Environmental Infrastructure Holdings Corp - FORM 10-K

Attached files

file	filename
EX-31.1 - Environmental Infrastructure Holdings Corp	v181263_ex31-1.htm
EX-31.2 - Environmental Infrastructure Holdings Corp	v181263_ex31-2.htm
EX-32.2 - Environmental Infrastructure Holdings Corp	v181263_ex32-2.htm
EX-32.1 - Environmental Infrastructure Holdings Corp	v181263_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSSION

WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

For the fiscal year ending December 31, 2009

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

For the transition period from _________ to _________

Commission file number: 333-124704

ENVIRONMENTAL INFRASTRUCTURE HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

Delaware		32-0294481
(State or other jurisdiction of incorporation		(I.R.S. Employer
or organization)		Identification No.)

Four Tower Bridge

200 Barr Harbor Drive, Ste. 400

West Conshohocken, PA 19428

(Address of Principal executive offices)

Issuer’s telephone number: (866) 629-7646

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

Securities registered under Section 12(g) of the Exchange Act:

Common Share, Par Value, $.0001

(Title of Class)

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes x No

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 last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $5,132,120 on June 30, 2009

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the last practicable date. There were 44,422,309 shares of the Company's common stock outstanding on April 14, 2010.

DOCUMENTS INCORPORATED BY REFERENCE: None.

ENVIRONMENTAL INFRASTRUCTURE HOLDINGS CORP.

ANNUAL REPORT ON FORM 10-K

For Year Ended December 31, 2009

INDEX

		Page No:

PART I		3
ITEM 1.	BUSINESS	3
ITEM 1A	RISK FACTORS	8
ITEM 2.	PROPERTIES	20
ITEM 3.	LEGAL PROCEEDINGS	21
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDEDRS	21

PART II		21
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES	21
ITEM 6	SELECTED FINANCIAL INFOMATION	23
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS	23
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	29
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	42
ITEM 9A(T).	CONTROLS AND PROCEDURES	42
ITEM 9B.	OTHER INFORMATION	43

PART III		43
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	43
ITEM 11	EXECUTIVE COMPENSATION	45
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	46
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	46
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	46

PART IV		47
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	47
Signatures		47

ENVIRONMENTAL INFRASTRUCTURE HOLDINGS CORP.

INTRODUCTORY COMMENT

Throughout this Annual Report on Form 10-K, the terms "we," "us," "our," and "our company" refer to ENVIROMENTAL INFRASTRUCTURE HOLDINGS CORP. ("EIHC"), a Delaware corporation and, unless the context indicates otherwise, includes our wholly-owned subsidiaries, XIOM Corp., Equisol, LLC, and Gulf States Chlorinator and Pump, Inc.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This document contains forward-looking statements, which reflect the views of our management with respect to future events and financial performance. These forward-looking statements are subject to a number of uncertainties and other factors that could cause actual results to differ materially from such statements. Forward-looking statements are identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "projects," "targets" and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on the information available to management at this time and which speak only as of this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a discussion of some of the factors that may cause actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under "Risk Factors" beginning on page 7.

The identification in this document of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

PART I

Item 1. BUSINESS

ABOUT OUR COMPANY

Environmental Infrastructure Holdings Corp (“EIHC”, or the “Company”), was incorporated in Delaware on November 5, 2009. The Company was formed to be the holding company of XIOM Corp. and its subsidiaries. See “Reorganization” below. The Company is the successor issuer of XIOM for purposes of the Securities Act of 1933, as amended, and the filings made by XIOM thereunder. Pursuant to Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), the Company is the successor issuer of XIOM with respect to XIOM Common Shares, which were registered pursuant to Section 12(g) of the Act. Pursuant to such rule, the Company Common Shares may be deemed to be registered pursuant to Section 12(g) of the Act.

Reorganization

On December 7, 2009, XIOM reorganized its operations into a holding company structure (the “Reorganization”) whereby XIOM became a direct wholly owned subsidiary of the Company pursuant to an Agreement and Plan of Merger pursuant to Section 251(g) of the Delaware General Corporation Law (the “Merger Agreement”) dated as of December 7, 2009, by and among the Company, XIOM and EIHC Merger Co. (“Merger Sub”).

To effect the Reorganization, XIOM formed the Company as a wholly owned subsidiary, which in turn formed Merger Sub as a wholly owned subsidiary. Pursuant to the Merger Agreement, Merger Sub then merged with and into XIOM (the “Merger”), with XIOM being the surviving entity. In the Merger, each share of the common stock of Merger Sub issued and outstanding immediately prior to the Merger and held by the Company was converted into and exchanged for a share of XIOM common stock, par value $0.0001 (an “XIOM Common Share”), and Merger Sub’s corporate existence ceased. Each XIOM Common Share issued and outstanding immediately prior to the Reorganization converted into and was exchanged for one common share, par value $0.0001 per share, of the Company (a “Company Common Share”), having the same rights, powers, preferences, qualifications, limitations and restrictions as the stock being converted and exchanged. Immediately after the Merger, the Company Common Shares existing prior to the Merger were cancelled.

The certificate of incorporation and bylaws of the Company are immediately following the merger were identical to those of XIOM (other than provisions regarding certain technical matters, as permitted by Section 251(g) of the Delaware General Corporation Law), and the directors and officers of the Company immediately following the merger were identical to the directors and officers of XIOM immediately prior to consummation of the Merger. XIOM’s stockholders will not recognize gain or loss for United States federal income tax purposes upon the conversion of the XIOM Common Shares.

Acquisition

On December 7, 2009, the Company, and its wholly owned subsidiary, XIOM Corp. (“XIOM”), entered into that a Membership Interest Purchase Agreement (the “Purchase Agreement”) dated as of December 7, 2009, by and among the Company, XIOM, and each of the persons who held membership interests (collectively, the “Sellers”) in Equisol, LLC (“Equisol”). Pursuant to the Purchase Agreement, the Company acquired all of the issued and outstanding membership interests of Equisol, and in exchange, the Sellers received shares of common stock of the Company representing forty percent (40%) of the issued and outstanding shares of the common stock of the Company on a fully diluted basis (the “Acquisition”).

As a condition to the closing of the Acquisition, the Company and XIOM raised a total of $705,000 in capital for working capital purposes of the Company. Upon the completion of the Acquisition, Messrs. Parrish and Given were elected to the Board of Directors of the Company, and Mr. Parrish was named President, CEO and Chairman of the Company.

Equisol is an equipment solutions provider, delivering environmentally friendly products, services and engineering solutions to its customers. Equisol has a broad range of services, including those identified below, and a national presence that makes it different from any other consulting, manufacturing, distribution, engineering or service company in the environmental industry.

Consulting - On-site system reviews/audits and phone consultation services to answer questions on existing equipment systems to help customers determine the best available technology for their application needs.

Design - Equipment solutions that meet both customer's application needs and their budgets. These solutions can range from simple feed and control systems to full turn-key equipment packages.

Sales - Access to a wide range of products that represent the best available technology in the water industry. Equisol’s model is unique because Equisol can procure from many different suppliers instead of being tied to a few key principle suppliers that may not have the best solution for an application. Equisol can sell complete equipment systems, basic Maintenance, Repair, and Operations (MRO) components, or spare parts depending upon the need of a customer.

Fabrication - In order to eliminate the need to build equipment systems on-site from many different pieces and parts, Equisol can have systems fabricated as a complete turn-key skid and delivered to the plant. This provides a way to test the equipment prior to delivery and decrease the time needed for installation. Complete documentation, drawings, and system P&IDs are provided for each system.

Installation - Equisol uses its expertise to make sure the right equipment is installed correctly every time. With installation, Equisol also offer start-up and commissioning services as well as operator training. Equisol also has certified tank installers on staff to meet storage compliance and certification needs of customers.

Services - Both preventative maintenance and emergency response services to ensure customers’ automation and instrumentation equipment is functioning properly.

Where you can find us

Our corporate offices are located at Four Tower Bridge, 200 Barr Harbor Drive, Ste. 400,West Conshohocken, PA 19428.The main telephone number is (866) 629-7646. Any information contained on our website should not be considered as part of this prospectus. The information contained on our website is used for disseminating sales and marketing purposes.

BUSINESS OF THE COMPANY – PRINCIPAL PRODUCTS AND SERVICES

Environmental Infrastructure Holdings Corp was founded to acquire and manage diverse entities and subsidiaries specializing in environmentally related companies focused on the improvement of our nation’s and world’s infrastructure. Currently the company has two wholly owned subsidiaries in Equisol, LLC and Xiom Corp.

Equisol, LLC was founded to address the recurring need of industrial and commercial businesses to maximize efficiencies and meet environmental compliance requirements. These include the need to accurately treat their water and process systems through filtration and/or chemical injection as well as comply with the Clean Air and Clean Water Acts through air and monitoring. Equisol is a nationally recognized equipment solutions provider delivering environmentally friendly products, services and engineering solutions to our customers. Specializing in the Water & Wastewater Industry, the company provides:

·	Turnkey Solutions

·	Systems design, fabrication, and sales

·	Equipment and Systems Service and Repair

·	Optimization, Calibration & Maintenance

·	24 Hour Environmental Engineering and Consulting

Equisol’s primary customer is the industrial end user; the Company works in conjunction with water treatment chemical companies, industry consultants, original equipment manufacturers (OEMs) and equipment distributors to market its services and expand its customer base. Equisol’s major customers are refineries, power plants, engineering firms, and manufacturing facilities in addition to supporting commercial, municipal, as well as governmental facilities. Additionally, the top five major water treatment companies, including GE, Nalco, and Siemens, now use Equisol to support their equipment needs. Currently, the company has approximately 35 teammates and growing, the majority of which are in the Gulf Coast Region between Houston and New Orleans and all have significant experience in the industry, specifically with electrical, mechanical, instrumentation skills. The company’s other geographical strength is in the New York to DC corridor with satellite offices in Ohio, Georgia, and Maryland. Because of the company’s national focus, Equisol has been able to compete and win at the corporate level in addition to our successes at the local, plant level. Our competition are the billion dollar engineering firms and the thousands of small, regional, mom & pop firms which we consider potential acquisition targets. Equisol has grown rapidly through acquisitions and organic growth. Equisol was selected by Entrepreneur Magazine as one of the nation’s Top 100 Fastest Growing New Entrepreneurial Companies for 2004. According to Inc.com Magazine, the company was the 7th fastest growing privately held environmental services company in America for 2008, when it was the 601st fastest growing privately held company and we expect that ranking to continue to improve, as it did from 2007, when Equisol was the 620th fastest growing privately held company. The Entrepreneurs Forum of Greater Philadelphia named Equisol, LLC to the Philly 100 list of fastest growing companies in the region in 2009.

While Equisol sells nationally and has worked in most states, Canada, and internationally, part of the Company’s growth needs are to acquire on-site assets in the West and strengthen our Midwest and Southeast presence.

Materials used with XIOM 1000 System are produced from various formulas of plastic powders. The powder mixture is melted and projected onto a substrate via a mixture of air and flammable gases that produce the actual coating. The air, flammable gases and powder mixture are brought together through a specialized and patented gun with a flame nozzle where the powder material is melted and sprayed forward onto the surface to be coated. The gases and heated coating are cooled by the surface that it adheres to.

The company is a technology business offering delivery of plastic powder coatings at on-site locations utilizing the XIOM 1000 System. Powder coating currently is a process in which metal parts are brought into a factory environment where they are cleaned and prepared to receive a powder coating. Plastic in powder form is then applied to the various metal parts by means of an electrostatic charge that causes the powder to adhere to the surface. The coated part is then heated in an oven for a period of time to cause the plastic to melt and adhere to the substrate. Our process operates differently. Although we use plastic powder, we do not electrostatically charge that powder in order for it to adhere to a substrate. We use a different mechanism which simultaneously applies and fuses the powder to a substrate. The advantage of this process is that the coating process is totally portable and can be applied anywhere, not necessarily in a factory setting, and can be applied without use of an oven to cure the coating., and can be applied to most substrates in addition to the metal substrate to which powder coatings are traditionally applied in a factory, using an oven.

The company’s plastic spray technology is unique and has patents issued and pending. The patents cover technology and processes to apply and deliver powder coatings through a specialized spray system that allows those coatings to be applied both on site and in a factory. The patents will last, upon issuance for a period of 17 years, unless other patents are applied for. With our process, the on-site plastic powder coating process, you can deposit coatings on wood, steal, fiberglass, concrete and plastic – a variety of substrates not all available to traditional powder coating. Our process is quick, does not use an expensive oven for curing and can be used both outside and inside a building.

