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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

                         Commission file number: 0-6428

                           ASI Technology Corporation
                 (Name of Small Business Issuer in its charter)

            Nevada                                             88-0105586
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification Number)


                     980 American Pacific Drive, Suite #111
                             Henderson, Nevada 89014
                                 (702) 734-1888
          (Address and telephone number of principal executive offices)


    Securities registered pursuant to Section 12(b) of the Exchange Act: None


      Securities registered pursuant to Section 12(g) of the Exchange Act:
                          Common Stock, par value $0.02


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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $ 78,026

The aggregate  market value of the issuer's common stock held by  non-affiliates
as of March 15, 2002  (assuming for this purpose that only  directors,  officers
and 10% or more shareholders of registrant are affiliates of registrant),  based
on the  average  of  the  closing  bid  and  asked  prices  on  that  date,  was
approximately $-0- .

As of March 15, 2002 there were 3,346,522  shares of ASI Technology  Corporation
common stock, par value $0.02, outstanding.

Transitional Small Business Disclosure Format (check one): Yes ___ No _X_

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<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                 Page
                                     PART I
<S>           <C>                                                                                                <C>
ITEM 1.       Description of Business                                                                             2
ITEM 2.       Description of Property                                                                            12
ITEM 3.       Legal Proceedings                                                                                  12
ITEM 4.       Submission of Matters to a Vote of Security Holders                                                12

                                     PART II

ITEM 5.       Market for Common Equity and Related Stockholder Matters                                           12
ITEM 6.       Management's Discussion and Analysis or Plan of Operation                                          13
ITEM 7.       Financial Statements                                                                               21
ITEM 8.       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure               21

                                    PART III

ITEM 9.       Directors, Executive Officers, Promoters and Control Persons;
              Compliance With Section 16(a) of the Exchange Act                                                  22
ITEM 10.      Executive Compensation                                                                             23
ITEM 11.      Security Ownership of Certain Beneficial Owners and Management and
              Related Stockholder Matters                                                                        23
ITEM 12.      Certain Relationships and Related Transactions                                                     24
ITEM 13.      Exhibits and Reports on Form 8-K                                                                   26
FINANCIAL STATEMENTS                                                                                             28
SIGNATURES                                                                                                       42
</TABLE>

                           FORWARD-LOOKING STATEMENTS

IN  ADDITION  TO   HISTORICAL   INFORMATION,   THIS   ANNUAL   REPORT   CONTAINS
FORWARD-LOOKING   STATEMENTS  WITHIN  THE  MEANING  OF  THE  PRIVATE  SECURITIES
LITIGATION  REFORM ACT OF 1995 AND THE COMPANY  DESIRES TO TAKE ADVANTAGE OF THE
"SAFE  HARBOR"  PROVISIONS  THEREOF.  THEREFORE,  THE COMPANY IS INCLUDING  THIS
STATEMENT FOR THE EXPRESS  PURPOSE OF AVAILING ITSELF OF THE PROTECTIONS OF SUCH
SAFE  HARBOR  WITH  RESPECT  TO  ALL OF  SUCH  FORWARD-LOOKING  STATEMENTS.  THE
FORWARD-LOOKING  STATEMENTS IN THIS REPORT  REFLECT THE COMPANY'S  CURRENT VIEWS
WITH RESPECT TO FUTURE  EVENTS AND  FINANCIAL  PERFORMANCE.  EXAMPLES OF FORWARD
LOOKING  STATEMENTS  INCLUDE THE EXPECTATIONS OF THE COMPANY WITH RESPECT TO ITS
STRATEGY.  THERE CAN BE NO ASSURANCES THAT THE COMPANY'S FINANCIAL GOALS WILL BE
REALIZED.  THESE  FORWARD-LOOKING  STATEMENTS  ARE SUBJECT TO CERTAIN  RISKS AND
UNCERTAINTIES, INCLUDING THOSE DISCUSSED HEREIN, THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER  MATERIALLY  FROM  HISTORICAL  RESULTS OR THOSE  ANTICIPATED.  IN THIS
REPORT, THE WORDS "ANTICIPATES,"  "ESTIMATES," "BELIEVES," "EXPECTS," "INTENDS,"
"FUTURE,"  "GOAL,"  "OBJECTIVE"  AND  SIMILAR  EXPRESSIONS   GENERALLY  IDENTIFY
FORWARD-LOOKING STATEMENTS.  READERS ARE CAUTIONED TO CONSIDER THE SPECIFIC RISK
FACTORS  DESCRIBED BELOW AND NOT TO PLACE UNDUE RELIANCE ON THE  FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING  STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE HEREOF.

In this report,  the terms "ASI," "the Company,"  "we," "us," and "our" refer to
ASI Technology Corporation.

                                     Part I

ITEM 1. DESCRIPTION OF BUSINESS.

Introduction


                                       2
<PAGE>

ASI Technology  Corporation is a development stage company,  incorporated  under
the laws of the State of Nevada. We own two patented plasma  technologies,  each
in an early  stage of  development.  We acquired  our  patented  plasma  antenna
technology  by purchase in August 1999 and acquired  our  patented  plasma sound
reduction  technology  for jet  engines by purchase  in  December  2000.  We are
engaged in developing our technologies  with the goal to  commercialize  through
licensing.

o        Plasma  Antenna  Technology  - When  gas is  electrically  charged,  or
         ionized  to a  plasma  state  it  becomes  conductive,  allowing  radio
         frequency (RF) signals to be transmitted or received. We employ ionized
         gas enclosed in a tube as the  conducting  element of an antenna.  When
         the gas is not ionized,  the antenna element ceases to exist. This is a
         fundamental  change from  traditional  antenna  design  that  generally
         employs  solid metal wires or surfaces as the  conducting  element.  We
         believe our plasma antenna offers numerous advantages including stealth
         for military  applications and higher digital performance in commercial
         applications.  We also believe our technology can compete in many metal
         antenna  applications.  Our initial  efforts  have  focused on military
         markets.  General  Dynamics'  Electric Boat Corporation  sponsored over
         $160,000  of  development  in  2000,  accounting  for  all of our  2000
         revenues.  The U.S. Government's Ballistic Missile Defense Organization
         ("BMDO")   sponsored   plasma   antenna   research,    accounting   for
         substantially all of our 2001 revenues of approximately $78,000.

o        Plasma Sound Reduction  Technology - This technology employs techniques
         to modulate  the plasma in jet engines to reduce noise  emissions.  Jet
         engine noise  emissions  are highly  regulated  and airlines and engine
         manufacturers  incur significant  costs to meet increasingly  stringent
         regulations.  Although our basic technology  concept has been tested in
         laboratory tests using hot plasma-type  flames, our goal is to validate
         this technology on reduced scale jet engines and thereafter develop and
         license the technology  for use in reducing the noise  emissions of jet
         engines.

Both of our plasma  technologies are in the early stage of development and there
can  be no  assurance  that  commercial  viability  will  be  achieved.  Further
development  is necessary in order to verify and  document  the  advantages  and
commercialize our technologies.

Prior to the purchase of the plasma  antenna  technology  ASI had no significant
assets or  liabilities.  During the period from 1995 until 1999 ASI was inactive
and engaged only in collecting  proceeds from prior asset sales,  reducing debts
and paying  corporate  costs.  At the beginning of 1999 we commenced our current
strategy of acquiring and developing new technologies for licensing.

ASI was incorporated on January 9, 1931 and has evolved through a number of name
changes and equity reorganizations. Our President, Jerry E. Polis, was appointed
President  and a  director  in 1973.  Prior  to the  acquisition  of our  plasma
technology  in August  1999,  ASI was  essentially  inactive.  ASI had not filed
Exchange Act reports from about 1982 until March 2001.  On September 1, 2000 the
Company  changed  its  name  from  "ASI"  to  "ASI  Technology  Corporation"  in
connection with a capital reorganization which included a 1 for 10 reverse stock
split.  All share and per share data  included in this  annual  report have been
adjusted  to  retroactively  reflect the reverse  stock  split.  The Company has
11,000,000  shares  authorized,  $0.02 par value, of which 10,000,000 shares are
designated common stock and 1,000,000 shares are designated  preferred stock. As
of the date of this annual  report there were  3,346,522  shares of common stock
issued  and  outstanding.  There  are no  shares of  preferred  stock  issued or
outstanding.

