UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                ------------------------------------------------
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(MARK  ONE)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE  SECURITIES  EXCHANGE
     ACT  OF  1934

     For  the  Fiscal  Year  Ended  December  31,  2000

[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE  ACT  OF  1934

     For  the  transition  period  from  ________  to  _________.

                        Commission File Number: 333-82493

                     CALIFORNIA MOLECULAR ELECTRONICS CORP.
           (EXACT NAME OF SMALL BUSINESS AS SPECIFIED IN ITS CHARTER)

              Arizona                                   86-0888087
     (STATE OR OTHER JURISDICTION           (I.R.S. EMPLOYER IDENTIFICATION NO.)
     INCORPORATION OR ORGANIZATION)

     50 Airport Parkway,
        San  Jose,  CA                                    95110
(ADDRESS  OF  PRINCIPAL  EXECUTIVE  OFFICES)           (ZIP  CODE)

       Registrant's telephone number, including area code: (408) 451-8404
           Securities registered pursuant to Section 12(b) of the Act:

     TITLE  OF  EACH  CLASS     TITLE  OF  EACH  EXCHANGE  ON  WHICH  REGISTERED
     ----------------------     ------------------------------------------------
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value

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

Yes  [X]  No  [  ].

     Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (section 229.405 of this chapter) is not contained herein, 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-K
or  any  amendment  to  this  Form  10-KSB.  [X]

State  issuer's  revenues  for  its  most  recent  fiscal  year.  $110,099.

State the aggregate market value of the voting and non-voting common equity held
by  non-affiliates computed by reference to the price at which the common equity
was  sold,  or  the  average  bid and asked price of such common equity, as of a
specified  date  within  the  past  60  days.  For  purposes  of  the  foregoing
calculation  only, the issuer has included in the shares owned by affiliates the
beneficial  ownership  of  common  equity  of  officers  and  directors  of  the
registrant  and  members  of  their  families,  and  such inclusion shall not be
construed  as  an  admission  that any such person is an affiliate for any other
purposes.  $2,201,628.

As of March 30, 2001,  there  were 5,131,675 outstanding shares of Common Stock.
                       DOCUMENTS INCORPORATED BY REFERENCE
     None.
     Transitional  Small  Business Disclosure Format (check one): Yes [ ] No [X]
================================================================================


<PAGE>
                    CALIFORNIA MOLECULAR ELECTRONICS CORP.

                               TABLE OF CONTENTS

                                2000 FORM 10-KSB


ITEM NO.                                                                    PAGE
--------                                                                    ----
                                     PART I
Item 1.   Business                                                            3
Item 2.   Properties                                                          7
Item 3.   Legal Proceedings                                                   7
Item 4.   Submission of Matters to a Vote of Security Holders                 7

                                    PART II

Item 5.   Market for the Registrant's Common Stock and Related
          Shareholder Matters                                                 7

Item 6.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                               8
Item 7.   Financial Statements                                               10

Item 8.   Changes In and Disagreements With Accountants on Accounting
          and Financial Disclosure                                           10

                                   PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act                  10
Item 10.  Executive Compensation                                             10
Item 11.  Security Ownership of Certain Beneficial Owners and Management     11
Item 12.  Certain Relationships and Related Transactions                     11
Item 13.  Exhibits and Reports on Form 8-K                                   12

     This  Report  contains  forward-looking  statements  within  the meaning of
Section  27A  of  the Securities Act of 1933, as amended (the "Securities Act"),
and  Section  21E  of  the  Securities  Exchange  Act  of  1934, as amended (the
"Exchange  Act"),  regarding  future events and California Molecular Electronics
Corp.'s  ("CALMEC") plans and expectations that involve risks and uncertainties.
When  used  in  this Report, the words "estimate," "project," "intend," "expect"
and  "anticipate"  and  similar  expressions  are  intended  to  identify  such
forward-looking  statements.  Because  these  forward looking statements involve
risk  and  uncertainties,  actual  results  could  differ  materially from those
expressed  or  implied  by  these  forward-looking  statements  for  a number of
reasons,  including  those  discussed  in the section entitled "Risk Factors" of
CALMEC's Form SB-2 filed with the Securities and Exchange Commission January 31,
2000.  In light of the important factors that can materially affect results, the
inclusion  of  forward-looking  information  herein  should not be regarded as a
representation  by  CALMEC  or any other person that the objectives or plans for
CALMEC  will  be  achieved. The reader is therefore cautioned not to place undue
reliance on the forward-looking statements contained herein, which speak only as
of  the date hereof. CALMEC undertakes no obligation to publicly release updates
or  revisions  to  these  statements.


                                      -2-
<PAGE>
                                     PART I

ITEM  1.  BUSINESS
------------------

     California  Molecular  Electronics  Corp.  ("CALMEC"  or the "Company"), an
Arizona corporation, was incorporated on March 17, 1997.  The Company was formed
to take advantage of a new field of technology in which individual molecules are
used  to  produce  effects  that  are  currently  being  produced  by electronic
circuits.  This  field  is  known  as  "molecular  electronics."  Molecular
electronics seeks to use individual molecules as the component parts of computer
devices,  display  devices,  and  data  storage  devices.

     CALMEC  currently  owns  the  patent  and  trade  secret  rights  to
Chiropticene(TM)  switching, a single-molecule switching technology. The Company
believes  these  switches,  one  molecule in size, will become key components of
future  computational,  optical,  and data storage devices. The Chiropticene(TM)
switch  goes beyond the semiconductor switch in size reduction. This switch is a
single  molecule  that  exhibits  classical switching properties. Being only one
molecule  in  size,  it  offers the promise of producing structures thousands of
times  smaller  than  the  smallest  structures  possible  with  semiconductor
electronics.

     The  Company's  aim  is to gain control of patents and trade secrets in the
molecular  electronics  field so as to take advantage of these technological and
economic  advances  in  order  to  generate  revenues by licensing to others the
patents  and  trade secrets controlled by the Company. Additionally, the Company
intends  to  develop  products  through  partnership  agreements  using  the
Chiropticene(TM)  technology.

     The  Company's  business currently consists of two major areas of activity,
Research  and  Development  and  Sales  and  Corporate  Development.

RESEARCH  AND  DEVELOPMENT  ("R&D")
-----------------------------------

     The  purpose  of the Company's R&D program is to capture as large a portion
of  the  intellectual property in the field of molecular electronics as possible
and  to develop the capability to create products that exploit this intellectual
property.  To  this  end,  the Company's R&D consists of the following segments:

          -    Research
          -    Intellectual  Property  Development
          -    Product  Technology  Development

     These  three  segments  work  together.  Research  develops  the  Company's
knowledge  by answering the questions that the other two segments need answered.
Intellectual  Property  Development  fashions  the  Company's  knowledge  into
patent-protectable  or  trade-secret-protectable  units that can be licensed and
otherwise  exploited for business.  Finally, Product Technology Development puts
in place those technical processes and technology arrangements necessary for the
Company  to  produce  or  support the production of salable products.  All three
research  segments are functioning now at a low but valuable level.  The Company
has  spent approximately $306,707 and $240,668 in research and development costs
during  the  years  ended  December  31,  2000  and  1999,  respectively.


                                      -3-
<PAGE>
SALES  AND  CORPORATE  DEVELOPMENT
----------------------------------
     The  purpose of this area of activity is to exploit CALMEC's R&D results in
order  to  generate  revenue.  This  area of activity is responsible for selling
products  and  for developing business arrangements so as to foster these sales,
as  well  as  developing  products  using  the  Company's  technology.