The technology associated with the XIOM 1000 Thermal Spray system was developed personally by the two operating officers of the Company, who, in August 2004, irrevocably transferred all rights title and interest in all current patents, patents pending and any future intellectual property rights that may be derived from this technology in exchange for restricted common shares on the Company. This technology was developed and enhanced over time with funding from contacts with the New York State Energy Research & Development Authority (“NYSERDA”). The refinements made to the technology pursuant to these contracts have resulted in the XIOM 1000 Thermal Spray system that is currently marketed for commercial sale.

HISTORY OF THE TECHNOLOGY

The history of applying polymer coatings dates back to the early 1950’s starting with the fluidized bed process and then in the 1960’s to the Electrostatic Powder Sprayer (“EPS”). Today EPS is the standard for applying organic polymer coatings. It is commonly referred to as “Powder Coating” which to this familiar with the process means EPS applied plastic powder coatings followed by oven curing at approximately 400 F, where melting and film formation takes place.

EPS is a large business today as polymer coatings, thermoplastic and thermoses are applied to a variety of substrates. They can be applied to cold surfaces before being cured to film thickness typically between 1 to 4 mils (50-200 microns). There are little Volatile Organic Compounds (“VOC”) and reduced Hazardous Air Pollutants (“HAP”). For these reasons EPS has captured substantial business from the established liquid coating processes we know as traditional painting.

The company’s products contain no VOCs . There is a current trend by the EPA to ban VOCs for products sold to the public for safety and health purposes, but there is no guarantee that our VOC-less products, although safer, will prove to be any more functionally effective than those alternative coating products such as paints that do have VOCs.

The traditional powder coating industry, directly competitive to the company’s products, usually requires a large investment in ovens and production lines, sophisticated preparation and cleaning equipment, and in many cases operates with sophisticated in-line computerized production control systems to manage the powder coating process. The XIOM system is designed to do powder coating outside a traditional factory setting. The company’s system enables a plastic coating to be directly sprayed onto a surface, contains no preparation equipment and requires no oven with which to cure powder coatings. The company’s system has no computerized control whatsoever and, in fact, does not even use electricity but relies on air, propane and oxygen to achieve a coating result.

Traditional powder coaters who do coating inside a factory environment could possibly try to re-engineer their systems to prevent the company from selling its systems. But it would require them to manufacture smaller, more portable ovens as well as develop more portable production and control systems in order to compete with the company’s on-site coating capability. The company acknowledges that in the event that enough traditional powder coaters alter their existing operations and create portable systems and ovens that could be mounted on mobile units equipped with power systems for operation, might compromise our ability to sell our systems.

There can be no assurance that the company’s technology will ever supplant traditional powder coating technology and become commercially successful. However, our technical data on our coatings gives us grounds to be optimistic (see attached test results from an independent laboratory). Because XIOM coatings are actually solid plastic coatings, they have the possibilities of being more durable and weather-resistant than conventional painting systems which are another large alternative to the company’s powder coating systems.

The company, believes, but cannot prove that its coatings are superior to paint. The company would have to conduct long term tests of its solid plastic coatings versus liquid paints in many environments over a period of many years using an independent agency to monitor such tests to prove its belief. The expense to do so would be extremely high since some plastic coatings are reputed to last many years. The company would have to continue to pay its overhead during such tests and possibly not sell anything because customers may want such proof and might not want to rely on our assertions, or the assertions of other plastic feed stock manufacturer’s as to the efficacy of plastic after it passes through our system. In that case the company would run out of funds long before such tests were completed. Investors would be well advised not to invest in the company if they need the assurance of long term testing on coatings from our process being able to outlast paint coatings. In this case the company would strongly advise such investors not to invest in the company.

Unlike most painting systems, XIOM’s coatings have no dripping and overspray problems and absolutely no VOCs. XIOM materials cure instantly after being applied and no curing ovens are needed. Due to the fact that the entire XIOM system weighs just seventy pounds, the entire system can be easily used onsite. The company is acting on its belief that there is a demand for plastic coatings applied outside a factory setting; the company cannot prove that its belief is accurate.

XIOM coatings can be applied at thicknesses from 3 mils up to 1 inch as compared to traditional powder coatings which usually vary from 1 to 4 mils thick. The company believes that thicker coatings generally give greater protection against corrosion than thin coatings. The company does not have definitive data to conclusively prove this assertion.

EPS applied plastic coatings are further characterized by their wide use in OEM and production applications for decorative purposes where appearance and durability are required. While there is some use of functional EPS coatings, by and large the vast majority of use for decorative applications. Large numbers of relatively small components can best take advantage of the economic benefits from EPS powder processing thus conforming to the limits of batch processing and over size restrictions.

UNIQUE THERMAL SPRAY TECHNOLOGY

The XIOM powder spray process uses the rich history of EPS Powder Coatings but takes the technology a step further to meet the field requirements of on-site liquid painting, thus bridging the gap between “in house” EPS and “on-site” liquid painting developing a true portable on-site polymer coating system.

Two major advances account for XIOM’s coating technology:

First, The XIOM 1000 Thermal Spray system is currently the Company’s only equipment product for on-site portability. It permits spraying of relatively low melting point polymer powder without over heating and generation of combustion with no VOC’s. High deposit rate and efficiency further characterize the XIOM 1000 system.

Second, XIOM plastic powders are designed specifically for Thermal Spraying. New materials technology utilizing multiplex combinations, blends, additives and composites, this taking advantage of synergy and covalent bonding to produce exceptionally high adhesion to most substrates and functional properties heretofore not possible with polymers (plastic coatings). For instance XIOM is the first to produce thermal sprayed polymer/zinc primer coats, which deliver very high quantities of zinc to the substrate for corrosion control. These polymer/zinc primer coatings not only bond securely to steel substrate, but they facilitate bonding of sprayed top coatings as well.

Many XIOM powders are unique and therefore patentable, with patents pending. Substrates such as wood, plastic, masonry and fiberglass – not processable via EPS – are now readily sprayable with the XIOM 1000 system, along with steel, aluminum and non-ferrous substrates.

The new powder coatings properties produced with the XIOM 1000 system are manifested in the wide variety of applications both functional and decorative now solvable.

The Company currently has approximately 20 varied material formulations to create spray coatings. The Coating functionality includes any-corrosions; wear resistance, architectural, anti-foul, anti-microbial, anti-graffiti, glow-in-the-dark, and grip and release. The Company’s materials come in over 100 different colors. The Company can mix ceramics and metals, if desired, for added wear, into its plastic coatings and can add anti-microbial formulations into the coatings. The system sprays eight pounds of plastic material an hour using different spray nozzles, allowing for both round patters and up to a 9-inch fan spray pattern. The system is electrically controlled. The fuel system is oxygen and propane with air as a cooling gas. Preparation of surfaces is the same as for painting. Since these are plastic coatings, all solids with no hollows and voids, they will last longer than paint-based coating systems and can be applied thick or thin.

Employees:

As of December 31, 2009, we employed approximately 45 persons. None of our employees are covered by collective bargaining agreements. We believe that our relations with our employees are good.

ITEM 1A. RISK FACTORS

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks and

uncertainties described below and all other information contained in this prospectus before deciding to invest in shares of our common stock. While all risks and uncertainties that we believe to be material to our business and therefore the value of our common stock are described below, it is possible that other risks and uncertainties that affect our business will arise or become material in the future.

If we are unable to effectively address these risks and uncertainties, our business, financial condition or results of operations could be materially and adversely affected. In this event, the value of our common stock could decline and you could lose part or all of your investment.

Risks Related To Our Business

EIHC has incurred losses since inception and expects to incur significant net losses in the foreseeable future and may never become profitable.

Since our inception, we have incurred significant losses and negative cash flows from operations. As of December 31, 2009, we had an accumulated deficit of $8,727,911, and may incur additional losses in the next several years. We expect to spend significant resources over the next several years to enhance our technologies and to fund research and development of our pipeline of potential products. In order to achieve profitability, we must develop products and technologies that can be commercialized by us or through future collaborations. Our ability to generate revenues and become profitable will depend on our ability, alone or with potential collaborators, to timely, efficiently, and successfully complete the development of our products, which may include manufacturing and marketing our products. There can be no assurance that any such events will occur or that we will ever become profitable. Even if we do achieve profitability, we cannot predict the level of such profitability. If we sustain losses over an extended period of time, we may be unable to continue our business.

Management expects that our independent registered public auditors will issue their report for the fiscal year ended December 31, 2009, with a “going concern” explanatory paragraph.

Our independent registered public auditors have not yet issued their report on their audit of our financial statements as of and for the fiscal year ended December 31, 2009. We expect that the independent registered auditor’s report will contain an explanatory paragraph indicating that the net losses we have incurred and our working capital deficit raise substantial doubt about our ability to continue as a going concern. Our going concern uncertainty may affect our ability to raise additional capital, and may also affect our relationships with suppliers and customers. Investors should carefully read the independent registered public auditor’s report and examine our financial statements.

We continue to need to obtain significant additional capital to fund our operations, and we may be unable to obtain such financing at all or on acceptable terms. If we are unable to obtain the funds necessary to do so, we may be required to delay, scale back or eliminate our product development or may be unable to continue our business.

The development of our products will require a commitment of substantial funds, to conduct the costly and time-consuming research, necessary to fully commercialize our products. Our future capital requirements will depend on many factors, including:

·	the cost of prosecuting, defending and enforcing patent claims and other intellectual property rights;

·	the cost of manufacturing our products;

·	competing technological and market developments; and

·	our ability to establish and maintain collaborative and other arrangements with third parties to assist in bringing our products to market and the cost of such arrangements.

There can be no assurance that we will not need additional capital sooner than currently anticipated. We will need to raise substantial additional capital to fund our future operations. We cannot be certain that additional financing will be available on acceptable terms, or at all. In recent years, it has been difficult for companies to raise capital due to a variety of factors, which may or may not continue. To the extent we raise additional capital through the sale of equity securities, the ownership position of investors in this offering and our existing stockholders could be substantially diluted. If additional funds are raised through the issuance of preferred stock or debt securities, these securities are likely to have rights, preferences and privileges senior to our common stock. Fluctuating interest rates could also increase the costs of any debt financing we may obtain.

To date, we have incurred significant expenses in product development and administration in order to ready our products for market. There is no assurance that actual cash requirements will not exceed our estimates, in which case we will require additional financing to bring our products into commercial operation, finance working capital and pay for operating expenses and capital requirements until we achieve a positive cash flow. Additionally, more capital may be required in the event that:

·	we incur unexpected costs in completing the development of our technology or encounter any unexpected

·	technical or other difficulties;

·	we incur delays and additional expenses as a result of technology failure;

·	we are unable to create a substantial market for our product and services; or

·	we incur any significant unanticipated expenses.

Failure to successfully address ongoing liquidity requirements will have a material adverse effect on our business. If we are unable to obtain additional capital on acceptable terms when needed, we may be required to take actions that harm our business and our ability to achieve cash flow in the future, including possibly the surrender of our rights to some technologies or product opportunities, curtailing or ceasing operations.

If we obtain additional financing, you may suffer significant dilution.