Our principal executive offices are located at 980 American Pacific Drive, Suite
#111,  Henderson,  Nevada 89014.  Our telephone number is (702) 734-1888 and our
Internet Web site is  www.asiplasma.com.  The information on our Web site is not
part of this annual report.

Key Business Developments

Beginning  in early 1999 we  developed  a strategy  focusing  on  acquiring  and
exploiting technology. In August 1999 we purchased our plasma antenna technology
and commenced  development.  We have paid for research and prototype development
and also obtained  sponsored  development from General  Dynamics'  Electric Boat
Corporation  and the U.S.  Government.  In  December  2000 we were  offered  the
opportunity to purchase our plasma sound  reduction  technology for jet engines.
We believe these  technologies are compatible,  both employing plasma physics as
an underlying concept and both having military and commercial prospects.


                                       3
<PAGE>

Management efforts have focused on the following:

o    We have established working relationships with:

     -   General  Dynamics  (Bath  Iron  Works  Corporation)  - Bath Iron  Works
         Corporation  has assisted us in focusing our  development and marketing
         efforts.  The first result of this  relationship  was our contract with
         the  General  Dynamics  Electric  Boat  Corporation   described  below.
         Although  we have no  formal  partnering  agreement,  Bath  Iron  Works
         Corporation has sponsored meetings and attended military  presentations
         on our behalf.  They continue to assist us in promoting our technology.
         There can be no assurance,  however, that we can consummate a strategic
         relationship with them or that their support will continue.

     -   University of  Tennessee's  Electrical  Engineering  and Plasma Physics
         Department - We have teamed with the University of Tennessee to develop
         and evaluate new plasma  prototypes.  We are paying the University on a
         project by project  basis.  We employed the  University of Tennessee to
         assist us in both our General  Dynamics and BMDO contracts.  We have no
         written agreement and there can be no assurance that we can continue to
         avail use of their facilities, equipment or personnel in the future.

     -   Malibu  Research,  Inc.  - In May  2001 we  entered  into a  partnering
         agreement with Malibu  Research,  Inc., a company  engaged in producing
         military antennas and related equipment. Malibu Research is prepared to
         supply radar and antenna  related  support to us and we are prepared to
         provide plasma expertise and development support to Malibu Research, on
         a project basis. Our strategy is to develop opportunities utilizing the
         combined  expertise and we intend to employ  Malibu  Research on future
         projects  to build  and test more  sophisticated  plasma  antennas.  In
         January 2002 we engaged Malibu Research and the University of Tennessee
         to develop a more sophisticated plasma antenna  demonstration system to
         our design.

o    In January 2000 we obtained our first sponsored  development purchase order
     for $89,710 from General Dynamics'  Electric Boat Corporation to develop an
     inflatable  plasma  antenna  prototype for satellite  communications.  This
     contract  was  completed  in August 2000 and a second phase was awarded for
     $78,696 to  develop  an  advanced  prototype.  This phase was  successfully
     completed in early 2001, demonstrating the ability of our plasma antenna to
     perform  satellite  communications  while having  favorable  mechanical and
     material advantages in certain military applications.

o    In May 2001 we obtained a fixed fee  government  Phase I contract from BMDO
     for an  aggregate  of $62,756  to fund  further  development  of our plasma
     antenna  technology.  This contract was completed in November 2001. In this
     work we  employed a plasma  blanket  around an antenna to  demonstrate  the
     advantages of plasma to contain and direct electromagnetic energy.

o    In  December   2001  we  were  granted  a  three-month   interim   contract
     continuation for $34,876 from BMDO. We have also been notified by BMDO that
     we have been  approved for a Phase II contract for up to $600,000  expected
     to start in  mid-2002,  subject to contract  negotiations.  There can be no
     assurance,  however,  that we will be  successful  in entering into a final
     contract.

o    We have applied to extend  patent  coverage for our two issued U.S.  plasma
     antenna  patents  into  Canada,  Europe and  Australia.  We have filed five
     additional  patent  applications  in the United States and we are preparing
     additional  patent  applications  to broaden our portfolio of  intellectual
     property.

We have applied for additional  government  contracts  through various  military
agencies.  There can be no assurance that we can obtain future development funds
from these or other sources.

Terms of Technology Purchase Agreements

Plasma Antenna


                                       4
<PAGE>

On August  20,  1999,  we signed a purchase  agreement  (the  "Antenna  Purchase
Agreement")  for  the  plasma  antenna   technology   with  Patriot   Scientific
Corporation  ("Patriot"),  an unaffiliated  company. The original plasma antenna
patent was issued in 1997.

We purchased the plasma antenna  technology for an aggregate cash purchase price
of $250,000.  The Antenna  Purchase  Agreement  further provides that during the
five year period  ending on August 20,  2004,  we will pay to Patriot  royalties
equal to 5% of gross revenues  actually received by us from the sale of products
incorporating the technology or from the license or sublicense of the technology
to third parties, up to a maximum of $250,000 in future royalties. If we sell or
assign the  technology  during such five year  period,  we have agreed to pay to
Patriot  an  amount  equal to 5% of the  purchase  price  received  by us or the
balance of the $250,000 maximum royalty that remains unpaid,  whichever is less.
Thereafter no additional  payments are due or payable to Patriot  related to the
technology. There are no minimum future royalties.


                                       5
<PAGE>

The technology purchased from Patriot was comprised of the following:

     o   U.S. Patent #5,594,456 (Gas Tube RF Antenna) issued January 14, 1997.
     o   U.S.  Patent   Application   (Rugged  Gas  Tube  RF  Cellular  Antenna)
         subsequently issued on November 23, 1999 as #5,990,837.
     o   All related trade secrets and proprietary information.
     o   Results of Patriot's  research  and  development,  including  two final
         reports issued for U.S. Navy contracts.

The $250,000 purchase price was expensed as acquired technology as there were no
other identifiable tangible assets acquired and since technological  feasibility
has not been  established  and no  future  alternative  uses of the  patents  or
technology currently exists.

Plasma Sound Reduction

On December  30,  2000,  we signed a purchase  agreement  (the "Sound  Reduction
Purchase  Agreement")  for the plasma sound  reduction  technology with American
Technology  Corporation  ("ATC"),  an unaffiliated  company.  The patent on this
technology was issued in 1999.

We purchased the sound reduction  technology for $200,000,  which has been fully
paid. We are obligated to pay  royalties  starting at 6% of product  revenues in
the first year of the agreement, 5% in the second year and 4% thereafter for the
term of the patent. A royalty of 15% is due on license revenues and a fee of 10%
of sale proceeds is due on the further sale of the technology.

The technology purchased from ATC was comprised of the following:

     o   U.S. Patent No. 5,966,452 for Sound Reduction Method and System for Jet
         Engines issued on October 12, 1999 and corresponding applications filed
         in Brazil,  Canada,  China, the European Patent Office (EPO), Japan and
         the Russian Federation.
     o   All related trade secrets, technical data and proprietary information.
     o   All market research, contact lists and related information.

The $200,000 purchase price was expensed as acquired technology as there were no
other identifiable tangible assets acquired and since technological  feasibility
has not been  established  and no  future  alternative  uses of the  patents  or
technology currently exists.

Description of our Technology

Plasma

The different states of matter generally found on earth are solid,  liquid,  and
gas. Sir William  Crookes,  an English  physicist,  identified a fourth state of
matter,  now called  plasma,  in 1879.  Plasma is by far the most common form of
matter.  Plasma in the stars and in the tenuous space between them makes up over
99% of the  visible  universe  and  perhaps  most of that which is not  visible.
Plasmas are created each time a  fluorescent  light is turned on. Jets of plasma
spin and maneuver orbiting  satellites.  Important to our technologies,  plasmas
are  conductive  assemblies  of charged  and neutral  particles  and fields that
exhibit  collective  effects.  Plasmas  carry  electrical  currents and generate
magnetic fields.

Plasma Antenna Technology

Since the discovery of radio frequency ("RF")  transmission,  antenna design has
been an integral part of virtually every  communication  and radar  application.
Technology  has  advanced to provide  unique  antenna  designs for  applications
ranging from  general  broadcast  of radio  frequency  signals for public use to
complex  weapon  systems.  In its most  common  form,  an antenna  represents  a
conducting metal surface that is sized to emit radiation at one or more selected
frequencies. Antennas must be efficient so the maximum amount of signal strength
is expended in the propagated wave and not wasted in antenna reflection.


