approximately $141,000 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 64%.

In March 2008, 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 20,000 shares of restricted common stock at $1.50 per share. Accrued Compensation was off-set and used as consideration for acquiring these option shares. A consultant to the company also partially exercised his March 2005 and March 2006 options and purchased 20,000 shares of restricted common stock at $.75 per share and 2,000 shares of restricted common stock at $1.50 per share. Accrued professional fees were off-set and used as consideration for acquiring these option shares.

7.	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 March 31, 2008, the Company has a total Stockholders' Deficit of approximately $354,000 and incurred a Net Loss of approximately $1,523,000 for the six months ended March 31, 2008. 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 steady increase in sales orders for the patented industrial thermal spray technology and related powder formulas. Furthermore, the Company plans to continue raising capital through a series of private placement transactions for the balance of fiscal 2008. It also plans to expand sales by significantly increasing domestic marketing efforts, including pursuing major contracts through its network of strategic alliance relationships. As a result of these factors, management believes it will have sufficient resources to meet the Company's cash flow requirements for at least twelve months following the date of these financial statements.

F-22

XIOM Corp.

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED MARCH 31, 2008

(Unaudited)

8.	SUBSEQUENT EVENTS

In April 2008, several Convertible Note holders elected to receive a total of 44,185 restricted common shares in lieu of payment for accrued interest due them as of April 1, 2008 of approximately $48,600. These shares were issued at a price of $1.10 per share, which approximated the fair market value on April 1, 2008.

In April 2008, XIOM received $500,000 related to a separate Convertible Note ("Note") agreement that matures in March 2010. The agreement includes interest at 7% per annum, compounded monthly, payable semi-annually in cash or stock, at the option of the Note holder. Additionally, the agreement includes two separate Warrants for 250,000 shares of common stock each, with an exercise price of $1.50 and $1.80 per share, respectively, through March 2013 and are immediately exercisable. The note is convertible, in whole or in part, into common shares of XIOM at price of $1.50 per share at the option of the holder at any time, or upon any 30 day prepayment notice by the Company, until maturity. The shares underlying the Note and Warrants have specific registration rights, including "piggy-back" registration rights, all at the expense of the Company. Unless earlier converted, the Note will automatically mature and be due and payable on the earlier of (a) the second anniversary of the Note, (b) the closing of a minimum of $5,000,000 of equity and, or, debt financing at a price per share (or conversion price) of not less than $3.00.

In April 2008, XIOM loaned $150,000 to the Kentucky Joint Venture. The Promissory Note is payable in one year, including accrued interest at 5% per annum, with $35,000 payable within two months. The maker may prepay this Note in whole, or in part, prior to maturity without penalty or premium. Upon the determination of the joint venture partner, it may pay the remaining balance, plus accrued interest, in common stock of the joint venture entity based on five day average closing price prior to the settlement date.

F-23

Title Of Securities To be Registered	Amount to be Registered			Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price (1)		Amount of Registration Fee (1)
Common Stock, Par value $.0001 Per share		1,536,420	(2)	$	1.20	$	1,843,704	$	556.02

Common Stock, Par value $.0001 Per share		1,642,672	(3)(4)	$	1.20	$	1,971,206	$	605.16

		Page
Prospectus Summary		3
The Offering		4
Summary Financial Information		5
Price Ranges of High Velocity Alternative Energy Corp. Common Stock
Risk Factors		5
Use of Proceeds		9
Determination of Offering Price		9
Dividends		9
Management's Discussion and Analysis or Plan of Operation		9
Results of Operations		10
Business of the Company		12
Off-Balance Sheet Arrangements		15
Inflation		15
Government Regulation		15
Management		16
Executive Compensation		16
Description of Property		17
Employees		17
Litigation		18
Employment Agreements		18
Certain Relationships		18
Principal Stockholders		18
Dilution		18
Offering by Selling Shareholders		19
Shares Eligible for Future Sale		23
Description of Securities		24
Plan of Distribution		24
Certain Provisions of the Certificate of Incorporation and Bylaws With Respect to Directors and Officers Regarding Indemnification		25
Delaware Business Combination Provisions		25
Where You Can Find More Information		26
Transfer Agent		26
Interest of Named Experts and Counsel		26
Legal Matters		26
Experts		26
Financial Statements		F-1