Because we have generated only limited revenues since commencing operations, we are dependent on raising additional financing through private and public financing sources and strategic alliances with larger companies to fund our short and long-term operations. As a result, we have been and likely will be required to issue securities to obtain such funds, which issuances have in the past and will in the future dilute the percentage ownership of our stockholders. In an effort to preserve cash and to better align the long term interests of our consultants and those with whom we conduct business with our long term interests, we have been issuing securities as payment in lieu of cash, which also has a dilutive effect on outstanding securities. This dilution could also have an adverse impact on our earnings per share and reduce the price of our common stock. In addition, the new securities may have rights, preferences or privileges senior to those of our common stock. For example, In October 2008 the Company issued 1,175,000, restricted common shares with a fair market value of $822,500 to several independent contractors in connection with professional service agreements for financial and legal services to be provided to the Company through various dates through September 2009. In November 2008, the Company issued 308,333 common shares with a fair market value of $135,667 to employees under the Company's Employee Stock Ownership Plan. In November 2008, the Company issued 320,191 restricted common shares with a fair market value of $128,056 in connection with the conversion of Convertible Notes Payable. In February 2009, the Company issued 12,500 restricted common shares with a fair market value of $18,750 to an employee in connection with a severance agreement. In February 2009, Company issued 121,048 restricted common shares at a price of $0.15 per share to one holder of the Convertible Notes Payable in satisfaction of accrued interest due in the amount of $18,157. In March 2009, the Company issued 1,225,000 restricted common shares with a fair market value of $163,000 to several independent contractors in connection with professional service agreements for financial and legal services to be provided to the Company through various dates through February 2011. In March 2009, the Company issued 541,667 common shares with a fair market value of $73,733 to employees under the Company's Employee Stock Ownership Plan in lieu of salaries. In March 2009, the Company issued 65,400 restricted common shares at a price of $0.25 per share to a vendor in satisfaction of an invoice due in the amount of $16,350. In April and May 2009, the Company issued 90,000 restricted common shares with a fair market value of $16,500 to third parties in satisfaction of claims and this amount was recorded as a non-cash expense on the date of issuance.

In June 2009, the Company issued 620,000 restricted common shares with a fair market value of $217,000 to several independent contractors in connection with professional service agreements for financial and legal services to be provided to the Company through May 2010. In June 2009, the Company issued 370,000 common shares with a fair market value of $129,500 to employees under the Company's Employee Stock Ownership Plan in lieu of salaries. In June 2009, the Company issued 10,000 restricted common shares with a fair market value of $3,500 to a former employee for consulting services. In June 2009, the Company issued 250,000 restricted common shares with an assigned value of $164,481 (including $116,093 relating to the beneficial conversion feature of the notes) in connection with the issuance of convertible notes with a face of $250,000 due in December 2009. In June 2009, two independent contractors exercised options previously granted in April 2009 for the purchase of 1,200,000 and 250,000 shares of common stock. As they elected to utilize the cashless exercise feature of those options, net amounts of 1,042,105 and 217,105 shares of restricted common stock were issued. In July 2009, the Company issued 195,000 common shares with a fair market value of $84,550 to three independent contractors for financial and legal services. In July 2009, the Company issued 100,000 restricted common shares with an assigned value of $59,973 (including $41,678 relating to the beneficial conversion feature of the notes) in connection with the issuance of convertible notes with an aggregate face value of $100,000 due in January 2010. In July 2009, the Company issued 155,000 common shares with a fair market value of $75,950 to two officers of the Company under the Company's Employee Stock Ownership Plan in lieu of salaries. In July 2009, an officer of the Company exercised options for the purchase of 1,200,000 shares of common stock. As he elected to utilize the cashless exercise feature of those options, the net amount of 1,077,551 shares of restricted common stock were issued. In August 2009, the Company issued 75,000 common shares with a fair market value of $30,000 to an independent contractor for financial services. In August 2009, an officer of the Company exercised options for the purchase of 300,000 shares of common stock. As he elected to utilize the cashless exercise feature of those options, the net amount of 261,539 shares of restricted common stock were issued. In August 2009, the Company issued 1,200 common shares with a fair market value of $475 to an independent contractor for consulting services. In August 2009, the Company issued 100,000 restricted common shares with an assigned value of $32,000 (including $4,383 relating to the beneficial conversion feature of the note) in connection with the issuance of a convertible note with a face of $100,000 due in February 2010.

In December, 2009, the Company issued 18,563,693 shares to the owners of Equisol, LLC and committed to issue 7,751,609 additional shares so that the owners of Equisol, LLC would own 40% of the fully diluted shares of EIHC.

We may not successfully establish and maintain collaborative and licensing arrangements, which could adversely affect our ability to develop and commercialize our products.

Our technological strategy includes developing our powder technology as well as establishing collaborations and licensing agreements with other companies. We may not be able to maintain or expand these licenses and collaborations or establish additional licensing and collaboration arrangements necessary to develop and commercialize our products. Even if we are able to maintain or establish licensing or collaboration arrangements, these arrangements may not be on favorable terms and may contain provisions that will restrict our ability to develop, test and market our products. Any failure to maintain or establish licensing or collaboration arrangements on favorable terms could adversely affect our business prospects, financial condition or ability to develop and commercialize our products.

We expect to rely at least in part on third-party collaborators to perform a number of activities relating to the development and commercialization of our products, including the manufacturing of product materials and the design for our products. Our collaborative partners may also have or acquire rights to control aspects of our product development. As a result, we may not be able to conduct these programs in the manner or on the time schedule we currently contemplate. In addition, if any of these collaborative partners withdraw support for our programs or products or otherwise impair their development, our business could be negatively affected. To the extent we undertake any of these activities internally, our expenses may increase.

In addition, our success depends on the performance of our collaborators of their responsibilities under these arrangements. Some potential collaborators may not perform their obligations in a timely fashion or in a manner satisfactory to us. Because such agreements may be exclusive, we may not be able to enter into a collaboration agreement with any other company covering the same field during the applicable collaborative period. In addition, our collaborators’ competitors may not wish to do business with us at all due to our relationship with our collaborators. If we are unable to enter into additional product discovery and development collaborations, our ability to sustain or expand our business will be significantly diminished.

If we are unable to create and maintain sales, marketing and distribution capabilities or enter into agreements with third parties to perform those functions, we will not be able to commercialize our products.

We currently have limited sales, marketing or distribution capabilities. Therefore, to commercialize our products, if and when such products are ready for marketing, we expect to collaborate with third parties to perform these functions. We have limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our future products directly. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, we will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies.

The industry in which we operate is highly competitive, and competitive pressures from existing and new companies could have a material adverse effect on our financial condition and results of operations.

The industry in which we operate is highly competitive and influenced by the following:

·	advances in technology;

·	new product introductions;

·	evolving industry standards;

·	product improvements;

·	rapidly changing customer needs;

·	intellectual property invention and protection;

·	marketing and distribution capabilities;

·	competition from highly capitalized companies;

·	ability of customers to invest in information technology; and

·	price competition.

We can give no assurance that we will be able to compete effectively in our markets. Many of our competitors have substantially greater capital resources, research and development resources and experience, manufacturing capabilities, regulatory expertise, sales and marketing resources, established relationships with business and consumer products companies and production facilities than us.

We may encounter difficulties managing our growth, which could adversely affect our business.

Our strategy includes entering into and working on simultaneous technology discovery and development programs across multiple markets. We expect to continue to grow to meet our strategic objectives. If our growth continues, it will continue to place a strain on us, our management and our resources. Our ability to effectively manage our operations, growth and various projects requires us to continue to improve our operational, financial and management controls, reporting systems and procedures, and to attract and retain sufficient numbers of talented employees. We may not be able to successfully implement these tasks on a larger scale and, accordingly, we may not achieve our research, development and commercialization goals. If we fail to improve our operational, financial and management information systems, or fail to effectively monitor or manage our new and future employees or our growth, our business would suffer significantly.

We may not be able to manufacture our planned products in sufficient quantities at an acceptable cost, or at all, which could harm our future prospects.

We lease a single manufacturing facility. If any of our proposed products become available for widespread sale, we may not be able to arrange for the manufacture of such product in sufficient quantities at an acceptable cost, or at all, which could materially adversely affect our future prospects.

Compliance with the Sarbanes-Oxley Act of 2002 will result in increased expenditures.

We are exposed to significant costs and risks associated with complying with increasingly stringent and complex regulation of corporate governance and disclosure standards. Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations require a growing expenditure of management time and external resources. In particular, Section 404 of the Sarbanes-Oxley Act of 2002 requires management’s annual review and evaluation of our internal controls, and attestations of the effectiveness of our internal controls by our independent registered auditors. Although we are not currently required to comply with all of the requirements of Section 404, we have begun the process of documenting and testing our internal controls. This process could result in our needing to implement measures to improve our internal controls. Any failure by us to maintain effective internal controls could have a material adverse effect on our business, operating results and stock price. This process may also require us to hire additional personnel and outside advisory services and will result in significant accounting and legal expenses.

Risks Related To Our Industry

Our products may become obsolete and unmarketable if we are unable to respond adequately to rapidly changing technology and customer demands.

Our industry is characterized by rapid changes in technology and customer demands. As a result, our products may quickly become obsolete and unmarketable. Our future success will depend on our ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, our products must remain competitive with those of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, we may not be able to adapt new or enhanced products to emerging industry standards, and our new products may not be favorably received.

If we are unable to attract and retain key personnel and advisors, it may adversely affect our ability to obtain financing, pursue collaborations or develop our products.

We are highly dependent on Michael Parrish, our chairman and chief executive officer, James Weber, the president of our subsidiary, XIOM Corp, and Kurt Given, president of our subsidiary, Equisol, LLC. Our future success depends on our ability to attract, retain and motivate highly qualified management and scientific, development and commercial personnel and advisors. To pursue our business strategy, we will need to hire or otherwise engage qualified personnel and managers, including personnel with expertise in discovery, development, manufacturing, marketing and sales. Competition for qualified personnel is intense among companies, academic institutions and other organizations. If we are unable to attract and retain key personnel and advisors, it may negatively affect our ability to successfully develop, test and commercialize our products and could have a material adverse effect on our proposals, financial condition and results of operations.

We may be sued for product liability, which could adversely affect our business.

Because our business strategy involves the development and sale by either us or our collaborators of commercial products incorporating our powder coating technology, we may be sued for product liability. We may be held liable if any product we develop and commercialize, or any product our collaborators commercialize that incorporates any of our technology, causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing, sale or consumer use.

If we and our collaborators commence sale of commercial products we will need to obtain additional product liability insurance, and this insurance may be prohibitively expensive, or may not fully cover our potential liabilities. Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of products developed by us or our product discovery and development collaborators. We may be obligated to indemnify our product discovery and development collaborators for product liability or other losses they incur. Any indemnification we receive from such collaborators for product liability that does not arise from our technology may not be sufficient to satisfy our liability to injured parties. If we are sued for any injury caused by our products or products incorporating our technology or any other products we develop, our liability could exceed our total assets.

If our products are not effectively protected by valid, issued patents or if we are not otherwise able to protect our proprietary information, it could harm our business.

The success of our operations will depend in part on our ability and that of our licensors to:

·	obtain any necessary patent protections for new technologies both in the United States and in other

·	countries with substantial markets;

·	defend patents once obtained;

·	maintain trade secrets and operate without infringing upon the patents and proprietary rights of others; and

·	obtain appropriate licenses upon reasonable terms to patents or proprietary rights held by others that are

·	necessary or useful to us in commercializing our technology, both in the United States and in other countries with substantial markets.

In the event we are not able protect our intellectual property and proprietary information, our business will be materially harmed.

We may not have adequate protection for our unpatented proprietary information, which could adversely affect our competitive position.

In addition to any patents that we may apply for in the future, we will substantially rely on trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive position. However, others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. To protect our trade secrets, we may enter into confidentiality agreements with employees, consultants and potential collaborators. However, these agreements may not provide meaningful protection of our trade secrets or adequate remedies in the event of unauthorized use or disclosure of such information. Likewise, our trade secrets or know-how may become known through other means or be independently discovered by our competitors. Any of these events could prevent us from developing or commercializing our products.

Our ability to compete in the powder coating market may decline if we do not adequately protect our proprietary technologies.

Because of the substantial length of time and expense associated with the development of new products, we, along with the rest of the industry, place considerable importance on obtaining and maintaining patent protection for new technologies, products and processes. Our success will depend in part on our ability to obtain and maintain intellectual property that protects our technologies and technology products. Patent positions may be highly uncertain and may involve complex legal and factual questions for which we seek patent protection. No consistent standard regarding the allowance or enforceability of claims in many of our pending patent applications has emerged to date. As a result, we cannot predict the breadth of claims that will ultimately be allowed in any future patent applications, if any, including those we have in-licensed or the extent to which we may enforce these claims against our competitors. The degree of future protection for our proprietary rights is therefore highly uncertain and we cannot assure you that:

·	we will be the first to file patent applications or to invent the subject matter claimed in patent applications that

·	we file, if any, which relate to the technologies upon which we rely;

·	others will not independently develop similar or alternative technologies or duplicate any of our

·	technologies;

·	any of our potential patent applications will result in issued patents;

·	any of our potential patent applications will not result in interferences or disputes with third parties regarding priority of invention;

·	any patents that may be issued to us, our collaborators or our licensors will provide a basis for commercially viable products or will provide us with any competitive advantages or will not be challenged by third parties;

·	we will develop any proprietary technologies that are patentable;

·	the patents of others will not have an adverse effect on our ability to do business; or

·	new proprietary technologies from third parties, including existing licensors, will be available for licensing to us on reasonable commercial terms, if at all.