PRODUCTS  AND  SERVICES

     The  Company's  products  are intellectual property and technical services.
Intellectual  properties  -  CALMEC's  patents  and  trade secrets - are salable
products.  The  Company intends to license them and support them in exchange for
the  payment  of  fees  and  royalties.

     The  Company  also  intends  to  sell  technical services: contract R&D and
product  development  support.  Customers  for  these services will again be the
companies  in  CALMEC's customer network.  The Company believes that its special
molecular  electronics  expertise  will  be  of  value  to its customers as they
attempt  to  develop  molecular  electronics  products.

     The  Company  will also, in addition to the above activities, undertake the
funding  and  development  of  certain  products using the Company's technology.

MARKET

     CALMEC believes that families of processors will be the major product areas
flowing from the field of molecular electronics.  The markets for these products
may  be  an  expanded  version  of today's markets for semiconductor chips.  The
common  types  of  chips  currently  being  manufactured  include  computer
microprocessors,  signal  processors,  special-purpose chips, programmable logic
chips,  memory  chips and controllers.  Semiconductor chips are purchased by the
manufacturers  of  chip-dependent  products.  Chip-dependent  products  are
manufactured  products  that would not exist if chips were to vanish.  This is a
very  long  list of products including PCs, laptops, personal digital assistants
(PDAs),  cellular  phones,  hand  held  calculators, digital camcorders, digital
cameras and a great many other consumer and non-consumer products. Semiconductor
chips  also  support  a  large  chip-driven  software  market providing software
applications  based on these chips.  The chip driven software market consists of
all  the  software  products that would not exist if chips were to vanish.  This
includes  all  PC  software application products, internet application products,
all  PC  operating  systems,  and  in  fact  every  software product written for
application  on  any  chip.

     The  Company  expects  molecular-electronic  processors  to  serve the same
markets  as  today's  semiconductor  chips.  However, since CALMEC believes that
successful  molecular  electronics  technology  will  provide  much  greater
performance  at a much smaller size and price, the Company further believes that
molecular  electronics  processors  will  find their way into many new products.


                                      -4-
<PAGE>
COMPETITION

     The  field  of  molecular  electronics is in the very early stages.  To the
best  of  the  Company's  knowledge,  no  one  anywhere is developing or selling
products  based  on molecular electronics technology.  The Company believes that
at  this  stage,  competition  is for intellectual property that will enable the
control  of  future  markets  and  not  for  the  products  for  these  markets.
Patents  have  been  and  are  being  granted  for  innovations  in the field or
innovations  that  will impact the field.  It is the Company's opinion, however,
that  overall, the intellectual property of the field is largely underdeveloped.
Moreover,  an  essential  part of the Company's business strategy is to exploit,
under  exploitation  agreements,  existing  and  future  intellectual  property
belonging  to  others for the mutual benefit of others and CALMEC.  By virtue of
these  strategies,  CALMEC  hopes  to  control  and  minimize  the impact of the
competition  that  will  be  seen.

     The  Company  believes  that the competition for this intellectual property
will  come  from  two  sources:  those  who  will  seek  to  imitate  CALMEC's
customer-building  strategy, and those who will develop and exploit intellectual
property  on  their own. Currently, the Company knows of no companies interested
in  imitating its customer-building strategy. And only time will tell whether or
not  there  will  be  many  or few intellectual property developers who have the
time,  resources  and  commitment to undertake exploitation on their own without
CALMEC's  or  others'  involvement.

     The Company believes that its ultimate competitors will be companies within
CALMEC's  own product-development customer network. The Company's customers will
have  the  knowledge, expertise and experience to engage this new market in part
because  of  the  Company's  work  with  them.  While CALMEC intends to work its
customer  agreements  to  its  benefit,  the  Company recognizes that it will be
impossible  and  perhaps  even  unwise  to  prevent its customers from being its
competitors  in  various  niches of the market. These customer-based competitors
will  probably  be the earliest specific competitors that CALMEC will be able to
identify.  Management  expects  to  know them in more intimate detail than other
future  competitors.

PATENTS

     The  Company  has  executed  an  exclusive  license  and  patent assignment
agreement for the worldwide rights to the economic exploitation of United States
Patent  Number  5,237,067 issued August 17, 1993 to Dr. Robert R. Schumaker, and
its  related  technology,  called  as  a  whole  "chiropticene" technology.  Dr.
Schumaker  is  also  the  Company's  Executive  Vice  President for Research and
Development  and  a major shareholder in the Company.  CALMEC has also filed new
patent  applications  on  related molecular electronics innovations flowing from
new  work  internal  to  the  Company  (United  States Patent Number 6,124,963).
On  March  26,  1999, the Company executed an exclusive patent license agreement
with  the  University of South Carolina for the worldwide rights to an invention
(USC  Disclosure  #98038) and its related technology that exploits electrostatic
signals  for  molecular electronic computation.  On May 6, 1999, CALMEC executed
an  exclusive  patent license agreement with the University of Minnesota for the
worldwide  rights  to  United  States  Patent  Number  5,766,952  on vapochromic
complexes  and  related  United  States  Patent  Numbers 6,137,118 and 6,160,267
together  exploiting  molecular  electronic  vapochromic  devices.


                                      -5-
<PAGE>
     In  addition,  the  Company  is  working  on developing patent exploitation
agreements with numerous other universities and government labs that are leaders
in  the  field  of  molecular  electronics  and  that own important intellectual
property  in  the  field.

     Chiropticene(TM) and CALMEC(R) are trademarks belonging to the Company that
refer to  the  Company's  molecular  switches  and  to  the  Company.

EMPLOYEES

     As  of  December  31,  2000, CALMEC had four full-time employees, including
three  employees  who  are  directors  of  the  Company.

DIRECTORS AND EXECUTIVE OFFICERS  OF  THE  COMPANY

     DR.  JON  N. LEONARD is a consultant to business and government in science,
technology,  and business development.  He has been the Chairman of CALMEC since
early in 1997.  He was the President and CEO of BPM Technology from 1992 through
1996, a company that raised $10 million in venture capital to develop and market
a  three-dimensional  printer product.  Prior to that, from 1985 to 1992, he was
the  Chief  Scientist  of,  and responsible for new business development in, the
Strategic  Products  Manufacturing  Division  of  Hughes  Aircraft Company.  Dr.
Leonard  has  authored  numerous  technical  papers in the areas of electronics,
computation  and  communication,  as  well as three popular books in the area of
human  health.  Dr.  Leonard received Ph.D. and Bachelors degrees in mathematics
and  physics  from the University of Arizona and a Masters degree in engineering
from  UCLA.

     MR.  JAMES  J.  MAREK,  JR. has over 30 years of business experience in the
management of high technology companies.  Since September of 1997, Mr. Marek has
been  the  President  and CEO of CALMEC.  Prior to this, in 1996, he had his own
consulting  practice  specializing  in  start-up  management,  turnaround
restructuring,  marketing/sales issues, and contract negotiations.  From 1990 to
1996, Mr. Marek was the President and General Manager of ITEC, Inc., a privately
held $25 million manufacturer of systems for telephone administrations worldwide
and  a provider of contract manufacturing services.  He has over 16 years in top
management  positions  (CEO,  President,  General  Manager,  Vice  President  of
Marketing  and  Sales,  and  Director)  with  full  responsibility  for start-up
companies  as  well  as  multimillion  dollar  corporations  manufacturing  and
marketing  sophisticated  electronic  products.  Mr.  Marek  has  a  Bachelor of
Electrical  Engineering  degree  from  Marquette  University  and  has  taken
post-graduate  work  in  communications,  marketing,  finance,  accounting,  and
business  management.

