SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[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

                         Commission File Number 0-28375


                               RHOMBIC CORPORATION
             (Exact name of registrant as specified in its charter)

            Nevada                                              86-0824125
 (State or other jurisdiction of                               (IRS Employer
incorporation or organization)                            Identification Number)

               11811 N. Tatum Blvd. # 3031, Phoenix, Arizona 85028
               (Address of principal executive offices) (Zip Code)

                        Telephone Number: (602) 953-7702

          Securities registered pursuant to Section 12(b) of the Act:

                                                   Name of each exchange
     Title of each class                           on which registered
     --------------------                          ---------------------
              None                                          None

          Securities registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                                (Title of Class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

     At December 31, 2001, the aggregate market value of the registrant's Common
Stock held by non-affiliates of the registrant was approximately $ 1,332,353

     At March 15, 2002, the number of shares outstanding of registrant's  Common
Stock was 28,697,042.
<PAGE>
                                     PART I

ITEM 1 - BUSINESS

GENERAL

Rhombic Corporation ("Rhombic" or the "Company"), is a development-stage company
incorporated  under  the  laws of the  State  of  Nevada.  The  corporation  was
initially  formed on February 26, 1987 as Toledo Medical  Corporation.  The name
was changed to Almaz Space Corporation on February 9, 1991 and to Ready When You
Are Funwear, Inc. on April 14, 1992. On December 30, 1994 a group of individuals
acquired control of the corporation. On February 17, 1995, they changed the name
to Rhombic  Corporation.  The  Company is  currently  headquartered  in Phoenix,
Arizona.

The Company is in the development stage and its efforts,  since inception,  have
been primarily focused on the acquisition of the rights to intellectual property
that could lead to the development of innovative technologies.  During the years
of 1999  and 2000 it began to  focus  on the  research  and  development  of its
portfolio of acquired  intellectual  property.  During 2001,  the Company's main
objective  was  to  identify  and  develop   specific   applications   from  its
intellectual  property  in  order  to make  them  commercially  marketable.  The
business  strategy  of the Company is to develop a specific  application  from a
technology,  then commence or contract for a marketing  effort for the developed
application that would generate sales.

The Company has four wholly owned  inactive  subsidiaries,  Rockford  Technology
Associates,    Inc.    ("Rockford"),Nanophase    Diamond   Technologies,    Inc.
("Nanophase"),   AEP   Technologies,   Inc.   ("AEPT")  and  Rhombic   Detection
Technologies, Inc.

By assignment  from the University of Illinois on September 5, 1995,  filed with
the  Patent  and  Trademark  Office,  Rockford  owns a patent  for the  Inertial
Electrostatic  Confinement  and Neutron  Monitor  technology.  On June 27, 1996,
Rockford  entered a licensing  agreement  with  Daimler Benz  Aerospace  and the
University of Illinois by which it is entitled to receive a long-term royalty on
all IEC sales  throughout  the world  including  North America and may engage in
direct  marketing of the  technology in North America  without  restriction.  In
return, Rockford assigned to Daimler Benz Aerospace, "Daimler", its right, title
and  interest  to the  Inertial  Electrostatic  Confinement  technology  for its
development  and  commercialization  by Daimler Benz  Aerospace.  In late August
2000,  Astrium,  which is a subsidiary of Daimler-Chrysler  Aerospace,  informed
Rhombic that they would not continue to self-fund the Neutron  Generator project
beyond  December 31,  2000.  As a result,  Rhombic  attempted to form of a joint
venture  between  itself,  Astrium and other partners that would provide capital
and  technological  expertise to  commercialize  the  technology  within certain
applications.  The joint venture  company was planned to originate in the wholly
owned subsidiary of Rhombic named AEP Technologies,  Inc.  ("AEPT").  Agreements
were obtained from all of the  participating  joint venture  partners to perform
their  respective  roles;  however,  Rhombic  was unable to raise the  necessary
capital to begin the project.

Nanophase  owns the  Diamond  Film  Forced  Diffusion  technology.  No  activity
occurred during 2001 in the subsidiary.

Rhombic Detection  Technologies,  Inc. was formed during 2000 in anticipation of
Rhombic's  being  awarded a contract from the  Department  of Energy  ("DOE") to
develop a Beryllium  detection  device.  Rhombic was not awarded the contract by
the DOE; therefore, the subsidiary was not used.

                                       1
<PAGE>
As a technology transfer and development  start-up company,  Rhombic has limited
finances. On March 8, 2001 it signed a $ 2.5 million convertible debenture to be
funded with installment payments starting May 1, 2001 in order to accomplish its
growth objectives and development of products and marketing of its technologies.
The Holder  funded  $200,000 on the  debenture  and  converted the advances into
1,166,142  shares of the Company under the terms of the  debenture.  On July 20,
2001, the Company withdrew its registration  statement for the shares issued and
to be issued  under the  debenture  because it was no longer  applicable  to the
Company.

There is no  assurance  that the Company  will be able to secure any  additional
funding necessary for such growth and expansion. There is also no assurance that
even if the  Company  obtains  adequate  funding to  complete  any  contemplated
acquisition,  such acquisition will succeed in enhancing the Company's  business
and will not  ultimately  have an adverse  effect on the Company's  business and
operations.

On November 5, 2001,  the Company  entered into a  non-binding  letter of intent
with Famco Holding Company, LLC to reach a definitive agreement wherein
Rhombic would acquire all the  outstanding  shares of six  corporations  that it
owned. On March 18, 2002,  Rhombic canceled the letter intent because it had not
received sufficient financial  information from the six corporations in order to
negotiate an agreement.

ACQUISITION OR DISPOSITION OF ASSETS

The Company  intends to make future  acquisitions  of with a revenue  generating
operation.  However,  currently,  the  Company  does not have a fixed  source of
capital to finance such  acquisitions.  In this respect,  the Company intends to
accomplish its acquisition  plans by exchange of the Company stock.  There is no
assurance that the Company will be able to arrange for such  acquisitions  or as
to the trading  price or liquidity of the Company's  common  stock.  Low trading
price or poor liquidity of the Company's  common stock may adversely  affect the
Company's ability to engage in future  acquisitions and to accomplish its growth
objectives.

On January 3, 2000,  the Company  acquired  the right,  title and interest in an
invention  named "Micro Wave Driven Ultra  Violet Lamp" or "Excimer  Lamp".  The
seller agreed to provide  technical  support for the research and development of
the Excimer Lamp when the  development  takes place.  The Company issued 100,000
restricted  shares at a deemed  value of $ 281,250 and issued the  inventor  and
option to purchase  50,000  shares of its common stock at $ 1.00 per share until
December  31,  2000.  The option was not  exercised  on  December  31,  2000 and
expired.

On April 12, 2000,  the Company  issued  100,000 shares of its common stock at a
deemed  value of  $194,250  for the  patent  rights,  title and  interest  to an
invention  called  long-lived  nuclear waste by low energy nuclear  reactions in
host metals and  Disperse  Composite  Material  "LENR/DCM".  The  invention is a
defined  process to convert the long-lived  nuclear wastes by low energy nuclear
reactions using hydrogen in host metals.  The inventor and seller,  Dr. Heinrich
Hora,  agreed to  provide  reasonable  technical  support  under a  compensation
agreement to be decided upon for the research and development of the technology.

                                       2
<PAGE>
The   Company  is  seeking   joint   venture   partners   or  others  to  effect
commercialization of its other impaired technologies. There is no assurance that
Company will be able to locate a joint venture  partner to develop any or all of
these  technologies.  In addition,  there is no  assurance  that even if a joint
venture  partner is found  that any of these  technologies  will ever  result in
marketable or viable products.

INTELLECTUAL PROPERTY

In early July 2001, the Company hired a scientific consultant to evaluate all of
the patents and patent  applications  of the Company for  relevance to potential
commercial  applications.  The  consultant  first  stated  that all  patents and
provisional  patents  involving Field Enhanced  Diffusion by Optical  Activation
(FEDOA) which covered  diamond based fuel cells,  diamond doping and the removal
of  impurities,  listed  inventors  that  are or  were  faculty  members  of the
University of Missouri at Columbia.  The University  Administration asserts that
all  inventions  created  at the  University  by its  faculty  members  are  its
intellectual  property and not  Rhombic's.  The following  opinions on Rhombic's
provisional  patents  invented by faculty  members at the University of Missouri
are summarized as follows:

     1.   Provisional  patents for the System and Method for Diamond  Based Fuel
          Cells give substantial evidence that the described process using FEDOA
          is too slow to be economically feasible.

     2.   Provisional  patent  applications  covering  the doping of natural and
          chemically vacuum deposited (CVD) diamond using FEDOA is too slow of a
          process  to  be  economically   feasible.   Additional  research  into
          electrical  applications  of these  provisional  patents could be used
          with  other   doping   processes  to  explore   potential   commercial
          applications.

     3.   Provisional patent applications for a System and Method for Removal of
          Imputities  from  materials such as  semiconductors  using FEDOA would
          require  significantly  more research to determine  commercial  value.
          Although  the  process  appears  to offer an  increase  yield of chips
          obtainable  from wafers,  the  commercial  viability  is  questionable
          because the FEDOA is very slow for commercial applications.

     4.   Provisional  patent  applications  for  Carbon  Crystal  Growth  Using
          Electric  Emission  Enhanced  Showerhead  Hot Filament  Chemical Vapor
          Deposition  offers an improved  process for the CVD  process,  but the
          applications  and  inventors  do not  have  enough  data to  determine
          commercial viability.

The  conclusion of the consultant and the company was not to continue the patent
process of the above listed provisional patent  applications  because of (1) the
limited economic  viability due primarily to the process speed of FEDOA; (2) the
high costs of patent counsel and the direct costs to obtain domestic and foreign
patents; and (3) the potential exposure to royalty payments to the University of
Missouri with corresponding costs of defending ownership of the patents.

                                       3
<PAGE>
The  consultant  also  evaluated  Rhombic's   intellectual   property  that  was
unaffected by potential claims from the University of Missouri. His opinions are
as follows:

     1.   Provisional  patent  for  the  Method  and  System  for  Manufacturing
          Disperse Composite Materials is of great economic value if the process
          is fully  developed  for the  numerous  applications  that  are  being
          proposed now by industry or that will emerge shortly.

     2.   Provisional  patent for a Method of Contact Diffusion into Diamond and
          Other Crystalline  Structures and Products using its thermal diffusion
          method is commercially viable.

The consultant  recommended  proceeding  with a development  plan for commercial
applications  involving the Manufacturing of Disperse  Composite  Materials.  He
also  recommended  to proceed with Contact  Diffusion into Diamond if reasonable
arrangements  could be made to secure a license to receive the processed diamond
material necessary to complete the process.

Upon the  recommendations  of the  consultant,  the  company met with its patent
attorneys and determined  that the  application  deadlines to extend the patents
pending on the Manufacturing of Disperse Composite Materials had expired. As a
result, the President, Roger Duffield, met with the inventors of the patents and
determined a commitment of $ 500,000 to $1,000,000 in capital would be needed to
begin a development  program for any commercial  applications that would provide
specific patent coverage for any process  developed.  Due to existing  financing
problems that the Company was facing,  Rhombic's President  recommended a merger
with a private research and development company that had capital and scientists.
Unfortunately,  Rhombic never received  enough  information  from the company to
evaluate a merger and Rhombic's President subsequently resigned.