                                       6
<PAGE>

Our plasma antenna  technology  employs ionized gas enclosed in a tube (or other
enclosure) as the conducting element of an antenna. We believe ionized gas is an
efficient  conducting element with a number of important  advantages.  Since the
gas is ionized only for the time of transmission or reception, unwanted trailing
signals or "ringing"  and  associated  effects of solid wire antenna  design are
eliminated.  The design  allows for extremely  short  pulses,  important to many
forms of digital  communication  and  radar.  The design  further  provides  the
opportunity  to  construct  an  antenna  that  can be  compact  and  dynamically
reconfigured for frequency, direction, bandwidth, gain and beamwidth. We believe
our plasma antenna  technology  will enable future  antennas to be designed that
are  efficient,  low in weight and smaller in size than  traditional  solid wire
antennas.

In September  1994,  Patriot filed a patent  application  on the plasma  antenna
technology.  Immediately  upon  receiving  notice of allowance in June 1995, the
invention  was  classified  secret by the U.S.  Department  of  Commerce  at the
request of a defense  agency.  In June 1996,  as a result of an  application  by
Patriot seeking declassification, the plasma antenna technology was declassified
allowing  exploitation for both  governmental and commercial  purposes.  In 1997
Patriot  completed a proof of concept contract funded by the U.S. Navy Office of
Naval  Research  to develop,  fabricate,  characterize  and  evaluate an ionized
plasma antenna element. This contract was designed to provide a demonstration of
the  ability to use  ionized  plasma as a  conducting  path for RF  energy.  The
results of this investigation  indicated that the plasma antenna element behaved
like a wire  (metal)  antenna  in both  transmit  and  receive  mode  exhibiting
essentially the same  characteristics.  In 1998 Patriot  completed a contract by
the Office of Naval Research and issued a report titled  "Ionized Plasma Antenna
Development  Concept"  to the  Office  of Naval  Research  under a Phase I Small
Business  Innovation  Research ("SBIR") Program Contract.  This report concluded
that a plasma antenna transmitted and received RF transmissions  comparable to a
wire at various frequencies and exhibited low noise.

One distinguishing  feature of a plasma antenna is that the gas ionizing process
can manipulate resistance.  When deionized,  the gas has infinite resistance and
does not interact  with RF  radiation.  When  deionized the gas antenna will not
backscatter  radar  waves  (providing  stealth)  and will not absorb  high-power
microwave radiation (reducing the effect of electronic warfare countermeasures).

A second distinguishing feature is that after sending a pulse the plasma antenna
can be deionized,  eliminating  the ringing  associated with  traditional  metal
elements.  Ringing  and the  associated  noise  of a  metal  antenna  can  limit
capabilities in high frequency short pulse transmissions. In these applications,
metal  antennas  are  often   accompanied  by   sophisticated   computer  signal
processing.  By  reducing  ringing  and  noise,  we believe  our plasma  antenna
provides increased accuracy and reduces computer signal processing requirements.
These advantages may become  important in cutting edge  applications for impulse
radar and high-speed digital communications.

Based on the results of research and  development to date, we believe our plasma
antenna technology has the following major attributes:

     o   No antenna ringing provides an improved signal and reduces distortion.
     o   Since a plasma  antenna is composed of  non-metallic  elements it has a
         reduced radar cross section providing stealth.
     o   Changes in plasma density can change bandwidth over wide ranges.
     o   After the gas is ionized,  a plasma  antenna has a low noise floor,  an
         important attribute to many transmission and reception applications.
     o   A circular radar or reception scan can be performed electronically with
         no moving parts at a high speed.
     o   Plasma antenna elements can be constructed and configured into an array
         that is dynamically  reconfigurable  for frequency,  beamwidth,  power,
         gain, polarization and directionality - on the fly.
     o   With a  reconfigurable  plasma antenna many RF subsystems can share one
         antenna resource reducing the number and size of antenna structures.
     o   Mathematical  illustrations  indicate  that by selecting  the gases and
         changing ion density,  the electrical  aperture (or apparent footprint)
         of a  plasma  antenna  may be  made  to  perform  on par  with a  metal
         counterpart having a larger physical size.

We have  funded  prototypes  developed  for us by the  University  of  Tennessee
demonstrating:


                                       7
<PAGE>

     o   the  operation of a plasma  antenna up to 2.5 GHz (a hertz is a unit of
         frequency of one cycle per second,  one gigahertz is one billion cycles
         per second), other experiments have been to 10 GHz
     o   use of a series of plasma tubes as a reflector
     o   use of plasma as a medium in a non-metallic wave guide (wave guides are
         hollow  structures  to carry  high  power  electromagnetic  waves to an
         antenna  element  similar in function to a coaxial cable in lower power
         applications)
     o   operation of flexible tube plasma antennas
     o   embedding of plasma antennas in shipboard composite structures

In addition we have generated analytical and mathematical support and models for
various plasma antenna measurements.  To date we have elected not to publish our
work as we continue to file patent applications.

Our results  indicate  that a plasma  antenna can be used for many  transmission
and/or  modulation  techniques:  such  as  continuous  wave,  phase  modulation,
impulse, AM, FM, chirp, spread spectrum or other digital techniques. And we have
determined  that plasma  antennas can be used over a large frequency range up to
20GHz and employ a variety of gases (for example neon, argon,  helium,  krypton,
mercury  vapor  and  zenon).  The same  appears  to be true as to its value as a
receive  antenna.  Whether and to what extent the  development of our technology
will result in a commercial plasma antenna exhibiting any of these attributes is
presently  unknown.  Plasma  antenna  technology  is still in an early  stage of
development and additional testing and commercial prototype  demonstrations will
be required to determine commercial viability. We are unable to predict the cost
of determining commercial viability.

Plasma Sound Reduction Technology

Jet engines and more  specifically  the gas turbine jet engines employed in most
aircraft are notorious for their excessive noise level whether in aircraft or in
industry or on ships. The noise pollution can be uncomfortable and possibly even
dangerous to humans.  As a result there are a variety of government  regulations
imposed  requiring  aircraft to adhere to certain maximum noise levels and limit
the number of takeoff and landings of certain  aircraft  based on their level of
overall noise output.

In  the  mid  1980's  the  International  Civil  Aviation   Organization  (ICAO)
established  the  Committee on Aviation  Environmental  Protection  (CAEP) which
developed  international  aircraft  noise  certification  and phaseout rules for
certain  aircraft.  Most airports  have noise limits and budgets.  In the United
States,  the  Department  of  Transportation  ("DOT") and the  Federal  Aviation
Authority  ("FAA") have authority  under the Aviation Safety and Noise Abatement
Act of 1979, as amended and recodified, and under the Airport Noise and Capacity
Act of 1990, to monitor and regulate  aircraft engine noise.  Noise standards in
the U.S.  have been  codified  most  recently in 1999 by FAR  (Federal  Aviation
Regulation)  Part  36  -  Noise  Standards:   Aircraft  Type  and  Airworthiness
Certification.  A mandate went into effect  January 1, 2000,  requiring that all
operations  into and out of U.S.  airports  must be made with  Stage 3 (the most
strict regulated so far) noise level compliant  airplanes.  Stage 3 aircraft are
required to be about 12% quieter  than phased out Stage 2 aircraft.  The CAEP is
continuing to evaluate  further noise  reductions and  regulations and has begun
work on Stage 4 standards that could be codified  within one to two years and be
phased in over a number of years.

Numerous airports have imposed additional restrictions on airplane noise levels,
noise budgets,  mandatory flight paths and runway restrictions,  which limit the
ability  of  carriers  to  increase  services  or  operate  as  desired at these
airports.

Traditional noise reduction methods are typically passive consisting of mufflers
and baffling techniques. More active techniques may employ mixing inlet air with
exhaust  gases to reduce  exhaust  velocity.  These  various  methods  generally
provide  limited  noise  reduction  and  may add  weight  and  reduce  operating
efficiency  of engines.  Many older Stage 2 aircraft are flying today because of
inefficient  "hush-kits"  used to quiet the aircraft to meet Stage 3 compliance.
The cost to hush-kit an aircraft such as a Boeing 737 can approach $2 million.

