U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999Commission File No. 0-28375
RHOMBIC CORPORATION
(Name of small business issuer in its charter)
NEVADA 86-0824125
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 901, 1212 Howe Street, Vancouver, British Columbia V6Z 2M9
(Address of principal executive offices)
Issuer's telephone number: (604) 683-4864
EMERALD ACQUISITION CORPORATION
(Former name of issuer)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
(title of class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X ; No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best or registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year: $0
At March 24, 2000 there were 18,386,100 outstanding shares of registrant's
common stock held by non-affiliates, with a market value of $55,158,300
based on a closing bid quotation on the NASD OTC Bulletin Board on that date
of $3.00 per share.
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 and 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes ; No ___
Not applicable
At March 24, 2000, a total of 34,286,100 shares of registrant's common stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format (check one): Yes; No X
RHOMBIC CORPORATION
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Acquisition of Emerald Acquisition Corporation
Pursuant to an Agreement and Plan of Reorganization (the
"Acquisition Agreement") Rhombic Corporation ("Rhombic" or the "Company")
acquired all the outstanding shares of common stock of Emerald Acquisition
Corporation ("Emerald"), a Delaware corporation, from the shareholder
thereof in an exchange for an aggregate of 200,000 shares of common stock of
Rhombic (the "Acquisition"). As a result, Emerald became a wholly-owned
subsidiary of Rhombic. The Acquisition was effective on January 21, 2000
and is intended to qualify as a reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
Emerald was incorporated on March 24, 1999, under the laws of
the State of Delaware to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. It has
been in the developmental stage since its inception.
On December 3, 1999, Emerald voluntarily filed a registration
statement on Form 10-SB with the Securities and Exchange Commission to
become a reporting company under the Securities Exchange Act of 1934.
Emerald's Form 10-SB was declared effective by the Securities and Exchange
Commission on December 23, 1999.
The consideration exchanged pursuant to the Acquisition was
negotiated between Emerald and Rhombic. In evaluating the Acquisition,
Emerald used criteria such as the value of assets of Rhombic, Rhombic's
ability to recognize merchantability of a technology or invention, Rhombic's
ability to compete in the technology transfer markets, the unique nature of
Rhombic's products and developing technologies, Rhombic's anticipated
business operations, and Rhombic's management's experience and reputation in
the technology transfer market. In evaluating Emerald, Rhombic placed a
primary emphasis on Emerald's status as a reporting company under Section
12(g) of the Securities Exchange Act of 1934 and Emerald's facilitation of
Rhombic's becoming a reporting company under the Act.
Prior to the Acquisition, Rhombic had 33,741,100 shares of
common stock issued and outstanding and it had 33,941,100 shares issued and
outstanding following the Acquisition.
Upon effectiveness of the Acquisition, pursuant to Rule
12g-3(a) of the General Rules and Regulations of the Securities and Exchange
Commission, Rhombic became the successor issuer to Emerald.
Rhombic has filed a Current Report Form 8-K, with amendment,
describing the Acquisition and containing its audited financial statements.
EMERALD ACQUISITION CORPORATION
At December 31, 1999, Emerald had no operating history and no
revenues nor earnings from operations. Emerald had no significant assets
or financial resources. The sole shareholder of Emerald agreed to pay all
its expenses until it effected a business combination without expectation of
repayment by Emerald.
In 1999, Emerald sought to locate and negotiate with a business
entity for the combination of that target company with it. Emerald was
formed to provide a method for a foreign or domestic private company to
become a reporting ("public") company with a class of registered securities.
Emerald negotiated and consummated the Acquisition by Rhombic in January,
2000.
RHOMBIC CORPORATION
Rhombic Corporation was incorporated under the laws of the State of
Nevada on February 26, 1987, as the predecessor company which was acquired
by Rhombic Corporation on November 24, 1994. Rhombic is currently
headquartered in Vancouver, British Columbia, Canada.
Rhombic is in the development stage and its efforts, since
inception, have been primarily focused on research and development of its
portfolio of acquired technologies. The Company's main objective is to
research and develop both its own and acquired technologies in order to make
them commercially marketable and capitalize on their commercial
applications. Rhombic contracts its development work with the University of
Missouri or joint venture partners. Other non-contract development work,
such as the Rhombic Explorer, is being funded by Rhombic.
Rhombic has three wholly owned subsidiaries, Rockford Technology
Associates, Inc. ("Rockford"), Nanophase Diamond Technologies, Inc.
("Nanophase") and Emerald Acquisition Corporation.
By assignment from the University of Illinois of September 5, 1995
filed with the Patent and Trademark Office, Rockford owns a patent for the
Inertial Electrostatic Confinement and Neutron Monitor technology. On June
27, 1996, Rockford entered a licensing agreement with Daimler Benz Aerospace
and the University of Illinois by which it is entitled to receive a long
term royalty on all Inertial Electrostatic Confinement ("IEC") technology
sales throughout the world, including North America, and may engage in
direct marketing of the technology in North America without restriction. In
return, Rockford assigned to Daimler Benz Aerospace its right, title and
interest to the Inertial Electrostatic Confinement technology for
development and commercialization by Daimler Benz Aerospace.
Nanophase owns the Diamond Film Forced Diffusion technology.
As a technology transfer and development start-up company, Rhombic
has limited finances and requires additional funding in order to accomplish
its growth objectives and development of products and marketing of its
technologies. There is no assurance that Rhombic will be able to secure any
or all funding necessary for such growth and expansion. There is also no
assurance that even if Rhombic obtains adequate funding to complete any
contemplated acquisition, such acquisition will succeed in enhancing
Rhombic's business and will not ultimately have an adverse effect on
Rhombic's business and operations.