     DR.  ROBERT  R. SCHUMAKER is a renowned chemist and inventor, credited with
the development of new superconducting materials while at IBM, and the holder of
more  than  a  dozen  patents.  Since  May  of  1997  Dr. Schumaker has been the
director of R&D at CALMEC.  Prior to coming to CALMEC, from 1992 until 1997, Dr.
Schumaker  ran  International  Molecular  Processors,  a private company that he
founded,  that  conducted  research  in  the  area  of molecular switch devices.
Before  this,  Dr.  Schumaker  spent 25 years as a research scientist at IBM and
another  10  years  in  research  and  teaching  at  the  University of Bordeaux
(France),  the  University  of  Alabama, and Universidad Autonoma de Guadalajara
(Mexico).  Dr.  Schumaker  received  his  Bachelors degree in Chemistry from the
University  of  California in Santa Cruz, and his Ph.D. degree in Chemistry from
the  University  of  Oregon.


                                      -6-
<PAGE>
ITEM  2.  PROPERTIES

     None.

ITEM  3.  LEGAL  PROCEEDINGS

     None.

ITEM  4.   SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     There was no submission of matters to a vote of security holders during the
fourth  quarter  of  the  year  ended  December  31,  2000.

                                     PART II

ITEM  5.  MARKET  FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     Market  Information
     -------------------

          There is no public market for the Company's common stock, and a public
market  may  not  be  available  in  the  foreseeable  future.

     Shareholders
     ------------

          The  number  of  common shareholders of record as of February 28, 2001
was  314.

     Dividend  Policy
     ----------------

          No  cash  dividends  have  been declared on the Company's common stock
since  the  Company's  inception.  It  is not anticipated that dividends will be
paid  in  the  foreseeable  future.


                                      -7-
<PAGE>
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

Overview
--------

     CALMEC  was  formed  to  engage  primarily in the business of producing and
selling  products  and  services  related  to  the  new  technological  field of
molecular  electronics.  Molecular electronics is the technology of using single
molecules  to  form  components  of  electronic  devices.

     The  Company  continues  to  be  in the initial phase of its existence, and
through  December  31, 1999, CALMEC's three officers had elected to forego their
salaries.  Commencing  February 2000, the Executive Vice President and Secretary
began  receiving  remuneration  for  his  services  and  the President and Chief
Executive  Officer began to receive a portion of his salary commencing May 2000.
The  Company  will  transition  from the start-up phase to the operational phase
when  the  Board  of  Directors  has  determined  sufficient  capital  has  been
accumulated  to  do so.  At that time, all employees and executive officers will
receive  salaries,  additional  space  will be leased, capital equipment will be
purchased,  and  other operating expenses will be incurred.  Prior to that time,
activities  will be restricted to low cost activities that will keep the Company
within  its  cash  resources.

     In  the  second quarter of 1999, the Company started paying salaries to two
chemists  to perform research.  Also in the second quarter of 1999, CALMEC began
leasing  lab  space  from  San  Jose State University for the purpose of housing
these  chemists and  developing  Chiropticene(TM)  demonstration chemistry.  The
lease ran through March 31, 2000, and the Company has renegotiated with San Jose
State University  to extend the lease until March 31, 2001, and then again until
March 31,  2002.

     On January 31, 2000, CALMEC filed a Form SB-2, Registration Statement under
the Securities Act of 1933, with the Securities and Exchange Commission ("SEC").
On  February  7,  2000,  the  Registration Statement became effective and CALMEC
commenced its sale of up to 1,000,000 shares of common stock at $6.00 per share.
CALMEC  planned  to  raise  $6  million  with  this  offering, before payment of
estimated offering expenses of $50,000.  Subsequent to the effective date of the
Registration  Statement through February 28, 2001, CALMEC sold 120,239 shares of
its  common  stock,  for  a  total  aggregate  price  of  $721,434.  The Company
terminated  the  sale  of  its  common stock under the Registration Statement on
February  28,  2001.

Operations
----------

     The  Company  was in the development stage during 1999, and had no revenues
from operations.  During the first quarter of 2000, the Company received a grant
from  The  National Science Foundation in the amount of $100,000, which was paid
in  three  equal  installments.  The grant supported research to demonstrate the
feasibility  of  the  unique  Chiropticene(TM)   molecular  switch.  The  first
installment of $33,333 was received in January 2000, and was recognized as grant
income  during  the  quarter  ended  March  31, 2000.  The second installment of
$33,333  was  received  in April 2000, and was recognized as grant income during
the  quarter  ended  June 30, 2000.   The third and final installment of $33,334
was recognized during the fourth quarter of 2000.  The grant has been recognized
in earnings in the period in which the related expenditures were incurred by the
Company.


                                      -8-
<PAGE>
     R&D  costs of $306,707 for the year ended December 31, 2000 compared to R&D
costs  of  $240,668  in 1999, an increase of $66,039 or 27.4%.  The increase was
primarily  related  to  an  increase  in  R&D  related  salary and wage expense.

     Officers' compensation donated to the Company of $126,400 in 2000 decreased
from  $270,000  recorded  in 1999, primarily related to the fact that certain of
the  officers  began  receiving  payment for all or a portion of their salary in
2000.  In  1999,  100  percent  of the officers' compensation was donated to the
Company.

     In  1999,  the Company was still considered to be in the development stage,
and  costs other than R&D and Officers' compensation donated to the Company were
considered  preoperating  expenses.  In  the  year  2000,  as the Company earned
revenue,  it  is  no longer considered in the development stage, and costs other
than  R&D  and  Officers'  compensation  donated  to the Company are recorded as
selling,  general and administrative costs.  Selling, general and administrative
costs  consist  primarily of rent, travel and other administrative expenses, and
in  2000  increased over 1999 by $125,004 or 72%, primarily related to increases
in  rent  and  travel  expenses.

Liquidity  and  Capital  Resources
----------------------------------

     The full extent of CALMEC's future capital requirements and the adequacy of
its  available  funds  will  depend  on  many  factors,  not all of which can be
accurately  predicted.  Although no assurance can be given, the Company believes
it  can  continue  to operate in its present status for at least the next twelve
months.  After  terminating its sale of common stock effective February 28, 2001
under  its  public  offering  relating  to  its  February  7,  2000 Registration
Statement  filed  with  the  SEC,  the Company has undertaken additional and new
activities  to  develop  certain  products  using the Company's technology.  The
Company  is  aggressively pursuing industrial and venture capital funds, as well
as  a  private  placement  offering,  in  order to develop this technology.  The
proposed  private  placement  would  attempt  to sell 200,000 units at $6.00 per
unit.  A  unit  would be comprised of one share of Series A Preferred Stock, one
warrant  for  one common share exercisable through October 31, 2001 at $2.50 per
share,  and  one  warrant  to  purchase  an additional common share at $3.50 per
share,  through  April  30,  2002.