Rhombic  impaired  the  value  of  FEDOA  and  its  corresponding   intellectual
properties  as a result of the  consultants  report and its  inability  to raise
money during 2001 for the development of any of its applications.

Rhombic  believes  that its  Ultra  Violet  (Excimer)  Lamp may have  commercial
application based upon numerous inquiries it has received from potential buyers.

This lamp uses a highly efficient photon emission reaction (7-50%) from excimers
to produce wavelengths of vacuum ultra violet (VUV) to visible light. An excimer
is an excited state in a molecule that dissociates  into an unbound state.  This
feature means that  self-absorption  in the lamp is small,  and because of this,
the lamp can be  scaled  to large  volumes  without  severe  degradation  of the
emission  wavelength.  The  pioneering  excimer  lamp  technology  developed  by
Columbia Research Instruments is now owned by Rhombic. It efficiently  transfers
the energy of electricity  to microwaves  and  microwaves to excimers  (transfer
efficiency  between  50 and  90%).  This  technology  produces  light  of a pure
wavelength  more  efficiently  than any other light source.  This is significant
because light is used to induce chemical reactions that are wavelength specific.
The  excimer  lamp is orders of  magnitude  more cost  effective  (dollar/photon
bandwidth) than anything that current technology is capable of producing.

                                       4
<PAGE>
POTENTIAL COMMERCIAL APPLICATIONS

The  development  of these  low-cost,  high power and  large-area VUV to visible
sources  promises  enormous  potential  for  materials'  processing  and several
applications of such sources have already been demonstrated.  These sources have
been  used in the  production  of  silicon  dioxide;  silicon  nitride,  silicon
oxynitride,  tantalum  pentoxide,  titanium oxide, zinc oxide, PZT and polymers.
Multi-layered  films can also be produced at low  temperature  (below  400oC) by
photo-induced  processing  (photo-CVD  and sol-gel  processing).  Excimer photon
sources  provide   selective  intense  VUV  to  visible  radiation  at  specific
wavelengths  as  opposed  to  other  types of light  sources.  This  narrow-band
radiation  can initiate  chemical  reactions,  break  molecular  bonds or modify
surface properties.  Like other UV sources,  Excimer lamps can be used to induce
photo-polymerization  of special paints,  varnishes,  and adhesives,  (a process
called UV-curing) but do so at a much lower cost per photon than any competitor.
The  following  is an overview of current and  potential  application  areas:(1)
Materials  deposition/coating of metals: for the production of dielectrics (high
and low  dielectric  constant  materials),  and  semiconducting  layers.  (2) UV
curing: hardening of paints,  lacquers,  adhesives,  e.g. for printing,  textile
finishing,  lamination,  automotive engineering and equipment  engineering.  (3)
Surface treatment: surface etching including three-dimensional applications. (4)
Photochemistry:for-photo-chlorination,photosulpho-oxidation,
photonitrosylization,  and photo-oxidation.  (5) Photomedicine: for treatment of
skin  conditions,   and  tanning.  (6)  Environmental   technology:   for  ozone
generation,  elimination  of  pollutants  in water and air  (chlorofluorocarbons
(CFCs),  dioxins,  etc.) (7) Fluorescent  lamps:  for flat plasma display panels
without the use of hazardous mercury. (8)  Decontamination:  for the destruction
of harmful  bio-organisms  in soil,  water or air,  for the  decontamination  of
biological  agents  in the  aftermath  of  biological  weapon  attack,  for  the
destruction  of  hazardous  chemicals  in  soil,  water,  or  air,  and  for the
decontamination of chemical agents in the aftermath of a chemical weapon attack.
(9)  Photosynthesis:  for the initiation of photosynthesis at wavelengths suited
for chlorophyll  absorption.  modification of polymers, dry etching of polymers,
synthesis  of  hydrophilic  polymers,  increasing  adhesion  between  metal  and
polymer, and surface cleaning.

IMPAIRED INTELLECTUAL PROPERTY

All of Rhombic's intellectual properties are in the development phase. Rhombic's
current  portfolio  of impaired  intellectual  property  includes  (1)  Inertial
Electrostatic   Confinement   and   the   Neutron   Monitoring   Detector,   (2)
Diamond-reinforced Flywheel Battery and Radio Nuclide Battery, (3) Active Engine
("Rhombic Explorer") (4) Disperse Composite Material (5) LENR/DCM technology and
(6)  Diamond  Film and  Forced  Diffusion.  All of these have been  acquired  by
Rhombic  in  exchange  for shares of its common  stock  from  different  parties
including research companies and individual  inventors  throughout the world. In
certain cases,  as part of the  acquisition of the  technology,  the Company has
agreed to pay royalty fees based on sales, when and if any such sales occur.

1. Inertial Electrostatic Confinement "IEC"

The IEC device is a large,  negatively  charged  grid  ionizing the gas inside a
spherical  vacuum  chamber.  The  positive  ions  produced  by this  plasma  are
attracted  toward the central cathode  (negative  electrode).  Since the grid is
mostly  transparent,  most of the ions will pass  through  the grid  toward  the
center of the device,  rather than collide with the grid. At the center, many of
the ions will collide with each other.  If the gas consists of fusionable  fuels
(tritium,  deuterium,  helium-3),  then some of the  collisions  will  result in
fusion and release of energy.  Increasing the number of fusion  reactions  would
increase the energy output of a fusion reactor,  or would increase the number of
valuable  fusion products  produced  (neutrons,  helium-3).  Potentially the IEC
device may become a source of energy.  Currently,  however,  the IEC device does
not produce as much energy as is used to operate it.

                                       5
<PAGE>
Research on the technology began during 1993 under a licensing agreement between
Daimler-Benz   Aerospace  (DASA),   the  University  of  Illinois  and  Rockford
Technology  Associates (a wholly owned  subsidiary of Rhombic).  The development
program objective was to develop a neutron generator for multiple  applications.
As of December 2000, the development  program with Astrium  successfully  proved
the demonstrator model of the neutron generator in continuous operation for over
5,000 hours.  This  achievement was significant  because there are not any known
competitors   that  have  been  able  to  match  the   longevity   of  Astrium's
demonstrator. Competitors have been able to generate a higher output of neutrons
per second than the demonstrator.  Current applications suitable for the Astrium
demonstrator are:

     a.   medical cancer treatments
     b.   bulk foodstuffs quality control
     c.   On-line   measurement  of  coal  quality  at  the  power  station  for
          combustion emission control.
     d.   On-line measurement of mineral quality in the mining industry.
     e.   Land mine detection

Rhombic  acquired a related device during September 1999 utilizing the principle
described  above.  The  device  is named the  Neutron  Monitoring  Detector  and
monitors the speed and  frequency  of passing  neutrons to assess the quality of
alloy.  Some practical  applications of this technology may include detection of
impurities in high quality alloys,  mineral quality analysis in coal, cement and
similar industries, detection contraband at airports, bus stops, train stations,
and detection of nonmetallic antipersonnel land mines.

During the second  quarter of this year,  the Company  paid  $22,000 in cash and
issued 50,000  restricted  common shares to Roger Duffield to prepare a business
plan  to  develop  and  commercialize  the  Inertial  Electrostatic  Confinement
technology.  On  September  1, 2000 Mr.  Duffield  became the  President  of the
Company and completed the business plan.  While  completing the business plan in
late August,  Astrium,  which is a  subsidiary  of  Daimler-Chrysler  Aerospace,
informed Rhombic that they would not continue to self-fund the Neutron Generator
project  beyond  December 31, 2000. As a result,  the business plan provided for
the formation of a joint venture between  Astrium,  Rhombic,  and other partners
that would provide  capital and  technological  expertise to  commercialize  the
technology within certain applications. Agreements were obtained from all of the
participating  joint venture  partners to perform their  respective  roles.  The
joint  venture was not funded by the  participating  partner  that  committed to
capitalizing  the joint venture.  As a result,  Astrium informed the Company and
the University of Illinois that it had no intention to continue  research on the
neutron  generator  project and paying any future  royalties beyond December 31,
2000.

As a result of the written statements from Astrium declining to continue further
research  on the IEC,  the  Company is in  discussions  with the  University  of
Illinois to determine  how to obtain the patent  rights and the best way to move
forward with the  technology.  It also  believes  that its rights to the Neutron
Monitoring   Detector  will  be  relevant  to  continued  research  on  the  IEC
technology.

                                       6
<PAGE>
The Company will need to determine specific applications and potential customers
before pursuing  development work because it has already identified  competitors
that are able to generate  confined  neutron  streams in at higher  outputs than
what was developed by Astrium.

2. Diamond-reinforced Flywheel Battery and Radio Nuclide Battery.

The battery  operates  on a principle  using  diamond  layers  instead of carbon
filters to increase the power density of  electro-mechanical  energy storage for
batteries used in automobiles or other storage systems. This concept is based on
a rupture stress  measure for present  polycrystalline  diamond.  An increase in
storage  capacity may result in the  development  of a  satisfactory  method for
storing large amounts of electrical  energy for portable  applications,  such as
automobiles and satellites, as well as fixed appliances,  such as electric power
load leveling from the  individual  house to the utility  level.  Throughout the
world,  much work is being  performed  on improving  electrochemical  cells with
limited  success.  The  hydrogen  fuel  cell,  long used in  space,  is just now
receiving its first tests in motor vehicles,  but offers no great improvement on
electrochemical  batteries and requires a large,  expensive  infrastructure.  Of
greatest current interest for electric automobiles is electromechanical  storage
(a flywheel coupled to a  motor-generator),  which, with new technology promises
all the advantages of an all-electric  automobile but with the performances of a
gasoline-powered automobile.

Carbon  fiber  technology,   developed  for  high  rotational  velocity  uranium
enrichment  centrifuges,  has been used to produce automobile  prototypes.  Cars
equipped with this "rotation  battery" are projected to demonstrate  performance
(speed and range) equal to that of a standard  mid-engine  automobile  and quite
superior to ones with electrochemical batteries, which last only about 40,000km.

On May 30, 2000,  the Company  received an extensive  five volume  Technical and
Business Panning and Development report on its Radionuclide  Batteries for space
applications. The conclusion was that the Noble Gas battery was not economically
feasible nor  commercially  viable because of the scarcity of the required gases
and the cost to produce those gases such as Kr-85 and Ar-39.

The dust plasma battery was evaluated as not feasible because the  Technetium-99
isotope is not a practical radioisotope because extremely large amounts would be
required for the battery.  Strontium-90  would not be appropriate for commercial
use because it represents a major biological hazard.

3. Active Engine ("Rhombic Explorer"):

The Active  Engine or Magnesite is a software  program  designed to economize on
Internet  search and data  download  costs.  It  creates  site  directories  and
translates hypertext  references,  making the information fully useable offline.
The development of the Magnesite is interrelated  with the Company's  efforts to
develop and launch the Rhombic  Explorer,  a personal  Internet  search  engine.
During  September,  the  Company and its  strategic  marketing  partner,  Vision
Magnetics,  conducted  quality assurance testing on the Magnesite code to ensure
product  reliability and to allow for expansion of Magnesite into Magnesite Pro.
The results of the testing  indicated  that the  program  was not  suitable  for
marketing because of its inability to download graphics and certain web sites in
their entirety.  As a result of the testing,  the Company is evaluating the cost
and  benefits  involved  in  debugging  the  program  and  bringing  it  to  the
marketplace.  In conjunction with the planned  marketing of Magnesite during the
third quarter,  Vision Magnetics engaged programmers to create a new website for
Rhombic to sell,  deliver and maintain user registration and update  information
as well as hard delivery of diskettes  containing  Magnesite  code to end users.
Vision  informed  Rhombic that it needed to obtain a marketing study in order to
determine the  specifications  needed for the Magnesite  Pro.  During the fourth
quarter of 2000, the Company  engaged a programmer to debug the program in order
to prepare it for quality assurance testing.