Rhombic intends to make future acquisitions of commercially
promising technologies that fit Rhombic's general technology acquisition
criteria. However, as of the date of this filing, Rhombic does not have a
fixed source of capital to finance such acquisitions. Rhombic intends to
accomplish its acquisition plans by exchange of its stock. There is no
assurance that Rhombic will be able to arrange for such acquisitions or as
to the trading price or liquidity of its stock. Low trading price or poor
liquidity of Rhombic's common stock may adversely affect Rhombic's ability
to engage in future acquisitions and to accomplish its growth objectives.
TECHNOLOGIES
Rhombic's current portfolio of technologies includes (1) Inertial
Electrostatic Confinement and Neutron Monitor, (2) Diamond Film Forced
Diffusion, (3) Nuclide Battery, (4) Diamond-reinforced Flywheel Battery, (5)
Disperse Composite Material, (6) Active Engine ("Rhombic Explorer"), (7)
Ultra Violet (Excimer) Lamp, and (8) FaxKey technology. All of these
technologies have been acquired by Rhombic in exchange for shares of its
common stock from different parties including research companies and
individual inventors throughout the world. In certain cases, as part of the
acquisition of the technology, Rhombic has agreed to pay royalty fees based
on sales, when and if any such sales occur.
These technologies are in the development phase. Rhombic has a
license agreement for development of the Inertial Electrostatic Confinement
technology but Rhombic is seeking joint venture partners or others to effect
commercialization of its other technologies. There is no assurance that
Company will be able to locate a joint venturer to develop any or all of
these technologies. In addition, there is no assurance that even if a joint
venture partner is found that any of these technologies will ever result in
marketable or viable products.
1. Inertial Electrostatic Confinement ("IEC"). The IEC device is a
large, negatively charged grid ionizing the gas inside a spherical vacuum
chamber. The positive ions produced by this plasma are attracted toward the
central cathode (negative electrode). Since the grid is mostly transparent,
most of the ions will pass through the grid toward the center of the device,
rather than collide with the grid. At the center, many of the ions will
collide with each other. If the gas consists of fusionable fuels (tritium,
deuterium, helium-3), then some of the collisions will result in fusion and
release of energy. Increasing the number of fusion reactions would increase
the energy output of a fusion reactor, or would increase the number of
valuable fusion products produced (neutrons, helium-3). Potentially the IEC
device may become a source of energy. Currently, however, the IEC device
does not produce as much energy as is used to operate it.
A related device utilizing the principle described above is Neutron
Monitoring detector. This device monitors the speed and frequency of passing
neutrons to assess the quality of alloy. Some practical applications of
this technology may include detection of impurities in high quality alloys,
mineral quality analysis in coal, cement and similar industries, detection
contraband at airports, bus stops, train stations, and detection of
nonmetallic antipersonnel land mines.
2. Diamond Film Forced Diffusion. Rhombic's negative type diamond
technology, referred to as "Forced Diffusion," has been successfully created
in a former Soviet Republic laboratory to create functional integrated
circuits. This technology consists of diffusing different elements into
diamond film, producing diamond with electronic properties greatly superior
to those of silicon, the material currently used for computer chips. This
technology allows for the exponential decrease of the space required for a
computer microchip. Such diamond film is considerably more heat and
radiation resistant extending the life of the electronic circuitry. Harder
cutting tools and abrasives, diamond televison and computer monitor screens,
sensor, bearing and radar screens are among a number of potential commercial
applications of this technology.
3. The Nuclide Battery. The nuclide battery produces energy from
the breakdown of unstable isotopes of a number of basic elements such as
krypton, strontium, and cesium. The battery's intended purpose is to provide
a generation of constant energy for both manned and unmanned space flights.
4. Diamond-reinforced Flywheel Battery. The diamond-reinforced
flywheel battery operates on a principle of using diamond layers instead of
carbon filters to increase the power density of electro-mechanical energy
storage for batteries used in automobiles or other storage systems. This
concept is based on the rupture stress measure for present polycrystalline
diamond. An increase in storage capacity may result in the development of a
satisfactory method for storing large amounts of electrical energy both for
portable applications, such as automobiles and satellites, and fixed
appliances, such as electric power load leveling from the individual house
to the utility level.
5. Disperse Composite Material. The manufacturing of extremely fine
dispersed materials with a homogeneous interior and an additional coating
which utilizes plasma processing of high efficiency. Plasma deposition
consists of filling a working chamber with a plasma producing gas which is
excited to plasma, and injecting of the dispersed (dusty) base material as
well as the one or other components of the coating material being in the gas
or vapor phase. A special application of this method and apparatus is the
manufacturing of coatings which leads to a conversion of long lived radio
nuclides (mostly from nuclear reactors) into stable nuclides or the
elimination of plutonium by transmutation into uranium. The material added
to the plasma for production the coatings (on glass or similar carrier
materials) is then one or in a sequence further mentioned host metals as
well as charges of the long time radio nuclides for transmutation,
preferably into the surfaces or in interfaces. Applications of this
technology may include semiconductor and microchip industries, as well as
consumer electronics, high-tech navigational tools, etc.
6. Active Engine ("Rhombic Explorer"). This technology consists of
an Internet browser, developed by Peter Weicker, of British Columbia,
Canada. The advantages of this Internet browser include automated and
quick-paced Web searching. The search engine supports nested statements and
boolean logical operations which will enable users to construct search
statements of large size and complexity while searching the Web.
7. Ultra Violet (Excimer) lamp. This device consists of a
microwave-driven ultra violet light source and solid-state laser. This laser
provides an efficient, compact and tunable solid-state laser. The laser has
the capability of illumination at varying wavelengths. Excimer lamps can be
used for dry cleaning and etching in the production of semiconductors. It is
also suitable for effective ozone production. The shorter the wavelength,
the higher the energy it can generate. Potential applications of this
technology include greenhouse plant light as well as curing semiconductor
wafer boards.
