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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the year ended March 31, 2001
Commission File Number 0-30161

DICUT, INC.

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(Name of Small Business Issuer in Its Charter)


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|Delaware                                                       |  | 52-2204952                          
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|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)
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|12140 Cotorro Way, San Diego, CA                               |  | 92128                               
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|(Address of principal Executive Offices)                       |  | (Zip Code)                          
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|(619) 692-2142                                                
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|(Issuers Telephone Number)                                   

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

Common Stock  .001 Par Value

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(Title of Class)




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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

|           |          
|---------- | ---------
|Yes    [X] | No  [   ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of 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.

|           |          
|---------- | ---------
|Yes    [X] | No  [   ]

The issuer had no revenues for the year ended March 31, 2001.

As of March 31, 2001, the registrant had 8,370,000 shares of common stock,
$.001 par value, issued and outstanding.



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TABLE OF CONTENTS



|                             |                                                                                                                        |                                              |  |  |  |  |  | 
|---------------------------- | ---------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- |  |  |  |  |  | 
|PART I                      
|                             | ITEM 1 DESCRIPTION OF BUSINESS                                                                                        
|                             |                                                                                                                        | BUSINESS DEVELOPMENT                        
|                             |                                                                                                                        | BUSINESS OF ISSUER                          
|                             |                                                                                                                        | REPORTS TO SECURITIES HOLDERS               
|                             | ITEM 2 DESCRIPTION OF PROPERTY                                                                                        
|                             | ITEM 3 LEGAL PROCEEDINGS                                                                                              
|                             | ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            
|PART II                     
|                             | ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.                                                     
|                             | ITEM 6 MANAGEMENT'S PLAN OF OPERATION                                                                                 
|                             | ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                    
|                             | ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                           
|MANAGEMENTS STATEMENT      
|INDEPENDENT AUDITORS REPORT
|                             |                                                                                                                        | Balance Sheet                               
|                             |                                                                                                                        | Statement of Operations                     
|                             |                                                                                                                        | Statement of Changes in Stockholders' Equity
|                             |                                                                                                                        | Statement of Cash Flows                     
|                             |                                                                                                                        | Notes                                       
|PART III                    
|                             | ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|                             | ITEM 10 EXECUTIVE COMPENSATION                                                                                        
|                             | ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                
|                             | ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                
|                             | ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                                              
|SIGNATURES                  
|EXHIBIT 23                  



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PART I




|       |  |                        
|------ |  | -----------------------
|ITEM 1 |  | DESCRIPTION OF BUSINESS




BUSINESS DEVELOPMENT

Organization

Dicut, Inc. was incorporated in Delaware on May 31, 1994 for the purpose of
developing
and marketing a residential Hydronic Low Pressure Heating and Air Conditioning
system (Hydronic LPHVAC) that would operate at lower pressure levels than
large commercial systems. During December 1997 and January 1998, the Company
received its initial funding through the sale of common stock to investors.
From inception until December 1999, the Company had no material operating
activities. In December 1999, Management completed its development and
testing of the Companys Hydronic LPHVAC design. In January 2000 Management
decided to seek necessary capital in order to advance the Companys business
plan.

Bankruptcy or Similar Proceedings

There have been no bankruptcy, receivership or similar proceedings.

Reorganizations, Purchase or Sale of Assets

As of the Companys fiscal year end of March 31, 2001 there were no material
reclassifications, mergers, consolidations, or purchase or sale of a
significant amount of assets not in the ordinary course of business.




BUSINESS OF ISSUER

Principle Products or Services and Markets

The Company intends to become a major supplier of its proprietary Hydronic Low
Pressure Heating and Air Conditioning System (Hydronic LPHVAC) to the
residential construction industry and the residential air conditioning repair
and replacement industry, first in California, and then throughout the United
States. The Companys target market includes single family residences,
condominiums, and apartment buildings. The Companys residential Hydronic
LPHVAC product is a heating and air conditioning system consisting of a trade
secret design for a gas fired temperature transfer generator that heats or
chills an aquas solution using natural gas, and a series of metal pipes,
concealed radiators, electric fans, and thermostats that set individual
room temperatures. The Companys Hydronic LPHVAC system is based on currently
available large scale commercial building hydronic systems that utilize high
pressure techniques to heat and cool large buildings. Unlike these large scale
commercial hydronic systems, the Companys residential Hydronic LPHVAC system
has been designed with a proprietary hydronic aquas



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temperature control system
and operates at low pressure levels that are approximately 70 PSI, comparable
to residential interior water pipe pressure of approximately 80 pounds PSI.

Fred McNorton developed the Hydronic LPHVAC system from 1994 through 1999. On
August 15, 1994 Mr. McNorton accepted the position of President of the Company.
On March 15, 1997, the Company signed an exclusive license agreement with its
President for use of his Hydronic LPHVAC design in exchange for 70,500
restricted shares of the Companys common stock. The number of shares issued
was based upon an estimate of the total costs incurred by Mr. McNorton for
product development and testing.

Based upon Managements experience in the residential construction industry and
in the design and manufacture of heating and cooling systems, the Companys
Hydronic LPHVAC system will offer contractors and owners of residential
dwellings the following advantages for heating and air conditioning
requirements:



| |  | The target price of the Companys proprietary new heating and air
conditioning system is estimated by Management to be eight to twelve
percent less than traditional systems installed in residential new
construction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The installed cost to replace an existing residential heating and air
conditioning system with the Companys new Hydronic LPHVAC system is
estimated by management to be approximately six to eight percent less
than purchasing traditional replacement heating and air conditioning
systems. The Hydronic LPHVAC system may be easily retrofitted through an
existing buildings central heating and air conditioning system and
in-wall air ducts.                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | The Companys Hydronic LPHVAC system is designed to primarily use natural
gas as its source of heating and cooling energy. Natural gas is less
expensive than electricity or heating oil as an energy source. National
average costs per one hundred thousand btu of useable heat are $1.79 for
electricity, $1.24 for heating oil, and $.95 for natural gas
(© 2000 warmair.com). In California, the target market for
the first two years of the Companys business plan, the cost of running a
gas based heating and air conditioning system is about $.60 per hour
compared to an all electric system of about $1.40 per hour
(© 2000 sdge.com/energy).                                                                                                                                                                                                                       
|
| |  | The Companys Hydronic LPHVAC system incorporates design features that
maintain low pressure levels in all components for safety and building
code compliance for residential applications. The Hydronic LPHVAC system
consists of a proprietary design for a gas fired temperature transfer
generator that utilizes a self-contained constant
temperature fluid bath and aquas fluid mixture that maintains temperature
within plus or minus five degrees of any temperature setting between
thirty eight degrees and one hundred fifty degrees Fahrenheit. The aquas
fluid mixture is an integral part of the design which functions to
maintain the bath temperatures. The aquas fluid mixture is an important
intellectual property of the company and is protected by trade secret
laws. Traditional heating and air conditioning systems, engineered to
maintain temperature