                                       7
<PAGE>
During the first quarter of 2001,  it became  apparent to Rhombic that there was
no cost benefit to continue developing  Magnesite because of the necessary costs
to  continue  developing  a  working  program,   conducting  marketing  studies,
incurring  marketing  costs and  incurring  administrative  and legal  costs for
licensing and customer service.  On March 14, 2001, Rhombic and Vision agreed to
cancel all of their  agreements  with each other  under a Mutual  Release,  Hold
Harmless and Cross Indemnification Agreement.

4. Disperse Composite Material

During the fourth quarter of 2000, the Company  impaired its Disperse  Composite
Material  technology.  The Company determined that it was not cost beneficial to
incur patent and  research  costs to advance the theory of the  technology.  Its
decision  was mainly due to having  identified  numerous  competitors  with more
capital resources intending to develop comparable technologies.

5. LENR/DCM

During the fourth quarter of 2000, the Company impaired its LENR/DCM technology.
The  Company  determined  that it was not cost  beneficial  to incur  patent and
research costs to advance the theory of the technology.  Its decision was mainly
due to  having  identified  numerous  competitors  with more  capital  resources
intending to develop comparable technologies.

6. Diamond Film Forced Diffusion.

Rhombic's negative type diamond  technology,  referred to as "Forced Diffusion,"
has been successfully  created in a former Soviet Republic  laboratory to create
functional integrated circuits.  This technology consists of diffusing different
elements into diamonds. Rhombic believes that Forced Diffusion has many spin off
applications.  Certain  elements in diamond can change the mechanical,  optical,
and  electrical  properties  of the material.  For example,  boron doping causes
diamond to turn blue, enhances the wear resistance of diamond and makes a p-type
conductor.

Methods of growing  diamond on a film has been  accomplished  by chemical  vapor
deposition.  Generally  methane gas is used as the source of carbon and hydrogen
is used as the flux and carrier gas. Substrate temperatures are generally in the
700 - 800 Centigrade  range.  Several  different  substrates  have been used for
single  crystal  growth.  In  general,  diamond  has very good  adhesion to most
carbide forming  materials.  Diamond will nucleate and grow on most  non-carbide
forming  materials but it tends to delaminate  except on nickel,  molybdenum and
tungsten.  Diamonds conductivity can be varied from very low values to very high
values.  It has tensile  strength  better than that of graphite  and is the most
chemically resistive material known to engineering.

Producing  diamond with  electronic  properties is greatly  superior to those of
silicon which is the material currently used for computer chips. This technology
allows  for the  exponential  decrease  of the  space  required  for a  computer
microchip.  Such diamond film is considerably more heat and radiation  resistant
extending  the  life of the  electronic  circuitry.  Harder  cutting  tools  and
abrasives,  diamond television and computer monitor screens,  sensor bearing and
radar screens are among a number of potential  commercial  applications  of this
technology.

                                       8
<PAGE>
The research  plan for this  technology  has four aspects.  First,  attention on
understanding  the forced  diffusion  process and how it produces n-type diamond
material with Lithium,  Oxygen and Chlorine will be done. Second, an examination
on the forced  diffusion of a variety of elements  will be conducted.  Third,  a
study on how the addition of these  impurities  change the mechanical,  optical,
chemical,  and electrical  properties of diamond.  Fourth,  an evaluation of the
electrical  characteristics  of various  elements put into diamond by the forced
diffusion process will be conducted.

During the year 2000, the Company targeted the development of the following four
applications of its Diamond Film Forced Diffusion technology:

     1.   A   Silicon-Carbide   purification   technology   for  the   high-tech
          manufacturing industry,
     2.   An  integrated  Diamond  Circuit  for  the  computer  and  electronics
          industry,
     3.   A Heavy Doped Diamond Fuel-Cell Electrode for the fuel cell industry,
     4.   Quality colored diamonds for the high-end jewelry accessory market.

Rhombic  believes  that  controlling  impurities  in Gallium  Nitride  "GaN" and
Silicon  Carbide "SiC" is important  because  impurities are used to make n-type
and p-type materials. The n-type and p-type material is used to form transistors
and  other   structures  in  integrated   circuits.   Impurities   represent  an
imperfection  in the crystal  structure and a center for further  propagation of
imperfections  during the growth  phase.  A high  quality  crystal  structure is
necessary in order to shrink the size of the  transistors  and other  electrical
elements.  Crystal  quality is also a means of  increasing  the  lifetime of the
integrated  circuit.  A second  benefit of a  relatively  impurity  free crystal
structure is in the limitation of unwanted leakage currents.

During the first  quarter  2000  approximately  $85,000 was spent to build three
second  generation forced diffusion  reactors.  One reactor will be used for the
n-type diamond material,  one reactor for p-type materials and the third reactor
for purification of crystals.  Also, a high voltage Silicon Carbide purification
reactor was built.  This reactor will enhance the  impurities  removal rate from
Silicon  Carbide  materials.  Results  from  research  during  the year  reduced
impurity  levels for oxygen and  nitrogen  from 10 parts per million to .5 parts
per million.  GaN is at the point where  impurity  levels are about the one part
per million level and SiC is at about the 20ppm level. It is imperative that the
GaN and  SiC  industries  continue  along  the  path  of  high  quality  crystal
production.  We know from the silicon  industry that when the impurity levels in
silicon were decreased by one or two orders of magnitude that silicon achieved a
factor of ten  improvements  in chip  power  consumption  and  lifetime.  We can
therefore anticipate improvements in GaN and SiC.

A specific  program of work has been  defined at the  University  of Missouri to
demonstrate  the process for treating  2-inch wafers using the existing  reactor
and to have  designed  and  tested  a  prototype  FEDOA  for  6-inch  GaN  wafer
treatment.  Development  budgets  for this work  program  are  estimated  at $.5
million.

                                       9
<PAGE>
6A. Diamond Fuel Cell

Previous research over many years by the team of scientists at the University of
Missouri have  developed  innovations  in diamond  materials that have shown the
capability to replace the current polymer electrolyte membrane with diamond.

This new development in proton diamond electrode  membrane (PDEM) technology may
allow high proton transport  through the membrane by the process of a non-porous
structure  supported by an improved anode and cathode and to which hydrogen ions
are not affected. Furthermore, a major advantage of using diamond is that it can
withstand  temperatures  four times  greater  than  current  membrane  material.
Rhombic believes that its planned PDEM could operate at higher temperatures than
current  standard  proton  polymer   electrolyte   membrane(PPEM)   fuel  cells,
subsequently,  reaction rates would be increased  considerably with the platinum
content  decreased  by a similar  factor,  while  manufacturing  costs  would be
drastically reduced. The new diamond membrane does not require moisture; whereas
current PPEM must be kept moist, thus restricting operating temperatures

In  conclusion  the  Diamond  PDEM  fuel cell may  allow  for  higher  operating
temperatures,  an increased  reaction rate and longevity and a much smaller fuel
cell stacked system.  Reduced platinum and manufacturing  costs that can provide
an opportunity to produce a fuel cell stacked system at an affordable price. The
research  budget would  require a minimum of $500,000 to create a working  model
and approximately $1,500,000 to create prototypes with marketing plans.

6B. Coloring Gemstones

Forced  diffusion  technology has been  demonstrated  on mined diamond,  diamond
films,  and  gahnite.  Impurities  were added to diamond  and the  results  were
verified. In these studies it was found that changes occurred to the mechanical,
chemical,  optical and electrical properties of diamond. The diamond became more
wear  resistant,  the crystal  color changed to blue,  and the diamond  became a
p-type  semiconductor.  Each of these property  changes has a commercial  value.
Another   example  is  that  the  addition  of  lithium  to  mined  diamond  and
polycrystalline diamond film made the diamonds an n-type conductor.

The forced  diffusion  process has demonstrated  that the optical  properties of
diamond can be changed with the addition of impurities.  Mined blue diamonds are
rare;  1 in  1,000,000  diamonds is blue.  Other  impurities  added to a diamond
crystal  change  its  color  from  red to  green.  Modification  of the  optical
properties of diamond can impact the gem market. The diamond gem market is about
$4.8 billion. The colored diamond market is about $500 million. It is well known
that the rare blue diamond is more than double the cost of a white  diamond.  In
addition,  red diamonds are the most rare gemstones known.  Recently a 1/2 carat
red diamond was auctioned for the price of $1.5 million dollars.

Forced diffusion is being applied to gemstone quality Type II diamond.  The goal
of this work is to demonstrate that the technology can be used to induce a color
change in the crystal.  The forced  diffusion  process used for coloring is used
commercially  and there are numerous  patents by competitors  covering the area.
Rhombic  does  not  believe  that  it  is  sufficiently  capitalized  to  pursue
commercializing its doping technology as it applies to coloring diamonds.

                                       10
<PAGE>
COMPETITION

The Company operates in the competitive  environment of developing  technologies
where other companies may be developing similar  technologies with substantially
larger financial resources,  operations,  staffs, scientists and facilities. The
Company is working toward developing prototype  demonstrative models for certain
applications of its  technologies.  There can be no assurance that the prospects
will yield  substantial  economic  returns or that a  competitor  may  develop a
similar prototype and enter the marketplace ahead of Rhombic. Failure to develop
applications from the technologies with an estimated  economic return could have
a material adverse impact on the Company's future financial  condition and could
result  in a  write-off  of a  significant  portion  of  its  investment  in the
technologies.

The Company's  competitors include major integrated  international  companies in
various  industries with research and development  programs.  The  international
companies  are large,  well  established  companies  with  substantially  larger
operating staffs and greater capital  resources than the Company's and which, in
many instances, have been engaged in the technology development arena for a much
longer time.

MARKETING

The Company's  primary  business focus is placed upon the  commercialization  of
advanced  technologies and commercial products resulting there from. The Company
has limited  experience in marketing of products and services in these fields of
applications for its intellectual  property and intends to rely on licensing and
joint  venture  opportunities  with  companies for the marketing and sale of its
technologies.  The Company also has little  experience  marketing  products of a
consumer  nature.  There is no assurance  that the Company will be successful in
developing  a market  for any of its  products  or that it will gain any  market
recognition and acceptance.