In addition, patent law outside the United States is uncertain and in many countries intellectual property laws are undergoing review and revision. The laws of some countries do not protect intellectual property rights to the same extent as domestic laws. It may be necessary or useful for us to participate in opposition proceedings to determine the validity of our competitors’ patents or to defend the validity of any of our or our licensor’s future patents, which could result in substantial costs and would divert our efforts and attention from other aspects of our business.

Technologies licensed to us by others, or in-licensed technologies, are important to our business. In particular, we depend on certain technologies relating to technology licensed to us, as well as our relationships with various communications, software and integrator companies. In addition, we may in the future acquire rights to additional technologies by licensing such rights from existing licensors or from third parties. Such in-licenses may be costly. Also, we generally do not control the patent prosecution, maintenance or enforcement of in-licensed technologies. Accordingly, we are unable to exercise the same degree of control over this intellectual property as we do over our internally developed technologies. If we cannot maintain the confidentiality of our technologies and other confidential information in connection with our collaborations, our ability to protect our proprietary information or obtain patent protection in the future may be impaired, which could have a significant adverse effect on our business, financial condition and results of operations.

Disputes concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming and extremely costly and could delay our research and development efforts.

Our commercial success, if any, will be significantly harmed if we infringe the patent rights of third parties or if we breach any license or other agreements that we have entered into with regard to our technology or business.

We are aware of other companies and academic institutions that have been performing research in the areas of powder coating technology. To the extent any of these companies or academic institutions currently have, or obtain in the future, broad patent claims, such patents could block our ability to use various aspects of our discovery and development process and might prevent us from developing or commercializing newly discovered technologies or otherwise conducting our business. In addition, it is possible that some of the new technologies that are discovered using our technology may not be patentable or may be covered by intellectual property of third parties.

We are not currently a party to any litigation, interference, opposition, protest, reexamination or any other potentially adverse governmental, ex parte or inter-party proceeding with regard to our patent or trademark positions. However, the technology industries are characterized by extensive litigation regarding patents and other intellectual property rights. Many technology companies have employed intellectual property litigation as a way to gain a competitive advantage. If we become involved in litigation, interference proceedings, oppositions, reexamination, protest or other potentially adverse intellectual property proceedings as a result of alleged infringement by us of the rights of others or as a result of priority of invention disputes with third parties, we might have to spend significant amounts of money, time and effort defending our position and we may not be successful. In addition, any claims relating to the infringement of third-party proprietary rights or proprietary determinations, even if not meritorious, could result in costly litigation, lengthy governmental proceedings, divert management’s attention and resources, or require us to enter into royalty or license agreements that are not advantageous to us.

Should any person have filed patent applications or obtained patents that claim inventions also claimed by us, we may have to participate in an interference proceeding declared by the relevant patent regulatory agency to determine priority of invention and, thus, the right to a patent for these inventions in the United States. Such a proceeding could result in substantial cost to us even if the outcome is favorable. Even if successful on priority grounds, an interference action may result in loss of claims based on patentability grounds raised in the interference action. Litigation, interference proceedings or other proceedings could divert management’s time and efforts. Even unsuccessful claims could result in significant legal fees and other expenses, diversion of management’s time and disruption in our business. Uncertainties resulting from initiation and continuation of any patent proceeding or related litigation could harm our ability to compete and could have a significant adverse effect on our business, financial condition and results of operations.

An adverse ruling arising out of any intellectual property dispute, including an adverse decision as to the priority of our inventions, could undercut or invalidate our intellectual property position. An adverse ruling could also subject us to significant liability for damages, including possible treble damages, prevent us from using technologies or developing products, or require us to negotiate licenses to disputed rights from third parties. Although patent and intellectual property disputes in the technology area are often settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and could include license fees and ongoing royalties. Furthermore, necessary licenses may not be available to us on satisfactory terms, if at all. Failure to obtain a license in such a case could have a significant adverse effect on our business, financial condition and results of operations.

We expect that our results of operations will fluctuate from period to period, and this fluctuation could cause our stock price to decline, causing investor losses.

Our operating results could vary significantly in the future based upon a number of factors, including many factors over which we have little or no control. We operate in a highly dynamic industry and future results could be subject to significant fluctuations. These fluctuations could cause us to fail to meet or exceed financial expectations of securities analysts or investors, which could cause our stock price to decline rapidly and significantly. Revenue and expenses in future periods may be greater or less than revenue and expenses in the immediately preceding period or in the comparable period of the prior year. Therefore, period-to-period comparisons of our operating results are not necessarily a good indication of our future performance. Some of the factors that could cause our operating results to fluctuate include:

·	our ability to develop technology;

·	our ability or the ability of our product discovery and development collaborators to incorporate our technology;

·	our receipt of milestone payments in any particular period;

·	the ability and willingness of collaborators to commercialize products incorporating our technology on expected timelines, or at all;

·	our ability to enter into product discovery and development collaborations and technology collaborations, or to extend the terms of any existing collaboration agreements, and our payment obligations, expected revenue and other terms of any other agreements of this type;

·	the demand for our future products and our collaborators’ products containing our technology; and

·	general and industry specific economic conditions, which may affect our collaborators’ research and

·	development expenditures.

If we acquire products, technologies or other businesses, we will incur a variety of costs, may have integration difficulties and may experience numerous other risks that could adversely affect our business.

To remain competitive, we plan to acquire additional businesses, products and technologies and we currently are actively seeking material acquisitions that complement our business. We have limited experience in identifying acquisition targets, successfully acquiring them and integrating them into our current infrastructure. We may not be able to successfully integrate any businesses, products, technologies or personnel that we might acquire in the future without a significant expenditure of operating, financial and management resources, if at all. In addition, future acquisitions could require significant capital infusions and could involve many risks, including, but not limited to, the following:

·	we may have to issue convertible debt or equity securities to complete an acquisition, which would dilute our stockholders and could adversely affect the market price of the common stock;

an acquisition may negatively impact our results of operations because it may require us to incur large one-time charges to earnings, amortize or write down amounts related to goodwill and other intangible assets, or incur or assume substantial debt or liabilities, or it may cause adverse tax consequences, substantial depreciation or deferred compensation charges;

·	we may encounter difficulties in assimilating and integrating the business, technologies, products, personnel or operations of companies that we acquire;

·	certain acquisitions may disrupt our relationship with existing collaborators who are competitive to the acquired business;

·	acquisitions may require significant capital infusions and the acquired businesses, products or technologies may not generate sufficient revenue to offset acquisition costs;

·	an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management;

·	acquisitions may involve the entry into a geographic or business market in which we have little or no prior experience; and

·	key personnel of an acquired company may decide not to work for us.

Any of the foregoing risks could have a significant adverse effect on our business, financial condition and results of operations.

To the extent we enter markets outside of the United States, our business will be subject to political, economic, legal and social risks in those markets, which could adversely affect our business.

There are significant regulatory and legal barriers in markets outside the United States that we must overcome to the extent we enter or attempt to enter markets in countries other than the United States. We will be subject to the burden of complying with a wide variety of national and local laws, including multiple and possibly overlapping and conflicting laws. We also may experience difficulties adapting to new cultures, business customs and legal systems. Any sales and operations outside the United States would be subject to political, economic and social uncertainties including, among others:

·	changes and limits in import and export controls;

·	increases in custom duties and tariffs;

·	changes in currency exchange rates;

·	economic and political instability;

·	changes in government regulations and laws;

·	absence in some jurisdictions of effective laws to protect our intellectual property rights; and

·	currency transfer and other restrictions and regulations that may limit our ability to sell certain products or repatriate profits to the United States.

The price of our common stock is expected to be volatile and an investment in common stock could decline in

value.

The market price of our common stock, and the market prices in general for securities of companies in our industry, are expected to be highly volatile. The following factors, in addition to other risk factors described in this filing, and the potentially low volume of trades in common stock, may have a significant impact on the market price of common stock, some of which are beyond our control:

·	announcements of technological innovations and discoveries by us or our competitors;

·	developments concerning any research and development, manufacturing, and marketing collaborations;

·	new products or services that we or our competitors offer;

·	actual or anticipated variations in operating results;

·	the initiation, conduct and/or outcome of intellectual property and/or litigation matters;

·	changes in financial estimates by securities analysts;

·	conditions or trends in technology or software industries;

·	changes in the economic performance and/or market valuations of other technology companies;

·	our announcement of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

·	additions or departures of key personnel;

·	global unrest, terrorist activities, and economic and other external factors; and

·	sales or other transactions involving our common stock.

The stock market in general has recently experienced relatively large price and volume fluctuations. In particular, market prices of securities of technology companies have experienced fluctuations that often have been unrelated or disproportionate to the operating results of these companies. Continued market fluctuations could result in extreme volatility in the price of common stock, which could cause a decline in the value of common stock. Prospective investors should also be aware that price volatility may be worse if the trading volume of common stock is low.

We do not expect to pay cash dividends in the foreseeable future.

We currently intend to retain any future earnings to finance the growth and development of our business; therefore, we do not expect to pay any cash dividends in the foreseeable future. Any future dividends will depend on our earnings, if any, and our financial requirements.

It is not anticipated that there will be an active public market for shares of our common stock in the near term, and you may have to hold your shares of common stock for an indefinite period of time. You may be unable to resell a large number of your shares of common stock within a short time frame or at or above their purchase price.

There is not an active public or other trading market for our common stock, and there can be no assurance that any market will develop or be sustained after the completion of this offering. Because our common stock is expected to be thinly traded, an investor cannot expect to be able to liquidate its investment in case of an emergency or if it otherwise desires to do so. Large transactions in common stock may be difficult to conduct in a short period of time. Further, the sale of shares of common stock may have adverse federal income tax consequences.

It is more difficult for our shareholders to sell their shares because we are not, and may never be, eligible for the Nasdaq Stock Market or any National Stock Exchange.

We are not presently, nor is it likely that for the foreseeable future we will be, eligible for inclusion in the Nasdaq Stock Market or for listing on any United States national stock exchange. To be eligible to be included in the Nasdaq Stock Market, a company is required to have not less than $4,000,000 of stockholders’ equity, a public float with a market value of not less than $5,000,000, and a minimum bid price of $4.00 per share. At the present time, we are unable to state when, if ever, we will meet the Nasdaq Stock Market application standards. Unless we are able to increase our net worth and market valuation substantially, either through the accumulation of surplus out of earned income or successful capital raising financing activities, we will not be able to meet the eligibility requirements of the Nasdaq Stock Market. As a result, it will more difficult for holders of our common stock to resell their shares to third parties or otherwise, which could have a material adverse effect on the liquidity and market price of our common stock.

Substantial future issuances of our common stock could depress our stock price.

The market price for our common stock could decline, perhaps significantly, as a result of issuances of a large number of shares of our common stock in the public market or even the perception that such issuances could occur. Sales of a substantial number of shares of common stock, or the perception that holders of a large number of shares intend to sell their shares, could depress the market price of our common stock.

Directors and officers of the Company will have a high concentration of our common stock ownership.

Based on the aggregate number of shares of our common stock that are outstanding as of April 15, 2010, our officers and directors beneficially own approximately 33.3% of our outstanding common stock. Such a high level of ownership by such persons may have a significant effect in delaying, deferring or preventing any potential change in control of the Company. Additionally, as a result of their high level of ownership, our officers and directors might be able to strongly influence the actions of our Board of Directors, and the outcome of actions brought to our stockholders for approval. Such a high level of ownership may adversely affect the voting and other rights of our stockholders.

Changes in, or interpretations of, accounting rules and regulations, such as expensing of stock options and other stock-based compensation, could result in unfavorable accounting charges or require us to change our compensation policies.

Accounting methods and policies, including policies governing revenues recognition, expenses, and accounting for stock options and other forms of stock-based compensation are subject to further review, interpretation and guidance from relevant accounting authorities, including the SEC. Changes to, or interpretations of, accounting methods or policies in the future may require us to reclassify, restate or otherwise change or revise our financial statements, including those contained in this prospectus. Prior to January 1, 2006, we were not required to record stock-based compensation charges if the employee’s stock option exercise price equals or exceeds the fair market value of our common stock at the date of grant.