     In  the event that additional capital is required, CALMEC may seek to raise
that  capital  through  public  or  private  equity  or debt financings.  Future
capital  funding  transactions  may  result  in  dilution  to  stockholders.

     There  can  be  no  assurance  that additional capital will be available on
favorable  terms, if at all.  CALMEC's inability to obtain additional capital on
acceptable  terms  could  limit  its  ability  to  meet  its  plan of operation.


                                      -9-
<PAGE>
Hiring  of  employees
---------------------

     CALMEC  will  transition  from  its start-up phase to its operational phase
when  its accumulated cash balances permit it to do so according to the business
judgment  of  management.  At that time, employees currently working without pay
or  for  partial pay will begin receiving full compensation.  Regardless of when
that  time  occurs, the Company has already hired and is supporting the lab work
of a chemist, and is paying one of the executive officers full compensation, and
another  executive  officer  a  portion  of  his  compensation.


ITEM  7.  FINANCIAL  STATEMENTS

(1)     Financial  Statements
        See  Index  to  Financial  Statements  on  Page  F-1

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

     None.

                                    PART III

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

     Reference  is made to the information regarding Directors under the heading
"Directors  and  Executive  Officers  of  the  Company"  in  Part  I  hereof.

ITEM  10.  EXECUTIVE  COMPENSATION

                                   SUMMARY COMPENSATION TABLE

                                                              Long-term
                              Annual Compensation         Compensation Awards
                              -------------------         -------------------

          (a)                 (b)            (c)                  (g)
                                                         Securities Underlying
Name and Principal Position   Year         Salary ($)      options/ SARS (#)
----------------------------  ----         ---------     ----------------------

President/CEO                 2000          33,600                   9,750
                              1999               -                       -

EVP/Secretary                 2000          110,000                      -
                              1999                -                      -

Note:  Reference  is  made  to  the  information  in  "Note  8  -  Related Party
Transactions"  of  the notes  to  the  financial  statements under Part II, Item
7  hereof.



                                      -10-
<PAGE>
<TABLE>
<CAPTION>
                      OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR

       (a)               (b)              (c)              (d)             (e)

                      Number of      Percent of Total
                     Securities       Options/ SARs
                     Underlying        Granted to       Exercise or
    Name and        Options/SARs      Employees in       Base Price
Principal Position     Granted (#)     Fiscal Year        ($/Sh)      Expiration Date
-------------------  -------------  -----------------  -------------  ----------------
<S>                  <C>            <C>                <C>            <C>
President/CEO                9,750              32.7%  $        6.00  April 30, 2010
</TABLE>

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

<TABLE>
<CAPTION>
     (1)                  (2)                       (3)            (4)

                                                Amount and
                                                 Nature of
                     Name and Address of        Beneficial    Percent of
Title of Class         Beneficial Owner            Owner        Class
---------------  -----------------------------  -----------  -----------
<S>              <C>                            <C>          <C>

Common           Jon N. Leonard                  3,987,166         78.3%
                 1512 W. Canada Hills Dr.
                 Tucson, AZ  85737

Common           James J. Marek, Jr.               390,200         7.70%
                 1080 Grande View Blvd., #828
                 Huntsville, AL  35824

Common           Robert R. Schumaker               370,000         7.30%
                 520 Pilgrim Dr.
                 Capitola, CA  95010
</TABLE>

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     None.


                                      -11-
<PAGE>
ITEM  13.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

     (a)  Exhibits

          See  the  exhibits filed under Item 13(c), which are filed herewith or
          incorporated  by  reference  herein.

     (b)  Reports  on  Form  8-K

          None.

     (c)  Exhibits

The  exhibits  listed  below  are  filed  or  incorporated  by reference herein.

<TABLE>
<CAPTION>
EXHIBIT NUMBER                       DESCRIPTION OF DOCUMENT
--------------                       -----------------------
<C>             <S>
3.1             Articles of Incorporation of California Molecular Electronics Corp., filed
                as exhibit 3.1 to our Registration Statement on Form SB-2 filed with the
                Commission on January 31, 2000 and incorporated herein by this
                reference.
--------------  ------------------------------------------------------------------------------
3.2             Bylaws of California Molecular Electronics Corp., filed as exhibit 3.2 to
                our Registration Statement on Form SB-2 filed with the Commission on
                January 31, 2000 and incorporated herein by this reference.
--------------  ------------------------------------------------------------------------------
10.1            Long term employment agreements between R. Schumaker and
                California Molecular Electronics Corp. and J. Marek and California
                Molecular Electronics Corp., filed as exhibit 4 to the Company's Registration
                Statement on Form SB-2 filed with the Commission on January 31, 2000
                and incorporated herein by this reference.*
--------------  ------------------------------------------------------------------------------
10.2            Exclusive patent license and assignment agreement between R.
                Schumaker and California Molecular Electronics Corp., filed as exhibit 5
                to the Company's Registration Statement on Form SB-2 filed with the Commission
                on January 31, 2000 and incorporated herein by this reference.
--------------  ------------------------------------------------------------------------------
10.3            Stock Option Agreement between James J. Marek, Jr. and California
                Molecular Electronics Corp. dated May 1, 2000.*
--------------  ------------------------------------------------------------------------------
10.4            Rights Agreement between James J. Marek, Jr. and California Molecular
                Electronics Corp. dated June 1, 2000.*
--------------  ------------------------------------------------------------------------------
27.1            Financial Data Schedule
--------------  ------------------------------------------------------------------------------
<FN>
*  Management  contract  or  compensation  plan  arrangement.
</TABLE>


                                      -12-
<PAGE>
SIGNATURES
----------

CALIFORNIA  MOLECULAR  ELECTRONICS  CORP.

In  accordance  with  Section  13  or  15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

California  Molecular  Electronics  Corp.
-----------------------------------------
(Registrant)

/s/  James  J.  Marek,  Jr.
---------------------------
James  J.  Marek,  Jr.
President  and  Chief  Executive  Officer


Date:  March  30,  2001
-----------------------


In  accordance  with  the Exchange Act, this report has been signed below by the
following  persons  on behalf of the registrant and in the capacities and on the
dates  indicated.

Date                   Name: Position                 Signature
--------------  -----------------------------  -----------------------

March 30, 2001  Dr. Jon N. Leonard: Director,  Jon. N. Leonard
--------------  -----------------------------  -----------------------
                Chairman of the Board          /s/ Jon N. Leonard
                ---------------------          -----------------------

March 30, 2001  James J. Marek, Jr: Director,  James J. Marek, Jr.
--------------  -----------------------------  -----------------------
                President, Chief Executive     /s/ James J. Marek, Jr.
                --------------------------     -----------------------
                Officer
                -------


                                      -13-
<PAGE>
                     CALIFORNIA MOLECULAR ELECTRONICS CORP.
                              FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
Report of Independent Certified Public Accountants                                F-2
Balance Sheet at December 31, 2000 and 1999                                       F-3
Statement of Operations for the Years Ended December 31, 200 and 1999             F-4
Statement of Stockholders' Equity for the Years Ended December 31, 2000 and 1999  F-5
Statement of Cash Flows for the Years Ended December 31, 2000 and 1999            F-6
Notes to Financial Statements                                                     F-7
</TABLE>


                                       F-1
<PAGE>
March  17,  2001

To  the  Board  of  Directors

  and  Stockholders  of

    California  Molecular  Electronics  Corp.


          REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS
          -------------------------------------------------------

     In  our  opinion, the accompanying balance sheet and the related statements
of  operations,  stockholders'  equity  and  cash  flows  present fairly, in all
material  respects,  the  financial position of California Molecular Electronics
Corp.  ("CALMEC")  at  December  31,  2000  and  1999,  and  the  results of its
operations  and  its  cash  flows  for  the years then ended, in conformity with
generally  accepted  accounting  principles.  These financial statements are the
responsibility  of the Company's management; our responsibility is to express an
opinion  on  these  financial  statements based on our audits.  We conducted our
audits  of  these  statements  in  accordance  with  generally accepted auditing
standards  which require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  financial  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,  assessing  the
accounting  principles  used  and  significant estimates made by management, and
evaluating  the  overall  financial statement presentation.  We believe that our
audits  provide  a  reasonable  basis  for  the  opinion  expressed  above.


ODENBERG,  ULLAKKO,  MURANISHI  &  CO.  LLP
San  Francisco,  California


                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                          CALIFORNIA MOLECULAR ELECTRONICS CORP.
                          --------------------------------------

                                      BALANCE SHEET

                                                                     December 31
                                                             ----------------------------
                                                                 2000           1999
                                                             -------------  -------------
<S>                                                          <C>            <C>
                                         ASSETS
                                         ------

Current assets:
  Cash                                                       $    120,606   $     91,993
  Employee advance                                                 10,000              -
  Prepaid expenses                                                  8,247          6,493
                                                             -------------  -------------
     Total current assets                                         138,853         98,486

Equipment, net                                                      5,167          2,099
Other                                                               1,406            427
                                                             -------------  -------------
                                                             $    145,426   $    101,012
                                                             =============  =============

                           LIABILITIES AND STOCKHOLDERS' EQUITY
                           ------------------------------------

Current liabilities:
  Accounts payable and accrued liabilities                   $     23,175   $     13,800
  Other payable                                                     5,000          5,000
                                                             -------------  -------------
     Total current liabilities                                     28,175         18,800
                                                             -------------  -------------

Stockholders' equity:
  Common stock, no par value:
     Authorized 20 million shares; 5,090,123 and
     4,994,065 issued and outstanding (including
     4,800 treasury shares) at December 31, 2000
     and 1999, respectively                                     1,937,413      1,280,242
  Less: Treasury stock at cost; 4,800 shares at December 31,
     2000 and 1999, respectively                                  (28,800)       (28,800)
  Accumulated deficit                                          (1,791,362)    (1,169,230)
                                                             -------------  -------------
                                                                  117,251         82,212
                                                             -------------  -------------
  Commitments (Notes 6 and 10)
                                                             -------------  -------------
                                                             $    145,426   $    101,012
                                                             =============  =============
</TABLE>

                    See accompanying notes to financial statements.


                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                     CALIFORNIA MOLECULAR ELECTRONICS CORP.
                     --------------------------------------

                             STATEMENT OF OPERATIONS
                             -----------------------

                                                        Year ended December 31
                                                        ----------------------
                                                            2000        1999
                                                       -----------  -----------
<S>                                                    <C>          <C>
Revenue:
  Grant income                                         $  100,000   $        -
  Interest income                                          10,099        9,319
                                                       -----------  -----------
                                                          110,099        9,319
                                                       -----------  -----------

Expenses:
  Research and development expenses                       306,707      240,668

  Officers' compensation donated to the Company (Note 8)  126,400      270,000

  Selling, general and administrative expenses            298,274            -

  Preoperating expenses                                         -      173,270
                                                       -----------  -----------

     Total expenses                                       731,381      683,938
                                                       -----------  -----------

Loss before state income taxes                           (621,282)    (674,619)

Provision for state income taxes                              850           50
                                                       -----------  -----------

Net loss                                               $ (622,132)  $ (674,669)
                                                       ===========  ===========


Basic and diluted loss per common share                $    (0.12)  $    (0.14)
                                                       ===========  ===========

Weighted average number of common shares outstanding    5,071,256    4,930,858
                                                       ===========  ===========
</TABLE>

                    See accompanying notes to financial statements.


                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                                CALIFORNIA MOLECULAR ELECTRONICS CORP.
                                --------------------------------------

                                    STATEMENT OF STOCKHOLDERS' EQUITY



                                              Common stock
                                         ----------------------   Treasury    Accumulated
                                            Shares      Amount      Stock      Deficit       Total
                                            -------     -------     ------     --------      ------
<S>                                       <C>         <C>          <C>        <C>           <C>
Balance at December 31, 1998              4,887,520   $  636,556   $      -   $  (494,561)  $ 141,995

Stock issued in private placement            91,540      347,900          -             -     347,900

Stock issuance costs                              -      (49,239)         -             -     (49,239)

Officers' compensation donated to the
  Company (Note 8)                                -      270,000          -             -     270,000

Stock issued for license technology fee      15,005       75,025                               75,025

Treasury stock, at cost                      (4,800)           -    (28,800)            -     (28,800)

Net loss                                          -            -          -      (674,669)   (674,669)
                                          ----------  -----------  ---------  ------------  ----------

Balance at December 31, 1999              4,989,265    1,280,242    (28,800)   (1,169,230)     82,212

Stock issued in public offering              89,007      534,042          -             -     534,042

Stock issued for services                     7,051       42,306          -             -      42,306

Stock issuance costs                              -      (45,577)         -             -     (45,577)

Officers' compensation donated to the
  Company (Note 8)                                -      126,400          -             -     126,400

Net loss                                          -            -          -      (622,132)   (622,132)
                                          ----------  -----------  ---------  ------------  ----------

Balance at December 31, 2000              5,085,323   $1,937,413   $(28,800)  $(1,791,362)  $ 117,251
                                          ==========  ===========  =========  ============  ==========
</TABLE>

                    See accompanying notes to financial statements.


                                       F-5
<PAGE>
<TABLE>
<CAPTION>
                     CALIFORNIA MOLECULAR ELECTRONICS CORP.
                     --------------------------------------

                             STATEMENT OF CASH FLOWS
                             -----------------------

                                                            Year ended December 31
                                                            ----------------------
                                                               2000        1999
                                                            ---------   ----------
<S>                                                         <C>         <C>
Operations:
  Net loss                                                  $(622,132)  $(674,669)
  Items not requiring current use of cash:
     Officers' compensation, donated to the Company (Note 8)  126,400     270,000
     Common stock issued for:
       License fees                                                 -      75,025
       Other services                                          42,306           -
     Depreciation and amortization                              1,838         525
     Changes in other operating items:
       Employee advances                                      (10,000)    (20,147)
       Prepaid expenses                                        (1,754)     (6,493)
       Other                                                   (1,000)        200
       Accounts payable and accrued liabilities                 9,375      11,408
       Other payable                                                -       5,000
       Payable to related party                                     -     (14,500)
                                                            ----------  ----------
       Cash used for operating activities                    (454,967)   (353,651)
                                                            ----------  ----------

Investments:
  Equipment                                                    (4,885)     (2,624)
                                                            ----------  ----------
     Cash used for investing activities                        (4,885)     (2,624)
                                                            ----------  ----------

Financing:
  Advance from related party                                        -      (1,366)
  Issuance of common stock, after stock issuance expense      488,465     298,661
  Purchase of Treasury stock                                        -      (3,653)
                                                            ----------  ----------
     Cash provided by financing activities                    488,465     293,642
                                                            ----------  ----------

Increase (decrease) in cash                                    28,613     (62,633)

Cash at beginning of period                                    91,993     154,626
                                                            ----------  ----------
Cash at end of period                                       $ 120,606   $  91,993
                                                            ==========  ==========

Supplemental cash flow disclosures:
  Taxes paid                                                $     850   $      50
                                                            ==========  ==========
  Interest paid                                             $     193   $       -
                                                            ==========  ==========

  Acquisition of Treasury stock                             $       -   $ (25,147)
  For cancellation of employee advances                             -      25,147
                                                            ----------  ----------
                                                            $       -   $       -
                                                            ==========  ==========
</TABLE>

                    See accompanying notes to financial statements.