Shares offered by Selling Shareholders:
Including shares to be issued upon the conversion of the convertible notes			1,246,003 shares
Shares underlying Warrants			1,382.255 shares
Shares Outstanding as of July 20, 2008:			F
Not including shares to be issued pursuant to the conversion of notes and exercise of warrants			9,890,523 shares
Shares Outstanding after conversion of all notes and the exercise of all warrants			*11,422,088* shares

Fiscal Year 2006:	High Bid		Low Bid		High Ask		Low Ask
January 2006		0.19		0.11		0.20		0.115
February 2006		0.135		0.11		0.14		0.12
March 2006		0.17		0.11		0.18		0.12
April 2006		0.17		0.101		0.185		0.13
May 2006		0.13		0.08		0.20		0.095
June 2006		0.10		0.07		0.15		0.095
July 2006		0.07		0.04		0.10		0.05
August 2006		0.23		0.03		0.25		0.05
September 2006		0.24		0.041		0.26		0.055
October 2006		0.11		0.04		0.13		0.06
November 2006		0.055		0.035		0.07		0.05
December 2006		0.045		0.04		0.05		0.045

Fiscal Year 2007:	High Bid		Low Bid		High Ask		Low Ask
January 2007		0.043		0.035		0.045		0.045
February 2007		0.056		0.025		0.06		0.03
March 2007		0.061		0.0095		0.064		0.01
April 2007		0.028		0.0075		0.03		0.008
May 2007		0.015		0.0016		0.02		0.0018
June 2007		0.0042		0.002		0.0047		0.0025
July 2007		0.005		0.003		0.006		0.0034
August 2007		0.0035		0.0016		0.0044		0.0025
September 2007		0.011		0.002		0.015		0.003
October 2007		0.006		0.0031		0.009		0.04
November 2007 (1)		0.20		0.10		2.50		0.20

	March 31, 2008			September 30, 2007			September 30, 2006
Balance Sheet Data:
Total Assets	$	2,226,403		$	1,307,051		$	683,571
Total Liabilities	$	1,910,131		$	1,508,506		$	258,467
Common Stock, Subject to Rescission Rights	$	670,399		$	670,399		$	670,399
Total Stockholders' Equity (Deficit)	$	(354,127	)	$	(871,854	)	$	(245,295	)

Statement of Operations:
Revenues	$	918,973		$	933,194		$	629,336
Expenses	$	2,441,993		$	3,656,903		$	1,435,157
Net Profit (Loss)	$	(1,523,020	)	$	(2,723,709	)	$	(805,821	)
Basic and Diluted Income (Loss) Per Share	$	(.18	)	$	(0.35	)	$	(0.13	)
Weighted Average No. Shares Used In Computing Income (Loss) Per Share		8,615,776			7,752,047			6,374,448

Name	Age	Position
Andrew B. Mazzone	67	Chairman, President, Chief Accounting/Financial Officer and Promoter
Thomas Gardega	59	Executive Vice President, Director and Promoter

Name and			Option
principal			Salary		awards		Total
position(s)	Year		($)		($)		($)

Andrew Mazzone,		2006	$	60,000	$	20,940	$	80,940
Chairman & President		2007	$	76,500	$	53,048	$	129,548

Thomas Gardega		2006	$	60,000	$	20,940	$	80,940
Executive VP		2007	$	76,500	$	53,048	$	129,548

	Number of
	securities
	underlying
	unexercised		Option
	options		exercise		Option
	(#)		price		expiration
Name	exercisable		($)		date
Andrew Mazzone		76,667	$	1.50		February 28, 2011
		150,000	$	1.75		October 14, 2012
		75,000	$	1.25		July 5, 2012

Thomas Gardega		60,000	$	.75		February 28, 2010
		150,000	$	1.50		February 28, 2011
		150,000	$	1.75		October 14, 2012
		75,000	$	1.25		July 5, 2012