PATENTS

Current patents

     *    Field-Enhanced  Diffusion  Using Optical  Activation,  U.S. Patent No.
          5,597,762
     *    Microwave-Driven  UV Light Source and Solid-State Laser, US Patent No.
          5,659,567
     *    Microwave-Driven  UV Light Source and Solid-State  Laser,  U.S. Patent
          No. 5,659,567

Patent applications

     *    System and Method for Network Based Information Retrieval (Magnesite),
          U.S. Patent App. No. 60/240,770
     *    Compact Power Technology Using  Photon-Intermediate  Direct Conversion
          of Radioisotope Energy to Electricity, U.S. Patent App. No. 60/223,869
     *    System and Method for Diamond Based Fuel Cells,  U.S.  Patent App. No.
          60/241,097
     *    System  and  Method  for  Diamond   Based  Fuel   Cells,   Docket  No.
          790072.408P2
     *    System and Method for Conductive Diamond and Ohmic Contacts 60/251,823
     *    System and Method for Conductive Diamond and Ohmic Contacts 60/255,686
     *    System and Method for Removal of  Impurities  From  Materials  Such as
          Semi-conductors, Docket No. 790072.411P1
     *    System and Method for Removal of  Impurities  from  Materials  Such as
          Semi-conductors, Docket No. 790072.411P1

                                       11
<PAGE>
Patent applications terminated

     *    Supercompact Radio Nuclide Battery Docket No. 790072.401
     *    Low-cost Elimination of Long-lived Nuclear Waste, U.S. App. 09/013,179
     *    Method and  System for  Manufacturing  Disperse  Composite  Materials,
          International Patent Application No. PCT/US99/16552.

EMPLOYEES

The Company currently has no employees.

RISK FACTORS

The Company has no Revenues  and is Currently  Operating at a Loss.  The Company
has not received  any  revenues to date and is operating at a loss.  The Company
will need to raise additional capital through the placement of its securities or
from  debt or  equity  financing.  If the  Company  is not  able to  raise  such
financing or obtain alternative sources of funding,  management will be required
to curtail  operations.  There is no assurance  that the Company will be able to
continue to operate if additional sales of its securities cannot be generated or
other sources of financing located.

Limited  History  of  Operations.  The  Company  has only a limited  history  of
operations.  The Company  operations  are  subject to the risks and  competition
inherent in the  establishment  of a  relatively  new business  enterprise  in a
highly competitive field of technology transfer.  There can be no assurance that
future operations will be profitable.  Revenues and profits, if any, will depend
upon  various  factors,   including  market   acceptance  of  its  products  and
technologies, market awareness, its ability to promptly and accurately recognize
a marketable  technology  or  invention,  dependability  of an  advertising  and
recruiting network, and general economic conditions.  There is no assurance that
the Company  will  achieve its  expansion  goals and the failure to achieve such
goals would have an adverse impact on it.

The  Company  May  Need  Additional  Financing.  Future  events,  including  the
problems,  delays,  expenses and difficulties  frequently encountered by startup
companies may lead to cost  increases  that could make the  Company's  source of
funds  insufficient to fund the Company's proposed  operations.  The Company may
seek  additional  sources of capital,  including an  additional  offering of its
equity securities, an offering of debt securities or obtaining financing through
a bank or other entity. The Company has not established a limit as to the amount
of debt it may  incur  nor  has it  adopted  a  ratio  of its  equity  to a debt
allowance.  If the Company  needs to obtain  additional  financing,  there is no
assurance that financing will be available,  from any source, or that it will be
available on terms  acceptable  to the Company,  or that any future  offering of
securities will be successful.  The Company could suffer adverse consequences if
it is unable to obtain additional capital when needed.

Trademark  Protection and Proprietary  Marks. The Company may continue  pursuing
patents and several pending patents as a result for its  intellectual  property.
There is no assurance that the Company will be able to prevent  competitors from
using the same or similar names, marks,  concepts or appearances or that it will
have the financial  resources  necessary to protect its marks against infringing
use.

                                       12
<PAGE>
The Company's  Intellectual Property and Inventions May become Obsolete.  Patent
review is usually a lengthy,  tedious and expensive process that may take months
or,  perhaps,  several  years to complete.  With the current rate of  technology
development and its  proliferation  throughout the world,  those  inventions may
become  commercially  obsolete  during or after the patent  review.  There is no
assurance that the Company's intellectual property,  acquired or developed,  may
not become obsolete and remain commercially viable.

The Company May Fail to Obtain Patent Protection in Various  Jurisdictions.  The
Company has filed patent applications in several jurisdictions, including Japan,
Korea,  and the  United  States.  The  filing  process  is  usually a costly and
time-consuming  undertaking requiring proper legal counsel under the laws of the
jurisdiction where patent protection is sought. There is no assurance that those
patent  protection  filings  were  properly  and timely  made.  There is also no
assurance that upon review,  those  applications may not be rejected for lack of
novelty or any other bases sufficient to reject a pending patent  application in
any of those jurisdictions.

Commercial  Viability of the  Company's  Current  Technologies.  The Company was
organized to identify, assess, acquire and capitalize on technologies introduced
and developed by scientists throughout the world. These technologies are new and
in their research and development  stage.  Generally,  it requires a substantial
time and  resource  effort  to bring be able to both  recognize  a  commercially
successful  technology  or  invention at an early stage and conduct a successful
marketing  campaign to sell this technology or invention.  There is no assurance
that all or any of the Company's research and development efforts will result in
commercially viable final products.

The Company May Fail to Generate Sufficient  Interest in Acquired  Technologies.
The Company  must  undertake  substantial  effort to educate the buying  public,
consumers  and  businesses,  in the  U.S.  and  worldwide,  as to the  Company's
products and  technologies.  There is no assurance that the Company will be able
to  generate  interest  in and to create  and  maintain  steady  demand  for its
products over time.

Reliance on Future  Acquisitions  Strategy.  The Company  expects to continue to
rely on acquisitions as a primary component of its growth strategy. It regularly
engages in evaluations of potential  target  candidates,  including  evaluations
relating to acquisitions that may be material in size and/or scope.  There is no
assurance  that the Company  will  continue  to be able to identify  potentially
successful companies that provide suitable acquisition opportunities or that the
Company will be able to acquire any such  companies on  favorable  terms.  Also,
acquisitions  involve a number of  special  risks  including  the  diversion  of
management's  attention,  assimilation  of the personnel  and  operations of the
acquired  companies,  and possible loss of key employees.  There is no assurance
that the acquired  companies  will be able to  successfully  integrate  into the
Company's  existing  infrastructure or to operate  profitably.  There is also no
assurance  given as to the  Company's  ability  to obtain  adequate  funding  to
complete any contemplated  acquisition or that any such acquisition will succeed
in enhancing  the  Company's  business and will not  ultimately  have an adverse
effect on the Company's business and operations.

                                       13
<PAGE>
Possible Inability to Finance Acquisitions. In transactions in which the Company
agrees to make an  acquisition  for cash, it will have to locate  financing from
third-party  sources such as banks or other  lending  sources or it will have to
raise cash through the sale of its  securities.  There is no assurance that such
funding will be available to the Company when required to close a transaction or
if available on terms acceptable to the Company.

Loss of the Company Key Directors May Adversely  Affect Growth  Objectives.  The
Company's success in achieving its growth objectives depends upon the efforts of
of its directors.  Their  experience and  industry-wide  contacts  significantly
benefit the Company.  The loss of the services of any of these  individuals  may
have a material adverse effect on the Company business,  financial condition and
results of  operations.  There is no assurance  that the Company will be able to
maintain  and achieve its growth  objectives  should it lose any or all of these
individuals' services.

Failure to Attract Qualified Personnel. A change in labor market conditions that
either further reduces the availability of employees or increases  significantly
the  cost of  labor  could  have a  material  adverse  effect  on the  Company's
business,  financial condition and results of operations. The Company's business
growth is dependent  upon its ability to attract and retain  qualified  research
personnel,  administrators and corporate management.  There is no assurance that
the Company  will be able to employ a sufficient  number of  qualified  training
personnel in order to achieve its growth objectives.

Issuance of Future Shares May Dilute  Investors Share Value.  The Certificate of
Incorporation  of the Company  authorizes  the issuance of 70,000,000  shares of
common stock and 1,000,000 shares of preferred stock. The future issuance of all
or part of the  remaining  authorized  common or  preferred  stock may result in
substantial dilution in the percentage of the Company's common stock held by the
its then existing shareholders.  Moreover, any common stock issued in the future
may be  valued  on an  arbitrary  basis  by the  Company.  The  issuance  of the
Company's shares for future services or acquisitions or other corporate  actions
may have the effect of diluting the value of the shares held by  investors,  and
might have an adverse  effect on any  trading  market for the  Company's  common
stock.

Penny  Stock  Regulation.  The  Company's  common  stock is deemed to be a penny
stock.  Penny stocks  generally are equity  securities with a price of less than
$5.00 per share other than securities  registered on certain national securities
exchanges or quoted on the NASDAQ Stock Market,  provided that current price and
volume  information  with respect to transactions in such securities is provided
by the exchange or system.  The  Company's  securities  may be subject to "penny
stock   rules"  that  impose   additional   sales   practice   requirements   on
broker-dealers  who sell such  securities  to  persons  other  than  established
customers and  accredited  investors  (generally  those with assets in excess of
$1,000,000 or annual income exceeding  $200,000 or $300,000  together with their
spouse).  For transactions covered by these rules, the broker-dealer must make a
special  suitability  determination for the purchase of such securities and have
received  the  purchaser's  written  consent  to the  transaction  prior  to the
purchase.  Additionally,  for any  transaction  involving a penny stock,  unless
exempt, the "penny stock rules" require the delivery,  prior to the transaction,
of a disclosure  schedule  prescribed  by the  Commission  relating to the penny
stock market.  The broker-dealer  also must disclose the commissions  payable to
both the broker-dealer and the registered  representative and current quotations
for the securities.  Finally,  monthly statements must be sent disclosing recent
price  information  on the limited  market in penny  stocks.  Consequently,  the
"penny  stock  rules" may  restrict  the ability of  broker-dealers  to sell the
Company's  securities.  The foregoing required penny stock restrictions will not
apply to the Company's  securities if such securities maintain a market price of
$5.00 or  greater.  There can be no  assurance  that the price of the  Company's
securities will reach or maintain such a level.

                                       14
<PAGE>
ITEM 2. PROPERTIES

PROPERTY

As the Company is not  producing  any  products  at present,  it has no lease or
physical facilities  commitments.  The Company's executive office is 11811 North
Tatum Suite 3031 Phoenix, 85028 Arizona on a month-to-month basis.

ITEM 3. LEGAL PROCEEDINGS

LITIGATION

There is no current outstanding  litigation in which the Company is involved and
the Company is unaware of any pending actions or claims against it.

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

Inapplicable.

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER

MATTERS

GENERAL

The Company has an  authorized  capitalization  of  70,000,000  shares of Common
Stock and  1,000,000  shares of  Preferred  Stock,  $.001 par value per share of
which 28,697,042 were issued and outstanding at March 15, 2002.

MARKET INFORMATION

The Company's common stock is traded in the  over-the-counter  market on the OTC
Bulletin Board under the symbol "NUKE". The following table sets forth the range
of high and low bid quotes of the  Company's  Common Stock per calendar  quarter
which  reflect   inter-dealer  prices  without  retail  mark-up,   mark-down  or
commission and may not necessarily represent actual transactions.

           2001                  Low                High
           ----                  ---                ----
      Fourth quarter            .050                .160
      Third quarter             .090                .210
      Second quarter            .150                .280
      First quarter             .160                .480

           2000                  Low                High
           ----                  ---                ----
      Fourth quarter             .218               .969
      Third quarter              .625              1.500
      Second quarter            1.313              3.781
      First quarter             1.875              5.563

On March 10, 2000 the Company's common shares began trading on the Hamburg Stock
Exchange in Hamburg, Germany under the symbol "919335".