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| |  | fluctuations of plus or minus ten degrees, use more
energy as they repeatedly correct for wider temperature variances.                                                                                                                                                                                                                                                                                 
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | A key feature of The Companys Hydronic LPHVAC system allows individual
rooms within a residential building to be adjusted for temperature
variances up to ten degrees instead of a traditional system of heating or
cooling the building to only one temperature setting. Thus the rooms on
the side of a building facing the sun may be cooled more than the rooms
on the shady side of the building.
|
| |  | The Companys trade secret Hydronic LPHVAC constant temperature
controller and aquas bath system was designed to utilize existing
off-the-shelf components such as heating and electrical parts used in gas
furnaces, low pressure pipes, radiators, electric fans and thermostats,
all of which are available in building code approved formats.                                                      

The Company has a current business plan which proposes to utilize its founders
backgrounds
to develop its business from the current design stage into a unique affordable
alternative to residential contractors for their new residential HVAC and
replacement HVAC needs.

The Companys business plan steps include obtaining a listing for trading on
the OTC Electronic Bulletin Board, and raising capital of $5,000,000 through
the sale of common stock in a private placement. After raising capital, the
Company intends to utilize subcontract manufacturers in California to begin
production of its proprietary residential Hydronic LPHVAC system for sale in
California. The Company intends to expend $2,500,000 for subcontractor
production of its proprietary residential Hydronic LPHVAC system, $75,000 for a
marketing manager, $75,000 for two salesmen, $30,000 for two office clerical
employees, $20,000 for set-up and maintenance of the Companys web site,
$500,000 for advertising, $50,000 for purchase of computers and fixed assets,
and $75,000 for rent and other operating expenses.

Distribution Methods of Products or Services

For the first two years of its business plan, the Company will advertise its
products through direct mailings to all major plumbing, heating, and air
conditioning companies in California. In addition, the Company will advertise
weekly in medium to large city construction newspapers and in developer,
construction, and plumbing trade journals throughout California. The Company
intends to offer information on its product to prospective contractor and
homeowner customers on its web site, www.hydronicsamerica.com, which will
feature product information and local plumbing contractors who will sell and
service the Companys Hydronic LPHVAC systems.

Based upon Managements experience in the heating and air conditioning
manufacturing business and the construction business, the Company will sell its
complete residential Hydronic LPHVAC product in a range of approximately $2,100
for a 2,000 sq. ft. building to $30,000 for a 25,000 sq. ft. building. This
compares to traditional complete heating and air conditioning products priced
in a range of approximately $2,500 for a 2,000 sq. ft. building to $37,500 for
a



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25,000 sq. ft. building per information from the Air Conditioning &
Refrigeration Institute (© 2000 ari.org). These selling prices
are for all components including controls and air ducts, but exclude
installation labor which is approximately $1.25 to $1.50 per sq. ft. for the
Companys Hydronic LPHVAC product, the same installation labor price for
traditional heating and air conditioning systems.

Status of Any Publicly Announced New Products or Services

The Company has no new product or service planned or announced to the public.

Competition and Competitive Position

The size and financial strength of the Companys primary competitors,
traditional residential heating and air conditioning manufacturers, Carrier,
Rheem, Trane, and Lennox are substantially greater than those of the Company.
The Company intends to compete against these manufacturers by offering a
product that is approximately the same cost to install, but is less costly to
run than their systems. There are major competitors for large commercial
building hydronics systems, such as Kitec and Bio-Radiant Energy, Inc.
However, none of the current hydronics systems manufacturers offer products
that incorporate the Companys trade secret low pressure constant temperature
features designed to handle residential heating and air conditioning
requirements in compliance with building codes. The Companys competitors have
longer operating histories, larger customer bases, and greater brand
recognition than the Company. Management is not aware of any significant
barriers to the Companys entry into the residential heating and air
conditioning manufacturing market, however, the Company at this time has no
market share of this market.

Suppliers and Sources of Raw Materials

Management will rely on their combined experience and knowledge in the heating
and air conditioning manufacturing and construction businesses to arrange for
the manufacture of its hydronic parts. The Company will utilize hydronic parts
manufacturers to produce and assemble its Hydronic LPHVAC product. While the
Company has no current contracts with hydronic parts manufacturers, Management
is aware of manufacturers and suppliers such as Sparco Hydronic Heating,
Plumbing, and Energy Products, Amtrol, Inc. and Haydon Thermogenic. Management
is aware that general manufacturing costs for its Hydronic LPHVAC product
currently average
approximately fifty percent of its projected wholesale selling price. The
Company will enter into agreements with manufacturers and suppliers per its
business plan after raising capital during the first six months of its plan.

Dependence on One or a Few Major Customers

The Company will not depend on any one or a few major customers. The Companys
target market for the first two years of its business plan will be California
heating and air conditioning units installed in new housing starts and
replacement units for housing over fifteen years old. This market is served by
heating and air conditioning contractors in California estimated by



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Management
at over six thousand throughout the State. According to United States Census
Bureau housing data (census.gov/const) for residences of one to four units,
California averaged the following new construction starts per year:

|            |  |                                               |         | 
|----------- |  | --------------------------------------------- | ------- | 
|Time Period |  | Average Number of New Housing Starts Per Year
|           
|           
|           
|           
|           
|           
|           
|           
|1980 - 1989 |  |                                               | 199,355 | 
|           
|           
|           
|           
|1990 - 1998 |  |                                               | 74,000  | 
|           
|           
|           
|           
|1999        |  |                                               | 103,888 | 

Californias existing housing units total over 8,500,000 built before 1990 per
United States Census Bureau housing data (census.gov/const). Based upon an
average life for heating and air conditioning systems of fourteen to fifteen
years (Air Conditioning & Refrigeration Institute  © 2000
ari.org), the Company will target this large potential replacement market with
its Hydronic LPHVAC product. After the first two years of marketing in
California, the Company intends to expand into the national heating and air
conditioning market. The national residential housing market that the Company
will target with its Hydronic LPHVAC system includes single family residences,
condominiums, and apartment buildings averaging over 1,000,000 new housing
starts per year, for a total national market of existing units over 47,000,000
built since 1959 per United States Census Bureau housing data
(census.gov/const).