8. FaxKey technology. This technology consists of a combination
of hardware and software device that offers a high level of security in
sending and receiving facsimile messages. By the insertion of a personal
key, only the intended recipient may retrieve the faxed message.
MARKETING
Rhombic's primary business focus is placed upon the
commercialization of advanced technologies and commercial products resulting
therefrom. Rhombic anticipates that microchip, computer, satellite and space
industries will be the primary markets for Rhombic's products and
technologies. Rhombic has limited experience in marketing of products and
services in these fields and intends to rely on licensing and joint venture
opportunities with multinational companies for the marketing and sale of its
technologies. Rhombic also has little experience marketing products of a
consumer nature. There is no assurance that Rhombic will be successful in
developing a market for any of its products or that it will gain any market
recognition and acceptance.
TRADEMARKS AND PATENTS
Rhombic has spent a total of $53,980 in patent procurement costs for
its technologies with $11,507 and $31,373 spent in 1998 and 1999,
respectively. Rhombic has filed patent applications in several
jurisdictions including Canada, Japan, Korea, and the United States.
Currently, through Nanophase, Rhombic holds a patent to the "Forced
Diffusion" technology, United States Patent No. 5,597,762 granted on January
28, 1997. As part of the licensing agreement with Daimler Benz Aerospace,
Rockford transferred its patent to the IEC technology. All other patent
applications filed by Rhombic are pending approval. There is no assurance
that any of these patents will be granted or if granted that Rhombic will be
able to defend against any infringement of such patents.
EMPLOYEES
Neither Emerald nor Rhombic currently have any employees.
ITEM 2. DESCRIPTION OF PROPERTY
As Rhombic is not producing any products at present, it has no lease
or physical facilities commitments. Rhombic's executive office in Vancouver,
British Columbia, Canada, is provided by Owen & Associates on a
month-to-month basis. The monthly rent for this executive space is included
in CN$7,500 monthly payment to Owen & Associates.
On June 21, 1999, Rhombic accepted a proposal from the University of
Missouri to use its laboratory facilities, technical equipment and personnel
to develop selected projects using Rhombic's "Forced Diffusion" technology.
ITEM 3. LEGAL PROCEEDINGS
Rhombic Corporation
There is no current outstanding litigation in which Rhombic is
involved and Rhombic is unaware of any pending actions or claims against it.
During November 1999, Rhombic settled a two year dispute with the
management of Rockford Technology Associates, Inc. ("Rockford"). Rhombic
asserted that the management of Rockford was selling the shares of Rhombic
that Rockford owned in violation of Rule 144 and were not using the proceeds
for the benefit of Rockford. The dispute was settled by Rhombic purchasing
2,900,000 Rockford shares for $300,000 and taking over control of the Board
of Directors of Rockford.
Emerald Acquisition Corporation
There is no current outstanding litigation in which Emerald is
involved and Emerald is unaware of any pending actions or claims against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During 1999, there were no actions brought before the security
holders of Emerald Acquisition Corporation.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(A) GENERAL. As of December 31, 2000 there was no trading
market for the Emerald common stock. Emerald has an authorized
capitalization of 100,000,000 shares of common stock of which 5,000,000 were
issued as of December 31, 1999 and 20,000,000 shares of preferred stock of
which none were issued.
Rhombic has an authorized capitalization of 70,000,000 shares
of Common Stock, $.001 par value per share, of which 34,286,100 shares were
issued and outstanding as of March 24, 2000, and 1,000,000 shares of
Preferred Stock, $.001 par value per share, of which no shares are issued
and outstanding. Rhombic has no outstanding debt.
(b) MARKET INFORMATION. Rhombic had been a non-reporting
publicly traded company with certain of its securities exempt from
registration under the Securities Act of 1933. Rhombic's common stock is
traded on the NASD OTC Bulletin Board under the symbol NUKE. The Nasdaq
Stock Market implemented a change in its rules requiring all companies
trading securities on the NASD OTC Bulletin Board to become reporting
companies under the Securities Exchange Act of 1934. Rhombic acquired all
the outstanding shares of Emerald to become successor issuer to it pursuant
to Rule 12g-3 in order to comply with the Eligibility Rule for the OTC
Bulletin Board.
The following table sets forth the range of high and low bid
quotes of Rhombic's Common Stock per calendar quarter as provided by the
National Quotation Bureau, Inc. (which reflect inter-dealer prices without
retail mark-up, mark-down or commission and may not necessarily represent
actual transactions).
1999 Low High
Fourth quarter .360 5.125
Third quarter .410 .900
Second quarter .290 1.140
First quarter .009 .760
1998 Low High
Fourth quarter .009 .310
Third quarter .120 .875
Second quarter .300 1.750
First quarter .140 .320
On March 10, 2000 Rhombic's common shares began trading on the
Hamburg Stock Exchange in Hamburg, Germany under the symbol "919335".
HOLDERS
As of March 24, 2000, Rhombic had 34,286,100 shares of common
stock outstanding held by 156 shareholders of record. Rhombic estimates
there to be over 400 additional individual shareholders holding their
certificates in street name form.
DIVIDENDS
Neither Rhombic nor Emerald have ever declared or paid cash
dividends on their common stock. Rhombic anticipates that future earnings,
if any, will be retained for development of its business. Payment of cash
dividends in the future will be wholly dependent upon Rhombic's earnings,
financial condition, capital requirements and other factors deemed relevant
by it. It is not likely that cash dividends will be paid in the foreseeable
future.
RECENT SALES OF UNREGISTERED SECURITIES
Emerald has not issued any securities other than those reported
on its registration statement on Form 10-SB as filed with the Securities and
Exchange Commission on December 3, 1999.