                                       15
<PAGE>
HOLDERS

As of March 15,  2002,  the  Company  had  28,697,042  shares  of  common  stock
outstanding. A total of approximately 140 shareholders of record held a total of
10,000,000 common shares. The Company estimates the remaining  18,697,042 common
shares in street name to be held by over 400 additional individual shareholders.

DIVIDENDS

The Company has never  declared or paid cash  dividends  on its common stock and
anticipates  that future  earnings,  if any, will be retained for development of
its business.  Payment of cash dividends in the future will be wholly  dependent
upon the Company's earnings, financial condition, capital requirements and other
factors  deemed  relevant by them. It is not likely that cash  dividends will be
paid in the  foreseeable  future.  In the event of the  acquisition of or merger
with a  business  by the  Company,  control  of the  Company  and its  Board  of
Directors may pass to others.  In that event,  the payment of dividends would be
wholly dependent upon such persons.

ITEM 6. MANAGEMENT'S PLAN OF OPERATION

In the  following  discussion  we are  providing  an analysis  of our  financial
condition  and Plan of Operation  during the next quarter and the balance of the
fiscal year.  This discussion  should be read in conjunction  with our financial
statements and the notes thereto.  Certain matters  discussed below are based on
potential future circumstances and developments,  which the Company anticipates,
but which cannot be assured.  Such  forward-looking  statements include, but are
not limited to, seeking a revenue generating  business to acquire and conducting
research  and  development  on  the  Excimer  Lamp  within  the  Company  and in
conjunction with joint venture partners.

The  competition in the technology  proliferation  and transfer market is highly
intense  and is based on product  and  technology  recognition  and  acceptance,
novelty and  marketability  of an invention,  price,  and sales  expertise.  The
Company has placed its primary  emphasis on product  development,  dependability
and commercial viability of its acquired  technologies.  Management is currently
determining  the  expenses  involved to develop its  Excimer  Lamp  intellectual
property into  commercial  applications.  To date, the Company has not generated
any  revenues  from any of its acquired  intellectual  property  except  minimal
royalties  from  Daimler  Benz from the IEC  Technology.  Rhombic is currently a
development  stage company and is operating at a loss. None of the  technologies
have been developed to  commercialization.  The Company is not able to determine
an approximate date for commercialization of any of its intellectual property at
this time.  No assurances  can be given that any of the  Company's  intellectual
property will ever be developed to a point of usefulness or, if developed,  that
any will be commercially feasible.

Development of its intellectual  property may be possible through joint ventures
where Rhombic contributes its intellectual  property for an ownership percentage
in a joint venture and all costs are paid by the other joint venture partners.

On March 19, 2002,  Rhombic canceled the letter intent with FAMCO because it had
not received sufficient financial information from the six corporations in order
to  negotiate an  agreement.  During the calendar  year 2002,  Rhombic  plans to
actively seek the acquisition of a revenue generating operation. The acquisition
may or may not bear a relationship to the intellectual property currently owned.
In the event Rhombic is able to acquire  sufficient  working  capital to begin a
development project, it would proceed toward the Excimer Lamp.

                                       16
<PAGE>
Rhombic's  plan during the next twelve months is to acquire a revenue  producing
operation.  Ideally,  the  acquisition  will  have  operations  that  bear  some
relationship  to one or more of the  intellectual  properties  currently held by
Rhombic.

In the  event  Rhombic  had an  opportunity  to raise  cash,  it would pay for a
marketing study and development plan for the Excimer Lamp. An 18-month budget of
approximately $ 350,000 to develop a prototype with patent protection.

The Company  currently has options  outstanding from which it could obtain cash;
however,  it is not probable  that the Rhombic will obtain cash from the options
while the stock price trades below the outstanding  option strike prices. In the
event all of the outstanding options were exercised, the Company would receive $
$ 1,725,000  before  December  31,  2002.  The Company has a total of  2,000,000
options  outstanding  at an  average  exercise  price  of $ .86 per  share.  The
exercise prices range from $.50 to $4.50.

At  December  31,  2000 the  Company had $ 9,100 in cash and $ 49,092 in current
payables. Rhombic may be able to settle the majority of the debt with its common
shares; however, it has no source of income.

Rhombic  believes that it will be able to survive  during the next twelve months
with the  limited  amount  of cash and  resources  that it has.  Because  of the
limited resources and the lack of investor interest in its current  intellectual
property, Rhombic will be seeking a revenue producing operation.

The Company does not have any  employees  because its Directors are handling all
of the  business  required to maintain  its status and seek a revenue  producing
operation.

ITEM 7. FINANCIAL STATEMENTS

The following financial information is filed as part of this report:

(1)      Financial Statements:
         Independent Auditors Report                                 F-2
         Consolidated Balance Sheet December 31, 2001                F-3
         Consolidated Statements of Operations years Ended
          December 2000 and 2001                                     F-4
         Consolidated Statement of Stockholders' Equity Years
          Ended December 31, 2000 and 2001                           F-5
         Consolidated Statement of Cash Flows Years Ended
          December 31, 2000 and 2001                                 F-6
         Notes to Consolidated Financial Statements                  F-7

(2)      Schedules
         Supplemental Disclosure of Cash Flow Information            F-6
         Supplemental Schedule of Non-Cash Investing and
          Financing Activities                                       F-6

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

The Company had no  disagreements  on accounting and financial  disclosures with
its independent auditors during the reporting period.

                                       17
<PAGE>
                                    PART III

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

The following  table sets forth the names and ages of the current  directors and
executive officers of the Company,  the principal offices and positions with the
Company  held by each  person  and the date such  person  became a  director  or
executive  officer of the Company.  Each serves until the next annual meeting of
the stockholders.

 Names of Executive
Officers and Directors              Age              Title
----------------------              ---              -----
R.G. Krushnisky                     41      Director since 1/1/95
Albert Golusin                      47      C.F.O. & Director since 2/5/99
Stanley Porayko                     66      Secretary & Director since 1/1/95

R.G.  Krushnisky,  Director  of the  Company.  Mr.  Krushnisky  served  as  past
President  of  Rockford  Technology  Corporation  which  is a  Canadian  company
involved in  Hydrogeneration  plants.  Since 1984,  Mr.  Krushnisky has been the
owner and  operator of  International  Laser Games,  Ltd.,  a British  Columbia,
Canada,  and  coin-operated  arcade  machinery  business.  Mr.  Krushnisky  is a
graduate  of the  United  States  International  University  at San Diego with a
Bachelor Science degree in Business and International Commerce

Albert Golusin,  Chief  Financial  Officer and Director,  is a Certified  Public
Accountant  in Phoenix,  Arizona.  Since 1992,  Mr.  Golusin has been in private
practice as an accounting consultant to public companies.  He has also served as
a controller for Glenayre Electronics,  a NASDAQ company, from 1984 - 1991. From
1983 to 1984, Mr. Golusin worked for Kenneth  Leventhal & Company.  From 1979 to
1981, Mr. Golusin worked for the international accounting firm of Grant Thornton
& Company.  Mr.  Golusin  graduated  from Brigham Young  University in 1978. Mr.
Golusin  worked  full-time  for Rhombic  during  part of 2000 and has  continued
working on a part-time basis.

Stanley  Porayko,  Secretary  and  Director of the Company,  is a  self-employed
rancher from Alberta, Canada. He was a founder of the huge jade deposit on Ogden
Mountain,  British  Columbia,  and a  director  of  Yugold  Mines.  Mr.  Porayko
graduated from Ryerson Institute of Technology in 1957.

                                       18
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth certain  information  concerning the compensation
paid by the Company for services  rendered in all  capacities to the Company for
the two fiscal  years ended  December  31, 2001 and 2000 of the chief  executive
officer at December 31, 2001 and all officers and directors, as a group.

<TABLE>
<CAPTION>
                                                   Annual Compensation             Long-Term Compensation
                                      -----------------------------------------    -----------------------
                                                                                   Securities
Name and Principal                                                 Other Annual    Underlying      All
Positions at 12/31/00                   Salary         Bonus       Compensation     Options       Other
---------------------                   ------         -----       ------------     -------       -----
<S>                           <C>      <C>           <C>          <C>              <C>           <C>
William L. Owen,               2001          0             0            None         None         None
President & Chairman           2000          0             0         $60,000 (1)     None         None

Roger Duffield,                2001   $ 70,000             0         $10,000 (2)     None         None
President & CEO                2000   $ 50,000       $50,000 (2)     $12,500 (2)     None         None

All officers and directors,    2001   $145,000             0         $46,000          (4)         None
As a group (five persons)      2000   $ 40,000 (2)   $50,000         $60,450         None         None
(3),(4),(5),(6)
</TABLE>
----------
(1)  William  Larry  Owen,  was  compensated  by Owen &  Associates  through  an
     agreement with the Company to provide office and administrative support for
     $7,500 a month.  He served as the  President of the Company from  inception
     until April 2000 in which he then became the Chairman  until his retirement
     on July 26, 2000.
(2)  During the year 2000, Roger Duffield  provided services as a consultant and
     received $ 12,500 in cash for such services. On August 1, 2000 Mr. Duffield
     became the President and Chief Executive Officer and received 50,000 shares
     of restricted stock at a deemed value of $50,000 as a signing bonus. During
     the  remaining  part of 2000 he received  $50,000 in cash.  During the year
     2001, the Company issued 125,000 restricted common shares at a deemed value
     of $10,000 to reimburse him for moving expenses.
(3)  Albert  Golusin,  Chief  Financial  Officer and  Director  of the  Company,
     provided his services on a part-time  basis during 2000 until  September 1,
     2000.  During the year 2000,  he received $20,000  in cash for services and
     25,000  shares at a deemed  value of $30,563  for office  expenses.  During
     2001, Mr. Golusin received $60,000 for his services.
(4)  R.G. Krushnisky,  Vice President and Director of the Company,  provides his
     consulting services on a part-time basis. During 2000, he received $20,000.
     During  2000 he  exercised  an option  and  purchased  100,000  shares  for
     $100,000.  During 2001, Mr.  Krushnisky  received $15,000 for services as a
     Vice President. He also earned $18,000 for director fees during 2001.
(5)  Stanley  Porayko,  Secretary  and  Director of the  Company,  provides  his
     consulting  services  on a part-time  basis.  He did not receive any shares
     during 2000 for services.  He received $450 for his  participation in board
     meetings  during the year 2000.  During 2001, he earned $18,000 in director
     fees.
(6)  All of the  current  directors  collectively  have an  option  to  purchase
     1,000,000 shares at $.50 per share until June 30, 2002.

There  are no  current  plans to pay cash or stock  dividends  on the  Company's
stock.

                                       19
<PAGE>
VALUE OF OPTIONS AT DECEMBER 31, 2001

The Company  currently has options  outstanding from which it could obtain cash.
In the event all of the outstanding  options were  exercised,  the Company would
receive $  1,725,000  before  December  31,  2002.  The  Company  has a total of
2,000,000  options  outstanding at an average exercise price of $ .86 per share.
The exercise prices range from $.50 to $4.50.

At December 31, 2001  officers and directors  held a total of 1,000,000  options
outstanding at an exercise price of $ .50 per share expiring on June 30, 2002.