The  science of noise  cancellation  and the  ability to create a sound wave 180
degrees out of phase with the  original  sound wave to  interfere  and cancel is
well known. Noise cancellation  algorithms and systems have been developed for a
variety of uses ranging from headphones to industrial  machinery.  These methods
generally use a speaker to produce the interfering and canceling wave.


                                       8
<PAGE>

Use of  active  electronic  noise  cancellation  technology  in jet and  turbine
engines has not been practical,  although  various methods have been proposed by
others,  due to the  difficulty  in  getting a timely  wave to the source of the
sound. The patent we purchased  describes a method of using the internal hot gas
plasma as the speaker  element to create a phase inverted wave to interfere with
the acoustic  noise wave inside a jet engine.  The patent  discusses  methods of
seeding the fuel with chemicals to enhance the  conductivity  in the jet engine.
It is  uncertain  whether  fuel  seeding is  required  for  performance  of this
technology and will have to be determined in actual testing.

Our method has to date only been  tested by  creating  a  plasma-type  flame and
reducing the  perceptible  level of noise.  There can be no assurance  that this
method will function in a jet engine, which is inherently more complex.  Further
there may also be practical  limitations to  implementing  the technology due to
the need to sense noise  waves and couple the  generated  canceling  wave in the
appropriate section or sections of a multi-stage jet engine.

While it is not  practical  to eliminate  the noise of a jet engine,  even small
reductions of several  decibels may provide  benefits  sufficient to justify the
cost of this form of noise reduction if it can be successfully commercialized. A
decibel (dB) is a logarithmic  unit of measure for sound pressure levels. A 3 dB
change  typically  relates to a doubling  of the level.  Typical  conversational
speech at one foot is about 60  decibels,  the average  pain level is 130 dB and
jet engine noise levels can approach 160 Db at close range.  On takeoff  typical
Stage 2 aircraft projected noise at 97 dB and the newer Stage 3 aircraft project
sound at about 87 dB.

Theory suggests,  but we have no experimental or other support,  that our method
of sound  reduction may smooth the  turbulence  exiting a jet engine and thereby
possibly provide  improvement in operating  efficiency or performance that could
reduce operating costs.

Our development  strategy is to test this method of noise reduction in a reduced
scale jet engine. These tests would be designed to seek solutions to some of the
implementation  issues and measure the noise reduction,  if any. The tests would
also determine the level of seeding, if any, necessary for optimal reduction. It
may also be  possible  in these tests to  determine  if there is any  measurable
operating  performance  improvement.  We have  commenced  discussions  with  one
university  to  determine  if they can  perform  this  experimental  work  under
contract.  We are  working  with  the  university  to seek  funding  for a joint
development  project.  There can be no assurance  that we will be  successful in
this  effort.  If  unsuccessful  in  obtaining  outside  support  we may have to
consider  financing  further  development  from our own funds in order to pursue
development of this technology.  We currently have no established  timetable for
the  development  of this  technology  nor do we have an  estimate  of the costs
necessary to develop the technology.

Market Opportunities and Strategy

Plasma Antenna

We believe our plasma antenna  technology  offers  distinct  advantages  and, if
successfully  developed,  will  be able  to  compete  with  most  metal  antenna
applications, although there can be no assurance that this will be the case. The
plasma antenna's advantages over conventional metal elements are most obvious in
military applications where stealth and electronic warfare are primary concerns.
Other important military factors are weight, size and the ability to reconfigure
and reduce the number of  antennas  required  on a vehicle.  Potential  military
applications include:

     o Shipboard/submarine antenna replacements.
     o Unmanned air vehicle sensor antennas.
     o IFF ("identification friend or foe") land-based vehicle antennas.
     o Stealth aircraft antenna replacements.
     o Broad band jamming equipment including for spread-spectrum emitters.
     o ECM (electronic counter-measure) antennas.
     o Phased array element replacements.
     o EMI  (Electromagnetic  Interference)  / ECI  (Electronic  Compatibility
         Interference) mitigation.
     o Detection and tracking of ballistic missiles.
     o High power waveguides.

Military antenna  installations can be quite  sophisticated and just the antenna
portion of a  communications  or radar  installation  on a ship or submarine can
cost in the  millions of dollars.  We believe  that we have the  opportunity  to
replace certain  existing  military  antennas with stealth  antennas and also to
create new applications.


                                       9
<PAGE>

We believe, based primarily on discussion with technical  consultants,  that our
plasma antenna technology has commercial  applications in telemetry,  broad-band
communications,  ground penetrating radar, navigation, weather radar, wind shear
detection  and  collision  avoidance,  high-speed  data (for  example  Internet)
communication  and  spread  spectrum  communication.  A part of our  development
strategy  is to  identify  the most  promising  commercial  markets  and  target
development efforts to provide solutions to prospective customers.

We  are  focusing  our  development  and  marketing  strategy  initially  on the
following major activities:

     o   Establish and expand development strategic relationships.
     o   Seek industry and military financial support.
     o   Identify primary market opportunities.
     o   Develop prototype antenna targeted at selected opportunities.
     o   Identify prospective licensing partners.

We have invested resources to review the overall patent and propriety aspects of
our technology. We have filed four new U.S. patent applications.  We continue to
review other areas where patent  applications  may be appropriate.  We have also
applied to obtain  rights to certain  patents  developed by Dr. Ted Anderson (an
ASI  consultant)  while working with the Navy.  There can be no assurance we can
obtain rights to use these patents.

Our goal is to license this technology to companies engaged in producing antenna
systems.  We do not presently intend to produce or manufacture  communication or
antenna systems.

There can be no assurance  our plasma  antenna  technology  can be  successfully
developed or commercialized.

Plasma Sound Reduction

We believe that our plasma sound reduction  technology,  if successfully proven,
may have  applications in most jet and gas turbine engine  applications  whether
for aircraft,  industry or ships.  We may have the  opportunity  to make certain
non-conforming  jet  engines or aircraft  become  conforming  to existing  noise
regulations  thereby  increasing the value of older engines.  This could have an
impact on existing aircraft.

Our goal is to prove the  technology  and  thereafter  license the technology to
either  engine  producers  or others  engaged in the  business of  servicing  or
providing technology for jet engines. It is not our present intent to produce or
manufacture systems.

Competition and Alternatives

The market for communication technology is extremely competitive. Many companies
produce antenna products that are generally competitive to the technology we are
developing. These companies are larger and have substantially greater financial,
research  and  marketing  resources  than we do.  We may not be able to  compete
successfully in this market.  Antenna  products are normally sold as a part of a
communication or radar system.  Accordingly, an antenna must be selected by such
a  supplier  and  incorporated  into a  system  prior to the  system  sale to an
end-user  of the  technology.  Communication  and radar  systems  are  generally
supplied by large companies many of whom have their own antenna products or have
existing  relationships  with  antenna  product  suppliers.  Accordingly,  to be
successful,  we will have to  demonstrate  to such  customers the  advantages of
using a plasma antenna in existing  systems or the ability of the plasma antenna
to be a key element in a new  communication or radar system.  For these reasons,
our  strategy  is to  attempt  to  develop  strategic  relationships  within the
communications and radar industries,  although there can be no assurance that we
will succeed in doing so.

Our proposed antenna  solutions will compete with existing metal and other types
of antenna products.

While our original  patent has caused others to experiment  with plasma antennas
thus  creating  potential  competitors,  it has  also  resulted  in  independent
confirmation of many of the advantages of a plasma antenna.  The Plasma Research
Laboratory of the Research  School of Physical  Sciences and  Engineering at the
Australian  National  University  (ANU) in Australia has been conducting  plasma
antenna research as a result of Patriot's initial work. Several technical papers
have  been  produced  and at  least  one  patent  application  has  been  filed.
Similarly,  while  employed  by the  Naval


                                       10
<PAGE>

Undersea  Warfare  Center,  Dr.  Ted  Anderson,  an  ASI  consultant,  performed
analytical and mathematical work on plasma antennas and filed patents on certain
applications of plasma technologies.