The following information is given with respect to all
unregistered securities sold by Rhombic within the past three years:
(i) During 1997, the Company issued 160,000 shares of its
common stock to eight persons for services valued by the Company at $
32,000. Of the eight persons, one received 100,000 shares for providing
financial and accounting services to the Company and maintained its books
and records from inception through December 31, 1997. A second person was a
Canadian company that received 6,000 common shares valued at $ 1,200 for
setting up an internet site for the Company. The remaining six persons, five
of which received 10,000 shares each and one who received 4,000 shares
during October 1997, had substantial experience in evaluating technologies
under development for commercial application. The issuance of the
securities was exempt from registration pursuant to Section 4(2) of the
Securities Act and/or Rule 506 adopted thereunder.
(ii) On July 16, 1997, the Company acquired the rights to the
Flywheel Battery technology by issuing 350,000 common shares valued at
$70,000 to a group consisting of four scientists. The issuance of the
securities to the group was exempt under Section 4(2) of the Securities Act.
(iii) During 1998, the Company issued 985,666 shares of its
common stock to ten persons for services valued by the Company in
relationship to its trading market at $ 394,372. Of the ten persons, two
received a total of 56,666 shares valued at $ 26,013 for providing for
providing financial and accounting services during the year. A third person
received 150,000 common shares valued at $ 34,089 as a finders fee for
introducing the Nuclide Battery technology to the Company. The fourth person
was a Canadian attorney that received 20,000 shares valued at $ 4,540 for
assisting the Company in a settlement with Rockford which was based in
Calgary, Alberta. A fifth person, was also the Secretary of the Company and
received 100,000 shares valued at $ 22,700 for his services during the year.
The sixth person received 100,000 common shares valued at $ 22,700 for
evaluating the commercial feasibility of numerous applications of the
technologies of the Company. The remaining four persons received 559,000
common shares valued at $ 284,330 for reimbursement of expenses and investor
relation services. The issuance of the securities was exempt from
registration pursuant to Section 4(2) of the Securities Act and/or Rule 506
adopted thereunder.
(iv) On September 14, 1998, the Company acquired the rights to
the Nuclide Battery technology by issuing 350,000 common shares to a group
consisting of eight scientists and their representative valued at $ 175,000.
The issuance of the securities to the group was exempt under Section 4(2) of
the Securities Act.
(v) During 1998, the Company issued 2,665,834 common shares to
18 non-U.S. citizens and two U.S. citizens for $ 399,875 in cash at $.15 per
share in a private transaction. The Company's President, William Owen and
Chairman John R. Krushnisky participated in the private placement and each
purchased 100,000 shares for $15,000, totaling 200,000 shares for $ 30,000.
The issuance of the securities was exempt from registration under Rule 504
adopted under Regulation D of the Securities Act. A Form D was filed by the
Company.
(vi) During 1999 the Company issued 280,000 shares of its
common stock to four persons for services valued by the Company in
relationship to its trading market at $ 104,025. Of the four persons, one
received 50,000 shares valued at $ 18,500 for providing financial and
accounting services to the Company during the year. A second person received
50,000 shares valued at $ 18,500 in accordance with an agreement to provide
software programming services for the Rhombic Explorer technology, which was
owned by Rhombic. The remaining two persons received 180,000 shares valued
at $ 67,025 for investor relation services. The issuance of the securities
was exempt from registration pursuant to Section 4(2) of the Securities Act
and/or Rule 506 adopted thereunder.
(vii) During 1999, the Company acquired the rights to two
technologies by issuing at total of 840,000 shares at a value of $ 636,150.
On June 11, 1999 it issued 640,000 shares at a value of $ 510,150 for the
Disperse Composite Material technology. The shares were issued to ten
scientists and their business representative. On September 8, 1999 the
Company issued 200,000 shares to one scientist at a value of $ 126,000 for
the Neutron Monitor Detection technology. The issuance of the securities to
the group was exempt under Section 4(2) of the Securities Act.
(viii) During January 1999, the Company received $ 731,000 in
cash and subsequently issued 3,705,000 common shares to five non-U.S.
citizens and one U.S. citizen in a private transaction. The Company's
President, William Owen purchased 100,000 shares for $ 15,000 and the
Company's Chairman John R. Krushnisky purchased 500,000 shares for $ 95,000.
No advertising or general solicitation was employed in offering the shares.
The issuance of the securities to the U.S. citizen was exempt from
registration under Rule 504 adopted under Regulation D of the Securities
Act. A Form D was filed by the Company. The issuance of the securities to
the five non-U.S. citizens was exempt from Registration pursuant to
Regulation S adopted under the Securities Act.
(ix) On January 1, 1999 the Company established a stock option
plan for 2,969,000 shares at exercise prices ranging from $.25 to $.75 per
share. During 1999 the Company received $ 699,500 from the exercise of
options and issued 2,774,000 shares. As of March 24, 2000 the Company had
received $107,250 from the exercise of options and issued 195,000 shares
during the year 2000. The issuance of the securities to all optionees that
exercised their options was exempt under Section 4(2) of the Securities Act.
ITEM 6. PLAN OF OPERATION
At December 31, 1999, Emerald had no operating history,
revenues, earnings from operations, significant assets or financial
resources. The sole shareholder of Emerald agreed to pay all expenses
without expectation of repayment incurred by Emerald until it effected a
business combination.
The following discussion provides an analysis of the plan of
operation during the next quarter and the balance of the fiscal year for
Rhombic Corporation. Certain matters discussed below are based on potential
future circumstances and developments, which the Company anticipates, but
which cannot be assured. Such forward-looking statements include, but are
not limited to, plans to conduct research and development within the Company
and in conjunction with joint venture partners.
CURRENT OPERATIONS
The competition in the technology proliferation and transfer market
is highly intense and is based on product and technology recognition and
acceptance, novelty and marketability of an invention, price, and sales
expertise. Rhombic has placed its primary emphasis on product development,
dependability and commercial viability of its acquired technologies.