OPTION GRANTS IN THE LAST FISCAL YEAR

The Company granted the following options during 2001:

                   Number of Shares    Options Granted    Exercise    Expiration
     Name         Underlying Options     During Year     Price($/sh)     Date
     ----         ------------------     -----------     -----------     ----
Albert Golusin          400,000            400,000           .50        6/30/02
Robert Krushnisky       350,000            350,000           .50        6/30/02
Gordon Krushnisky       100,000            100,000           .50        6/30/02
Stanley Porayko         250,000            250,000           .50        6/30/02

STOCK OPTION PLAN

The Board of Directors of the Company has approved its year 2000 Incentive Stock
Option  Plan  ("Plan")  that  authorizes  the Company to grant  incentive  stock
options.  The Plan  relates  to a total of  2,500,000  shares  of  common  stock
including  all  unexercised  options from prior plans.  All options which may be
outstanding  at any point in time must be  exercised  no later than three months
after  termination  of  employment  or service as a  director,  except  that any
optionee  who is unable to continue  employment  or service as a director due to
total and  permanent  disability  may exercise  such options  within one year of
termination  and the options of an optionee  who is employed or disabled and who
dies must be exercised within one year after the date of death.

The  Plan  is to be  administered  by the  Company's  Board  of  Directors  or a
committee  thereof which determines the terms of options granted,  including the
exercise price, the number of shares of common stock subject to the option,  and
the  terms  and  conditions  of  exercise.  Options  granted  under the plan are
transferable by the optionee.

                                       20
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table contains information, as of December 31, 2001, regarding the
shareholdings of (1) Rhombic's  current  directors and executive  officers,  (2)
those persons or entities who  beneficially own more than 5% of its common stock
and (3) all of the directors and executive officers as a group(giving  effect to
the  exercise  of the  warrants  held by each  such  person or  entity).  Unless
otherwise indicated,  the person or entity listed in the table is the beneficial
owner of the shares and has sole voting and investment power with respect to the
share indicated:

                                    Number of shares          Percent of
                                     Common Stock            Common Stock
       Name                        Beneficially Owned     Beneficially Owned (1)
       ----                        ------------------     ----------------------
R.G. Krushnisky                         2,350,000                  7.9%
Vice President, Director
Suite 901, 1212 Howe Street
Vancouver, British Columbia
Canada V6Z 2M9

Albert Golusin (1)                         420,000                 1.4%
Chief Financial Officer, Director
10641 North 44 Street,
Phoenix, Arizona 85028

Stanley Porayko (1)                        250,000                 0.8%
Director
P.O. Box 1765
Vegreville, Alberta
Canada T9C 1S8

Total shares owned by Directors and      3,020,000                10.1%
Officers of the Company (4 persons)

Rockford Technology Corporation(2)       2,045,500                7.66%
4873 Delta Street
Delta, British Columbia, Canada

----------
(1)  Based upon 29,697,042  outstanding  shares of common stock,  which includes
     the exercise of 1,000,000 outstanding options.
(2)  Mr.  Krushnisky  is a director of Rhombic and is one of three  directors of
     Rockford Technology Corporation but does not own controlling interest.

                                       21
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

William Owen  received $60,000  during 2000  through his wholly  owned  Canadian
company named Owen &  Associates.  Owen & Associates  provided an office,  local
telephone service, postage and compensated William Owen on behalf of Rhombic.

On August 18, 2000, Robert G. Krushnisky the Company's Vice President, a citizen
of Canada,  purchased 200,000 shares for $200,000.  The  shares were exempt from
registration  under Rule 504 adopted under  Regulation D of the Securities  Act.
They were also subject to the restrictions under Rule 144.

On September 1, 2000, the Company canceled  3,000,000 escrowed shares to William
Owen, the President and 6,000,000 escrowed shares to Durham Technology, which is
a A Niue Island (New Zealand overseas territory)  corporation  primarily engaged
in marketing  of new  technologies.  The Rhombic  shares were held in escrow and
couldn't  be sold or  hypothecated  until  Rhombic  generated a net income of at
least $.01 per share in any year.

                                       22
<PAGE>
                                   SIGNATURES

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.

RHOMBIC CORPORATION


By /s/ Albert Golusin                                       April 12, 2002
  -----------------------------------
  Albert Golusin
  Acting Chief Executive Officer, Principal Executive
  Officer, Chief Financial Officer & Director,
  Principal Accounting Officer

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.


By /s/ R.G. Krushnisky                                      April 12, 2002
  -----------------------------------
  Director



By /s/ Stanley Porayko                                      April 12. 2002
  -----------------------------------
  Secretary & Director

                                       23
<PAGE>
                               RHOMBIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                           December 31, 2001 and 2000

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                         PAGE
                                                                         ----
REPORT OF INDEPENDENT AUDITORS                                            F-2

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2001 AND 2000              F-3

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
 DECEMBER 31, 2001 AND 2000                                               F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE
 YEARS ENDED DECEMBER 31, 2001 AND 2000                                   F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
 DECEMBER 31, 2001 AND 2000                                               F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                F-7

                                      F-1
<PAGE>
                         INDEPENDENT ACCOUNTANTS' REPORT


To the Stockholders and Board of Directors of
 Rhombic Corporation:

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Rhombic
Corporation (a Development  Stage Company) and  subsidiaries  as of December 31,
2001,  and the related  consolidated  statements  of  operations,  stockholders'
equity and cash flows for the two years then ended and the period from inception
to December 31, 2001. These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Rhombic  Corporation and its
consolidated  subsidiaries  as of December  31,  2001,  and the results of their
operations  and cash  flows for the two years  then  ended and the  period  from
inception  to December  31,  2001,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

As disclosed in Note 1, the accompanying financial statements have been prepared
assuming  that the Company  will  continue as a going  concern.  The Company has
experienced  material  operating  losses  and  has yet to  commence  significant
revenue producing  operations.  Ultimate  realization of material investments in
intellectual   properties  is  uncertain.   These  and  other  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The accompanying  financial statements do not include any adjustments that might
be necessary should the Company be unable to continue as a going concern.


                                     /s/ James C. Marshall, CPA, P.C

Scottsdale, Arizona
April 8, 2002

                                      F-2
<PAGE>
                               RHOMBIC CORPORATION
                           CONSOLIDATED BALANCE SHEET
                          (A Development Stage Company)
                                December 31, 2001


                                     ASSETS

CURRENT ASSETS:
  Cash                                                              $     9,100

  Receivables                                                                --

  Prepaid expenses                                                          300
                                                                    -----------

  Total Current Assets                                                    9,400
                                                                    -----------

OTHER ASSETS:
  Investments                                                            12,042
  Licensing Agreements and Intellectual property                        281,258

  Patents                                                                   734
                                                                    -----------

Total assets                                                        $   303,434
                                                                    ===========

                                  LIABILITIES
CURRENT
  Accounts Payable                                                  $    49,092

STOCKHOLDERS' EQUITY
  Preferred stock, $.001 par value,
   1,000,000 shares authorized, none issued
  Common stock, $.001 par value, 70,000,000 shares
   authorized, 28,697,042 and 26,286,100 issued and
   outstanding at December 31, 2001 and 2000                             28,697
  Additional paid-in capital                                          8,452,629
  (Deficit) accumulated during the development stage                 (8,226,984)
  Net unrealized holding loss on available for sale securities           (7,476)
                                                                    -----------

Total stockholders' equity                                              254,342
                                                                    -----------

Total liabilities and stockholders' equity                          $   303,434
                                                                    ===========

See accompanying notes to these consolidated financial statements.

                                      F-3
<PAGE>
                               RHOMBIC CORPORATION
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                     Cummulative From
                                                  For the 12 Months Ended            November 21, 1994
                                             ---------------------------------        (Inception) to
                                                 2001                  2000          December 31, 2001
                                             ------------         ------------       -----------------
<S>                                          <C>                  <C>                  <C>
REVENUES
  Royalty income                             $         --         $         --         $      5,729
  Interest income                                      80                5,690                6,954
                                             ------------         ------------         ------------

                                                       80                5,690               12,683
EXPENSES
  Research and development expense                 12,159              494,082              697,747
  Write down on intellectual property             404,158            1,487,630            1,891,788
  Legal and accounting                            164,055              259,397              741,318
  Consulting, related party                         1,294               60,000              368,294
  Consulting                                       37,375            1,891,556            2,876,830
  Other general and administrative                291,329              970,924            1,583,750
                                             ------------         ------------         ------------
        Total Expenses                            910,370            5,163,589            8,159,727

Net (loss) from operations                       (910,290)          (5,157,899)          (8,147,044)

OTHER REVENUES & EXPENSES
  (Loss) on sale of investments                   (72,464)                  --              (72,464)
                                             ------------         ------------         ------------
NET (LOSS)                                   ($   982,754)        ($ 5,157,899)        ($ 8,219,508)
                                             ============         ============         ============
NET (LOSS) PER SHARE:
  Basic                                      $      (0.04)        $      (0.20)
                                             ============         ============
  Diluted                                    $      (0.04)        $      (0.20)
                                             ============         ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
  Basic                                        27,097,894           25,749,799
                                             ============         ============
  Diluted                                      27,097,894           25,749,799
                                             ============         ============
</TABLE>

See accompanying notes to these consolidated financial statements.

                                      F-4
<PAGE>
                               RHOMBIC CORPORATION
                         ( A Development Stage Company)
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                            Net
                                                                                                         Unrealized
                                                                                           (Deficit)      Holding
                                                                                           Accumulated    Loss On
                                                     Common Stock         Additional         During      Available
                                               ----------------------      Paid-In         Development    For Sale
                                                  Shares       Amount      Capital            Stage      Securities       Total
                                                  ------       ------      -------            -----      ----------       -----
<S>                                            <C>             <C>       <C>              <C>           <C>           <C>
Balance at December 31, 1999                   24,741,100      $24,741   $ 4,589,750      $(2,078,855)                $ 2,535,636

Acquisition of Excimer Lamp Technology            100,000          100       281,150                                      281,250
Acquisition of LENR/DCM intellectual property     100,000          100       194,150                                      194,250
Shares issued to acquire Emerald Investments      200,000          200          (200)                                           0
Shares issued for services                        775,000          775     2,671,810                                    2,672,585
Exercise of stock options                         370,000          370       306,880                                      307,250
Net (loss)                                                                                 (5,157,899)                 (5,157,899)
                                               ----------      -------    ----------      -----------      -------    -----------
Balance at December 31, 2000                   26,286,100       26,286     8,043,540       (7,236,754)                    833,072

Shares issued for services                      1,244,800        1,245       210,255                                      211,500
Shares issued under convertible debenture       1,166,142        1,166       198,834                                      200,000
Net unrealized holding loss on available
 for sale securities                                                                                       $(7,476)        (7,476)
Net (loss)                                                                                   (982,754)                   (982,754)
                                               ----------      -------    ----------      -----------      -------    -----------
                                               28,697,042      $28,697    $8,452,629      $(8,219,508)     $(7,476)   $   254,342
                                               ==========      =======   ===========      ===========      =======    ===========
</TABLE>
See accompanying notes to these consolidated financial statements.