Although  there are no existing  suppliers of plasma  antennas to our knowledge,
there is no assurance  that there will not be direct  competitors in the future.
The work of ANU, and Dr. Anderson,  while working for the Navy, is indicative of
the ongoing  interest and work being  performed in this field.  We believe,  but
there can be no  assurance,  that our  patents  will be an  important  factor in
establishing our position in the marketplace.

The market for jet engine  noise  reduction  systems  both passive and active is
highly  competitive.  Many companies  produce noise  reduction  systems that are
competitive to the system we intend to develop.  These  organizations are larger
and  have  substantially  greater  resources  than we do.  We may not be able to
compete  successfully  in this  market.  In  addition,  these  companies  expend
significant funds on research and development.  NASA is also conducting research
on methods to reduce noise in jet engines.  They or others may have developed or
may succeed in developing  technology  and systems that are more  effective than
those  proposed by us. There can be no assurance that we will be able to compete
successfully with such competitors or that additional  competition will not have
a material adverse effect on our business.

Government Regulation

The  transmission  of RF energy is highly  regulated  throughout the world.  Our
antenna solutions will have to meet the regulatory  requirements associated with
the systems in which they are  employed.  We do not believe the  generation of a
plasma in an enclosed  structure will face any new regulatory  hurdles but there
can be no assurance that this will be the case.  There is currently a high level
of concern  about the  possible  health  effects of RF and other  transmissions.
Although we do not believe that there are any special  risk  factors  associated
with plasma  technology,  this  atmosphere  of public  concern  could  create an
adverse marketing environment.

Jet engines and jet engine noise are regulated domestically and internationally.
Since our  technology is designed to reduce this noise we do not believe we will
be subject to any  regulations not presently part of the jet engine and aircraft
regulatory  scheme.  If we should require some form of seeding of fuel as a part
of our system, this may be subject to additional regulation.

Intellectual Property Rights

We  purchased  one issued  U.S.  patent,  in  November  1999 we were  granted an
additional U.S. patent. We have filed to protect the key claims of these patents
in Australia,  Europe and Canada.  Although we believe we will be able to obtain
additional  foreign rights on these two issued U.S. patents in Canada and Europe
there can be no  assurance  that such foreign  patents can be obtained.  We have
filed four additional U.S. patent  applications on the plasma antenna technology
and we are preparing additional patent applications.  We expect to elect foreign
protection on some of these pending claims as we continue to work to broaden our
portfolio of intellectual property.

We purchased one U.S.  patent on our plasma sound  reduction  technology.  Broad
foreign  rights  have been  applied  for and we are  currently  pursuing  patent
applications in Canada, Europe, Brazil, China, Japan and the Russian Federation.
We may consider additional patents in the future.

We have an ongoing policy of filing patent  applications  to seek protection for
novel features of our technologies. Prior to the filing and granting of patents,
our policy is to disclose  key  features to patent  counsel and  maintain  these
features as trade secrets. There can be no assurance that any additional patents
on our technology will be granted.

In  addition  to  such  factors  as  innovation,   technological  expertise  and
experienced  personnel,  we  believe  that a  strong  patent  position  will  be
important to compete  effectively  through licensing in our proposed markets. We
are investing significant  management,  legal and financial resources toward our
technology  patents.  The new technology  industry is  characterized by frequent
litigation  regarding patent and other  intellectual  property  rights.  Others,
including academic  institutions and competitors,  may hold patents in competing
areas.  Patents  filed by the Navy and by ANU or by others may limit our ability
to license our plasma antenna  technology in certain  areas.  Although we do not
believe  any  existing   patents  would  inhibit  our  ability  to  license  our
technology,  there can be no assurance that others will not assert claims in the
future. There can be no assurance that such claims, with or without merit, would
not have a material  adverse  effect on our  financial  condition  or results of
operations.


                                       11
<PAGE>

The  validity of our  existing  patents has not been  adjudicated  by any court.
Competitors  may bring legal action to challenge the validity of our existing or
future  patents or may attempt to  circumvent  the  protection  provided by such
patents. There can be no assurance that either of such activities by competitors
would not be successful.  The failure to obtain patent protection or the loss of
patent  protection on our technologies or the  circumvention of our patents,  by
competitors  could  have a  material  adverse  effect on our  ability to compete
successfully.

We generally  take  advantage of the Patent  Convention  Treaty  procedures  for
patent protection in foreign  countries.  This procedure is more cost efficient,
but  results in a delay in the  application  and  issuance  of foreign  patents;
however,  any  resulting  foreign  patents,  if and when issued,  enjoy the same
priority date as U.S. counterparts.

Our policy is to enter into  nondisclosure  agreements  with each  employee  and
consultant  or  third  party  to  whom  any of our  proprietary  information  is
disclosed.  These agreements prohibit the disclosure of confidential information
to others,  both during and  subsequent  to  employment  or the  duration of the
working  relationship.  They also provide for  assignment  of  inventions to us.
There can be no assurance,  however, that these agreements will not be breached,
that we will have  adequate  remedies  for any breach or that our trade  secrets
will not otherwise become known or be independently developed by competitors.

Research and Development

For the years ended  December  31,  2001,  2000 and 1999 we  invested  $157,709,
$422,107 and $303,946, respectively, on research and development,  including the
acquired technology. In 2000 we recognized $160,536 of revenue from one customer
for sponsored  research and development  and in 2001 we recognized  $78,026 from
two customers for sponsored research and development.  Future levels of research
and  development  expenditures  will vary  depending  on the  timing of  further
technology  development  and the  availability  of funds to carry on  additional
research and development on currently owned technologies or in other areas.

Employees

We have no employees  other than our two  executive  officers  that provide only
part-time services to the Company. We employ technical  consultants or others on
a  contract  or  project  by project  basis.  We have not  experienced  any work
stoppages and are not a party to a collective bargaining agreement.


ITEM 2. DESCRIPTION OF PROPERTY

Our principal executive offices are located at 980 American Pacific Drive, Suite
#111,  Henderson,  Nevada 89014,  which is the principal  business office of our
President,  Jerry E. Polis, who has other business  operations at this location.
We share approximately  2,600 square feet with other businesses  affiliated with
Mr.  Polis.  Commencing in September  1999 we began paying a company  affiliated
with Mr. Polis an  aggregate  of $500 per month for office rent and  bookkeeping
and administrative  services.  We believe these terms are no less favorable than
what could be obtained from outside providers.

ITEM 3. LEGAL PROCEEDINGS

We are not involved in any threatened or pending legal proceedings.

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

No matter was submitted to a vote of security  holders during the fourth quarter
of the fiscal year covered by this report.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

There has been no public trading market for our securities  since  approximately
1982.  Although we are engaged in an application process to allow the trading of
our  shares of common  stock  and  quotations  on the  National  Association  of


                                       12
<PAGE>

Securities Dealers, Inc. ("NASD") OTC Electronic Bulletin Board, there can be no
assurance of when or if this can be successfully accomplished or that any market
for our common stock will develop in the future.

We had  1,069  holders  of  record of our  3,307,722  shares of common  stock at
December  31,  2001,  which we believe  approximates  the  number of  beneficial
owners. We have never paid a cash dividend on our common stock and do not expect
to pay cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

We sold no equity  securities  during the three  years ended  December  31, 2001
under an exemption from the Securities Act other than described in the following
paragraphs or previously reported.

In December 2001,  demand notes for $110,000 of prior cash advances plus accrued
interest of $4,229 were  converted to 228,458  shares of common stock at a price
of $0.50 per share.  We also sold for $183,800 in cash 367,600  shares of common
stock,  also at a price of $0.50 per share. Of these amounts converted and sold,
one officer and director  received  172,814  common  shares and there were three
other unrelated purchasers.

We sold the securities without an underwriter or cash commission. The securities
were offered and sold without  registration under the Securities Act of 1933, as
amended (the "Act"),  in reliance  upon the  exemption  provided by Section 4(2)
thereunder and appropriate legends were placed on the shares of common stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Overview

We acquired two plasma technologies in August 1999 and December 2000, each in an
early stage of development. Since the August 1999 purchase of our plasma antenna
technology we have devoted most of our expenditures to develop and commercialize
the  technology.  At the end of  December  2000 we  acquired  additional  plasma
technology,  our jet engine noise reduction  technology.  Our principal business
activity is to:

     o   Develop for future licensing our patented plasma antenna technology for
         military and commercial applications.
     o   Test,  validate  and  develop  our  patented  plasma jet  engine  noise
         reduction  technology  for  licensing  for  use in the  commercial  and
         military  markets  for  aircraft  engines  and  industrial  gas turbine
         engines.