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts

The Company has setup its first web pagehydronicsamerica.com, and will expand
its web site in 2001. The Company has no current plans for any additional
registrations such as patents, trademarks, copyrights, franchises, concessions,
royalty agreements or labor contracts at this time. The Company will assess
the need for any additional copyright, trademark or patent applications on an
ongoing basis. The Hydronic LPHVAC system consists of a proprietary design for
a gas fired temperature transfer generator that utilizes a self-contained
constant temperature fluid bath and aquas fluid mixture that maintains
temperature within plus or minus five degrees of any temperature setting
between thirty eight degrees and one hundred fifty degrees Fahrenheit. The
aquas fluid mixture is an integral part of the design which functions to
maintain the bath temperatures. The aquas fluid mixture is an important
intellectual property of
the company and is protected by trade secret laws.

On March 15, 1997, the Company signed an exclusive license agreement with its
President for use of his Hydronic LPHVAC design in exchange for 70,500
restricted shares of the Companys common stock. The Company issued 70,500
shares of its common stock in exchange for a ten year exclusive right to
development, manufacturing, marketing, sale, sublicensing, and any and all
usages of the Hydronic LPHVAC design in the United States and throughout the
world. After ten years the license is subject to automatic renewal each year
thereafter, subject to written notification, sixty days in advance to the
renewal, by both parties of the license agreement.



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Need for Government Approval for its Products or Services

The Company is not required to apply for or have any government approval for
its products or services.

Effect of Existing or Probable Governmental Regulations on the Company

The Companys business is not subject to material regulation by federal
governmental agencies. The Company will be required to meet all state and
local governmental building codes and standards for the manufacturer of its
residential Hydronics HVAC product. Management personnel are familiar with all
California state and local building codes, plumbing and health department
regulations, and contractor licensing requirements.

Research and Development Costs

The Company has not expended funds for research and development costs since
inception.

Costs and Effects of Compliance with Environmental Laws

Environmental regulations have had no materially adverse effect on the
Companys operations to date, but no assurance can be given that environmental
regulations will not, in the future, result in a curtailment of service or
otherwise have a materially adverse effect on the Companys business, financial
condition or results of operation. Public interest in the protection of the
environment has increased dramatically in recent years. The trend of more
expansive and stricter environmental legislation and regulations could
continue. To the extent that laws are enacted or other governmental action is
taken that imposes environmental protection requirements that result in
increased costs, the business and prospects of the Company could be adversely
affected.

The Companys business plan allows for maintaining insurance coverage against
certain environmental liabilities, but there can be no assurance that such
insurance will continue to be available or carried by the Company or, if
available and carried, will be adequate to cover the
Companys liability in the event of a catastrophic occurrence.

Number of Total Employees and Number of Full-Time Employees

The Companys only current employees are its two Officers who will devote as
much time as the Board of Directors determines is necessary to manage the
affairs of the Company. The Officers intend to work on a full-time basis when
the Company raises capital per its business plan. The Companys business plan
calls for hiring five new full-time employees during the next twelve months.



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Risks

While Management believes its estimates of projected occurrences and events are
within the
timetable of its business plan, there can be no guarantees or assurances that
the results
anticipated will occur.

The Companys long-term viability is substantially dependent upon the
widespread acceptance
of its residential Hydronics HVAC product. There is no historic evidence that
this type of new product will be accepted by the Companys end-user, the
residential home market or by the construction industry. The potential lack of
acceptance by purchasers of residential HVAC products could have a material
adverse effect upon the Companys business, financial condition, operating
results and cash flows.

The Companys performance and future operating results are substantially
dependent on the
continued service and performance of its current Management. The Company
intends to hire a relatively small number of additional technical and marketing
personnel in the next year.
Competition for such personnel is intense, and there can be no assurance that
the Company will be able to retain its essential employees or that it will be
able to attract or retain highly-qualified technical and managerial personnel
in the future. The loss of the services of any of the Companys current
Management or other key employees or the inability to attract and retain the
necessary technical, and marketing personnel could have a material adverse
effect upon the Companys business, financial condition, operating results and
cash flows.

The current officers, Mr. McNorton and Mr. Davis, are the sole officers and
directors of the
company and have control in directing the activities of the company. Both
officers are involved in other business activities and may, in the future,
become involved in additional business opportunities. If a specific business
opportunity becomes available, the officers and directors of
the company may face a conflict of interest. The Company has not formulated a
plan to resolve any conflicts that may arise. While the Company and its sole
officers and directors have not formally adopted a plan to resolve any
potential or actual conflicts of interest that exist or that may arise, they
have verbally agreed to limit their roles in all other business activities to
roles of passive investors and devote full time services to the Company after
the Company raises capital of $5,000,000 through the sale of securities through
a private placement and is able to provide officers salaries per its business
plan.

While Management believes its estimates of projected occurrences and events are
within the
timetable of its business plan, there can be no guarantees or assurances that
the results
anticipated will occur. Investors in the Company should be particularly aware
of the inherent
risks associated with the Companys planned business. These risks include a
lack of a proven
market for the Companys residential Hydronics HVAC product, lack of equity
funding, and the size of the Company compared to the size of its competitors.
Although Management intends to implement its business plan through the
foreseeable future and will do its best to mitigate the risks associated with
its business plan, there can be no assurance that such efforts will be



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successful. Management has no liquidation plans should the Company be unable
to receive funding. Should the Company be unable to implement its business
plan, Management would investigate all options available to retain value for
the shareholders. Among the options that would be considered are: acquisition
of another product or technology, or a merger or acquisition of another
business entity that has revenue and/or long-term growth potential. However,
there are no pending or anticipated arrangements, understandings or agreements
with outside parties for acquisitions, mergers or any other material
transactions.




REPORTS TO SECURITIES HOLDERS

The Companys bylaws do not require the Company to deliver an annual report to
its shareholders and the Company has no present plans to provide an annual
report to its shareholders. The Company is voluntarily filing this Form 10-KSB
in order to make its financial information equally available to any interested
parties or investors. The Company is subject to the disclosure rules of
Regulation S-B for a small business issuer under the Securities Act of 1933
and the Securities Exchange Act of 1934. The Company is subject to disclosure
filing requirements and is required to file Form 10-KSB annually and Form
10-QSB quarterly. In addition, the Company will be required to file Form 8 and
other proxy and information statements from time to time as required.