Generally accepted accounting principles require all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. This has a significant impact on the presentation of our results of operations if we utilize stock-based compensation to reward and incentivize employees and others who contribute to our growth and success, although it will have no impact on our overall financial position.

We may rely heavily on stock options to motivate existing employees and to attract new employees. When we are required to expense stock options, we may then choose to reduce our reliance on stock options as a motivation tool. If we decide to reduce our potential use of stock options in the future, it may be more difficult for us to attract and retain qualified employees. However, if we decide to not reduce our reliance on stock options in the future, it will decrease our reported earnings.

We do not expect to make dividend payments in the foreseeable future.

The Company has never declared or paid any cash dividends on its common stock. For the foreseeable future, the Company intends to retain any earnings to finance the development and expansion of its business, and it does not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including the Company's financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors consider relevant.

The fact that we are subject to Penny Stock Regulation may make it less appealing for a broker-dealer to engage in transactions involving our securities.

The Commission has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that impose additional sales practice requirements on broker dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by such rules, the broker dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating to the penny stock market. The broker dealer must also disclose the commission payable to both the broker dealer and the registered representative, current quotations for the securities and, if the broker dealer is the sole market maker, the broker dealer must disclose this fact and the broker dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Broker-dealers must wait two business days after providing buyers with disclosure materials regarding a security before effecting a transaction in such security. Consequently, the “penny stock” rules restrict the ability of broker dealers to sell our securities and affect the ability of investors to sell our securities in the secondary market and the price at which such purchasers can sell any such securities, thereby affecting the liquidity of the market for our common stock.

Stockholders should be aware that, according to the Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

·	control of the market for the security by one or more broker-dealers that are often related to the promoter or issuer;

·	manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

·	“boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

·	excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

·	the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

·	Our management is aware of the abuses that have occurred historically in the penny stock market.

Item 2. PROPERTY

EIHC leases approximately 7,000 square feet of manufacturing and warehouse facility in West Babylon, New York pursuant to a four-year lease at $5,000 per month. In addition, the Company leases a 2,000 square foot training and testing facility adjacent to the above space on a month-to-month basis for $1,300 per month. Rent expense for fiscal 2009 and 2008 was approximately $95,000 per annum. The manufacturing and warehouse facility is adequate for the needs of the Company at this time. However, if it were necessary to expand the manufacturing and warehouse capacity, the Company would need to relocate its facilities, at an additional cost per month. Such location would be relatively easy to locate, however the initial cost of moving might be substantial.

In addition, as a result of the acquisition of Equisol, LLC in December, 2009, the Company acquired leased facilities in Conshohocken, PA, Baton Rouge, LA, and Kemah, TX. The Company leases these facilities at a monthly rent of $4,300. The Company maintains its Corporate Headquarters in Conshohocken, PA.

Item 3. LEGAL PROCEEDINGS

On December 22, 2009, the Company received a notice from holders of $820,000 of its convertible notes that the Company was in default of its obligations under the notes, and acceleration and demand for payment of the face amount of the notes and all accrued and unpaid interest. The Company is in the process of reviewing these claims.

We are not aware of any other litigation, pending, or threatened at this time. We may occasionally become subject to legal proceedings and claims that arise in the ordinary course of our business. It is impossible for us to predict with any certainty the outcome of pending disputes, and we cannot predict whether any liability arising from pending claims and litigation will be material in relation to our consolidated financial position or results of operations.

Indemnification of Officers and Directors

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

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

The Company’s Board of Directors approved on February 26, 2010, by unanimous written consent, submission of an amendment to our Certificate of Incorporation to (a) increase the number of authorized shares of Common Stock from 50,000,000 shares, par value $0.0001 per share, to 125,000,000 shares, par value $0.0001 per share, and (b) authorize the issuance of 25,000,000 shares of preferred stock, par value $0.0001 per share (collectively, the “Amendment”). On March 8, 2010, the Company received notice of written consent by holders of more than 50% of the Company’s outstanding shares to this Amendment. The Company will file an Information Statement with the Securities and Exchange Commission, and address any comments received thereby before distributing the statement to all shareholders and filing with the State of Delaware to effect the Amendment.

Part II

Item 5. Market for Common Equity and Related Stockholder Matters

General:

The authorized capital stock consists of 50,000,000 shares of common stock, par value $.0001 per share. As of April 15, there were 44,422,309 shares of Common Stock issued and outstanding. The Company has a contractual commitment to issue an additional 7,751,609 shares to the former owners of Equisol, LLC. This does not include shares underlying warrants or options yet to be exercised. The following summary description of the Common Stock is qualified in its entirety by reference to the Company's Certificate of Incorporation and all amendments thereto.

Common Stock:

Our authorized capital stock consists of 50,000,000 shares of common stock, par value $.0001 per share. Each share of Common Stock entitles its holder to one non-cumulative vote per share and, the holders of more than fifty percent (50%) of the shares voting for the election of directors can elect all the directors if they choose to do so, and in such event the holders of the remaining shares will not be able to elect a single director. Holders of shares of Common Stock are entitled to receive such dividends, as the board of directors may, from time to time, declare out of Company funds legally available for the payment of dividends. Upon any liquidation, dissolution or winding up of the Company, holders of shares of Common Stock are entitled to receive pro rata all of the assets of the Company available for distribution to stockholders.

Stockholders do not have any pre-emptive rights to subscribe for or purchase any stock, warrants or other securities of the Company. The Common Stock is not convertible or redeemable. Neither the Company's Certificate of Incorporation nor its By-Laws provide for pre-emptive rights.

Price Ranges of XIOM CORP. Common Stock:

Market Information:

The Company’s Common Stock is traded on the NASD OTC Bulletin Board under the symbol “EIHC.OB” commencing on or about January 27, 2010.

There is currently a limited trading market for the Company’s Common Stock with the price being very volatile. The following table shows the reported high and low closing prices per share for our common stock through December 31, 2009. Since that date through April 14, 2010, the closing price per share has been between $0.30 and $0.11.

	High		Low
Fiscal 2009:
Fourth quarter	$	0.45	$	0.22
Third quarter		0.49	$	0.21
Second quarter		0.46		0.09
First quarter		0.35		0.10

Fiscal 2008:
Fourth quarter	$	0.75		0.12
Third quarter		1.81	$	0.52
Second quarter		2.19		1.50
First quarter		2.90		1.05

Liquidation:

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

Dividend Policy:

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

Stock Transfer Agent:

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

Sales of Unregistered Securities

On October 27, 2009, the Company issued 600,000 restricted shares with a fair market value of $222,000 to officers, employees, directors, and consultants. On that date, the Company issued 2,975,000 restricted shares to consultants with a fair market value of $1,100,750. On November 3, 2009, the Company issued 700,000 restricted shares in a private sale of a stock subscription for proceeds of $175,000. On November 9, 2009, the Company issued 700,000 restricted shares in a private sale of a stock subscription for proceeds of $175,000. On December 15, 2009, the Company issued 18,563,693 restricted shares in connection with the purchase of Equisol, LLC.

Purchase of Equity Securities by the Small Business Issuer and Affiliated Purchasers

We did not repurchase any shares of our common stock during the year ending December 31, 2009.

Equity Compensation Plan Information

None

ITEM 6. SELECTED FINANCIAL INFORMATION

Not required

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION.

Overview

We currently do not plan to conduct any business other than the business in which EIHC and its subsidiaries XIOM and EQUISOL are engaged. We expect to continue to incur significant research, development and administrative expenses before any of our current or proposed products are approved for marketing, if ever, and generate significant revenues.

Plan of Operations:

Both subsidiaries’ plans to move into an expansion phase were adversely affected by the weakened economy during fiscal 2009 and such plans are expected to be further adversely affected by the continued weakness of the economy during the beginning of fiscal 2010. Going forward the focus of the subsidiaries is to expand organically through increased sales and improved productivity through reduced SG&A costs. The parent company will begin to acquire other entities focused on environmental equipment manufacturing, engineering, services, and consulting as well as geographic expansion throughout North America. Longer term, we anticipate to emulate such acquisitions internationally.

During the first quarter of fiscal 2008, the Company’s subsidiary, Xiom introduced its XIOM 5000, a high speed spray gun which can apply material five times faster than the XIOM 1000 system each and significantly reduce the cost per square foot of spray coating to less than $1.00 per square foot. During the last two years, over 200 of XIOM’s spray systems were sold. The sales were primarily to customers in North America with 40 systems going to overseas customers.

Xiom now offers the XIOM 1000 and XIOM 5000 spray gun in a combination package for $15,000 and expects to sell approximately 100 of these systems on a worldwide basis during fiscal 2010. However, there can be no assurance that Xiom will be able to achieve this target since this will entail a shipping rate approximately equal to what Xiom has achieved in the past. During an expected weak economy in fiscal 2010, training and support which will be required to support a customer base aggregating approximately 300 members as well as supplying the requisite materials used in the spray systems will be a significant economic and logistical challenge for Xiom.

Xiom plans to incur patent acquisition expenditures of approximately $50,000 during fiscal 2010.

Xiom has a joint venture in the United States whose purpose is to develop contract revenues from spraying coatings on ship hulls and ship super structures. Management is currently reviewing its plans for this joint venture.

Xiom formed a European distribution arrangement during the second quarter of fiscal 2008. Through this arrangement, Xiom has sold 20 systems to date and has established 6 independent European sub-distributors to date. Xiom plans to maintain its sales efforts in Europe during fiscal 2010.

The Company’s overhead expense run rate has been decreased to approximately $150,000 per month during the first quarter of fiscal 2010. We have approximately $2 million of firm contracts in house. The Company believes that it has enough funds to only operate for the next 3 months even if it does not sell any systems or services.

The Company is not in able to accurately forecast sales for fiscal 2010. The Company does not have sufficient cash resources and revenue to adequately support overseas marketing plans for the foreseeable future. Therefore, without increasing revenues or acquiring additional capital, it is likely that our current overseas marketing plans will have to proceed at a slower rate.

Critical Accounting Policies

Management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to impairment of long-lived assets, finite lived intangible assets, accrued liabilities and certain expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting policies are summarized in Note 1 of our audited financial statements for the year ended December 31, 2009. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

REVENUE RECOGNITION

Revenue from product sales is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed or determinable, (3) collectability is reasonably assured, and (4) delivery has occurred. Persuasive evidence of an arrangement and fixed price criteria are satisfied through sales orders. Collectability criteria is satisfied through credit approvals. Delivery criteria is satisfied when the products are shipped to a customer and title, and risk of loss, pass to the customer in accordance with the terms of sale. The Company has no obligation to accept the return of products sold other than for replacement of damaged products. Other than quantity price discounts negotiated with customers prior to billing and delivery (which are reflected as a reduction in sales), the Company does not offer any sales incentives or other rebate arrangements to customers

Revenues from long-term contracts are recognized on the percentage-of-completion method, measured by the percentage of actual cost incurred to date, to the estimated total cost for each contract. Estimated costs and revenues are based upon engineering estimates of the work performed to date relative to the total work required under the contract. Changes in contract estimates which result in changes in estimated profit are applied to the cumulative work accomplished on the project. The re-calculated gross profit on the contract is applied to the revenues recorded to date for the entire life of the contract and the resulting income or loss is recorded in the current period.

INVENTORY

Inventory consists primarily of various parts, materials and supplies utilized in the assembly of water treatment systems and the assembly and 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.

SHARE BASED PAYMENTS

Share based payments are made primarily to outside consultants and other professional service providers, from time to time, subject to current cash flow conditions and at the discretion of the Board of Directors. The compensation cost is determined based on the estimated fair value of the shares at the measurement date, which is the earlier of (a) the date at which a commitment for performance by the counterparty to earn the shares is reached (generally the contract date),or (b) the date at which the counterparty’s performance is complete. These compensation costs are capitalized as prepaid expenses and expensed over the remaining term of the respective contracts.

Common stock options granted to employees are issued for past services from time to time, at the discretion of the Board of Directors, and the value of each option is recorded as compensation expense as of the grant date. The related excess tax benefit received upon the exercise of stock options has not been recognized because, in the opinion of management, it is more likely than not, that such tax benefit will not be utilized in the future.