                                      F-5
<PAGE>
                               RHOMBIC CORPORATION
                          (A Devlopment Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                      For the years ended          Cummulative from
                                                                          December 31,             November 21, 1994
                                                               -------------------------------      (Inception) to
                                                                  2001                2000           Dec. 31, 2001
                                                               -----------         -----------       -------------
<S>                                                            <C>                 <C>               <C>
OPERATING ACTIVITIES
  Net (loss) income for the period                             $  (982,754)        $(5,157,899)      $(8,300,709)
  Adjustments to reconcile net cash used by operations:
    Write down on intellectual property and patents                404,158           1,487,630         1,891,788
    Loss on sale of marketable securities                           72,464              72,464
    Rockford shares issued for services                             32,275              32,275
    Common stock issued for services                               211,500           1,108,653         1,920,484
    Fair value of options granted                                       --           1,563,932         2,082,113
    (Increase)/decrease  in accounts receivable                         --              18,896                --
    (Increase)/decrease  in prepaid expenses                         2,200             197,500              (300)
    Increase/(decrease) in accounts payable                        (67,463)             74,155            49,092
                                                               -----------         -----------       -----------
Net Cash (Used) by Operating Activities                           (327,620)           (707,133)       (2,252,793)

INVESTING ACTIVITIES
  Cost of patents                                                  (50,163)            (64,286)         (168,430)
  Proceeds from sale  marketable securities                         93,499              93,499
  Investment in Rockford Technologies                             (207,756)
  Investment in marketable securities                              (10,000)
                                                               -----------         -----------       -----------
Net Cash (used) in investment activities                            43,336             (64,286)         (292,687)
                                                               -----------         -----------       -----------
FINANCING ACTIVITIES
  Proceeds from private placements                               1,347,830
  Proceeds from exercise of stock options                          307,250           1,006,750
  Proceeds from conversion of debenture                            200,000             200,000
                                                               -----------         -----------       -----------
Net Cash provided from financing activities                        200,000             307,250         2,554,580
                                                               -----------         -----------       -----------

Increase (decrease) in cash                                        (84,284)           (464,169)            9,100

Cash at beginning of period                                         93,384             557,553                --
                                                               -----------         -----------       -----------
Cash at end of period                                          $     9,100         $    93,384       $     9,100
                                                               ===========         ===========       ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Issuance of common stock for licensing agreements
 and intellectual property                                     $        --         $   475,500       $ 2,005,350
                                                               ===========         ===========       ===========
Noncash investing and financing activities
  Unrealized loss on available for sale stock                  $     7,476                  --       $     7,476
                                                               ===========         ===========       ===========
</TABLE>

See accompanying notes to these consolidated financial statements

                                      F-6
<PAGE>
                               RHOMBIC CORPORATION
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR YEARS ENDED DECEMBER 31, 2001 AND 2000


Note 1 - ORGANIZATION AND BASIS OF PRESENTATION

     Pursuant to an Agreement and Plan of Reorganization dated January 18, 2000,
Rhombic  Corporation  (the  "Company")  acquired all the  outstanding  shares of
common  stock  of  Emerald  Acquisition  Corporation  ("Emerald"),   a  Delaware
corporation,  from the  shareholders  thereof in an exchange for an aggregate of
200,000  shares of common  stock of Rhombic  ("the  Acquisition").  As a result,
Emerald  became a wholly owned  subsidiary  of Rhombic and was later merged into
the Company.

     The  Acquisition  was  approved  by the  unanimous  consent of the Board of
Directors  of Rhombic on January 18,  2000.  The  Acquisition  was  effective on
January  20,  2000.  Upon  effectiveness  of the  Acquisition,  pursuant to Rule
12g-3(a) of the General Rules and  Regulations  of the  Securities  and Exchange
Commission,  Rhombic  elected to become  the  successor  issuer to  Emerald  for
reporting  purposes  under the  Securities  Exchange  Act of 1934 and elected to
report under the Act effective January 20, 2000.

     The Company has  acquired  rights to certain  intellectual  properties  and
intends to further develop,  determine commercial  applications and market these
intellectual  properties.  Since its inception, the Company had directed most of
its efforts toward identifying and acquiring intellectual properties,  primarily
from   universities   in  the  United  States  or  entities   related  to  those
universities.  The Company's primary office is located in Phoenix,  Arizona. The
majority of the Company's assets,  liabilities and expenses relate to operations
in the United States.

     The Company  owns 100% of the issued and  outstanding  shares of  Nanophase
Diamond  Technologies,  Inc. and Rockford  Technology  Associates,  Inc.  Theses
entities had no significant operations nor any significant assets or liabilities
at the time of acquisition  other than specific  intellectual  property  rights.
These  entities  have been  merged  into the  Company  and are  included  in the
financial  statements.  During 2000, the Company formed two new subsidiaries for
the purpose of participating in joint ventures.  These  subsidiaries have had no
activities to date.

     The accompanying financial statements have been prepared on a going concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities  in the normal  course of  business.  The Company  has had  material
operating  losses and has had to rely on offerings of its common stock to obtain
sufficient cash to meet its operating expenses.  The Company has yet to generate
substantive  revenue.  Also,  there can be no assurances  that the  intellectual
properties  owned by the Company will be successfully  developed to a marketable
prototype  level to be used as the basis for  licensing  agreements or marketing
activity or that the book value of the  investments in  intellectual  properties
will be realized.  These  factors  raise  substantial  doubt about the Company's
ability to  continue  as a going  concern.  The  Company  intends  to  determine
commercial applications for intellectual properties that it owns or for which it
has licenses.  However, there can be no assurances that the applications will be
commercially  viable  nor  that  Company  will be able  to  generate  profitable
operations.  The financial statements do not include any adjustments relating to
the  recoverability  of  the  carrying  value  of  assets  or  the  amounts  and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue as a going concern.

                                      F-7
<PAGE>

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

     The consolidated  financial  statements  include the results of operations,
account balances and cash flows of the Company and its wholly owned subsidiaries
after elimination of intercompany transactions

CASH AND EQUIVALENTS

     The Company considers cash to be all short-term,  highly liquid investments
that are  readily  convertible  to  known  amounts  of cash  and  have  original
maturities of three months or less.

FOREIGN CURRENCY TRANSLATION

     The functional currency of the Company is the U. S. dollar.  Certain of the
Company's assets,  liabilities and expenses are denominated in Canadian dollars.
Transactions  denominated  in Canadian  dollars are  translated to U.S.  dollars
using  an  average   exchange  rate  applicable  for  the  month  in  which  the
transactions occur.  Assets and liabilities  denominated in Canadian dollars are
translated  to U.S.  dollars at the exchange  rate existing at the balance sheet
date. Foreign exchange transaction gains and losses have been immaterial.

FINANCIAL INSTRUMENTS

     Financial  instruments  consist  primarily of cash,  investments in closely
held entities and obligations under accounts payable and accrued  expenses.  The
carrying amounts of cash,  accounts  receivable,  accounts payable notes payable
and accrued  expenses  approximate fair value because of the short term maturity
of those  instruments.  The Company has not determined the fair value of certain
of its  investments  due to the lack of  marketability  and  liquidity  of those
investments and the common director with one such investee.

INVESTMENTS

     At December 31, 2001,  the Company the  investments  were held for sale. At
December 31, 2000, the Company  accounted for its  approximately 15% interest in
Rockford  Technologies,  Inc.  under the cost  method.  The  Company  also had a
minority  ownership in Peabody  Coffee,  Inc.  which was recorded under the cost
method.  The investment in Peabody is recorded at its cost,  which  approximates
the market value on the basis of trading values at December 31, 2000..

INTELLECTUAL PROPERTY

     Intellectual  properties have been acquired  through the issuance of shares
of the Company's common stock and further developed for cash. These intellectual
properties  are valued at the estimated fair market value of the stock issued at
the time of purchase. The value of the common stock is determined by the trading
value of the shares at and near the date of the transaction  less a 25% discount
to that trading value due to restrictions on those securities.  All stock issued
in  those  transactions  contains  regulatory  restrictions,  and in some  cases
contractual restrictions,  on transferability.  Management periodically analyzes
the values of the intellectual properties for impairment.  During 2001 and 2000,
the Company evaluated its intellectual  properties and determined,  based on the
limited  resources  of the Company,  market for the end  products and  potential
development  times and  required  development  costs,  that it would not  pursue
development of certain of the intellectual properties. The Company wrote off its
investments  in those  intellectual  properties  in 2001 and 2000.  The purchase
price  of the  remaining  intellectual  properties  will be  amortized  over the
estimated useful lives when revenue begins to be generated from those assets.

                                      F-8
<PAGE>
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

STOCK-BASED COMPENSATION

     Statements  of  Financial  Accounting  Standards  No. 123,  ACCOUNTING  FOR
STOCK-BASED  COMPENSATION,  ("SFAS 123")  established  accounting and disclosure
requirements  using a fair-value  based  method of  accounting  for  stock-based
employee  compensation.  The Company  periodically issues options to consultants
and members of the Board of Directors.  The estimated  value of these options is
determined in accordance  with SFAS No. 123 and expensed as the granted  options
vest to the grantees.

INCOME TAXES

     The Company  accounts for income taxes under the liability  method pursuant
to the  Statement of Financial  Accounting  Standards  No. 109,  ACCOUNTING  FOR
INCOME TAXES, ("SFAS 109"). Deferred taxes arise from temporary differences, due
to  differences  between  accounting  methods  for tax and  financial  statement
purposes.

LOSS PER SHARE

     Net loss per share is  calculated  using  the  weighted  average  number of
shares of common stock outstanding during the year.

USE OF ESTIMATES

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

NEW TECHNICAL PRONOUNCEMENTS

     In June 2001, the FASB issued SFAS No. 142,  Goodwill and Other  Intangible
Assets.  This  statement  establishes  accounting  and  reporting  standards for
goodwill and intangibles for years commencing  after December 15, 2001.  Whether
already  acquired or subsequently  acquired after the effective date,  companies
are required to identify intangibles with finite lives and those with indefinite
lives.  Those  intangibles  with  finite  lives  are to be  amortized  over  the
estimated  useful lives of the assets while those with indefinite  lives are not
to be amortized.  Each  intangible or goodwill asset should be analyzed at least
annually for impairment  where the carrying value is in excess of the fair value
of the  intangibles  and in  excess  of the  implied  fair  value in the case of
goodwill  assets.  The  asset's  carrying  value is to be reduced by a charge to
income if the fair value is lower than the carrying  value.  The Company has not
determined the effect of this new standard;  however, the impact is not expected
to be material.

                                      F-9
<PAGE>
Note 3 - INTELLECTUAL PROPERTY

     The Company has entered into numerous  agreements  having acquired  certain
rights to various complex  intellectual  properties  which it intends to further
develop, with the assistance of strategic partners, for commercial applications.
Or, it may sell or license  these rights and transfer the control of such to the
buyer or  licensee.  The  acquisitions  of these  intellectual  properties  have
occurred since 1995. The intellectual properties include titles such as; Nuclear
Battery, Radio Nuclide Battery, Inertial Electrostatic Confinement, Diamond Film
Electromechanical  Battery and Disperse Composite Material.  There has yet to be
proven profitable commercial applications for these intellectual properties. The
Company works with U.S.  universities  and their  professors to further  develop
these  intellectual  properties  through funding of research  projects.  In most
cases,  the  rights  to the  intellectual  properties  were  acquired  from  the
universities,  or from the professors or inventors to the extent they had rights
to the intellectual  properties.  The consideration given by the Company for the
most part was  shares of the  Company's  common  stock.  The value of the shares
given was the basis for the recorded value of the purchases (Note 1).