The public may read and copy any materials the Company files with the
Securities and Exchange Commission, (SEC), at the SECs Public Reference
Room at 450 Fifth Street, N. W., Washington D. C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC.




|       |  |                        
|------ |  | -----------------------
|ITEM 2 |  | DESCRIPTION OF PROPERTY

The Companys principal executive office address is 12140 Cotorro Way, San
Diego, CA 92128. The principal executive office and telephone number are
provided by an officer of the corporation. The costs associated with the use
of the telephone and mailing address were deemed by management to be immaterial
as the telephone and mailing address were almost exclusively used by the
officer for other business purposes. Management considers the Companys
current principal office space arrangement adequate until such time as the
Company achieves its business plan goal of raising capital of $5,000,000 and
then begins hiring new employees per its business plan.




|       |  |                  
|------ |  | -----------------
|ITEM 3 |  | LEGAL PROCEEDINGS

The Company is not currently involved in any legal proceedings and is not aware
of any pending or potential legal actions.



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|       |  |                                                    
|------ |  | ---------------------------------------------------
|ITEM 4 |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year ended March 31, 2001, there were
no submissions of matters to a vote of security holders.




PART II




|       |  |                                                           
|------ |  | ----------------------------------------------------------
|ITEM 5 |  | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.

The Company has filed for trading on the OTC Electronic Bulletin Board which
is sponsored by the National Association of Securities Dealers (NASD). The OTC
Electronic Bulletin Board is a network of security dealers who buy and sell
stock. The dealers are connected by a computer network which provides
information on current bids and asks as well as volume information.

As of the date of this filing, there is no public market for the Companys
securities. As of
March 31, 2001, the Company had 73 shareholders of record. The Company has
paid no cash dividends. The Company has no outstanding options. The Company
has no plans to register any of its securities under the Securities Act for
sale by security holders. There is no public offering of equity and there is
no proposed public offering of equity.




|       |  |                               
|------ |  | ------------------------------
|ITEM 6 |  | MANAGEMENTS PLAN OF OPERATION

The Companys current cash balance is $163. Management believes the current
cash balance is sufficient to fund only a minimum level of operations. In
order to advance the Companys business plan, the Company must raise capital
through the sale of equity securities. To date, the Company has sold $9,200 in
equity securities and used approximately $9,037 for licenses and fees and other
operating expenses. Sales of the Companys equity securities have allowed the
Company to maintain a positive cash flow balance.

Management has made initial progress in implementing its business plan by
obtaining an exclusive licence for the use of the HVAC proprietary design,
registering its Internet domain name on the Internet, and opening its own web
page on the Internet. The Company will only be able to continue to advance its
business plan after it receives capital funding through the sale of equity
securities. After raising capital, Management intends to hire employees, rent
commercial space in San Diego, and begin production and marketing of its
residential Hydronics LPHVAC product. The Company intends to use its equity
capital to fund the Companys business plan during the next twelve months as
cash flow from sales is not estimated to begin until year two of its business
plan. The Company will face considerable risk in each of its business plan
steps, such as difficulty of hiring competent personnel within its budget,
longer than anticipated time



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for subcontractors to manufacture its residential
Hydronics LPHVAC product, and a shortfall of funding due to the Companys
inability to raise capital in the equity securities market. If no funding is
received during the next twelve months, the Company will be forced to rely on
its existing cash in the bank and funds loaned by the directors and officers.
The Companys officers and directors have no formal commitments or arrangements
to advance or loan funds to the Company. In such a restricted cash flow
scenario, the Company would be unable to complete its business plan steps, and
would, instead, delay all cash intensive activities. Without necessary cash
flow, the Company may be dormant during the next twelve months, or until such
time as necessary funds could be raised in the equity securities market.

There are no current plans for additional product research and development.
The Company
plans to purchase approximately $50,000 in furniture, computers, and software
during the next
twelve months from proceeds of its equity security sales. The Companys
business plan
provides for an increase of five employees during the next twelve months.




|       |  |                                            
|------ |  | -------------------------------------------
|ITEM 7 |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The required financial statements begin on page F-1 of this document.




|       |  |                                                                                     
|------ |  | ------------------------------------------------------------------------------------
|ITEM 8 |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On May 14, 2001, Dicut was notified of the death of Barry Friedman, the
companys independent auditor.

During the Companys two most recent fiscal years and the subsequent interim
period preceding the death of Mr. Friedman, there were no disagreements between
Dicut and Mr. Friedman with respect to any matter of accounting principles or
practices, financial statement disclosure or audit scope or procedure. The
report on the companys financial statements prepared by Mr. Friedman for
either the past two fiscal years did not contain an adverse opinion or a
disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles.

On May 14, 2001, Dicut engaged G. Brad Beckstead, CPA as the companys
independent auditor to audit the companys financial statements. Neither the
company nor anyone on its behalf has consulted G. Brad BEckstead, CPA during
the two most recent fiscal years regarding any matter for which reporting is
required under Regulation S-B, Item 302 (a) (2) (i) or (ii) and the related
instructions. The decision to engage G. Brad Beckstead, CPA was approved by
the Board of Directors.



12





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##### Table of Contents






MANAGEMENTS STATEMENT

The death of Mr. Friedman caused the discontinuance of Mr. Friedmans
accounting and auditing practice. Accordingly, for all periods subsequent to
the date of any of Mr. Friedmans issued audit reports and/or consent
statements, there have been no subsequent event audit procedures performed by
Mr. Friedman on the financial statements of Dicut, Inc. Additionally, the
death of Mr. Friedman and the discontinuance of his auditing services severely
impacts the ability of investors to sue, and potentially, recover damages from
Mr. Friedman for material misstatements or omissions, if any, in any document
filed with the U.S. Securities and Exchange Commission containing any report or
consent issued by Mr. Friedman, including the financial statements covered in
Mr. Friedmans audit report(s) and/or consent statements.



13





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##### Table of Contents



Dicut, Inc.
(A Development Stage Company)

Balance Sheets
as of
March 31, 2001

and

Statements of Income,
Stockholders Equity, and
Cash Flows
for the years ending
March 31, 2001
and for the period
May 31, 1994 (Date of Inception)
through
March 31, 2001



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##### Table of Contents



TABLE OF CONTENTS

|                                  |  |      |     | 
|--------------------------------- |  | ---- | --- | 
|                                  |  | PAGE
|                                  |  |     
|Independent Auditors Report      |  |      | F-1 | 
|                                 
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|Balance Sheet                     |  |      | F-2 | 
|                                 
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|Income Statement                  |  |      | F-3 | 
|                                 
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|Statement of Stockholders Equity |  |      | F-4 | 
|                                 
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|Statement of Cash Flows           |  |      | F-5 | 
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|Footnotes                         |  |      | F-6 | 



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##### Table of Contents





|                            |                    
|--------------------------- | -------------------
|G. BRAD BECKSTEAD           |                    
|Certified Public Accountant |                    
|                            | 330 E. Warm Springs
|                            | Las Vegas, NV 89119
|                            | 702.528.1984       
|                            | 425.928.2877 (efax)