Recently Adopted Accounting Pronouncements

FASB ASC 820-10 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting from the application of this standard relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. This standard is effective for fiscal years beginning after November 15, 2007; however, it provides a one-year deferral of the effective date for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. The Company adopted this standard for financial assets and financial liabilities and nonfinancial assets and nonfinancial liabilities disclosed or recognized at fair value on a recurring basis (at least annually) as of October 1, 2008. The Company adopted the standard for nonfinancial assets and nonfinancial liabilities on October 1, 2009. The adoption of this standard in each period did not have a material impact on its financial statements.

FASB ASC 810-10 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. The standard establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that does not result in deconsolidation and expands disclosures in the consolidated financial statements. This standard is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. This standard is not currently applicable to the Company because the Company does not have any non-controlling minority interests.

FASB ASC 815-10 is effective January 1, 2009. This standard requires enhanced disclosures about derivative instruments and hedging activities to allow for a better understanding of their effects on an entity’s financial position, financial performance, and cash flows. Among other things, this standard requires disclosures of the fair values of derivative instruments and associated gains and losses in a tabular formant. This standard is not currently applicable to the Company since the Company does not have derivative instruments or hedging activity.

FASB ASC 825-10 requires disclosures about the fair value of financial instruments for interim reporting periods. This standard is effective for interim reporting periods ending after June 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial statements.

FASB ASC 820-10 provides additional guidance for Fair Value Measurements when the volume and level of activity for the asset or liability has significantly decreased. This standard is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this standard did not have a material effect on its financial statements.

FASB ASC 320-10 amends the other-than-temporary impairment guidance for debt and equity securities. This standard is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this standard did not have a material effect on its financial statements.

FASB ASC 855-10 is effective for interim or annual financial periods ending after June 15, 2009 and establishes general standards of accounting and disclosure of events that occur after the balance sheet but before financial statements are issued or are available to be issued. However, since the Company is a public entity, management is required to evaluate subsequent events through the date that financial statements are issued and disclose the date through which subsequent events have been evaluated, as well as the date the financial statements were issued. This standard was adopted for its interim period ending June 30, 2009. Subsequent events have been evaluated through November 16, 2009 the date the financial statements were issued.

In June 2009, the FASB issued Accounting Standards Update No. 2009-01, The FASB Accounting Standards Codification, which establishes the Codification as the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. This standard is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this standard is not expected to have an effect on the Company’s financial reporting.

FASB ASC 805 establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. This standard also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This standard was adopted by the Company beginning October 1, 2009 and will change the accounting for business combinations on a prospective basis.

FASB ASC 350-30 and 275-10 amend the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the effect of this statement on its financial position and results of operations.

FASB ASC 260-10 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not currently have any share-based awards that would qualify as participating securities. Therefore, application of this standard is not expected to have an effect on the Company's financial reporting.

FASB ASC 470-20 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The standard includes guidance that convertible debt instruments that may be settled in cash upon conversion should be separated between the liability and equity components, with each component being accounted for in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. This standard is currently not applicable to the Company since the Company does not have any convertible debt that may be settled for cash upon conversion.

FASB ASC 815-10 and 815-40 are effective for financial statements for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The standard addresses the determination of whether an instrument (or an embedded feature) is indexed to an entity’s own stock, which is the first part of the scope exception for the purpose of determining whether the instrument is classified as an equity instrument or accounted for as a derivative instrument which would be recognized either as an asset or liability and measured at fair value. The standard shall be applied to outstanding instruments as of the beginning of the fiscal year in which this standard is initially applied. Any debt discount that was recognized when the conversion option was initially bifurcated from the convertible debt instrument shall continue to be amortized. The cumulative effect of the change in accounting principles shall be recognized as an adjustment to the opening balance of retained earnings. The Company adopted this standard as of January 1, 2009, and was not required to reclassify any of its warrants as liabilities.

As of September 30, 2009, the FASB has issued Accounting Standards Updates (ASU) through No. 2009-12. None of the ASUs have had an impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In January, 2010, the FASB issued ASUs No. 2010-01 through 2010-07. In February, 2010, the FASB issued ASU No. 2009-08 through 2010-10. In March, 2010, the FASB issued ASU 2010-11. The Company is currently evaluating the effect of these standards updates on its financial position and results of operations.

Results of Operations:

Because the merger of the Company with Equisol was accounted for as a reverse merger for accounting purposes, the unaudited comparative consolidated financial statements reflect the results of operations of Equisol prior to the merger on December 7, 2009.

For the Fiscal Years Ended December 31, 2009 Versus December 31, 2008

For the fiscal year ended December 31, 2009, the Company recorded $3,654,000 in sales and cost of sales of $2,929,000. This is in comparison to total sales of $6,073,000 and cost of sales of $4,256,000 for fiscal year ended December 31, 2008. The Company’s discontinued operation recorded sales of $1,600,000 in 2009 and $1,937,000 in fiscal 2008. Gross profit for fiscal 2009 was $724,647 or 20%, a decrease of $1,092,000 compared to the gross profit in fiscal 2008 of $1,816,847 or 30%. This decrease in sales and gross profit in fiscal 2009 resulted primarily from general economic conditions and the Company's limited ability to generate profitable sales.

Selling, general and administrative expenses decreased from $1,729,000 in fiscal 2008 to $1,132,000 in fiscal 2009. Cost containment measures in the areas of reduced headcount, marketing and general overhead lowered expenses by $597,000 or 35%. This decrease in selling, general and administrative expenses was offset by a $7,373,000 charge for impairment of goodwill, which resulted from accounting for the merger of Equisol and the Company as a reverse merger. Because the Company, prior to the merger, had a significant stockholder’s deficit and had sustained operating losses for several years, the goodwill resulting from the reverse merger was considered by management to be impaired.

Other expense increased from $124,000 in fiscal 2008 to $182,000 in fiscal 2009. This increase of $58,000 or 46% was due to the increase in interest expense. This increase in interest expense is directly related to the Company's increased debt resulting from the reverse merger in fiscal 2009 coupled.

The Company’s results of operations swung from net profit of $34,000 in 2008 to a net loss of $7,946,000 in fiscal 2009. This decrease was attributable to the reduction of gross profit and increases in interest expenses as well as charges for goodwill impairment offset by a decrease in general and administrative expenses as described above.

We will need to generate significant revenues to achieve profitability, which may not occur. We expect our operating expenses to increase as a result of our plans for growth. If we do achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis in the future. We expect to have quarter-to-quarter fluctuations in revenues, expenses, losses and cash flow, some of which could be significant. Results of operations will depend upon numerous factors, some beyond our control, including regulatory actions, market acceptance of our products and services, new products and service introductions, and competition.

Liquidity, Capital Resources and Operations:

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

There are no known trends, events or uncertainties that have or are reasonably likely to have a material impact on the Company’s short-term or long-term liquidity, other than the inability to sell our products, or the failure to sell any of future shares of common stock or the lack of exercise of the warrants by the shareholders. Near term the current turmoil in financial markets may make new fund raising more difficult than in the recent past.

During the fiscal years ended December 31, 2009, net cash used by operating activities was $283,000; in fiscal 2008, operating activities provided $114,000. The Company incurred net losses of $7,946,000 for the fiscal years ended December 31, 2009. Additionally, at December 31, 2009, the Company had a Stockholders’ Deficit of $2,907,000.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company anticipates that in order to fulfill its plan of operations, it will need to seek financing from outside sources. To this end, the Company is constantly pursuing private debt and equity sources. However, there is no assurance that any future financing, if successful, will be sufficient to allow the Company to operate profitably or successfully. It is also the intention of the Company’s management to improve profitability by significantly increasing sales of its wastewater treatment services and its patented thermal spray process in fiscal 2010 while maintaining reasonable levels general and administrative expenses as the company grows.

Under the federal securities laws, any offering of securities must be registered unless an exemption from registration is available, and, with limited exceptions, no exemption from registration is generally available for a private placement transaction which is made concurrently with a public offering. We may be considered to have commenced a public offering of securities on May 6, 2005, when we first filed the registration statement on Form SB-2.

In private placement transactions completed subsequent to the filing of our initial registration statement, from January 1, 2006 through October 20, 2006 (the effective date of the registration statement) we sold a total of 563,718 shares of restricted common stock from which we received gross offering proceeds of $670,000. These securities were offered and sold in reliance upon claimed private placement exemptions from registration. As a result, the purchasers of the shares may have the right to claim that the purchase transactions violated the federal securities laws. If any of these transactions did violate federal securities laws, the purchasers in those transactions may have claims against us for damages or for rescission and recovery of their full subscription price, plus interest. Although none of the purchasers of these shares has made or threatened any claim against us alleging violation of federal securities laws, in the event the purchasers of these securities successfully asserted claims for rescission it would have a substantial adverse effect on our business and on our ability to continue to operate. We may not have sufficient funds available to pay such claims, and there is no assurance that we would be able to obtain funds from other sources. In that event, we may be forced to cease operations and liquidate our available assets to pay our liabilities, including, but not limited to, the rescission claims.

In connection with the acquisition of Equisol, LLC, the Company raised $705,000 in a private placement. These funds were used to pay for costs of the acquisition and outstanding and overdue payables.

Inflation:

The amounts presented in the financial statements do not provide for the effect of inflation on the Company’s operations or its financial position. Amounts shown for machinery, equipment and leasehold improvements and for costs and expenses reflect historical cost and do not necessarily represent replacement cost. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Item 8. FINANCIAL STATEMENTS

Index To Unaudited Financial Statements


Unaudited Consolidated Balance Sheets as of December 31, 2009 and 2008	F-3

Unaudited Consolidated Statements of Operations for the years ended
December 31, 2009 and 2008	F-4

Unaudited Consolidated Statements of Changes in Stockholders’ Equity
(Deficit) for the years ended December 31, 2009 and 2008	F-5

Unaudited Consolidated Statements of Cash Flows for the years ended
December 31, 2009 and 2008	F-7

Notes to Unaudited Consolidated Financial Statements	F-8

Rules 3-01 and 3-02 of Regulation S-X require that financial statements included in annual reports on Form 10-K be audited by an independent registered public accountant using professional standards and procedures for conducting such reviews, as established by the generally accepted auditing standards, as may be modified or supplemented by the Securities and Exchange Commission ("SEC"). The Company's registered public accounting firm, Michael T. Studer, CPA, P.C. advised the Company that it was unable to provide a report on its audit of the Company's consolidated financial statements for the years ended December 31, 2008 and 2009, as required by Rules 3-01 and 3-02 of Regulation S-X, because of a lack of available resources. These financial statements have not previously been audited. Once this matter has been resolved, the Company intends to file an amended annual report on Form 10-K for the year ended December 31, 2009.