At the  beginning  of 1999 we  commenced  our  strategy  seeking to acquire  and
develop  new  technologies  for  licensing.  Because  no  significant  operating
revenues  have  occurred and because we have  devoted most of our efforts  since
1999 to developing new  technology,  we are considered to be in the  development
stage.  Our financial  statements are presented on the basis that we are able to
continue as a going concern,  which  contemplates  the realization of assets and
the  satisfaction of liabilities in the normal course of business.  We have only
recently commenced  operations and our continued existence is dependent upon our
ability to obtain  working  capital and financing to meet our  obligations  on a
timely  basis  and  to  fund  the  development  and   commercialization  of  our
technologies.   The  accompanying   financial  statements  do  not  include  any
adjustments  that would be necessary  should we be unable to continue as a going
concern  and  therefore  be required  to realize  our assets and  discharge  our
liabilities in other than the normal course of business and at amounts different
from those reflected in the accompanying financial statements.

Results of Operations - 2001 vs. 2000

Revenues

Our revenues  for 2001  consisted of $78,026 of  development  contract  revenue,
which was a $82,510  decrease from contract  revenues of $160,536  recognized in
2000.  The decrease is due to the  completion  of 2000  contracts and receipt of
smaller  contracts in 2001. Our revenues are subject to significant  variability
due to the nature of contract work.

The  development  revenue of $78,026  consisted of $7,870  recognized  under the
final  portion  of a General  Dynamics  contract  started in 2000.  The  balance
relates primarily to a $62,756 Phase I Small Business Innovation Research (SBIR)
contract  with the U.S.  Government's  Ballistic  Missile  Defense  Organization
(BMDO) which was completed in November 2001. In December 2001 we were granted an
additional  three-month  contract of $34,876. We have also


                                       13
<PAGE>

been  notified  by BMDO  that we have  been  approved  for a  $600,000  Phase II
two-year contract,  subject to contract negotiations,  expected to be awarded to
us in the first  quarter of 2002,  although  there can be no assurance  that the
contract ultimately will be awarded.

Although we have applied for additional  government and industry  sponsored work
for 2002, and will as part of our strategy  continue to seek such support in the
future,  there can be no assurance  of any  additional  development  revenues in
future periods.

Research and Development

Research  and  development  costs in 2001  totaled  $157,709  or a  decrease  of
$264,398  for the 2000 total of $422,107.  Included in research and  development
costs for 2000 was $200,000  related to the purchase of technology.  The balance
of the decrease of $64,398 resulted from reduced technical  consultant costs and
lesser  amounts paid to the  University  of Tennessee  for  subcontract  work on
contracts.

Research and development costs in 2001 included $100,900 of technical consultant
costs,  $47,809 of patent costs and $9,000 paid to the  University  of Tennessee
for work under our contracts.  Research and  development  costs in 2000 included
$132,000 of technical  consultant  costs and $60,261 paid to the  University  of
Tennessee  for  prototypes   and  work  under  the  Electric  Boat   Corporation
arrangement.

Subsequent patent costs related to acquired  technology are expensed as incurred
because the technology being developed has not reached technological feasibility
and requires further development, refinement and testing.

Research and  development  costs will vary  significantly  from year to year and
quarter to quarter.  Our technical  consultants are on month to month agreements
and we expect  future  payments  will vary  depending on  elections  made on the
amount of Company funded  research and  development and depending on the amount,
if any, of future awarded sponsored  development.  Future expenditures will also
depend  on  the  availability  of  financial  resources  to  fund  research  and
development.

Marketing and Promotion Costs

Marketing and promotion costs in 2001 were $60,538  comparable to the $67,585 in
2000.  These costs relate primarily to travel and personnel and consulting costs
related to visits with  prospective  development  sponsors.  In 2001 we expended
$30,738 in travel costs and $29,800 in marketing  consultant  costs.  In 2000 we
expended  $46,737  in travel  costs  and  $20,000  of  contributed  services  of
officers.

Marketing and promotion costs will vary from year to year and quarter to quarter
depending on elections  regarding the use of personnel and  consultants  and the
elections made on travel to visit prospective sponsors.

General and Administrative Costs

General and  administrative  costs in 2001 were $92,473,  an increase of $30,444
from the $62,029  reported in 2000.  These costs in 2001 consisted  primarily of
$26,000 in officer and  consultant  services,  $37,056 of  accounting  and audit
services,  $6,725 of office costs,  $14,432 of legal fees and $6,000 of rent and
administrative  expenses paid to a company affiliated with our President.  These
costs in 2000 consisted primarily of $20,000 in officer and consultant services,
$13,614  of  office  costs,  $17,554  of  legal  fees  and  $6,000  of rent  and
administrative  expenses paid to a company  affiliated  with our President.  The
increase in 2001 resulted primarily from the incurrence of $37,056 of accounting
and audit costs related to bringing our financial  statements current and filing
and preparing an annual report on Form 10-KSB.

General  and  administrative  costs  will vary from year to year and  quarter to
quarter  depending on elections  regarding changes in personnel and consultants,
legal and accounting costs and other expenses.

Net Loss

We had a net loss of  $232,697  in 2001  compared  to a net loss of  $372,743 in
2000.  The  decreased  loss was due in major part to the fact that  $200,000 was
expensed in 2000 as purchased  technology.  The net loss in 2001 included $7,521
of interest  expense on demand  notes.  There was no  interest  expense in 2000.
Interest  income in 2001 was  $7,518,  which was a decrease  from the $18,442 in
2000 due to reduced investment balances and lower interest rates.


                                       14
<PAGE>

We anticipate  continued losses until we are able to  commercialize  and license
our  technologies.  The level of future losses will be dependent on our expenses
and  future  revenues,  if  any,  and  elections  made  regarding  research  and
development, marketing and administrative costs.

The loss for the period from  inception  of the  development  stage  (January 1,
1999) to December 31, 2001 was  $954,652  and  consisted of the losses for 1999,
2000 and 2001.

Results of Operations - 2000 vs. 1999

Revenues

Our revenues for 2000 consisted of $160,536 of development  contract revenue. We
had no revenues in 1999.

The  development  revenue  of  $160,536  consisted  of two  purchase  orders for
development  from one customer,  General  Dynamics'  Electric Boat  Corporation.
Phase I of this order was  granted in January  2000 for  $89,710  and  prototype
development  was  completed  in  August  2000.  Phase  II to  generate  a second
generation  prototype was awarded in August 2000 for $78,696 and at December 31,
2000 a total of  $70,826  had been  recognized  as revenue  with the  balance of
$7,870  recorded as deferred  revenue since the entire  purchase  order had been
billed as of December 31, 2000 and was collected in January 2001.

Research and Development

Research and development costs in 2000 totaled  $422,107,  which was an increase
of $118,161 over the $303,946 incurred in 1999. We only commenced development of
our plasma antenna technology in August of 1999. As a result,  1999 expenditures
only  reflected  five months of work with  limited  work  performed in the early
months of the period.

Research and development costs in 2000 included $132,000 of technical consultant
costs and $60,261 paid to the  University of Tennessee for  prototypes  and work
under the Electric Boat Corporation arrangement. Our 1999 costs included $26,950
of  technical  consultant  costs  including  $10,000  related to the issuance of
20,000 shares of our common stock to two consultants for services.

Also included in research and  development  costs for 2000 and 1999 are $200,000
and $250,000, respectively, related to purchases of technology in an early stage
of development  that are expected to eventually lead to new products or systems,
although  there can be no assurance that this will be the case. The amounts paid
for   technologies   were  expensed  upon  acquisition   because   technological
feasibility had not been established and no known future alternative uses exist.
The value assigned to purchased technology  represents the amounts paid as there
were no material  identifiable  assets requiring an allocation of costs based on
discounted cash flows. Management believes the technology is unique and does not
have an  estimate  of the cost of  developing  the  technology  to the  point of
commercial viability or how long such development may take.