                                       F-6
<PAGE>
                     CALIFORNIA MOLECULAR ELECTRONICS CORP.
                     --------------------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

NOTE  1  -  Operations  and  summary  of  significant  accounting  policies:

     California  Molecular  Electronics  Corp.  ("CALMEC"  or the "Company"), an
Arizona  corporation,  was incorporated on March 17, 1997.  CALMEC was formed to
engage  primarily in the business of producing and selling products and services
related  to  the  new  technological  field of molecular electronics, as well as
research  and  development  related to this field.  Molecular electronics is the
technology  of  using  single  molecules  to  form  the components of electronic
devices.

     The  accompanying  financial  statements  have  been  prepared assuming the
Company  will  continue  as a going concern. The Company has sustained operating
losses  since  inception  and expects such losses to continue as it furthers its
research  and  development  programs. The Company will need to obtain additional
funds  to  continue  its  research and development activities and fund operating
expenses.  The  Company has raised $240,312 from the sale of common stock during
January  through  March  2001,  and  is actively pursuing industrial and venture
capital  and,  as  more  fully  described in Note 13, will be offering a private
placement  of its common stock. If the Company is unable to obtain the necessary
capital,  substantial  restructuring options may be necessary which would have a
material  adverse  effect  on the Company's business, results of operations, and
prospects.  The  financial  statements do not include any adjustments to reflect
the  future  effects  in  the recoverability and classification of assets or the
amounts  and  classification  of liabilities that might result from the possible
inability  of  the  Company  to  continue  as  a  going  concern.

     A  summary  of  significant  accounting  policies  follows:

     Use  of  estimates
     ------------------

     The  preparation  of  financial  statements  requires  management  to  make
estimates  and  assumptions  that  affect  the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

     Fair  value  of  financial  instruments
     ---------------------------------------

     The carrying values of financial instruments, such as employee advances and
accounts  payable,  approximate  their  fair  market  values.

     Cash  and  cash  equivalents
     ----------------------------

     The  Company  considers  all  highly  liquid investments with a maturity of
three  months  or  less  at  the  date  of  acquisition  to be cash equivalents.


                                       F-7
<PAGE>
     Concentration  of  credit  risk
     -------------------------------

     The Company maintains its cash in bank deposit accounts at well-established
financial  institutions.  At times the balances per the records of the financial
institutions  may  exceed  federally  insured  limits.

     Furniture  and  fixtures
     ------------------------

     Furniture  and  fixtures  are stated at cost.  Expenditures for maintenance
and  repairs are charged to expense.  Depreciation is computed using accelerated
methods  over  the  estimated  useful  lives  of  the  assets  of  five  years.

     Grant  income
     -------------

     Grant  income  is  recognized  as income in the period in which the related
expenditures  are  incurred  by  the  Company.

     Research  and  development
     --------------------------

     Research  and  development  costs  are  expensed  as  incurred.

     Income  taxes
     -------------

     The  Company uses the asset and liability method in accounting for deferred
income  taxes.  Under this method, deferred income taxes are recorded to reflect
the  tax consequences in future years of differences between the carrying amount
of  assets  and  liabilities for financial reporting and tax purposes (primarily
relating  to  start-up  costs)  at  each  fiscal  year  end.

     Reclassification  of  financial  statement  presentation
     --------------------------------------------------------

     Certain  prior  year  balances  have  been  reclassified  to conform to the
current  year  presentation.

     Loss  per  share
     ----------------

     Basic  and dilutive loss per common share is calculated by dividing the net
loss for the period by the average number of common shares outstanding.  In 2000
and  1999,  dilutive  loss per share excludes the effect of options, because the
effect  would  have  been  antidilutive.


                                       F-8
<PAGE>
NOTE  2  -  Equipment:

Equipment  is  summarized  as  follows:

                                  December  31
                                  ------------
                                  2000    1999
                                 ------  ------

Computer equipment               $7,509  $2,624
Less - accumulated depreciation   2,342     525
                                 ------  ------
                                 $5,167  $2,099
                                 ======  ======

NOTE  3  -  Common  stock  offerings:

     In  April 1998, CALMEC commenced a private placement offering of its common
stock.  The  offering  agreement allowed for the sale of up to 400,000 shares of
CALMEC's  common stock at $2.50 per share (restated for stock dividend; see Note
4),  for  a  maximum  value  of  $1  million.  There  was  no  minimum number of
securities  which  were  required to be sold in the offering.  In February 1999,
the  Company increased the price of the shares to $5 per share (restated for the
stock  dividend).   On  March  1,  1999,  the  Company  began  providing  stock
purchasers  with  a  warrant for each share purchased.  The warrant entitles the
purchasers  to  buy  an  additional  share for $5 through February 2002.  CALMEC
terminated  the  offering  in  June  1999.

     On January 31, 2000, CALMEC filed a Form SB-2, Registration Statement Under
The Securities Act of 1933, with the Securities and Exchange Commission ("SEC"),
which  became effective on February 7, 2000, and CALMEC commenced its sale of up
to  1,000,000  shares  of  common  stock  at  $6.00 per share. Subsequent to the
effective  date  of the Registration Statement through February 28, 2001, CALMEC
has sold 120,239 shares of its common stock, for an aggregate price of $721,434.
The  Company  terminated  the  sale  of  its common stock under the Registration
Statement  on  February  28,  2001.

NOTE  4  -  Issuances  of  capital  stock:

     On  March 19, 1997, the Company's chairman agreed to pay expenses he deemed
essential  to  the  Company's  start-up  phase,  with the understanding that the
Company would reimburse him for these costs at 10% per annum, until such time as
the  Board  of  Directors determined the Company had attained sufficient capital
for  its  operations.  The  chairman  agreed to cancel the first $10,000 of such
obligations  owed to him by the Company in exchange for 10 million shares of the
Company's  no par common stock valued at $.001 per share.  On June 5, 1997, upon
the  execution  of  certain long-term employment and other agreements related to
CALMEC,  the  Company  issued  1  million  shares  of  common  stock  to  an
officer/director  of CALMEC at $.001 per share.  On September 17, 1997, upon the
execution  of  certain  employment agreements, CALMEC issued 1 million shares of
its  common  stock  to  the  Company's president and CEO at $.002 per share.  On
January  1,  1998,  each of the stockholders voluntarily contributed back to the
Company  80%  of his stock to effect a pro-rata voluntary 80% reduction in their
ownership.  The  stock that was contributed back to the Company was deemed to be


                                       F-9
<PAGE>
authorized  and unissued stock rather than treasury stock.  In 1998, the Company
issued  87,520  shares  of  its common stock to accredited investors, as defined
under  Rule  501(a)  of  Regulation D promulgated by the Securities and Exchange
Commission,  at  $2.50 per share.  In 1999, the Company issued 106,545 shares of
its  common  stock to accredited investors at prices ranging from $2.50 to $5.00
per  share.  On  February 15, 1999, the Board of Directors declared a 100% stock
dividend.  All shares and per share data have been restated to reflect the stock
dividend.