Environmental Infrastructure Holdings Corp

Unaudited Consolidated Balance Sheets

As of December 31, 2009 and 2008

	2009			2008
ASSETS
Current Assets
Cash and cash equivalents		245,780			19,612
Accounts Receivable, net of allowance for doubtful accounts		760,811			830,042
Inventory		351,488			161,413
Prepaid expenses		30,465			-
Other current assets		2,000			-
Total Current Assets		1,390,544			1,011,067

Fixed Assets, net of accumulated depreciation		176,854			23,885
Assets of discontinued operations held for sale					510,472

Other Assets
Intangible assets, net of amortization and valuation reserve		294,649			342,435
Retainage receivable		51,851			-
Security deposits		11,445			-
Total Other Assets		357,945			342,435

Total Assets		1,925,343			1,887,859

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable		899,825			442,501
Line of credit		525,058			515,816
Accrued expenses		297,415			12,056
Accrued compensation		150,000			-
Accrued interest		480,399			111,663
Notes payable, net of discount		2,194,528			362,324
Total Current Liabilities		4,547,225			1,444,360
LIABILITIES OF DISCONTINUED OPERATION HELD FOR SALE					329,679
LONG TERM LIABILITES		285,066			288,175

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock (50,000,000 shares authorized, 41,811,100 outstanding)		4,181			1,856
Additional paid in capital		5,816,781			303,987
Retained earnings		(8,727,911	)		(480,198	)
Total Company Deficit					(176,211	)
Noncontrolling interest					-
Total Stockholders' Deficit		(2,906,948	)		(174,355	)

Total Liabilities and Stockholder's Deficit		1,925,343			1,887,859

Environmental Infrastructure Holdings Corp

Consolidated Statements of Operations

For the Years Ended December 31,

	2009			2008

Revenues		3,654,043			6,073,439

Cost of Revenues		2,929,396			4,256,592

Gross Profit		724,647			1,816,847
		20	%		30	%
Operating Expenses
Selling, General & Administrative Expenses		1,131,694			1,729,447
Impairment of goodwill		7,372,762
Operating Income (Loss)		(7,779,809	)		87,400

Other Income (Expense)
Interest Income		233			438
Interest Expense		(182,147	)		(124,186	)

Income (loss) from Continuing Operations before Income Tax Provision and Minority Interests		(7,961,723	)		(36,348	)

Income tax provision		9,267			17,009

Income from Continuing Operations		(7,970,990	)		(53,357	)
Income from Discontinued Operations, net of tax		25,236			87,309

Net Income (loss)		(7,945,754	)		33,952

Environmental Infrastructure Holdings Corp

Unaudited Consolidated Statements of Cash Flow

For the Years Ended December 31,

	2009			2008

Cash Flow from Operating Activities

Net income (loss)		(7,945,754	)		33,952
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		15,494			21,236
Impairment of goodwill		7,425,066
Amortization of debt discount		29,111			5,493
Net change in assets and liabilities
Accounts Receivable		197,470			469,979
Inventory		(11,491	)		(3,408	)
Prepaid expenses		(9,903	)
Assets and liabilities held for sale		-			(146,723	)
Other assets					4,666
Accounts payable		40,542			(313,093	)
Accrued expenses		(23,343	)		41,980

Net cash provided (used) in operating activities		(282,808	)		114,082

Cash Flow from Investing Activities
Reverse acquisition		79,033
Payments to acquire patents		(2,118	)
Capital expenditures		(1,200	)		(11,754	)

Net cash provided (used) in investing activities		75,715			(11,754	)

Cash Flow from Financing Activities
Conversion of convertible notes payable to equity		66,269
Spinoff of subsidiary to members		(121,166	)
Distributions to members		(162,904	)		(96,238	)
Net proceeds from (payments to) line of credit		9,242			56,111
Net proceeds from notes payable		62,020			(41,983	)
Proceeds from private offering of stock subscription		579,799

Net cash provided (used) in financing activities		433,260			(82,110	)

Increase (decrease) in cash and cash equivalents		226,168			20,218
Cash and cash equivalents, beginning of period		19,612			(606	)
Cash and cash equivalents, end of period		245,780			19,612

ENVIRONMENTAL INFRASTRUCTURE HOLDINGS CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2009 and 2008

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ENTITY AND ORGANIZATION

Reorganization

Environmental Infrastructure Holdings Corp. (“EIHC or “the Company”) was incorporated as Equisol, LLC on January, 2004. In December 2009, Equisol was acquired by EIHC, which was the product of a reorganization as a holding company structure whereby the operating company XIOM Corp. became a direct wholly owned subsidiary of the Company and the Company changed its name to Environmental Infrastructure Holdings Corp. EIHC issued 18,563,693 shares to the owners of Equisol, LLC and committed to issue 7,751,609 additional shares so that the owners of Equisol, LLC would own 40% of the fully diluted shares of EIHC. Because outstanding shares were 23,247,407 at the time of the acquisition, the sellers received the equivalent of 53% of the outstanding shares of EIHC. In addition, the most of the board members and management of EIHC resigned at the time of the acquisition. Accordingly, the acquisition was accounted for as a reverse merger of EIHC into Equisol. Results of operations prior to the merger presented in these financial statements are those of Equisol, LLC. Equisol’s equity prior to the merger has been retroactively restated for the equivalent number of shares received in the merger. As part of the merger agreement, Equisol spun off to its members a wholly-owned subsidiary as of December 7, 2009. As a result, this subsidiary has been accounted for as a discontinued operation in the comparative financial statements. Also, in connection with the merger, the Company’s fiscal year end was changed from September 30th to December 31st.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

Revenue from product sales is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed or determinable, (3) collectibility is reasonably assured, and (4) delivery has occurred. Persuasive evidence of an arrangement and fixed price criteria are satisfied through sales orders. Collectibility criteria is satisfied through credit approvals. Delivery criteria is satisfied when the products are shipped to a customer and title, and risk of loss, pass to the customer in accordance with the terms of sale. The Company has no obligation to accept the return of products sold other than for replacement of damaged products. Other than quantity price discounts negotiated with customers prior to billing and delivery (which are reflected as a reduction in sales), the Company does not offer any sales incentives or other rebate arrangements to customers

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 water treatment systems and thermal spray coating systems and is valued at the lower of cost (first-in, first-out) or market.

PROPERTY, EQUIPMENT AND DEPRECIATION

EQUITY INVESTMENTS

Equity investments of 20% to 50% ownership are accounted for using the Equity Method of accounting. Equity investments of less than 20% ownership are accounted for using the Cost Method of accounting and equity investments of greater than 50% ownership are consolidated with the financials of the Company, as appropriate.

EARNINGS (LOSS) PER SHARE

The Company follows Financial Accounting Standards Board Accounting Standards Compilation (“ASC”) topic 260, “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 records the tax effects of all transactions that have been reported in its financial statements. This includes tax effects that are taxable or deductible in the current reporting period, as well as tax effects that will lead to taxable income or tax deductions in future periods. Income taxes are accounted for using the asset/liability method. At each balance-sheet date, a current tax asset or liability is recorded, representing income taxes currently refundable or payable. Deferred tax assets and liabilities are also recorded, representing the tax effects of temporary book-tax differences, which will become payable or refundable in future periods. Deferred tax assets arise principally from net operating losses and capital losses available for carryforward against future years’ taxable income.Under the asset/liability method, the income tax provision is the result of the change in these current and deferred tax accounts from period to period, plus or minus tax payments made or refunds received during the year. A valuation allowance is recognized against deferred tax assets if, based on the weight of available evidence, it is more likely than not (i.e., greater than 50% probability) that some portion or all of the deferred tax asset will not be realized.

FOREIGN CURRENCY TRANSLATION

For any 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 December 31, 2009 and 2008, all foreign sales were transacted in U.S. dollars.

SHARE BASED PAYMENTS

Share based payments are made primarily to employees, outside consultants and other professional service providers, from time to time, subject to current cash flow conditions and at the discretion of the Board of Directors. The compensation cost is determined based on the estimated fair value of the shares at the measurement date, which is the earlier of (a) the date at which a commitment for performance by the counterparty to earn the shares is reached (generally the contract date),or (b) the date at which the counterparty’s performance is complete. These compensation costs are capitalized as prepaid expenses and expensed over the remaining term of the respective contracts.

Common stock options granted to employees may be issued for past services from time to time, or for future service, at the discretion of the Board of Directors, and the value of each such option is recorded as compensation expense as of the grant date. The related excess tax benefit received upon the exercise of stock options has not been recognized because, in the opinion of management, it is more likely than not, that such tax benefit will not be utilized in the future. In addition, the Company may issue restricted stock, which vests either immediately or over a future service period.

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

Recently Adopted Accounting Pronouncements

As of December 31, 2009, the FASB has issued Accounting Standards Updates (ASU) through No. 2009-17. None of the ASUs have had an impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

2) INVENTORY

Inventory consisted of the following as of December 31, 2009 and 2008:

	2009		2008
Parts and supplies		267,775		161,413
Coating powders		77,204		-
Finished goods		6,509		-
Total Inventory		351,488		161,413

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 stock.

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) FIXED ASSETS

Fixed assets consisted of the following as of December 31, 2009 and 2008:

			2009			2008
	Useful
	Life -
	Years		Consolidated			Equisol
Machinery and equipment		5-10		181,596			62,869
Vehicles		3-5		56,998			64,496
Office Equipment		3-5		24,642
Furniture and Fixtures		5-7		17,952			5,522
Computer Software		5-7		27,861
Leasehold improvements		5-31.5		112,455
				421,504			132,887
Less accumulated depreciation and amortization				(244,650	)		(54,501	)

Net property and equipment				176,854			78,386

Fixed asset depreciation and amortization for the years ended December 31, 2009 and 2008 was $15,454 and $21,236, respectively.

4) INTANGIBLE ASSETS

Intangible assets consisted of the following as of December 31, 2009 and 2008:


	2009		2008

Goodwill		286,798		342,525
Patents pending related to the low temperature, low speed, thermal spray gun, control unit and powder feeder;		7,851		-
Retainage receivable	51,851		-
Security deposits		11,445		-
Intangible Assets	$	357,945	$	342,525

The patents pending and technology acquired are amortized using the straight-line method over their estimated economic life of seventeen (17) years.

During fiscal 2009 and earlier, 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 $7,851 in fiscal 2009.

5) RETAINAGE RECEIVABLE

Retainage receivable represents the cumulative amount held-back from each percentage-of-completion billing pursuant to long-term contracts. Such amounts will be paid to the Company upon the completion of each contract and final customer approval..

6) ACCRUED COMPENSATION

Accrued Compensation represents compensation that had been accrued for each of the two former officers of the Company and recognized as a liability in the acquisition.

7) NOTES PAYABLE

Short-term Notes Payable consisted of the following as of December 31, 2009 and 2008:

	2009		2008

Convertible notes due June 2007 through October 2010, net of unamortized discounts of $5,332 and $11,881 as of December 31, 2009 and 2008, respectively	$	269,859	$	308,304
Convertible notes due December 2009 through February
2010 with face values totaling $450,000 net of unamortized discounts totaling $8,184 as December 31, 2009		441,816
Convertible note due March 2010 with a face value of $500,000		500,000
Convertible notes due April 2012 with face values totaling $940,000		940,000
Auto finance loans, due 2009 through 2010		1,726		10,855
Premium finance notes, due 2010		8,707
Current portion of long-term debt		32,400		43,165
Total	$	2,194,508	$	362,324

Long-term notes payable consisted of the following at December 31, 2009 and 2008:

		2009				2008
SBA loan due 2016, interest payable at prime plus 2.75%		$	255,775			$	288,175

8) SALES TO MAJOR CUSTOMERS AND BY CUSTOMER GEOGRAPHIC AREA

For the fiscal year ended December 31, 2009 and 2008, the Company had xx major customers which accounted for xx% and xx% of total sales. These customers represented xx% and xx% of trade accounts receivable as of December 31, 2009 and 2008.

Substantially all sales for the years ended December 31, 2009 and 2008 were in the United States.

9) COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases office, manufacturing and warehouse space pursuant to a various leases that expires from May, 31 2010 to _____, 20xx for approximately $xxx per month. In addition, the Company leases a training and testing facility adjacent to its manufacturing space on a month-to-month basis for $1,300 per month. Rent expense for fiscal 2009 and 2008 was approximately $xx and $xx, respectively.

10) STOCK OPTIONS

In connection with the merger with Equisol, the Company agreed to honor the stock options outstanding at September 30, 2009. Those stock options totaled 6,186,500 shares, as follows:

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

2006		67,500	$	0.25	September 30, 2010
2006		214,000	$	0.50	February 28. 2011
2007		350,000	$	0.58	October 14, 2011
2007		250,000	$	0.42	July 5, 2012
2007		300,000	$	0.42	August 14, 2012
2007		30,000	$	1.25	August 30, 2012
2008		525,000	$	0.50	October 15, 2012
2008		300,000	$	1.05	February 19, 2013
2008		500,000	$	0.42	February 29, 2013
2009		1,500,000	$	0.25	February 27, 2014
2009		750,000	$	0.50	March 23, 2014
2009		500,000	$	0.75	March 23, 2014
2009		900,000	$	0.05	May 26, 2014

Total		6,186,500

11) INCOME TAXES

As of December 31, 2009, the Company had net operating and capital loss carryforwards of approximately $6,634,000, which expire at various dates through 2016.

Changes in the ownership of the Company that have occurred in the past or that could occur in the future may limit the future utilization of these net operating loss and capital loss carryforwards pursuant to federal and state tax statutes and regulations. The amount of such limitations, if any, have not been quantified by the Company.

At December 31, 2009 and 2008, 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.

12) 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. The Company 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 the Company 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 the Company 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. The Company 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.

13) 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 December 31, 2009, the Company has a total Stockholders’ Deficit of $2,833,868 and negative working capital. Additionally, the Company incurred a Net Loss of $7,911,682 for the years ended December 31, 2009. 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. The Company will continue seeking to raise money through a series of equity and debt transactions in 2010.