Management is currently determining the expenses involved to develop its
existing technologies into commercial applications. None of the
technologies have been developed to commercialization. To date, the Company
has not generated any revenues from any of its acquired technologies and is
currently operating at a loss. Rhombic is not able to determine an
approximate date for commercialization at this time. No assurances can be
given that any of the Company's technologies will ever be developed to a
point of usefulness or, if developed, that any will be commercially feasible.
For the twelve months ended December 31, 1997, Rhombic did not
incur any development costs. For the twelve months ended December 31, 1998,
Daimler Benz Aerospace continued developing the IEC technology at no cost to
the Company during the year. The Company spent $11,682 in developing the
"Active Engine " technology and was credited $10,000 against those expenses
by a joint venture partner that forfeited its interest in the development
due to its inability to continue paying its share.
The Company requires additional funding to achieve its growth
objectives. If the Company does not receive additional funding, it will not
be able to pursue the intended marketing plan and, in such case, may not be
able to successfully conduct its operations. There is no assurance that the
Company will be successful in marketing any of its technologies or in
generating any meaningful revenues from operations.
The Company acquired the Nuclide Battery Technology in
September 1998 for 350,000 common shares at a deemed value of $ 175,000. No
development work was done on the Nuclide Battery Technology during 1998.
Rhombic acquired additional technologies during 1999 in
exchange for its common shares. It acquired the Disperse Composite Material
for common shares valued at $510,150 and the Neutron Monitoring Detector for
common shares valued at $126,000.
Rhombic incurred $98,721 and $ 63,310 in legal expenses during
1998 and 1999, respectively. The expenses were incurred as a result of
Rhombic's assertive action against Rockford. During 1998, Rhombic sold a
significant amount of its Rhombic common shares into the marketplace.
Rhombic considered Rockford to be an affiliate and believed that the amount
of Rhombic shares being sold was in excess of the allowable limit for
affiliates during each fiscal quarter of 1998 and 1999. In November 1999,
Rhombic settled its dispute with Rockford by purchasing 2,900,000 shares of
Rockford, which amounted to approximately 15.5% of Rockford after the
purchase, for approximately $ 208,000. The settlement also provided for the
resignation of the Rockford officers instrumental in having sold the Rhombic
shares. Rhombic does not control the board of directors of Rockford
although three of Rhombic's directors currently sit on the seven member
board of directors of Rockford.
The Company paid $352,728 and $114,746 for consulting expenses
during 1998 and 1999, respectively. The consulting expenses were for
investor relations services, technology feasibility studies and project
budget analysis. The decrease in expenditures during 1999 was primarily due
to the reduction in investor relation services. The Company was able to
obtain more economical service by contracting with a couple organizations
rather than numerous individuals in various locations throughout the world.
General and Administrative expenses were $90,673 and $88,206
during 1998 and 1999, respectively. The expenditures were primarily for
providing information to shareholders and coordinating research activity.
Rhombic paid Owen & Associates $90,000 during 1998 and $90,000 during 1999
for providing rent, basic telephone service and compensation to William Owen
for serving as the President of Rhombic.
For the twelve months ended December 31, 1999, Daimler Benz
Aerospace continued research on the IEC Technology for development
applications at no cost to the Company. Rhombic spent $41,373 in developing
the "Active Engine" technology during 1999. Development on the Active Engine
progressed to the point of estimating a working prototype model during the
year 2000.
During 1999, the Company paid $48,500 to the University of
Illinois for work on the IEC Technology and research on projects that could
have application to that technology. The Company concluded that there were
no continuing benefits to be derived from the expenditure.
During 1999, the Company paid the University of Missouri
$90,100 and independent laboratories $9,200 for research and development on
six work programs to develop applications on the "Forced Diffusion"
technology. Work is continuing into the year 2000 and reports are expected
later in the year 2000.
At December 31, 1999 the Company had approximately $ 57,000 in
cash and $19,000 in receivables and at March 24, 2000, it had approximately
$456,431 in cash and $3,218 in receivables, compared to approximately $4,660
in cash and $58,611 in receivables at December 31, 1998.
During 1998 and 1999, the Company raised $ 399,875 and $
731,000 and issued 2,665,834 and 3,705,000 common shares, respectively. The
Company also received $ 699,500 and issued 2,774,000 shares from the
exercise of stock options during 1999. During the year 2000 through March
24, 2000, the Company had received $ 107,250 and issued 195,000 common
shares from the exercise of additional stock options.
The Company does not plan to acquire additional technologies
during the year 2000. It intends to use its resources to research and
develop applications for its diamond technologies and Nuclid Battery
Technology.
Rhombic engaged a non-profit organization during 1999 to
evaluate the commercial feasibility of its battery technologies. The Company
believes that the satellite industry is seeking battery technology because
of its durability in ultra violet light and extensive power life.
Rhombic's Board of Directors approved a stock option plan for
the year 2000 to issue options on 2,500,000 shares of common stock at $2.50
per share with expirations ranging from December 31, 2000 to December 31,
2001. In addition there is an option to a scientist to purchase 100,000
shares at $1.00 per share expiring December 31, 2000. In the event all of
the options were exercised during the year 2000, the Company would receive $
6,350,000 and issue 2,600,000 common shares. There is no assurance or
indication that any or all of these options will be exercised.
Rhombic has not received any revenues to date and is operating at a
loss. It will need to raise additional capital through the placement of
its securities or from debt or equity financing. If it is not able to
raise such financing or obtain alternative sources of funding, management
will be required to curtail operations. There is no assurance that the
Company will be able to continue to operate if additional sales of its
securities cannot be generated or other sources of financing located.
Rhombic does not have any employees and instead uses
consultants for matters pertaining to technology evaluations, administrative
functions and investor relations. The Company does not presently contemplate
hiring employees during the next 12 months.
ITEM 7. FINANCIAL STATEMENTS
The audited financial statements for Emerald Acquisition
Corporation as December 31, 1999 are included herewith.