     In  2000,  the  Company  issued  96,058  shares of its common stock under a
public  offering  to  investors  at  a  price  of  $6.00 per share (see Note 3).

NOTE  5  -  Grant:

     During  the  first  quarter  of 2000, the Company received a grant from The
National Science Foundation in the amount of $100,000, to be paid in three equal
installments.  The  grant  was  made  in  support of research to demonstrate the
feasibility  of the unique Chiropticene(TM) molecular switch.  The first
installment of  $33,333  was  received  in  January 2000, and was recognized as
grant income during the quarter ended March 31, 2000.  The second installment of
$33,333 was received  in  April  2000, and was recognized as grant income during
the quarter ended June 30, 2000.  The third and final installment of $33,334 was
received in the  fourth  quarter of  2000.  The grant  has  been  recognized  in
earnings in the period  in  which  the  related  expenditures  were  incurred by
the  Company.

NOTE  6  -  Leases:

     The  Company  had  entered  into a cost reimbursable contract with San Jose
State  University  Foundation  ("Foundation")  for the period from April 1, 2000
through  March  31,  2001,  which has been extended through March 31, 2002.  The
contract  includes  advisory  services  to  be  provided  by  the San Jose State
University Department of Chemistry, facilities, supplies and equipment use.  The
Foundation  shall  be  reimbursed  for  costs  incurred  in  providing  the
aforementioned  items  not to exceed a maximum amount of $90,658 over the period
of  the contract.  The Company also leases office space in Arizona. Rent expense
was  $100,955  and  $36,326  for  the  years  ended  December 31, 2000 and 1999,
respectively.

NOTE  7  -  Licenses:

     CALMEC  has  entered  into  an  exclusive  license  and  patent  assignment
agreement  with  an officer/director of the Company.  The agreement provides the
Company  with  the exclusive rights to use Chiropticene(TM) switches, a class of
molecular  electronic switches.  The agreement also called for the assignment to
CALMEC of all of the officer/director's rights to Chiropticene(TM) technology on
May 1, 1999.  CALMEC paid the officer/director a license fee of $25,000 ($10,500
of  the  license  fee  was paid in 1998, and the balance was paid in 1999.)  The
cost  of  the  license  fee  has  been  expensed  in  the accompanying financial
statements  as  research  and  development  costs.


                                       F-10
<PAGE>
     During  1999,  CALMEC  entered  into  license  agreements  with  certain
universities  which  provide  the Company with exclusive licenses to use or sell
products  using  technology  owned by the universities. The Company has paid the
universities  $25,000,  and  has  issued  15,005  shares  of  common  stock to a
university  and certain inventors for license fees. CALMEC has reimbursed one of
the  universities $15,237 for prior expenses incurred. The Company has reflected
the payments and common stock issuance in the amount of $115,262 as research and
development  costs  in  1999  in  the  accompanying financial statements, with a
credit  to  cash  in  the amount of $40,237 and to common stock in the amount of
$75,025.

NOTE  8  -  Related  party  transactions:

     CALMEC's  three officers have devoted 100% of their time to the business of
the  Company since their hire in 1997. Planned annual remuneration for the three
officers  is as follows:  $40,000 - Chairman and Treasurer; $110,000 - President
and  Chief  Executive  Officer;  and  $120,000  -  Executive  Vice President and
Secretary.  The  officers have elected to forego their salaries through December
31,  1999,  and  certain  officers have continued to forego all or a portion  of
their  salaries  through  December  31,  2000. As required by the Securities and
Exchange  Commission  accounting rules, in the accompanying financial statements
the officers' unpaid salaries totaling $126,400 and $270,000 for the years ended
December  31, 2000 and 1999, respectively, are reflected as compensation expense
and  a  credit  to  common  stock,  as the Company does not intend to repay such
forfeited  salaries  in  the future. Effective February 2000, the Executive Vice
President  and  Secretary  began to receive a salary for his services. Effective
May  2000,  the  President and Chief Executive Officer("CEO") began to receive a
portion  of  his salary in cash ($1,050 per week) and 250 stock options per week
with an exercise price of $6.00 per share ("Rolling Option").  When the Board of
Directors determines at some point in the future that the Company is able to pay
full  cash compensation to the CEO, the CEO has a right to no longer receive 250
stock  options  per  week  and require the Company to issue him shares of common
stock  or  pay  him  $6.00  per share, or a combination of the two, based on the
number  of  unexercised  shares  under  the  Rolling  Option.

NOTE  9  -  Stock  option  plan:

     On  May  1,  1997,  the Board of Directors of CALMEC adopted the 1997 Stock
Option  Plan  (the  "1997  Plan").  The  aggregate  number  of  shares  that are
available  for  issuance  pursuant  to the exercise of options granted under the
1997  Plan  may not exceed 1,600,000 shares of common stock.  Options granted in
2000  and  1999  have  vesting  periods  ranging  from  immediate to five years.
Incentive  stock options are priced at the fair market value of the stock at the
date  of  grant.  Nonqualified  stock  options are priced at eighty-five percent
(85%)  of  the fair market value at the date of grant.  Options generally have a
life  of  seven  to  ten  years.

     During  1997, CALMEC adopted Financial Accounting Standards Board Statement
No.  123,  "Accounting  for  Stock-Based  Compensation"  ("SFAS  No.  123") and,
pursuant  to the provisions of SFAS No. 123, applies Accounting Principles Board
Opinion  No.  25,  "Accounting  for Stock Issued to Employees" ("APB 25") to the
1997  Plan.  Accordingly,  no compensation cost has been recognized for the Plan
in  2000  and  1999.


                                       F-11
<PAGE>
     Had  CALMEC  elected  to adopt the fair value approach of SFAS No. 123, the
net  loss  of  $622,132  as  reported for the year ended December 31, 2000 would
compare  to  a  pro  forma  net  loss  of $645,588.  The net loss of $674,669 as
reported  for  the year ended December 31, 1999 would compare to a pro forma net
loss  of $737,762.  Basic and diluted loss per share of $0.12 for the year ended
December  31, 2000 would compare to a net loss per share of $0.13 on a pro forma
basis.  Basic and diluted loss per share of $0.14 as reported for the year ended
December  31,  1999  would  compare  to a pro forma net loss per share of $0.15.

     The  effects of applying SFAS No. 123 in the preceding pro forma disclosure
are  not  indicative  of  the  effect  on  reported net income for future years.

     The fair value of each option grant is estimated on the date of grant using
the  minimum value method with the following assumptions used for grants in 2000
and  1999,  respectively:  risk-free  interest rates of 6.4% for both years, and
expected  lives  of  5.8  years  for  both years.  No dividend yield was used as
CALMEC  has  not  paid  dividends  in  the  past  and does not anticipate paying
dividends  in  the  future.