14) CHANGE OF FISCAL YEAR

In connection with the reverse merger for accounting purposes with Equisol, LLC, the Company changed its fiscal year. The Company previously reported its results of operations for the year ended September 30, 2009 on Form 10-K filed with the Securities and Exchange Commission on January 13, 2010.

For the three months ended December 31, 2009, the legal acquirer had the following results of operations:

Revenues	$	118,018
Cost of Revenues		117,438
Gross Profit		580
Selling, General & Administrative Expenses		371,319
Loss from Operations		(370,739	)
Interest Expense		317,184
Net Loss		(687,923	)

15) SUBSEQUENT EVENT

Nearly all of the Company’s short-term convertible notes are past their maturity date and have not been repaid. The Company has received demands for payment from some of the holders of Xiom’s debt, but does not have the funds to meet the demands for payment. Negotiations are continuing on the restructuring of the Company’s debt.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A(T). CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management of the Company is responsible for the preparation and integrity of the consolidated financial statements appearing in our annual report on Form 10-K. The financial statements were prepared in conformity with generally accepted accounting principles appropriate in the circumstances and, accordingly, include certain amounts based on our best judgments and estimates. Financial information in this annual report on Form 10-K is consistent with that in the financial statements.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 (“Exchange Act”). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements. Our internal control over financial reporting is supported by a program of reviews by management, written policies and guidelines, careful selection and training of qualified personnel, and a written Code of Business Conduct adopted by our Company’s Board of Directors, applicable to all Company Directors and all officers and employees of our Company and subsidiaries. Our internal control over financial reporting includes those policies and procedures that:

· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of EIHC;

· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of EIHC are being made only in accordance with authorizations of management and directors of EIHC; and

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of EIHC’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, including our then principal executive officer and principal financial officer, assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2008. In making this assessment, management used the criteria set forth by [the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment as further discussed in the following paragraph, management believes that the Company maintained ineffective internal control over financial reporting as of September 30, 2008.

Based on this evaluation, management and the officers of the company concluded that our disclosure controls and procedures needed improvement and were ineffective to ensure that information required to be disclosed by our company in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Commission rules and forms. Additionally, management and the chief executive officer/chief financial officer concluded that our company's disclosure controls and procedures needed improvement to ensure that the information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is accumulated and communicated to management and its chief executive officer/chief financial officer to allow timely decisions about required disclosure.

As a result, during the quarter ended December 31, 2008 we instituted additional levels of review and have retained the services of additional financial professionals with the requisite background and experience that will coordinate and be responsible for our disclosure controls and procedures.

Changes in Internal Controls over Financial Reporting

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

Item 9b. OTHER INFORMATION

None

Part III

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE.

The directors and officers of the Company are listed below with information about their respective backgrounds. Each Director is elected to serve a one year term, until the next annual meeting of the shareholders or until their successor is elected (or appointed) and qualified.

Effective as of December 7, 2009, the following individuals were elected to the Board of Directors of the Company:

Name	Age	Position
Michael D. Parrish	46	Chairman of the Board of Directors/CEO, President
Gregory N. Moore (1)	59	Director and Chairman of the Audit Committee of the Board of Directors
Andrew B. Mazzone(2)	68	Director
James W. Zimbler	44	Secretary/Director
Kurt M. Given	45	Treasurer/Director

Mr. Mazzone resigned as a director on February 26, 2010 and was replaced by James K. Weber, the president of the Company’s Xiom subsidiary.

(1)	Member of our Audit Committee.

Michael D. Parrish

In connection with the Acquisition, the Company entered into an Employment Agreement dated as of December 7, 2009 (the “Employment Agreement”) with Michael D. Parrish, the President and CEO of Equisol and a Seller under the Purchase Agreement. Under the terms of the Employment Agreement, Mr. Parrish will be employed as the President and CEO of the Company for an initial term of two (2) years, which term may be extended for an additional one-year. The initial term of employment commenced on the closing date of the Acquisition. Mr. Parrish will also serve as the Chairman of the Board of Directors of the Company. Mr. Parrish will have an annual base salary of $175, 000, and he is also eligible to receive discretionary performance bonuses.

Mr. Parrish has extensive operational and general management experience; his focus is on financial performance and strategic alliances. Mr. Parrish has over 24 years of leadership and finance experience in a variety of global firms. Prior to Equisol, Mr. Parrish held various executive positions in several General Electric Companies where he served in positions such as General Manager for global logistics and services for GE’s Water business, and, earlier, as Managing Director for GE Capital specializing in ecommerce, six sigma, and productivity of several of GE’s equipment management groups. Prior to GE, Mr. Parrish served for 14 years active duty in the U.S. Army where he held various leadership positions of increasing responsibility as an Army Aviator culminating as a member of the Army Acquisition Corps. Mr. Parrish has a Bachelor’s degree in Engineering from the U.S. Military Academy at West Point as well as a Masters Degree in Astronautical Engineering from Stanford University and an MBA with honors from the Wharton School at the University of Pennsylvania. He is the current President of the West Point Society of Philadelphia and serves on the boards of the USO of SE PA/NJ and the Delaware Valley Industrial Resources Council.

Gregory N. Moore

Gregory N. Moore, has over 25 years of senior management experience in major multi-national companies and extensive international experience in major worldwide markets. He served as the Senior Vice President and Controller of YUM! Brands, Inc. from 2003 to 2005. Prior thereto, Mr. Moore was the Vice President and General Auditor of Yum from 1997 to 2003. Before that, he was with PepsiCo, Inc. and held the position of Vice President and Controller of Taco Bell and Controller of PepsiCo Wines and Spirits International. Since retiring, he has been a frequent speaker and lecturer and currently sits on two boards: Texas Roadhouse, Inc. (NASDAQ) serving as Chairman of the Audit Committee and Nominating & Corporate Governance Committee, and as a member of the Compensation Committee; and 3 Day Blinds, a privately held company owned by two private equity firms, for which he chairs the Audit Committee.

James W. Zimbler

James W. Zimbler, has been a principal of Keystone Capital Resources, LLC, since its inception in March 2004. Keystone is involved as a consultant in the mergers and acquisitions of public companies and consulting for private companies that wish to access the public markets. Prior to becoming a founding member of Keystone, he was involved in consulting for capital raising, re-capitalization and mergers and acquisitions for various clients. Mr. Zimbler was one of the initial shareholders in Accountabilities, Inc., f/k/a Human Trans Services Holding Corp (“ACBT”). Mr. Zimbler has recently focused his energies in the field of turnarounds of small emerging private and public companies. He has served on the Board of Directors and/or Officer of several companies since 2000.

Kurt M. Given

Kurt M. Given, is responsible for the day-to-day business functions and operations of Equisol, including marketing, technology, and linking together sales, administration, and customer relationships. With 20 years of water treatment experience at GE Betz, he has held positions in engineering and management for both the chemical and feed equipment product lines. From 1999 to 2002, he was group Leader and Product Manager for the Equipment team, overseeing all activities including pricing, marketing, profitability, capital equipment, contracts and product management. He has a Bachelor of Science degree in Chemical Engineering from Pennsylvania State University and holds a patent for dust control foam generation.

Code of Ethics

Our board of directors had adopted a code of ethics applicable to persons at our company who are responsible for financial management. A copy of the code of ethics has been previously filed as an attachment to the Annual Report for September 30, 2007 as Exhibit 14.1.

Audit Committee and Audit Committee Financial Expert

Mr. Gregory Moore serves as our audit committee. Mr. Moore is an “audit committee financial expert,” as that term is defined in Item 401(e) of Regulation S-B promulgated under the Securities Act.

Section 16(A) Beneficial Ownership Reporting Compliance

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

Item 11. EXECUTIVE COMPENSATION

For the three months ended December 31, 2009, the Officers/Directors have not been compensated.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-equity Incentive Plan Compensation	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Michael D. Parrish, President, Chairman & CEO	2009 2008	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-

James K. Weber, President, XIOM Corp.	2009 2008	-0- -0-

Kurt M. Given, President, Equisol LLC	2009 2008	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-	-0- -0-

The following table details options granted to each executive officer in the last fiscal year ended September 30, 2009:

Outstanding Equity Awards at Fiscal Year-End

OPTION AWARDS
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options	Option Exercise Price ($)	Option Expiration Date
Michael D. Parrish, President, Chairman & CEO
Andrew B. Mazzone, President, XIOM Corp.
Kurt M. Given, President, Equisol LLC

All directors hold office until the next annual meeting of stockholders and the election and qualification of their successors. Each executive officer is elected annually by the Board of Directors to hold their respective office until the annual meeting of shareholders and until their successors is chosen and qualified.

Director and Officer Insurance:

The Company has directors and officers (“D & O”) liability insurance.

Stock Option Plan

The Company plans to submit an Equity Incentive Plan to a vote of shareholders during 2010.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information as of March 31, 2010 with respect to the beneficial ownership of the 44,422,309 outstanding shares of the Company's Common Stock by (i) each person known by the Company to beneficially own five percent or more of the outstanding shares; (ii) the Company's officers and directors; and (iii) the Company's officers and directors as a group. A person is deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within sixty (60) days.

			Percentage of
Identity of Shareholder	Number of Shares		Beneficial Ownership

Michael D. Parrish		9,388,580
200 Barr Harbor Drive, Ste 400
West Conshohocken, PA 19428
Chairman and CEO
Kurt M. Given		5,445,256
200 Barr Harbor Drive, Ste 400
West Conshohocken, PA 19428
Executive VP and Director
James W. Zimbler
165 Fernleaf Court
State College, PA 16801Director		650,000
All Officers and Directors as		15,483,836
A Group (5 Persons)

All Officers and Directors as

A Group (5 Persons)

* Less than 5%

(1)

Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of Common Stock that an individual or entity has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or entity, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person or entity shown in the table.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

Transactions Between Us and Our Affiliates

Director Independence

One of our current directors, Mr. Gregory Moore, is considered to be independent at this time.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Michael T. Studer, CPA, P.C. as our independent accountants, audited our financial statements for the year ending September 30, 2009, and performed reviews of our financial statements included in our Forms 10-Q during our fiscal year ended September 30, 2009.

Audit Fees: The aggregate fees we paid Michael T. Studer, CPA, P.C. during the fiscal years ended September 30, 2009 and 2008 for professional services for the audit of our financial statements and the review of financial statements included in our Forms 10-Q were $27,500 and $32,500, respectively.

Tax Fees: Michael T. Studer, CPA, P.C. did not provide or bill for, and was not paid for, any audit-related fees in the fiscal years ended December 31, 2009 and 2008.

All Other Fees: Michael T. Studer, CPA, P.C. did not provide or bill for, and was not paid for, any other services in the fiscal years ended December 31, 2009 and 2008.

The Company’s Board of Directors has annually reviewed and approved the engagement of the Company’s auditors and approved in advance the fee arrangements with regard to audit services and reviews of financial statements included in the Company’s Forms 10-Q, along with audit-related fees and tax fees. Substantially all such fees were approved in advance for 2009 and 2008.

PART IV

Item 15. EXHIBITS

Index to Exhibits:

SEC REFERENCE
NUMBER		TITLE OF DOCUMENT
31.1		Certification of President Officer pursuant to 18 U.S.C. Section 1350, as adopted, Pursuant to section 906 of the Sarbanes-Oxley act of 2002 (1)
32.1		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, Pursuant to section 906 of the Sarbanes-Oxley act of 2002 (1)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, XIOM CORP. has duly caused this Report to be signed on behalf of the undersigned thereunto duly authorized on April 15, 2010.

	ENVIRONMENTAL INFRASTRUCTURE HOLDINGS CORP.

	By:	/s/ Michael D. Parrish
		Michael D. Parrish, President, Chairman and CEO

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

Signature	Title	Date

/s/ Michael D. Parrish	President, Principal	April 15, 2010
Michael D. Parrish	Executive and Accounting Officer and Director

/s/ James K. Weber	Director	April 15, 2010
James K. Weber

/s/ Kurt M. Given	Director	April 15, 2010
Kurt M. Given

/s/ Gregory N. Moore	Director	April 15, 2010
Gregory N. Moore

/s/ James W. Zimbler	Director	April 15, 2010
James W. Zimbler

Environmental Infrastructure Holdings Corp Reports

Also read

Attached files

Stock widget

Investing forum