     The Company  periodically  analyzes the  investments in these  intellectual
properties for impairment.  The stage in which these intellectual properties are
in make estimation of value or determination of impairment a difficult task. The
Company has only one such  technology for which there is a commercial  strategic
partner.  However,  there have been no  substantive  revenues yet generated from
that arrangement.  The Company has determined that there is no evidence that the
book values of these  intellectual  properties  are  impaired  until it has been
determined  that  there is no  likely  commercial  application  or one that will
produce  adequate cash flow to support those values.  The Company  believes that
its  current  intellectual   properties  each  require  substantial  development
dedication of resources, in both financial and human resources.  The Company has
determined to pursue a limited number of these  intellectual  properties and not
pursue a number of others for various reasons.  Therefore, the Company has taken
a write off of those intellectual  properties that it does not intend to pursue.
The Company is funding  further  research  and is more  actively  marketing  and
seeking strategic partners for the remaining intellectual  properties.  However,
any change in  estimates  of  impairment  may have a  significant  effect on the
financial condition and results of operations of the Company.

Note 4 - INVESTMENTS

         The  Company has the  following  investments  at December  31, 2001 and
2000:

                                    December 31, 2001        December 31, 2000
                                 ----------------------   ---------------------
                                             Estimated               Estimated
                                   Cost      Fair Value     Cost     Fair Value
                                   ----      ----------     ----     ----------
AVAILABLE FOR SALE SECURITIES
Peabody's Coffee, Inc.           $     --    $     --     $ 10,000    $ 10,000
Rockford Technologies, Inc.        24,750      17,274      207,756     207,756
                                 --------    --------     --------    --------
Totals                           $ 24,750    $ 17,274     $217,756    $217,756
                                 ========    ========     ========    ========

                                      F-10
<PAGE>
     Statements  of  Financial  Accounting  Standards  No. 115,  ACCOUNTING  FOR
CERTAIN  INVESTMENTS IN DEBT AND EQUITY  SECURITIES,  ("SFAS 115") requires that
all applicable  investments be classified as trading  securities,  available for
sale  securities  or held to maturity  securities.  The Company did not have any
investments classified as trading securities or held-to-maturity securities. The
statement  further  requires that  available for sale  securities be reported at
fair value, with unrealized gains and losses excluded from earnings but reported
in a separate  component  of  shareholders'  equity (net of the effect of income
taxes) until they are sold.  At the time of sale,  any gains or losses,  will be
recognized as a component of operating results.

     At December 31, 2000,  the estimated  fair value of Peabody's was estimated
based on the quoted  trading  price of the security at December  31,  2000,  the
value of the Peabody's stock  approximated the cost. This stock was sold in 2001
and the Company realized a loss of $6,000.

     The  Company  acquired  2,900,000  shares of  Rockford  Technologies,  Inc.
("Rockford") in the year ended December 31, 1999 for $207,756 as part of a legal
settlement with Rockford.  The 2,900,000  shares  represented an approximate 15%
interest in Rockford. As part of that settlement, members of the Company's Board
of Directors assumed half of the Board seats of Rockford.  At December 31, 2001,
one of the  Company's  directors  was also one of three  directors  of Rockford.
Rockford  had no material  operations  during the two years ended  December  31,
2001.  During 2001, the Company sold 1,654,519  shares and  distributed  900,000
shares  for goods and  services.  The  Company  realized a loss of  $66,464.  At
December 31, 2001, the Company the unrealized decline in value was $7,476.

Note 5 - INCOME TAXES

The Company  does not provide any current or deferred  income tax  provision  or
benefit for any period  presented  because it has experienced  operating  losses
since inception.  The Company has provided a full valuation allowance because of
the   uncertainty   regarding  the   utilization   of  the  net  operating  loss
carryforwards.

                                                 For the year ended December 31,
                                                     2001               2000
                                                 -----------        -----------
Current income tax benefit                       $   238,115        $ 1,541,513
                                                 -----------        -----------

Deferred income tax benefit                      $   165,705        $   624,805
                                                 -----------        -----------

Total current and deferred income tax benefit        403,820          2,166,318
Valuation allowance                                 (403,820)        (2,166,318)
                                                 -----------        -----------
Benefit of income taxes                          $        --        $        --
                                                 ===========        ===========

     Income tax expense  does not differ from  amounts  computed by applying the
U.S.  Federal  income  tax  rate  of 34%  and  the  state  rate  of 7%  and  8%,
respectively, at December 31, 2001 and 2000, except for the valuation allowance.

                                      F-11
<PAGE>
     At December 31, 2001,  the Company had  realized  net  operating  losses of
approximately  $6,838,123.  Future realization of the net deferred tax assets is
dependent on generating sufficient taxable income prior to their expiration. The
realized  net  operating  losses  expire,  as  follows:  Note 5 -  INCOME  TAXES
(continued)

       Expiration                                     Federal            State
       ----------                                     -------            -----
          2002                                                        $  236,028
          2003                                                           861,526
          2004                                                           603,950
          2005                                                          3,670269
          2006                                                           580,770
          2009                                      $   44,994
          2010                                         379,485
          2011                                         461,101
          2012                                         236,028
          2018                                         861,526
          2019                                         603,950
          2020                                       3,670,269
          2021                                         580,770
                                                    ----------        ----------
              Total net operating loss available    $6,838,123        $5,952,543
                                                    ==========        ==========

Note 6 - COMMITMENTS

     The Company's acquisition agreements for intellectual  properties generally
contain  requirements  to pay royalties to the sellers when revenue is generated
from those intellectual  properties.  At December 31, 2001 and 2000, the Company
had no royalties payable.

     The  Company  periodically  enters  into  agreements  with  third  parties,
primarily  U.S.   universities,   to  fund  research  projects  related  to  its
intellectual properties.  At December 31, 2001 and 2000, there were no long-term
commitments under such arrangements.

Note 7 - STOCKHOLDERS' EQUITY

     The Company  issues  common stock as  compensation  to  consultants  and to
acquire  intellectual  properties.  During the year ended  December 31, 2000 the
Company  issued  200,000  of  its  common  stock  to  acquire  new  intellectual
properties.  The  value of those  transactions  was  determined  based  upon the
trading value of the Company's common stock at the time of the transactions.

     During 2001, the Company  issued  $200,000 of 10%  convertible  debentures.
These  debentures  were converted  during 2001 into  1,166,142  shares of common
stock.

     Prior to 1999,  the Company  entered into an agreement  granting  9,000,000
shares to three of the Company's  officers and  directors and a consultant.  The
shares were placed in escrow and could not be released  until the Company  meets
certain  operating  milestones  and  profitability.  The shares are presented as
issued  and  outstanding  and are  included  in the loss per share  calculation.
During 2000,  the Company  cancelled  the escrow  agreement  and the  restricted
shares held by the escrow agent were returned to the treasury of the Company and
cancelled.  No value or cost had been  associated with those shares when issued.
Expense was to be  recognized  at the time the shares become earned and released
from escrow to the individuals and consultant.  The loss per share  calculations
have been recomputed based on the cancellation.

                                      F-12
<PAGE>
Note 8 - STOCK OPTIONS

     The Company issues stock options periodically to consultants and members of
the  Board  of  Directors.  The  Company  has  adopted  Statement  of  Financial
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation".  The
options  granted in the years ended December 31, 2000 and 1999,  were granted to
other than  employees,  the  intrinsic  value method  prescribed  by  Accounting
Principles  Board Opinion No. 25,  "Accounting  for Stock Issued to  Employees",
does not apply. Accordingly, compensation cost has been recognized for the stock
options granted to other than employees.

     Under the  provisions  of SFAS No. 123, the number of fully vested  options
granted of 1,500,000 and 1,300,000 options for the years ended December 31, 2001
and 2000,  respectively,  were used to determine compensation cost. The value of
options charged to expense during the year ended December 31, 2001 and 2000 were
$0 and $1,645,133.

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes  option-pricing model with the following assumptions for years
ended December 31:

                                                  2001             2000
                                                  ----             ----
     Dividend yield                               None             None
     Volatility                                   .894             1.61
     Risk free interest rate                     4.07%             5.75%
     Expected asset life                       7.5 months        2.04 year

     The Board of Directors  authorized  the granting of 1,500,000 and 1,300,000
options  during the years ended  December  31,  2001 and 2000.  The price of the
options  granted  pursuant to these grants is not to be less than 100 percent of
the fair market value of the shares on the date of grant. The options expire one
year from date of grant and are immediately vested.

         The summary of activity for the  Company's  stock  options is presented
below:

<TABLE>
<CAPTION>
                                                                       Weighted                     Weighted
                                                                        Average                      Average
                                                                       Exercise                     Exercise
                                                          2001        Price 2001         2000      Price 2000
                                                          ----        ----------         ----      ----------
<S>                                                    <C>           <C>             <C>           <C>
Options outstanding at beginning of year               1,100,000           N/A          250,000         N/A
Granted                                                1,500,000         $ 0.50       1,300,000       $ 0.42
Exercised                                                     --           N/A         (450,000)      $ 0.26
Terminated/Expired                                      (600,000)        $ 1.00              --         N/A
Options outstanding at end of year                     2,000,000         $ 2.30       1,100,000       $ 2.30
Options exercisable at end of year                     2,000,000         $ 2.30       1,100,000       $ 2.30
Options available for grant at end of year                    --                             --
Price per share of options outstanding               $0.50 - $0.50                  $1.00 - $4.50
Weighted average remaining contractual lives           7.5 months                      2 years
Weighted Average fair value of options granted
 during the year                                         $0.50                          $1.37
</TABLE>

                                      F-13
<PAGE>
Note 9 - LOSS PER SHARE

     Outstanding  options to purchase  common stock were not  considered  in the
calculation for diluted earnings per share for the years ended December 31, 2001
and 2000  because  the  effect  of their  inclusion  would  be  antidilutive.  A
reconciliation  of the  numerator and  denominator  of the basic and diluted per
share calculations for the loss from continuing operations is as follows:

<TABLE>
<CAPTION>
                                                  2001                                  2000
                                 ----------------------------------      -----------------------------------
                                                               Per                                      Per
                                     Loss        Shares       share          Loss         Shares       share
                                     ----        ------       -----          ----         ------       -----
<S>                              <C>           <C>           <C>         <C>             <C>            <C>
    Net (Loss)                   $(984,928)                              $(5,239,100)

    BASIC LOSS PER SHARE
     Loss available to common
      stockholders               $(984,928)    27,097,894    $(0.04)     $(5,239,100)    25,749,799     $(0.20)

    Effect of dilutive
     securities                        N/A                                       N/A

    DILUTED LOSS PER SHARE                                   $(0.04)                                    $(0.20)
</TABLE>

     Options to purchase  1,500,000  and  1,300,000  shares of common stock were
outstanding  at  December  31,  2001  and  2000,  and  were  excluded  from  the
computation  of diluted  loss per share  because  the effect of their  inclusion
would be anti-dilutive

Note 10 - CREDIT RISK AND OTHER CONCENTRATIONS

     The Company has historically  relied upon cash raised in private placements
of the  Company's  common  stock for  working  capital.  At times,  the  Company
maintains  cash balances at banks that exceed  insured  limits.  At December 31,
2001 and 2000 the  Company  did not have  funds on  deposit  that  exceeded  the
insured limits.

                                      F-14