Marketing and Promotion Costs

Marketing and promotion costs in 2000 were $67,585  compared to $30,238 in 1999.
These costs  relate  primarily  to travel and  personnel  and  consulting  costs
related to visits with  prospective  development  sponsors.  In 2000 we expended
$46,737 in travel costs and $20,000 of contributed services of officers. A total
of $40,000 of services was contributed in 2000 with $20,000 allocated to general
and   administrative   costs.   These   costs  are   reflected   as   additional
paid-in-capital.  Marketing  and  promotion  costs in 1999  included  $15,238 of
travel costs, $10,000 of contributed services and $5,000 related to the issuance
of 10,000 shares of our common stock for services. Marketing and promotion costs
in 1999 included only five months of activity on new technology.


General and Administrative Costs

General and administrative  costs in 2000 were $62,029, an increase from $20,441
in 1999.  These  costs in 2000  consisted  primarily  of $20,000 in  contributed
services,  $13,614 of office  costs,  $17,554 of legal fees,  $6,000 of rent and
administrative expenses paid to a company affiliated with our President. General
and  administrative  costs in 1999  included  $10,000 in  contributed  services,
$3,249 of office costs and $2,831 of legal fees.  The increase in 2000  reflects
operations for twelve months versus limited operations in the first seven months
in 1999.


                                       15
<PAGE>

Net Loss

We had a net loss of  $372,743  in 2000  compared  to a net loss of  $349,212 in
1999. The net loss in 1999 included  $1,608 of interest  expense on a short-term
bank loan used to help  acquire  the  plasma  antenna  technology.  There was no
interest  expense in 2000.  Interest  income in 2000 was  $18,442,  which was an
increase  from  interest  income  of $7,021  in 1999  with the  increase  due to
carrying a higher money market account balance.

Liquidity and Capital Resources

In October 1999 we completed a private  placement of 1,500,000  shares of common
stock at $0.50 per share for gross  proceeds of $750,000 and net proceeds  after
legal fees of $735,000.  Prior to this  transaction and the August 1999 purchase
of our plasma antenna technology, we had no significant assets or operations. In
December  2001 we obtained  $293,800  of cash  funding  through the  issuance of
common stock of which  $110,000  represented  demand notes  previously  advanced
earlier in 2001.

As of  December  31,  2001  and  2000 we had  cash  of  $180,674  and  $153,968,
respectively.  Net  cash  used in  operating  activities  was  $171,857  in 2001
consisting  primarily of a $232,697 net loss and a $38,016  decrease in accounts
payable.  These amounts were offset by $29,500 in non-cash  services,  $4,229 of
interest  paid  in  stock  and  $59,952  provided  by  a  decrease  in  accounts
receivable.  We expended  $95,237 on investing  activities,  primarily the final
payments on the purchase of our plasma sound reduction  technology.  We obtained
$293,800 from financing  activities as described above. The net increase in cash
in 2001 was $26,706.

Net cash used in operating  activities was $172,268 in 2000 consisting primarily
of a $372,743  net loss and a $80,304  increase  in accounts  receivable.  These
amounts  were offset by $40,000 in non-cash  services  and  $200,000 in acquired
technology   expensed  during  the  year.  We  expended   $96,315  on  investing
activities, primarily the purchase of our plasma sound reduction technology. The
net decrease in cash in 2000 was $268,583.

Our  principal  source of liquidity  at December  31, 2001  consisted of cash of
$180,674 and  accounts  receivable  of $20,352.  Other than  anticipated  future
revenues from our outstanding BMDO contract,  we have no other unused sources of
liquidity at this time.

At December 31, 2001 we had no outstanding commitments for capital expenditures.
We are committed to approximately  $50,000 for self-funded research to produce a
more sophisticated  prototype of our plasma antenna technology,  which we expect
to complete in the first half of 2002.

We do not believe  inflation had a significant  impact on our operations  during
2000 or 2001 or that it will have a significant  impact on operations during the
next twelve months.

Based on current expectations and business  conditions,  we expect that our cash
resources  are  sufficient  to meet our cash  requirements  for the next  twelve
months.  This may require  reductions in  expenditures  for outside  consultants
should we not obtain  anticipated  contract support.  Management has significant
flexibility to adjust the level of research and marketing  expenditures based on
the  availability of resources.  However  reductions in research and development
could delay  development  progress and adversely  affect our ability to generate
future revenues from our  technologies.  Our business,  expansion or contraction
thereof,  is subject to many  factors,  some  outside our control or that we are
unable  to  anticipate.  Business  opportunities  may  arise or we may  elect to
increase our investments in research and development or marketing in the future.
Accordingly,  there can be no assurance that our current expectations  regarding
the sufficiency of currently available cash resources will prove to be accurate.

Should additional  funding be required in the future,  there can be no assurance
it will be available to us or on what terms.  Potential sources of funds include
debt financing or additional  equity  offerings.  Any equity  issuances could be
dilutive to existing shareholders and such dilution could be material.


                                       16
<PAGE>

New Accounting Pronouncements and Issues

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Investments
and Hedging  Activities"  ("SFAS No.  133")  which  establishes  accounting  and
reporting  standards  requiring that every derivative  instrument be recorded in
the balance  sheet as either an asset or  liability  measured at its fair value.
The  statement  also  requires  that changes in the  derivative's  fair value be
recognized  currently in earnings unless specific hedge accounting  criteria are
met.  SFAS No.  133, as amended by SFAS No. 138 and as extended by SFAS No. 137,
is effective for all fiscal  quarters of all fiscal years  beginning  after June
15, 2000.  The  adoption of SFAS No. 133,  SFAS No. 137 and SFAS No. 138 did not
effect the Company's financial statements.

In June 2001, the Financial Accounting Standards Board Finalized FASB Statements
No.  141  Business  Combinations  (SFAS  141) and No.  142;  Goodwill  and Other
Intangible  Assets (SFAS 142).  SFAS 141 requires the use of the purchase method
of  accounting  and  prohibits  the  use of the  pooling-of-interest  method  of
accounting for business  combinations  initiated  after June 30, 2001.  SFAS 141
also requires that the Company recognize  acquired  intangible assets apart from
goodwill if the  acquired  intangible  assets meet  certain  criteria.  SFAS 141
applies to all  business  combinations  initiated  after  June 30,  2001 and for
purchase  business  combinations  completed  on or after July 1,  2001.  It also
requires,  upon  adoption of SFAS 142 that the Company  reclassify  the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires among other things, that companies no longer amortize goodwill
but instead test goodwill for impairment at least  annually.  In addition,  SFAS
142  requires  that the Company  identify  reporting  units for the  purposes of
assessing potential future impairments of goodwill, reassess the useful lives of
other existing recognized intangible assets and cease amortization of intangible
assets with an indefinite  useful life.  An intangible  asset with an indefinite
useful life should be tested for  impairment in accordance  with the guidance in
SFAS 142.  SFAS 142 is required to be applied in fiscal  years  beginning  after
December 15, 2001 to all goodwill and other intangible assets recognized at that
date  regardless  of when  those  assets  were  initially  recognized.  SFAS 142
requires the Company to complete a  transitional  goodwill  impairment  test six
months from the date of adoption.  The Company is also  required to reassess the
useful lives of other  intangible  assets within the first interim quarter after
adoption of SFAS 142. The Company has not entered into any business combinations
and  has no  recorded  goodwill.  The  Company  believes  the  adoption  of this
statement will have no material impact on its financial statements.

In August 2001, the FASB issued SFAS No. 143,  "Accounting for Asset  Retirement
Obligations."  SFAS No. 143 requires the fair value of a liability  for an asset
retirement  obligation to be recognized in the period in which it is incurred if
a reasonable estimate of fair value can be made. The associated asset retirement
costs are  capitalized as part of the carrying  amount of the long-lived  asset.
SFAS No. 143 is effective for the Company,  for the fiscal year ending September
31,  2003.  The Company  believes the  adoption of this  statement  will have no
material impact on its financial statements.

In October 2001, the SFAS issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lives  Assets".  SFAS 144 requires that those long-lived assets
be measured at the lower of  carrying  amount or fair value,  less cost to sell,
whether  reported  in  continuing  operations  or  in  discontinued  operations.
Therefore,  discontinued operations will no longer be measured at net realizable
value or include amounts for operating  losses that have not yet occurred.  SFAS
144 is effective  for  financial  statements  issued for fiscal years  beginning
after  December 15, 2001 and,  generally,  is to be applied  prospectively.  The
Company  believes the adoption of this statement will have no material impact on
its financial statements.

