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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999 Commission File No. 0-28375
RHOMBIC CORPORATION
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(Name of small business issuer in its charter)
Nevada 86-0824125
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 901, 1212 Howe Street, Vancouver, British Columbia V6Z 2M9
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(Address of principal executive offices)
Issuer's telephone number: (604) 683-4864
Emerald Acquisition Corporation
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(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/Aor any amendment to this Form 10-KSB/A. [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
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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 (the "Act") 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 on 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.
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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. 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 IEC 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
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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. 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
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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 the lamp 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 US$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
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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 Corporation ("Rockford Technology"). Rhombic
asserted that the management of Rockford Technology was selling the shares of
Rhombic that Rockford Technology owned in violation of Rule 144 and were not
using the proceeds for the benefit of Rockford Technology. The dispute was
settled by Rhombic purchasing 2,900,000 shares for approximately $208,000. The
settlement also provided for the resignation of the Rockford Technology officers
instrumental in having sold the Rhombic shares. Rhombic does not control the
board of directors of Rockford Technology although three of Rhombic's directors
currently sit on the seven-member board of directors of Rockford Technology.
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
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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
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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.
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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 Technology. During 1998, Rockford Technology
sold a significant amount of its Rhombic common shares into the marketplace.
Rhombic considered Rockford Technology 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 Technology by purchasing 2,900,000
shares of Rockford Technology, which amounted to approximately 15.5% of Rockford
Technology after the purchase, for approximately $ 208,000. The settlement also
provided for the resignation of the Rockford Technology officers instrumental in
having sold the Rhombic shares. Rhombic does not control the board of directors
of Rockford Technology although three of Rhombic's directors currently sit on
the seven member board of directors of Rockford Technlogy.
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.
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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 Nuclide 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 are outstanding options to purchase 250,000 shares outstanding.
The average exercise price of these options is $.83 per common share with the
option for 100,000 shares expiring December 31, 2000 and the option for 200,000
shares expiring December 19, 2002. In the event all of the options were
exercised during the year 2000, the Company would receive $6,500,000 and issue
2,800,000 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.
10
<PAGE>
11
<PAGE>
EMERALD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
12
<PAGE>
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
13
<PAGE>
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
14
<PAGE>
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
15
<PAGE>
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
16
<PAGE>
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
17
<PAGE>
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
18
<PAGE>
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
19
<PAGE>
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
20
<PAGE>
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
21
<PAGE>
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
22
<PAGE>
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 was:
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, Inc.
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.
23
<PAGE>
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.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Securities
Name and Principal Other Annual Underlying All
Positions at 12/31/98 Salary Bonus Compensation Options Other
William L. Owen
<S> <C> <C> <C> <C> <C>
1998 0 0 $90,000 (1) (1) None
1999 0 0 $90,000 (1) (1) None
All officers and directors,
As a group (four persons)
1998 0 0 $137,200 (1)(2) (1) None
1999 0 0 $108,500 (1)(2) (1) None
</TABLE>
(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 $22,700.
Currently, the Company does not provide any benefits to any of its
employees. There are no current plans to pay cash or stock dividends on the
Company's stock.
Value of Options at December 31, 1999
All officers and directors exercised options under the 1999 stock
option plan as of December 31, 1999. There were no unexercised options at
December 31, 1999.
Option Grants in the Last Two Fiscal Years
The Company did not grant any options during 1998. The Company granted
the following options to officers and directors during 1999:
24
<PAGE>
Exercise
Number of Shares Options Granted Price Expiration
Name Underlying Options During Year ($/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:
<TABLE>
<CAPTION>
Number of shares Percent of
Common Stock Beneficially Common Stock
Name Owned Beneficially Owned (1)
<S> <C> <C>
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 Golusin 50,000 *
Chief Financial Officer, Director
10641 North 44 Street
Phoenix, Arizona 85028
Stanley Porayko 200,000 *
Director
25
<PAGE>
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%.
</TABLE>
(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 Technology, 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 R. G.
Krushnisky are each 10% shareholders of Durham Technology Corporation.
On December 8, 1998, William Owen, the Company's President, and John R.
Krushnisky, the father of 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
Porayko, the Company's 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 father of 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 father of the Company's
Chairman, a citizen of Canada, purchased
26
<PAGE>
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).
*previously filed.
(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, and an amended Form 8-K containing the
Company's audited financial statements was filed on April 6, 2000.
27
<PAGE>
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.
RHOMBIC CORPORATION
By /s/ William Larry Owen
-----------------------------
President
By /s/ Albert Golusin
-----------------------------
Chief Financial Officer
Name Title Date
/s/ R. G. Krushnisky Director May 8, 2000
/s/ William Larry Owen Director May 8, 2000
/s/ Albert Golusin Director May 8, 2000
/s/ Stanley Poreyko Director May 8, 2000
28