INDEPENDENT AUDITORS REPORT

May 24, 2001

Board of Directors
Dicut, Inc.
Las Vegas, NV

I have audited the Balance Sheets of Dicut, Inc. (the Company) (A Development
Stage Company), as of March 31, 2001, and the related Statements of Operations,
Stockholders Equity, and Cash Flows for the years then ended, and for the
period May 31, 1994 (Date of Inception) to March 31, 2001. These financial
statements are the responsibility of the Companys management. My
responsibility is to express an opinion on these financial statements based on
my audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement presentation.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dicut, Inc. (A Development
Stage Company) as of March 31, 2001, and the results of its operations and cash
flows for the years then ended, and for the period May 31, 1994 (Date of
Inception) to March 31, 2001, in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the Company has had limited operations and have not commenced
planned principal operations. This raises substantial doubt about its ability
to continue as a going concern. Managements plan in regard to these matters
are also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ G. BRAD BECKSTEAD

G. Brad Beckstead, CPA



F-1





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##### Table of Contents






Dicut, Inc.
(a Development Stage Company)
Balance Sheet

|                                     |                                                                                                                              |                      |     |           |     | 
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------- | -------------------- | --- | --------- | --- | 
|                                     |                                                                                                                              |                      |     | March 31,
|                                     |                                                                                                                              |                      |     | 2001     
|                                     |                                                                                                                              |                      |     |          
|Assets                              
|                                    
|                                    
|                                    
|                                    
|Current assets:                     
|                                    
|                                    
|                                    
|                                    
|                                     | Cash                                                                                                                         |                      | $   | 163       |    
|                                     |                                                                                                                              |                      |     |          
|                                     |                                                                                                                              | Total current assets |     |           | 163 | 
|                                     |                                                                                                                              |                      |     |          
|                                     |                                                                                                                              | $                    | 163 |          
|                                     |                                                                                                                              |                      |     |          
|Liabilities and Stockholders Equity
|                                    
|                                    
|                                    
|                                    
|Stockholders Equity:               
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $0.001 par value, 20,000,000
shares authorized, 8,370,000 shares issued and
outstanding at 3/31/01 and 3/31/00 |                      |     | 8,370     |    
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                   |                      |     | 10,230    |    
|                                    
|                                    
|                                    
|                                    
|                                     | Deficit accumulated during development stage                                                                                 |                      |     | (18,437   | )  
|                                     |                                                                                                                              |                      |     |          
|                                     |                                                                                                                              |                      | 163 |          
|                                     |                                                                                                                              |                      |     |          
|                                     |                                                                                                                              | $                    | 163 |          
|                                     |                                                                                                                              |                      |     |          

The accompanying notes are an
integral part of these financial statements.



F-2





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##### Table of Contents






Dicut, Inc.
(a Development Stage Company)
Statement of Operations
For the Year Ending March 31, 2001
and For the Period May 31, 1994 (Inception) to March 31, 2001

|                                                     |                                     |                |           |             |       |                |           |              |        | 
|---------------------------------------------------- | ----------------------------------- | -------------- | --------- | ----------- | ----- | -------------- | --------- | ------------ | ------ | 
|                                                     |                                     |                |           |             |       |                |           | May 31, 1994
|                                                     |                                     |                |           | Year Ending |       | (Inception) to
|                                                     |                                     |                |           | March 31,   |       | March 31,     
|                                                     |                                     |                |           | 2001        |       | 2001          
|                                                     |                                     |                |           |             |       |               
|Revenue                                              |                                     | $              |          |             |       | $              |          |             
|                                                     |                                     |                |           |             |       |                |           |             
|Expenses:                                           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | General and administrative expenses |                |           | 8,032       |       |                |           | 18,437       |       
|                                                     |                                     |                |           |             |       |                |           |             
|                                                     |                                     | Total expenses |           |             | 8,032 |                |           |              | 18,437 | 
|                                                     |                                     |                |           |             |       |                |           |             
|Net (loss)                                           |                                     | $              | (8,032    | )           |       | $              | (18,437   | )           
|                                                     |                                     |                |           |             |       |                |           |             
|Weighted average number of
common shares outstanding |                                     |                | 8,370,000 |             |       |                | 8,241,324 |             
|                                                     |                                     |                |           |             |       |                |           |             
|Net (loss) per share                                 |                                     | $              | (0.00     | )           |       | $              | (0.00     | )           
|                                                     |                                     |                |           |             |       |                |           |             

The accompanying notes are an
integral part of these financial statements.



F-3





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##### Table of Contents






Dicut, Inc.
(a Development Stage Company)
Statement of Changes in Stockholders Equity