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - BALANCE SHEET AS OF DECEMBER 31, 1999
PAGE 3 - STATEMENT OF OPERATIONS FOR THE PERIOD
FROM MARCH 24, 1999 (INCEPTION) TO DECEMBER 31, 1999
PAGE 4 - STATEMENT OF CHANGES IN STOCKHOLDER'S
EQUITY FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
PAGE 5 - STATEMENT OF CASH FLOWS FOR THE PERIOD FROM
MARCH 24, 1999 (INCEPTION) TO DECEMBER 31, 1999
PAGES 6 9 - NOTES TO FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1999
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Emerald Acquisition Corporation
(A Development Stage Company)
We have audited the accompanying balance sheet of Emerald Acquisition
Corporation (a development stage company) as of December 31, 1999 and the
related statements of operations, changes in stockholder's equity and cash
flows for the period from March 24, 1999 (inception) to December 31, 1999.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in
all material respects, the financial position of Emerald Acquisition
Corporation (a development stage company) as of December 31, 1999, and the
results of its operations and its cash flows for the period from March 24,
1999 (inception) to December 31, 1999 in conformity with generally accepted
accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
March 27, 2000
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 1999
ASSETS
Cash $ 500
TOTAL ASSETS $ 500
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES $ -
STOCKHOLDER'S EQUITY
Preferred Stock, $.0001 par value, 20 million
shares authorized, zero issued and outstanding -
Common Stock, $.0001 par value, 100 million
shares authorized, 5,000,000 issued
and outstanding 500
Additional paid-in capital 1,330
Deficit accumulated during development stage (1,330)
Total Stockholder's Equity 500
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 500
See accompanying notes to financial statements.
2
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
Income $ -
Expenses
Organization expense 580
Professional fees 750
Total expenses 1,330
NET LOSS $ (1,330)
See accompanying notes to financial statements.
3
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN
STOCKHOLDER'S EQUITY
FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
Deficit
Additional Accumulated
Common Paid-In During Devel-
Stock Capital opment Stage Total
Common stock issuance 500 $ - $ - $ 500
Fair value of
expenses contributed - 1,330 - 1,330
Net loss for the period
ended December 31, 1999 - - (1,330) (1,330)
BALANCE AT DECEMBER 31,
1999 $ 500 $ 1,330 $ (1,330) $ 500
See accompanying notes to financial statements.
4
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (1,330)
Adjustment to reconcile net loss
to net cash used by operating activities:
Capitalized expenses 1,330
Net cash used in operating activities -
CASH FLOWS FROM INVESTING ACTIVITIES -
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 500
Net cash provided by financing activities 500
INCREASE IN CASH AND CASH EQUIVALENTS 500
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 500
See accompanying notes to financial statements.
5
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Emerald Acquisition Corporation (a development stage company) ("the
Company") was incorporated in Delaware on March 24, 1999 to serve
as a vehicle to effect a merger, exchange of capital stock, asset
acquisition or other business combination with a domestic or
foreign private business. At December 31, 1999, the Company had not
yet commenced any formal business operations, and all activity to
date relates to the Company's formation and proposed fund raising.
The Company's fiscal year end is December 31.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective target business and raise the
capital it will require through the issuance of equity securities,
debt securities, bank borrowings or a combination thereof. (See
Note 5)
B. Use of Estimates
The preparation of the 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.
C. Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid investments purchased with an original maturity
of three months or less to be cash equivalents.
6
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
D. Income Taxes
The Company accounts for income taxes under the Financial
Accounting Standards Board of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("Statement 109"). Under
Statement 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date. There were no current or deferred income tax
expense or benefits due to the Company not having any material
operations for the period ending December 31, 1999.
NOTE 2 - STOCKHOLDER'S EQUITY
A. Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred
stock at $.0001 par value, with such designations, voting and other
rights and preferences as may be determined from time to time by
the Board of Directors.
B. Common Stock
The Company is authorized to issue 100,000,000 shares of common
stock at $.0001 par value. The Company issued 5,000,000 shares of
its common stock to TPG Capital Corporation ("TPG") pursuant to
Rule 506 for an aggregate consideration of $500.
7
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
NOTE 2 - STOCKHOLDER'S EQUITY - (CONT'D)
C. Additional Paid-In Capital
Additional paid-in capital at December 31, 1999 represents the fair
value of the amount of organization and professional costs incurred
by TPG on behalf of the Company. (See Note 3)
NOTE 3 - AGREEMENT
On March 24, 1999, the Company signed an agreement with TPG, a
related entity (See Note 4). The Agreement calls for TPG to
provide the following services, without reimbursement from the
Company, until the Company enters into a business combination as
described in Note 1A:
1. Preparation and filing of required documents with the
Securities and Exchange Commission.
2. Location and review of potential target companies.
3. Payment of all corporate, organizational, and other costs
incurred by the Company.
NOTE 4 - RELATED PARTIES
Legal counsel to the Company is a firm owned by a director of the
Company who also owns a controlling interest in the outstanding
stock of TPG. (See Note 3)
NOTE 5 SUBSEQUENT EVENTS
Pursuant to an Agreement and Plan of Reorganization (the
"Acquisition Agreement") dated January 18, 2000, Rhombic
Corporation, a Nevada corporation, acquired all the outstanding
shares of common stock of the Company in an exchange for an
aggregate of 200,000 shares of common stock of Rhombic (the
"Acquisition"). As a result, the Company became a wholly owned
subsidiary of Rhombic.
8
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
NOTE 5 SUBSEQUENT EVENTS
The Acquisition was adopted by the unanimous consent of the Board
of Directors of Rhombic on January 18, 2000. The Acquisition is
intended to qualify as a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended. For financial accounting purposes the Acquisition will be
accounted for using the purchase method of accounting.
Prior to the Acquisition, Rhombic had 33,741,100 shares of common
stock issued and outstanding, and 33,941,100 shares issued and
outstanding following the Acquisition.