Identity of Shareholder	Number of Shares (1)		Percentage of Beneficial Ownership (1)
Andrew B. Mazzone		1,191,910		12.1	%
513 Dryden Street Westbury, NY 11590 President and Director

Thomas Gardega		570,804		5.8	%
200 Landmark Road Conway, SC 29527 Executive VP and Director

All Officers and Directors as A Group (2 Persons)		1,761,714		17.9	%

	Number of Shares of Common Stock
	821,336			821,336			821,336

Conversion/exercise price per share	$	1.50		$	2.00		$	2.50

Tangible net book value before the current conversion of notes or current exercise of warrants	$	(0.16	)	$	(0.07	)(1)	$	0.11	(1)

Increase in tangible net book value attributable to conversion/exercise	$	0.09		$	0.17		$	0.18

Pro-forma tangible net book value after conversion of notes and exercise of warrants	$	(0.07	)	$	0.10		$	0.29

Dilution per share to note and warrant holders	$	1.62		$	1.90		$	2.21

Selling Shareholder	Total number Of shares owned prior to offering		Number of shares included in offering		Warrant Shares included in offering		% of Beneficial Ownership at completion of Offering (1)
Melchior Ancona		20,000		20,000		40,000		*
Frank Bua		- 0 -		10,000		20,000		*
William Schmidl		- 0 -		80,000		160,000		*
Richard Settducati		10,000		10,000		20,000		*
Fred Finocchiaro		- 0 -		80,000		160,000		*
Louis & Maria Chicca		25,000		66,667		133.334		*
Domenico & Maria Pinto		185,667		66,667		133.334		*
Antonio Suicis		99,667		66,667		133.334		*
Vickey Lanzieri Giannetti		11,850		10,000		20,000		*
Steve Grgas		22,133		13,334		26.668		*
Thomislava Grgas		43,241		66,667		133,334		*
Nancy Merriman		507		6,667		13,334		*
Kenneth Terminini		32,761		10,000		20,000		*
Diane Cowell and Timothy J Lawler		146,512		133,333		266,666		*
Giuseppe Mattina		17,673		33,333		66,666		*
John DeAngelis		507		6,667		13,334		*
A Grgas Contracting Co (2)		- 0 -		66,667		133,334		*
Basic Investors, Inc. (3)		50,000		74,667		149,334		*
Miami Holdings Company, LLC (4)		- 0 -		250,000		- 0 -		*
Lee Rubenstein		- 0 -		8,000		- 0 -		*
Strom Sales, Inc. (5)		- 0 -		10,000		- 0 -		*
Kevin Schlosser		25,000		30,000		- 0 -		*
Dan Schlosser		13,333		6,667		- 0 -		*
Henry C. Weber		- 0 -		12,500		- 0 -		*
Alan M. Ganz		- 0 -		12,500		- 0 -		*

Date of Sale of	Number of		Market Price		Total Value of
Convertible Notes	Underlying Securities		Per Share		Underlying Securities

May, 11, 2007		539,002	$	1.70	$	916,303
June, 14, 2007		282,334	$	1.40	$	395,268

Totals		821,336			$	1,311,571

Payment Date	Payment Amount		Description of Payment
May 11, 2007	$	169,050		Placement Agent Fees (1)
June 14, 2007	$	88,550		Placement Agent Fees (1)
October 1, 2007	$	30,793		Interest Payments to Note Holders (2)
April 1, 2008	$	43,242		Interest Payments to Note Holders (2)
October 1, 2008	$	43,242		Interest Payments to Note Holders

Total	$	374,877

Date of Sale of	Number of			Market		Conversion		(Premium)/
Convertible Notes	Underlying Securities			Value (1)		Value (2)		Discount

May, 11, 2007		539,002		$	916,303	$	808,503	$	107,800
June, 14, 2007		282,334		$	395,268	$	423,501	$	(28,233	)

Totals		821,336	(3)	$	1,311,571	$	1,232,004	$	79,567

Convertible Notes Sold	$	1,232,000
Warrants @ $2.00 Per Share		1,642,672
Warrants @ $2.50 Per Share		2,053,340
Total	$	4,928,012
All Payments Made, or to be Made		(374,877	)
Net Proceeds	$	4,553,135