|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |       | 
|---------------------------------------- | ----------------------------------- |  | ------------ | --------- | ------------- | - | ---------- | ----- | ----------- | - | ------------- | - | ------ | - | ------ | ------ | - | - | ----------- | - |  | - | ------ | ----- | 
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   | Deficit    
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   | Accumulated
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |            
|                                         |                                     |  | Common Stock |           |               |   | Additional |       | During      |   | Total        
|                                         |                                     |  |              |           | Subscriptions |   | Paid-in    |       | Development |   | Stockholders'
|                                         |                                     |  | Shares       |           | Amount        |   | Receivable |       | Capital     |   | Stage         |   | Equity
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |       
|March 1997                              
|                                        
|                                        
|                                        
|                                        
|                                         | Founders shares                     |  |              | 4,230,000 |               |   | $          | 1     |             |   | $             |  |        |   | $      | 9,399  |   |   | $           |  |  |   | $      | 9,400 | 
|                                        
|                                        
|                                        
|                                        
|Net
loss
April 1, 1996 to
March 31, 1997 |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   | (9,400      | ) |  |   | (9,400 | )    
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |      
|Balance, 3/31/97                         |                                     |  | 4,230,000    |           |               | $ | 1          |       |             | $ |              |   |        | $ | 9,399  |        |   | $ | (9,400      | ) |  | $ |       |      
|                                        
|                                        
|                                        
|                                        
|January 1998                            
|                                        
|                                        
|                                        
|                                        
|                                         | 504 Offering
issued for cash        |  |              | 4,140,000 |               |   |            | 1     |             |   |               |   |        |   |        | 9,199  |   |   |             |   |  |   |        | 9,200 | 
|                                        
|                                        
|                                        
|                                        
|Net loss
April 1, 1997 to
March 31, 1998 |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |            |   |  |   |       |      
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |      
|Balance, 3/31/98                         |                                     |  | 8,370,000    |           |               | $ | 2          |       |             | $ |              |   |        | $ | 18,598 |        |   | $ | (9,400      | ) |  | $ | 9,200  |      
|                                        
|                                        
|                                        
|                                        
|Net loss
April 1, 1998 to
March 31, 1999 |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |            |   |  |   |       |      
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |      
|Balance, 3/31/99                         |                                     |  | 8,370,000    |           |               | $ | 2          |       |             | $ |              |   |        | $ | 18,598 |        |   | $ | (9,400      | ) |  | $ | 9,200  |      
|                                        
|                                        
|                                        
|                                        
|Net loss
April 1, 1998 to
March 31, 1999 |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |            |   |  |   |       |      
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |      
|Balance, 3/31/99                         |                                     |  | 8,370,000    |           |               | $ | 2          |       |             | $ |              |   |        | $ | 18,598 |        |   | $ | (9,400      | ) |  | $ | 9,200  |      
|                                        
|                                        
|                                        
|                                        
|October 1999                            
|                                        
|                                        
|                                        
|                                        
|                                         | Amended
par value                   |  |              |           |               |   |            | 184   |             |   |               |   |        |   |        | (184   | ) |   |             |   |  |   |        |      | 
|                                        
|                                        
|                                        
|                                        
|January 2000                            
|                                        
|                                        
|                                        
|                                        
|                                         | Reclassification of
paid-in capital |  |              |           |               |   |            | 8,184 |             |   |               |   |        |   |        | (8,184 | ) |   |             |   |  |   |        |      | 
|                                        
|                                        
|                                        
|                                        
|Net loss
April 1, 1999 to
March 31, 2000 |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   | (1,005      | ) |  |   | (1,005 | )    
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |      
|Balance, 3/31/00                         |                                     |  | 8,370,000    |           |               | $ | 8,370      |       |             | $ |              |   |        | $ | 10,230 |        |   | $ | (10,405     | ) |  | $ | 8,195  |      
|                                        
|                                        
|                                        
|                                        
|Net loss
April 1, 2000 to
March 31, 2001 |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   | (8,032      | ) |  |   | (8,032 | )    
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |      
|Balance, 3/31/01                         |                                     |  | 8,370,000    |           |               | $ | 8,370      |       |             | $ |              |   |        | $ | 10,230 |        |   | $ | (18,437     | ) |  | $ | 163    |      
|                                         |                                     |  |              |           |               |   |            |       |             |   |               |   |        |   |        |        |   |   |             |   |  |   |        |      

The accompanying notes are an
integral part of these financial statements.



F-4





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##### Table of Contents



Dicut, Inc.(a Development Stage Company)Statement of Cash FlowsFor the Year Ending March 31, 2001
and For the Period May 31, 1994 (Inception) to March 31, 2001




|                                                                             |                                      |   |             |   |                |   |              |           | 
|---------------------------------------------------------------------------- | ------------------------------------ | - | ----------- | - | -------------- | - | ------------ | --------- | 
|                                                                             |                                      |   |             |   |                |   | May 31, 1994
|                                                                             |                                      |   | Year Ending |   | (Inception) to
|                                                                             |                                      |   | March 31,   |   | March 31,     
|                                                                             |                                      |   | 2001        |   | 2001          
|                                                                             |                                      |   |             |   |               
|Cash flows from operating activities                                        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net (loss)                                                                   |                                      | $ | (8,032      | ) |                | $ | (18,437      | )        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Adjustments to reconcile net loss to net cash
(used) by operating activities
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Shares issued for services           |   |             |  |                |   |              | 9,400     | 
|                                                                             |                                      |   |             |   |                |   |              |          
|Net cash (used) by operating activities                                      |                                      |   | (8,032      | ) |                |   | (9,037       | )        
|                                                                             |                                      |   |             |   |                |   |              |          
|Cash flows from investing activities                                        
|                                                                             |                                      |   |             |   |                |   |              |          
|Net cash used by investing activities                                        |                                      |   |            |   |                |   |             |          
|                                                                             |                                      |   |             |   |                |   |              |          
|Cash flows from financing activities                                        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Issuance of common stock             |   |             |  |                |   |              | 9,200     | 
|                                                                             |                                      |   |             |   |                |   |              |          
|Net cash provided by financing activities                                    |                                      |   |            |   |                |   | 9,200        |          
|                                                                             |                                      |   |             |   |                |   |              |          
|Net (decrease) increase in cash                                              |                                      |   | (8,032      | ) |                |   | 163          |          
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Cash  beginning                                                             |                                      |   | 8,195       |   |                |   |             |          
|                                                                             |                                      |   |             |   |                |   |              |          
|Cash  ending                                                                |                                      | $ | 163         |   |                | $ | 163          |          
|                                                                             |                                      |   |             |   |                |   |              |          
|Supplemental disclosures:                                                   
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Interest paid                        |   | $           |  |                |   | $            |          | 
|                                                                             |                                      |   |             |   |                |   |              |          
|                                                                             | Income taxes paid                    |   | $           |  |                |   | $            |          | 
|                                                                             |                                      |   |             |   |                |   |              |          
|Non-cash transactions:                                                      
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Stock issued for services provided   |   | $           |   |                |   | $            | 9,400     | 
|                                                                             |                                      |   |             |   |                |   |              |          
|                                                                             | Number of shares issued for services |   |             |   |                |   |              | 4,230,000 | 
|                                                                             |                                      |   |             |   |                |   |              |          

The accompanying notes are an
integral part of these financial statements.



F-5





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##### Table of Contents






Dicut, Inc.
(a Development Stage Company)
Notes

Note 1  History and organization of the company

The Company was organized May 31, 1994 (Date of Inception) under the laws of
the State of Delaware, as Dicut, Inc. The Company has no operations and in
accordance with SFAS #7, the Company is considered a development stage company.
The Company is authorized to issue 20,000,000 shares of $0.001 par value
common stock.

Note 2  Accounting policies and procedures

Accounting method



| |  | The Company reports income and expenses on the accrual method.
| |  | --------------------------------------------------------------

Estimates



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

Cash and cash equivalents



| |  | The Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash equivalents. There
are no cash equivalents as of March 31, 2001.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Reporting on the costs of start-up activities



| |  | Statement of Position 98-5 (SOP 98-5), Reporting on the Costs of Start-Up
Activities, which provides guidance on the financial reporting of start-up
costs and organizational costs, requires most costs of start-up activities and
organizational costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the adoption of SOP
98-5, there has been little or no effect on the Companys financial
statements.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Loss per share



| |  | Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) Earnings Per Share. Basic loss per
share is computed by dividing losses available to common stockholders by the
weighted average number of common shares outstanding during the period. As of
March 31, 2001, the Company had no dilutive common stock equivalents, such as
stock options or warrants.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dividends



| |  | The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid or declared since inception.
| |  | -----------------------------------------------------------------------------------------------------------------------------------

Year end



| |  | The Company has adopted March 31 as its fiscal year end.
| |  | --------------------------------------------------------



F-6





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##### Table of Contents



Dicut, Inc.
(a Development Stage Company)
Notes

Note 3  Income taxes

Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS #109)
Accounting for Income Taxes. A deferred tax asset or liability is recorded
for all temporary differences between financial and tax reporting. Deferred
tax expense (benefit) results from the net change during the year of deferred
tax assets and liabilities. There is no provision for income taxes for the
year ended March 31, 2001 due to net losses.