Upon effectiveness of the Acquisition, pursuant to Rule 12g-3(a) of
the General Rules and Regulations of the Securities and Exchange
Commission, Rhombic became the successor issuer to the Company for
reporting purposes under the Securities Exchange Act of 1934 (the
"Act") and elected to report under the Act effective January 20, 2000.
9
ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company had no disagreements on accounting and financial
disclosures with its independent auditors during the reporting period.
PART II
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
As of December 31, 1999, the officer and director of Emerald
Acquisition Corporation were:
Name Age Position
James M. Cassidy 64 President, Secretary, Director
As of December 31, 1999, there were no agreements or understandings
for the officer or director to resign at the request of another person and
the above-named officer and director was not acting on behalf of or at the
direction of any other person.
The sole officer and director of Emerald resigned effective upon
completion of the Acquisition. Upon the resignation of the sole officer and
director of Emerald the following persons were appointed to the respective
offices of the Company:
Name Age Title
R.G. Krushnisky 39 Chairman, Chief Executive Officer
and Director
William Larry Owen 79 President & Director
Albert Golusin 45 Chief Financial Officer and Director
Stanley Porayko 64 Secretary and Director
R.G. KRUSHNISKY, Chief Executive Officer and Director of the
Company. Mr. Krushnisky served as past President of Rockford Technology
Corporation which owns the Diamond Film Forced Diffusion technology. Since
1984, Mr. Krushnisky has been the President of International Laser Games,
Ltd., a British Columbia, Canada, coin-operated arcade machinery business.
Mr. Krushnisky is a graduate of the United States International University
at San Diego with a Bachelor Science degree in Business and International
Commerce.
WILLIAM LARRY OWEN, President of the Company. In 1963, Mr.
Owen was a founder of a New World Jade Company. From 1982 to 1985, Mr. Owen
was the President of International Phasor Telecom, a computer security
firm. Mr. Owen received a Bachelor of Arts degree from Pepperdine University
of California, and Masters of Education degree from the University of
Southern California.
ALBERT GOLUSIN, Chief Financial Officer, is a Certified Public
Accountant in Phoenix, Arizona. Since 1993, Mr. Golusin has been in private
practice as an accounting consultant to public companies. He has also served
as a controller for Glenayre Electronics, a NASDAQ company, from 1984 -
1991. From 1983 to 1984, Mr. Golusin worked for Kenneth Leventhal & Company.
From 1979 to 1981, Mr Golusin worked for the international accounting firm
of Grant Thornton & Company. Mr. Golusin graduated from Brigham Young
University in 1978.
STANLEY PORAYKO, Secretary and Director of the Company, and a
Director of the Company's wholly-owned subsidiary, Rockford Technology
Associates. Mr. Porayko is a self-employed rancher from Alberta, Canada. He
was a founder of the jade deposit on Ogden Mountain, British Columbia, and a
director of Yugold Mines. Mr. Porayko graduated from Ryerson Institute of
Technology in 1957.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning
the compensation paid by the Company for services rendered in all capacities
to the Company for the two fiscal years ended December 31, 1998 and 1999 of
the chief executive officer at December 31, 1999 and all officers and
directors, as a group.
Name and
Principal
Positions at Annual Compensation Long-Term Compensation
12/31/98 Securities
Other annual underlying
Salary Bonus Compensation Options Other
William Owen
1998 0 0 $90,000 (1) (1) None
1999 0 0 $90,000 (1) (1) None
All officers and
directors as a group
1998 0 0 $137,200 (1)(2) (1) None
1999 0 0 $108,500 (1)(2) (1) None
(1) William Larry Owen, President of the Company, is
compensated by Owen & Associates which has an agreement with
the Company to provide office and administrative support for $7,500 a
month. Mr. Owen received 3,000,000 shares of the common stock of the
Company for services rendered in 1999. The 3,000,000 shares are held in escrow
until the Company has received certain revenue amounts.
(2) Albert Golusin, Chief Financial
Officer and Director of the Company, provides his services on a part-time
basis and is compensated primarily with shares of the Company. In 1999, Mr.
Golusin received $50,000 in cash for payment of expenses, auditing costs of
the Company and compensation. In 1998, he received $10,000 in cash as
compensation. Mr. Golusin received 100,000, 50,000 and 50,000 shares of
common stock at deemed values of $10,000, $24,500 and $18,500 for the
services rendered in 1997, 1998 and 1999, respectively.
(3) R.G. Krushnisky, Chairman, Chief
Executive Officer and Director of the Company, provides his consulting
services on a part-time basis and is compensated with shares of the Company.
(4) Stanley Porayko, Secretary and
Director of the Company, provides his consulting services on a part-time basis
and is compensated with shares of the Company. Mr. Porayko received 100,000
shares for secretarial services rendered in 1998 at a deemed value of $22,700.
Currently, the Company does not provide any benefits to
any of its employees. There are no current plans to pay cash or stock
dividends on the Company's stock.
VALUE OF OPTIONS AT DECEMBER 31, 1999
All officers and directors exercised options under the
1999 stock option plan as of December 31, 1999. There were no unexercised
options at December 31, 1999.
OPTION GRANTS IN THE LAST TWO FISCAL YEARS
The Company did not grant any options during 1998. The
Company granted the following options to officers and directors during 1999:
Exercise
Number of Shares Options granted Price Expiration
underlying Options during Year ($/sh) Date
William L. Owen 275,000 275,000 .25 12/31/99
Albert Golusin 275,000 275,000 .25 12/31/99
Robert Krushnisky 275,000 275,000 .25 12/31/99
Stanley Porayko 100,000 100,000 .25 12/31/99
STOCK OPTION PLAN
The Board of Directors of Rhombic has approved its year
Incentive Stock Option Plan ("Plan") which authorizes it to grant
incentive stock options. The Plan relates to a total of 2,500,000
shares of common stock. Options relating to such shares have not
been granted as of March 24, 2000. Options are anticipated to range
from 9 months to 2 years at $ 2.50 per share. All options which may
be outstanding at any point in time must be exercised no later than
three months after termination of employment or service as a
director, except that any optionee who is unable to continue
employment or service as a director due to total and permanent
disability may exercise such options within one year of termination
and the options of an optionee who is employed or disabled and who
dies must be exercised within one year after the date of death.