The number of shares outstanding before the convertible note transactions that are held by persons other than the selling shareholders, affiliates of XIOM and affiliates of the selling shareholders.			7,421,041

The number of shares registered for resale by the selling shareholders, or affiliates of the selling shareholders, in prior registration statements.			-0-

The number of shares registered for resale by the selling shareholders, or affiliates of the selling shareholders, that continue to be held by the selling shareholders, or affiliates of the selling shareholders.			-0-

The number of shares that have been sold in registered resale transactions by the selling shareholders, or affiliates of the selling shareholders.			-0-

The number of shares registered for resale on behalf of the selling shareholders, or affiliates of the selling shareholders, in the current transaction.			2,464,008

Securities and Exchange
Commission registration fee	$	1,161.18
Legal fees and expenses (1)	$	17,500.00
Accounting fees and expenses (1)	$	7,500.00
Miscellaneous (1)	$	5,000.00
Total (1)	$	31,161.18

Lee Rubenstein			8,000
Strom Sales, Inc.			10,000
Kevin Schlosser			30,000
Dan Schlosser			6,667

Identity of Stockholder or Group	Number of Shares beneficially owned (1)		Percentage of Shares Owned
Melchior Ancona		20,000		*
Frank Bua		10,000		*
William Schmidl		80,000		*
Richard Settducati		10,000		*
Fred Finocchiaro		80,000		*
Louis & Maria Chicca		66,667		*
Domenico & Maria Pinto		66,667		*
Antonio Suicis		66,667		*
Vickey Lanzieri Giannetti		10,000		*
Steve Grgas		13,334		*
Thomislava Grgas		66,667		*
Nancy Merriman		6,667		*
Kenneth Terminini		10,000		*
Diane Cowell and Timothy J Lawler		133,333		*
Giuseppe Mattina		33,333		*
John DeAngelis		6,667		*
A Grgas Contracting Co (2)		66,667		*
Basic Investors Inc. (3)		74,667		*

Exhibit	Description of Exhibit

3.1 (1)	Certificate of Incorporation of XIOM Corp.
3.2 (1)	Certificate of Amendment to Certificate of Incorporation dated August 2004
3.3 (2)	Certificate of Amendment to Certificate of Incorporation dated August 2007
3.4 (1)	By-laws of XIOM Corp.
4.1 (3)	Subscription Agreement and Form of 7% Convertible Exchangeable Note
4.2 (3)	Form of Warrant
5.1 (4)	Opinion of Michael S. Krome, Esq.
23.1 (4)	Consent of N. Blumenfrucht, CPA, PC., Independent Auditor
23.2 (4)	Consent of Michael T. Studer, CPA P.C., Independent Auditor
23.3	Consent of Michael S. Krome, Esq. (included in Exhibit 5.1)
99.1 (1)	Patent Rights and Technology Rights transferred to the Company by Thomas Gardega
99.2 (1)	Agreement dated June 22, 2005 between New York State Energy Research and Development Authority and XIOM Corp.
99.3 (1)	Sample Distributor Agreement
99.4 (1)	Agreement between XIOM Corp. and Department of the Navy, dated May 17, 2006
99.5 (1)	Technical Data on Coatings done by Independent Testing Agency
99.6 (1)	Lease, dated June 1, 2006 by and Between Lamar Street Realty Corp. and XIOM Corp.

(1)		Previously filed with Registration Statement Form SB-2, filed with the Securities and Exchange Commission on May 6, 2006, as amended
(2)		Certificate of Amendment to Certificate of Incorporation dated August 31, 2007 filed with Form 10-KSB filed with the Securities and Exchange Commission on January 15, 2008
(3)		Previously filed with the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on January 28, 2008
(4)		Filed herewith

XIOM Corp.

/s/ Andrew B. Mazzone
By:	Andrew B. Mazzone
	President and Principal Accounting/Financial Officer and Director

Signature	Title	Date

/s/ Andrew Mazzone	President Principal	July 20, 2008
Andrew Mazzone	Accounting/Financial Officer and Director

/s/ Thomas Gardega	Executive Vice President	July 20, 2008
Thomas Gardega	Director