Note 4  Stockholders equity

The Company is authorized to issue 20,000,000 shares of its $0.001 par value
common stock.

All share and per share amounts have been retroactively restated to reflect the
splits discussed below.

On March 15, 1997, the Company issued 4,230,000 shares of its $0.001 par value
common stock to two of its founders and directors valued at $9,400.

On January 31, 1998, the Company issued 4,140,000 of its $.001 par value common
stock for total cash of $9,200 pursuant to a Regulation D, Rule 504 of the SEC
1933 Securities Act offering.

On October 25, 1999, the State of Delaware approved the Companys restated
Articles of Incorporation, which changed the par value from $0.00001 to $0.001.

On January 15, 2000, the Company effected a 45-for-1 forward stock split of its
$0.001 par value common stock.

There have been no other issuances of preferred or common stock.

Note 5  Going concern

The Companys financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not commenced its planned principal
operations and it has not generated any revenues. In order to obtain the
necessary capital, the Company intends to raise funds via future securities
offering. If the securities offerings do not raise sufficient capital, it
would be unlikely for the Company to continue as a going concern.

Note 6  Warrants and options

There are no warrants or options outstanding to acquire any additional shares
of common stock.



F-7





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##### Table of Contents



Dicut, Inc.
(a Development Stage Company)
Notes

Note 7  Related party transactions

The Company does not lease or rent any property. Office services are provided
without charge by a director. Such costs are immaterial to the financial
statements and, accordingly, have not been reflected therein. The officers and
directors of the Company are involved in other business activities and may, in
the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.

On March 15, 1997, the Company signed a license agreement with an individual
which is a shareholder, officer and director in exchange for 70,500 shares of
$0.001 par value common stock pre-split (or 3,172,500 shares of $0.001 par
value common stock post-split). The agreement grants the Company the exclusive
worldwide rights to use the proprietary technologies and know-how related to
the products which includes the development, manufacturing, marketing, sale,
sublicensing and usage of the products. The term of the agreement is 10 years
which will expire on March 15, 2007, with automatic renewal each year
thereafter, subject to written notification sixty days in advance and agreed
upon by both parties.



F-8





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##### Table of Contents






PART III




|       |  |                                                                                                                
|------ |  | ---------------------------------------------------------------------------------------------------------------
|ITEM 9 |  | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The Directors and Officers of the Company, all of those whose one year terms
will expire
3/31/01, or at such a time as their successors shall be elected and qualified
are as follows:

|                                                    |  |     |    |          |  |                                |  |              |  |        
|--------------------------------------------------- |  | --- | -- | -------- |  | ------------------------------ |  | ------------ |  | -------
|Name & Address                                      |  | Age |    | Position |  | Date First Elected             |  | Term Expires
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|Fred McNorton
12140 Cotorro Way
San Diego, CA 92128 |  |     | 61 |          |  | President,
Director            |  | 9/15/94      |  | 3/31/02
|                                                   
|                                                   
|                                                   
|                                                   
|Richard Davis
12140 Cotorro Way
San Diego, CA 92128 |  |     | 42 |          |  | Secretary,
Treasurer,
Director |  | 9/15/94      |  | 3/31/02

Each of the foregoing persons may be deemed a promoter of the Company, as
that term is
defined in the rules and regulations promulgated under the securities and
Exchange Act of
1933.

Directors are elected to serve until the next annual meeting of stockholders
and until their
successors have been elected and qualified. Officers are appointed to serve
until the meeting
of the Board of Directors following the next annual meeting of stockholders and
until their
successors have been elected and qualified.

No Executive Officer or Director of the Corporation has been the subject of any
Order,
Judgement, or Decree of any Court of competent jurisdiction, or any regulatory
agency
permanently or temporarily enjoining, barring suspending or otherwise limiting
him from acting
as an investment advisor, underwriter, broker or dealer in the securities
industry, or as an
affiliated person, director or employee of an investment company, bank, savings
and loan
association, or insurance company or from engaging in or continuing any conduct
or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.

No Executive Officer or Director of the Corporation has been convicted in any
criminal
proceeding (excluding traffic violations) or is the subject of a criminal
proceeding which is
currently pending.

No Executive Officer or Director of the Corporation is the subject of any
pending legal
proceedings.



14





---



##### Table of Contents



Resumes

Fred McNorton, President & Director

|               |  |                                                                                                                                                                   
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1999 - Current |  | President, Real Estate Consulting Group, Inc., responsible for
operations and marketing of company specializing in construction
inspection in Southern California.

|            |  |                                                                                                                                                                                                                                                   
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1997 - 1999 |  | Director of Manufacturing, Williams Materials Corporation, Colton,
California, responsible for manufacturing, purchasing, product
distribution, personnel  over 370 employee manufacturing firm
specializing in heating and air handling systems.

|            |  |                                                                                                                                                                                                                     
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1988 - 1997 |  | Director of Operations, Temtex Industries, Perris, California,
responsible for manufacturing, product distribution, personnel  over 140
employee manufacturing firm specializing in wood and gas fireplace
systems.

|            |  |                                                                                                                                                                           
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1959 - 1997 |  | BS Mathematics, University of Louisville, MBA studies, University
of Louisville, Engineering studies, Purdue University, Finance and
Accounting studies, Wartburg College.

Richard Davis, Secretary, Treasurer & Director

|               |  |                                                                                                                                                                                                                                                                                           
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1995 - Current |  | Order Coordinator, Sundt Construction, San Diego, California,
largest commercial contractor in San Diego, responsible for scheduling,
purchasing, logistics of construction materials and equipment for an
average of thirty five concurrent large scale commercial construction
projects.

|            |  |                                                                                                                                                            
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|1984 - 1995 |  | General Contractor, San Diego, California, owned and managed
construction firm specializing in small commercial projects and
residential home construction.



15





---



##### Table of Contents






|        |  |                       
|------- |  | ----------------------
|ITEM 10 |  | EXECUTIVE COMPENSATION

The companys current officers receive no compensation.