The Plan is to be administered by the Company's Board of
Directors or a committee thereof which determines the terms of
options granted, including the exercise price, the number of shares
of common stock subject to the option, and the terms and conditions
of exercise. Options granted under the plan are transferrable by the
optionee.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information, as of March 24,
2000, regarding the shareholdings of (1) Rhombic's current directors
and executive officers, (2) those persons or entities who
beneficially own more than 5% of its common stock and (3) all of the
directors and executive officers as a group(giving effect to the
exercise of the warrants held by each such person or entity). Unless
otherwise indicated, the person or entity listed in the table is the
beneficial owner of the shares and has sole voting and investment
power with respect to the share indicated:
Number of shares Percent of
Common Stock Beneficially Common Stock
Name Owned Beneficially Owned (1)
R.G. Krushnisky 4,375,000 12.76%
Chief Executive Officer,
Director
Suite 901, 1212 Howe Street
Vancouver, British Columbia
Canada V6Z 2M9
William Larry Owen (2) 3,229,500 9.41%
President, Director
Suite 901, 1212 Howe Street
Vancouver, British Columbia,
Canada V6Z 2M9
Albert Golusi 50,000 *
Chief Financial Officer, Director
10641 North 44 Street
Phoenix, Arizona 85028
Stanley Porayko 200,000 *
Director
P.O. Box 1765
Vegreville, Alberta
Canada T9C 1S8
Total shares owned by
Directors and 7,854,500 22.9%
Officers of the Company
(4 persons)
Durham Technology Corporation (3) 6,000,000 17.49%
#2, Commercial Central Square
Alofi, Niue Island
New Zealand
Rockford Technology Corporation (4) 2,045,500 5.96%
4873 Delta Street
Delta, British Columbia, Canada
*Less than 1%.
(1) Based upon 34,286,100 outstanding shares of common stock.
(2) Includes 229,500 shares owned by Rarerock Explorations,
Ltd., a corporation controlled by Mr. Owen and who may be
deemed the beneficial owner of the shares held by it. Also
includes 3,000,000 escrowed shares restricted from trading
until Rhombic generates a net income of at least $ .01 per
share in any year.
(3) A Niue Island (New Zealand overseas territory) corporation
primarily engaged in marketing of new technologies. The
Rhombic shares are held in escrow and cannot be sold or
hypothecated until Rhombic generates a net income of at
least $.01 per share in any year. Albert Golusin and R.G.
Krushnisky are each 10% shareholders of Durham Technology
Corporation.
(4) Messrs. Owen, Porayko and Krushnisky are directors of
Rhombic and are three of the seven directors of
Rockford but do not own controlling interest.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On November 10, 1998, the Company issued restricted
3,000,000 escrowed shares to William Owen, the President and
6,000,000 escrowed shares to Durham Technology, which is A Niue
Island (New Zealand overseas territory) corporation primarily
engaged in marketing of new technologies. The Rhombic shares are
held in escrow and cannot be sold or hypothecated until Rhombic
generates a net income of at least $.01 per share in any year.
Albert Golusin and John R. Krushnisky are each 10% shareholders of
Durham Technology Corporation.
On December 8, 1998, William Owen, the Company's
President, and John R. Krushnisky, the Company's Chairman, both
citizens of Canada, each purchased 100,000 shares for $ 15,000. The
shares were exempt from registration under Rule 504 adopted under
Regulation D of the Securities Act. They were also subject to the
restrictions under Rule 144.
On December 22, 1998, Rhombic issued 100,000 common
shares to Stanley Poryako, the Companies Secretary, valued at $
22,700 for his services during the year.
During 1998 and 1999, William Owen received $ 90,000 in
each year through his wholly owned Canadian company named Owen &
Associates. Owen & Associates provides an office, local telephone
service, postage and compensates William Owen on behalf of Rhombic.
On January 15, 1999, William Owen, the Company's
President, and John R. Krushnisky, the Company's Chairman, both
citizens of Canada, each purchased 100,000 shares for $15,000. The
shares were exempt from registration under Rule 504 adopted under
Regulation D of the Securities Act. They were also subject to the
restrictions under Rule 144.
On March 16, 1999, John R. Krushnisky, the Company's
Chairman, a citizen of Canada, purchased 400,000 shares for $80,000.
The shares were exempt from registration under Rule 504 adopted
under Regulation D of the Securities Act. They were also subject to
the restrictions under Rule 144.
During December 1999, all of the directors of Company
exercised their 1999 stock options at $.25 per share. The Company
issued 925,000 shares to the directors and received $ 231,250 in cash.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1. Agreement and Plan of Reorganization
between Rhombic Corporation and Emerald
Acquisition Corporation filed as an
exhibit to the Current Report on Form 8-K
filed January 21, 2000 (file no. 0-28375).
(b) No reports on Form 8-K were filed in the last quarter of the
period covered by this report, but a Form 8-K reflecting the
Acquisition was filed January 21, 2000.
SIGNATURES
In accordance with Section 13 of 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
In accordance with Section 13 of 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RHOMBIC CORPORATION
/S/ William Larry Owen
President
/s/ Albert Golusin
April 13, 2000
Name Title Date
/s/ R. G. Krushnisky Director 4/13/00
/s/ William Larry Owen Director 4/13/00
/s/ Albert Golusin Director 4/13/00
/s/ Stanley Porayko Director 4/13/00