<TABLE>
<CAPTION>
                                                         2000                1999
                                                 ------------------  -------------------
                                                           Weighted              Weighted
                                                           Average               Average
                                                           Exercise              Exercise
                                                 Shares     Price      Shares     Price
                                                --------  ----------  --------  ----------
<S>                                             <C>       <C>         <C>       <C>
Outstanding at beginning of year                918,020   $  0.4341   886,000   $  0.2156
Granted                                          29,830      6.0000    48,520      5.0000
Canceled                                        (20,000)    (5.5000)  (16,500)    (2.1250)
                                                --------  ----------  --------  ----------
Outstanding at end of year                      927,850   $  0.5039   918,020   $  0.4341
                                                ========  ==========  ========  ==========

Options exercisable at year end                 587,850               418,020

Weighted average grant-date fair value of
options granted during the year whose exercise
price equaled market price on date of grant               $    1.77             $    1.37
</TABLE>

     No  options  were  granted  during  2000  or  1999 whose exercise price was
greater  than  market price on the date of grant.  In 2000, a nonqualified stock
option  with  a  fair value of $2.37 per share for 80 shares of common stock was
granted  with an exercise price less than the market price on the date of grant.
No  options  were  granted  in  1999 with an exercise price less than the market
price.


                                       F-12
<PAGE>
     The  following table summarizes information about stock options outstanding
at  December  31,  2000:

<TABLE>
<CAPTION>
                Options Outstanding                          Options Exercisable
-------------------------------------------------------      -------------------
                               Weighted
                                Average     Weighted                      Weighted
   Range of                    Remaining    Average                       Average
   Exercise         Number    Contractual  Exercise         Number       Exercise
    Prices       Outstanding      Life      Price         Exercisable      Price
---------------  -----------  -----------  ---------     -----------    ---------
<S>              <C>          <C>          <C>               <C>          <C>
 $5.00 - $6.00       58,350    7.6 years  $  5.4878           38,350    $  5.0000
      $ .0025       400,000    3.3 years  $   .0025          240,000    $   .0025
      $ .0050       400,000    3.7 years  $   .0050          240,000    $   .0050
      $2.1250        55,500    7.5 years  $  2.1250           55,500    $  2.1250
      $2.5000        14,000    4.3 years  $  2.5000           14,000    $  2.5000
---------------  -----------  -----------  ---------     -----------    ---------
$ .0025 - $6.00     927,850    4.0 years  $   .5039          587,850    $   .5895
===============  ===========  ===========  =========     ===========    =========
</TABLE>

NOTE  10  -  Commitments:

     In  accordance  with the Company's license agreement with a university (see
Note  7), beginning January 1, 2002 and on January 1 of every year thereafter as
long  as  the  license  is  in  effect,  the  Company shall pay the university a
maintenance fee equal to either, at the university's option, 2,000 shares of the
Company's  common  stock  or a cash payment equal to the fair value of the 2,000
shares  on  the  due  date,  not  to  be  less  than  $10,000.

NOTE  11  -  Income  taxes:

     The  Company's  operating  loss  for  financial reporting purposes has been
reported  as  deferred start-up costs for federal and state income tax purposes.
Deferred  tax  assets  are  comprised  of  the  following:

<TABLE>
<CAPTION>
                                            Year ended December 31,
                                            -----------------------
                                                2000        1999
                                             ----------  ----------
<S>                                          <C>         <C>
Deferred start-up costs                      $ 332,962   $ 167,581

Valuation allowance for deferred tax assets   (332,962)   (167,581)
                                             ----------  ----------

Net deferred tax asset                       $       -   $       -
                                             ==========  ==========
</TABLE>

     A  valuation  allowance  is  provided  for  deferred  tax  assets as future
deductibility  is uncertain.  At December 31, 2000 and 1999, all of the deferred
tax  assets  were  noncurrent.  The change in valuation allowance of $165,381 is
comprised  of  an  increase  due  to  net  operating  losses.


                                       F-13
<PAGE>
     A  reconciliation  of income tax computed at the federal statutory tax rate
to  the  provision  for  income  taxes  is  as  follows:

<TABLE>
<CAPTION>
                                                              Year ended December 31,
                                                     --------------------------------------
                                                              2000               1999
                                                     ------------------  ------------------
                                                        Amount      %       Amount     %
                                                     ----------  ------  ----------  ------
<S>                                                  <C>         <C>     <C>         <C>
Income taxes at federal statutory rate               $(207,885)  (34.0)  $(229,370)  (34.0)
Increase (decrease) in income taxes resulting from:
  State and local income taxes, net of federal tax
    benefit                                            (30,571)   (5.0)    (33,731)   (5.0)
  Permanent differences                                 42,976     7.0      91,800    13.6
  State minimum taxes                                      850     0.0          50     0.0
  Net operating loss                                   195,480    32.0     171,301    25.4
                                                     ----------  ------  ----------  ------
                                                     $     850     0.0   $      50     0.0
                                                     ==========  ======  ==========  ======
</TABLE>

NOTE  12  -  Recent  accounting  pronouncements:

     In  June 1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS")  No.  133  "Accounting for Derivative
Instruments  and  Hedging  Activities",  as amended by Statements 137 and 138 in
June 1999 and June 2000, respectively.  These statements, which were required to
be  adopted  for fiscal years beginning after June 15, 2000, require the Company
to  recognize  all  derivatives on the balance sheet at fair value.  Among other
disclosures,  SFAS  133 requires that all derivatives be recognized and measured
at  fair  value  regardless  of the purpose or intent of holding the derivative.

     SFAS  133  is  effective for periods with fiscal years beginning after June
15,  2000.  To  date,  the  Company  has not traded in derivatives or engaged in
hedging  activities.

NOTE  13  -  Subsequent  event:

     On  January  26,  2001, as an inducement to warrant holders (see Note 3) to
exercise  their  warrants,  the  Company  reduced the exercise price of warrants
exercised  before  March 1, 2001 to $3.50 per share from $5.00 per share.  Those
warrant holders who exercise their warrants after March 1, 2001 and before April
30, 2001 will be able to exercise at $4.00 per share.  For those warrant holders
who  exercise  their  warrants  after April 30, 2001, the warrant exercise price
will  be  at  the  initial  $5.00  per  share.

     For  those  warrant  holders who exercise all of their warrants rather than
just  a  portion  of  them  prior to either March 1, 2001 or April 30, 2001, the
Company  will  issue  the  warrant  holders  the  same  number of warrants at an
exercise  price of $3.25 per share, such warrants expiring on November 30, 2001.


                                       F-14
<PAGE>
     For  those  warrant  holders  who  obtain the aforementioned warrants which
expire  on  November  30,  2001, and exercise all of them before expiration, the
Company  will  issue  the  warrant holders another warrant in the same number of
shares  as  the  original warrant, with an exercise price of $3.00 per share and
expiring  on  May  31,  2002.

     The  Company terminated the sale of common stock related to its February 7,
2000  Registration  Statement  at  the end of February 2001 (see Note 3). During
January through March 2001, the Company issued 46,352 shares of its common stock
(including  15,120  shares  issued  related to exercise of warrants at $3.50 per
share)  for  total  proceeds  of  $240,312.  The Company intends to fund new and
additional  activities  with  a  combination  of  industrial and venture capital
support, as well as a private placement offering. The proposed private placement
would attempt to sell 200,000 units at $6.00 per unit. A unit would be comprised
of  one  share  of  Series  A  Preferred Stock, one warrant for one common share
exercisable  through  October  31,  2001  at $2.50 per share, and one warrant to
purchase  an additional common share at $3.50 per share, through April 30, 2002.


                                       F-15
<PAGE>