Summary Compensation Table

|           |  |      |      |     |  |        |     |            |  |            |     |       |  |         |     |            |  |         |       |  |  |  |     |           |  |  |     |  |  |  |     | 
|---------- |  | ---- | ---- | --- |  | ------ | --- | ---------- |  | ---------- | --- | ----- |  | ------- | --- | ---------- |  | ------- | ----- |  |  |  | --- | --------- |  |  | --- |  |  |  | --- | 
|           |  |      |      |     |  |        |     |            |  |            |     |       |  | Other  
|Name &     |  |      |      |     |  |        |     |            |  |            |     |       |  | annual  |     | Restricted |  | Options |       |  |  |  |     | All other
|principle  |  |      |      |     |  | Salary |     | Bonus      |  | compen-    |     | stock |  | SARs    |     | LTIP       |  | compen-
|position   |  | Year |      | ($) |  | ($)    |     | sation ($) |  | awards ($) |     | ($)   |  | Payouts |     | sation ($)
|           |  |      |      |     |  |        |     |            |  |            |     |       |  |         |     |           
|          
|          
|          
|          
|F McNorton |  |      | 1996 |     |  |        | -0- |            |  |            | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|          
|          
|          
|          
|President  |  |      | 1997 |     |  |        | -0- |            |  |            | -0- |       |  |         | -0- |            |  |         | 7,050 |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|          
|          
|          
|          
|           |  |      | 1998 |     |  |        | -0- |            |  |            | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|          
|          
|          
|          
|R Davis    |  |      | 1996 |     |  |        | -0- |            |  |            | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|          
|          
|          
|          
|Secretary  |  |      | 1997 |     |  |        | -0- |            |  |            | -0- |       |  |         | -0- |            |  |         | 2,350 |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 
|          
|          
|          
|          
|           |  |      | 1998 |     |  |        | -0- |            |  |            | -0- |       |  |         | -0- |            |  |         | -0-   |  |  |  | -0- |           |  |  | -0- |  |  |  | -0- | 

There are no current employment agreements between the Company and its
executive officers.

The Board agreed to pay Mr. McNorton 70,500 shares of common stock for an
exclusive license agreement on March 15, 1997. The stock was valued at the
price unaffiliated investors paid for stock sold by the Company, $.10 per
share. On January 15, 2000, 3,102,000 shares of the Companys common stock
were issued to him per a 45 for 1 stock split.

The Board agreed to pay Mr. Davis for administrative services and services
related to the
Companys business plan 23,500 shares of the Companys common stock on March
15, 1997.
The stock was valued at the price unaffiliated investors paid for stock sold by
the Company,
$.10 per share. On January 15, 2000, 1,034,000 shares of the Companys common
stock were
issued to him per a 45 for 1 stock split.

The terms of these stock issuances were as fair to the Company, in the Boards
opinion, as
could have been made with an unaffiliated third party.

The officers currently devote an immaterial amount of time to manage the
affairs of the
Company. The Directors and Principal Officers have agreed to work with no
remuneration until
such time as the Company receives sufficient revenues necessary to provide
proper salaries to
all Officers and compensation for Directors participation. The Officers and
the Board of Directors have the responsibility to determine the timing of
remuneration for key personnel
based upon such factors as positive cash flow to include stock sales, product
sales, estimated
cash expenditures, accounts receivable, accounts payable, notes payable, and a
cash balance



16





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##### Table of Contents



of not less than $25,000 at each month end. When positive cash flow reaches
$25,000 at each month end and appears sustainable the board of directors will
readdress compensation for key personnel and enact a plan at that time which
will benefit the Company as a whole. At this time, management cannot
accurately estimate when sufficient revenues will occur to implement this
compensation, or the exact amount of compensation.

There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the Corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Corporation or any of its
subsidiaries, if any.




|        |  |                                                               
|------- |  | --------------------------------------------------------------
|ITEM 11 |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information on the ownership of the Companys
voting securities
by Officers, Directors and major shareholders as well as those who own
beneficially more than
five percent of the Companys common stock through the most current date  June
15, 2001:

|                                                      |  |                                                     |  |                 |    |         |    |  
|----------------------------------------------------- |  | --------------------------------------------------- |  | --------------- | -- | ------- | -- | -
|Title Of                                              |  | Name &                                              |  | Amount &        |    | Percent
|Class                                                 |  | Address                                             |  | Nature of owner |    | Owned  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|Common                                                |  | Fred McNorton
12140 Cotorro Way
San Diego, CA 92128 |  | 3,172,500 (a)   |    |         | 38 | %
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|Common                                                |  | Richard Davis
12140 Cotorro Way
San Diego, CA 92128 |  | 1,057,500 (b)   |    |         | 13 | %
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|Total Shares Owned
by Officers &
Directors As a Group |  | 4,230,000                                           |  |                 | 51 | %      

(a) Mr. McNorton received 70,500 shares of the Companys common stock on March
15, 1997 for a license agreement related to the Companys business plan.
3,102,000 shares of the Companys common stock were issued to him per a 45 for
1 stock split on January 15, 2000.

(b) Mr. Davis received 23,500 shares of the Companys common stock on March 15,
1997 for
administrative services and services related to the Companys business plan.
1,034,000 shares of the Companys common stock were issued to him per a 45 for
1 stock split on January 15, 2000.



17





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##### Table of Contents






|        |  |                                               
|------- |  | ----------------------------------------------
|ITEM 12 |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The principal executive office and telephone number are provided by Mr.
McNorton, an Officer of the Corporation. The costs associated with the use of
the telephone and mailing address were deemed by Management to be immaterial as
the telephone and mailing address were almost exclusively used by the Officer
for other business purposes.




|        |  |                                                                 
|------- |  | ----------------------------------------------------------------
|ITEM 13 |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K



| |  | Exhibit 23 Accountants Consent                                          
| |  | ------------------------------------------------------------------------
|
| |  | Reports filed on Form 8-K: Change in Certifying Accountant May 14, 2001.
|
| |  | Reports required to be filed by Regulation S-X: None                    




SIGNATURES

Pursuant to the requirements of Section 13 and 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



|     |         |             |                                       
|---- | ------- | ----------- | --------------------------------------
|     |         | Dicut, Inc.
|     |         |             |                                       
|     |         |             |                                       
|Date | 6/21/01 | By          | /s/ Fred McNorton                     
|     |         |             |                                       
|     |         |             | Fred McNorton, President & Director   
|     |         |             |                                       
|     |         |             |                                       
|Date | 6/21/01 | By          | /s/ Richard D. Davis                  
|     |         |             |                                       
|     |         |             | Richard D. Davis, Treasurer & Director



18