Tax Loss Carryforwards

As of  December  31,  2001,  we had  approximately  $718,000 of federal tax loss
carryforwards.  These  losses  create a deferred tax asset.  We have  recorded a
valuation allowance to reduce the net deferred tax asset to zero because, in our
assessment,  it is more likely than not that the  deferred tax asset will not be
realized.  There  may  also  be  limitations  on the  utilization  of  tax  loss
carryforwards to offset any future taxes.

Business Risks

This report  contains a number of  forward-looking  statements  that reflect our
current  views with respect to future events and  financial  performance.  These
forward-looking  statements  are  subject  to certain  risks and  uncertainties,
including  those  discussed  below,  that could cause  actual  results to differ
materially from historical  results or those  anticipated.  In this report,  the
words  "anticipates,"   "believes,"   "expects,"  "intends,"  "future,"  "goal,"
"objective" and


                                       17
<PAGE>

similar expressions identify forward-looking  statements.  Readers are cautioned
to consider the specific  risk  factors  described  below and not to place undue
reliance on the forward-looking statements contained herein, which speak only as
of the date  hereof.  We  undertake  no  obligation  to  publicly  revise  these
forward-looking  statements,  to reflect events or circumstances  that may arise
after the date hereof.

         We are a  start-up  company  and our lack of  operating  history  makes
evaluating our business difficult. Until we acquired the first plasma technology
in August 1999 we were inactive. As a result, we have limited relevant operating
history with which you may evaluate  our  business.  Our business is in the very
early stage of  development,  and our proposed  operations are subject to all of
the risks inherent in a start-up or early stage business  enterprise,  including
the likelihood of continued operating losses. The likelihood of our success must
be considered in light of the problems,  expenses,  difficulties,  complications
and delays  frequently  encountered in connection  with the growth of a start-up
business,  the  development  of new  technologies  and  products and channels of
licensing,  and current and future  development in several key technical fields,
as well as the competitive and regulatory environments in which we will operate.
You must consider the numerous  risks and  uncertainties  an early stage company
like  ours  faces in  attempting  to  develop  and  establish  a market  for new
technology. These risks include our ability to:

     o   Develop our technology to commercial viability;
     o   Establish new development and strategic relationships;
     o   Create a commercialization strategy, and
     o   Respond  to a highly  competitive  market for  communication  and noise
         reduction technology.

         If we are  unsuccessful  in  addressing  these  risks,  we  will in all
likelihood be unable to generate future revenues. There can be no assurance that
we will achieve profitability in the future, or that profitability, if achieved,
can be sustained.

         Our  technologies  are in early  stages of  development  and may not be
successful.  Our business  plan  contemplates  that  virtually all of our future
revenues,  if any, will be  attributable to our plasma  technologies,  which are
both  still  in the  early  stage  of  development.  We  have  not  demonstrated
commercial prototypes incorporating our technology and there can be no assurance
that we will be successful in doing so. In order to attract commercial interest,
we believe we must develop  prototypes for both military and private sector user
applications in order to demonstrate  commercial  viability of our technologies.
Our  objective  is to  license  our  technologies  to  companies  that then must
incorporate our technologies into  communication  products or jet engines (we do
not intend to manufacture  products  ourselves).  Even if one or more prototypes
can be developed successfully, we cannot provide any assurance that commercially
viable  technology or products  incorporating  our  technology can be completed,
developed,  manufactured  or  sold  due  to the  inherent  risks  of  technology
development,  limitations on financing,  competition,  obsolescence, loss of key
personnel and other factors.  We have generated limited revenues from our plasma
antenna  technology,  no revenues from our plasma sound technology and we cannot
assure that there will be any  revenues in the future.  The  development  of new
technology  is also  subject  to  significant  delays  and  cost  overruns  from
unforeseen technical hurdles and other factors. In addition, as discussed below,
we will rely on outside  consultants to provide us with the necessary  expertise
to  develop  our  technology   rather  than  an  in-house  staff  of  technology
developers,  thereby  possibly  increasing  the costs  and  risks of  technology
development.

         We expect to sustain losses during  development of our  technology.  We
expect to incur  research,  development and marketing  expenditures  without the
prospect of significant  revenues for the foreseeable future. We may not be able
to generate  revenue from our  technology in the future.  Even if we do generate
revenues,  we cannot assure that we will be able to generate  sufficient revenue
to offset operating costs or to achieve or sustain profitability.

         We may not be able to obtain  sufficient  funds to continue or grow our
business.  Based on, among other things,  our proposed  plan of  operations  and
certain  assumptions  regarding  expected  contract  revenues  and our  expected
expenditures,  we  believe  we  will  have  sufficient  resources  to  fund  our
operations during the next twelve months.  If our plans change,  our assumptions
change or prove to be  inaccurate,  we may be  required  during the next  twelve
months to seek additional financing to fund the costs of operations.  We have no
current commitments or arrangements for additional financing and there can be no
assurance that additional financing will be available on acceptable terms, or at
all. The failure to have  adequate  financial  resources  could  require that we
terminate  development  of our  technology  and  our  operations.  Consequently,
investors  could  lose their  entire  investment  if we


                                       18
<PAGE>

are  unable to  generate  positive  cash flow or raise  the  additional  capital
necessary to fund our operations.  Even if additional  financing is available to
us, using equity or convertible  debt  securities  will result in a reduction of
the percentage ownership of our stockholders and they may experience  additional
dilution of their investment.

         If  we  fail  to  establish  and  maintain   consulting  and  strategic
relationships  our ability to develop our technology  will suffer.  We currently
have month to month consulting agreements with Dr. Ted Anderson,  Delmar Kintner
and Dr. Igor Alexeff.  These  individuals  have been involved in the development
and marketing of our technology. We do not have any technical employees or staff
and will  depend on these or other  consulting  relationships  to  continue  the
development of our technology,  implement  intellectual  protection  strategies,
identify  and manage the  execution  of  technical  development,  and market and
license our technology. Each of these individuals,  however, may terminate their
relationship with us at any time. There can be no assurance, therefore, that any
of these  individuals will continue their consulting  relationships  with us for
the time  necessary  to  complete  development  of our  technology.  Although we
believe that there are other  consultants  capable of working on our technology,
the loss or  unavailability of these individuals could result in delays or added
costs of  development,  materially  impede  development or adversely  affect our
ability to continue in business.

         We also believe that our success will depend,  in part,  on our ability
to  establish  additional  consulting  or  strategic  relationships  to develop,
produce and market our  technology.  Our success will also depend on our ability
to develop and maintain strategic  development and marketing  relationships with
antenna  producers,  distributors,  end-users  and jet engine  manufacturers  or
entities  engaged in  supplying or servicing  the jet engine  market.  If we are
unable to develop  such  relationships  our chances for future  success  will be
substantially diminished.

         Our ability to protect our  intellectual  property  and  technology  is
uncertain.  Our success depends, and will continue to depend, to a great extent,
on our ability to maintain patent  protection for our technology and to preserve
our trade secrets and to operate without infringing the property rights of third
parties.  We cannot  guarantee  that  existing  or  pending  patents  will be of
sufficient  scope or  strength  to give us  competitive  advantages  or that any
patents that may be issued to us will not be challenged or invalidated.  We have
not performed any analysis of patents of others that may limit our ability to do
business.  We are aware of other parties that are currently  conducting research
in the area of gas  plasma  antennas  and they have  filed at least one  patent.
Further,  we have not  obtained any foreign  patents to date  although we may be
granted  foreign  patents  in the  future.  Consequently,  we may not be able to
protect our technology or products that are sold outside of the United States.

         Despite  our efforts to protect our  proprietary  rights,  unauthorized
parties may attempt to copy aspects of our technology or proposed products or to
obtain and use information that we consider proprietary.  The available means of
protecting our  proprietary  rights may not be adequate and our  competitors may
independently  develop  similar  technology,  duplicate  our  products or design
around  patents  issued  to us or our  other  intellectual  property.  We cannot
guarantee our intellectual property will provide us meaningful protection or any
commercial advantage.

         Defending against  intellectual  property claims could be expensive and
could disrupt our business.  The high technology  industry is  characterized  by
vigorous  protection  and  pursuit of  intellectual  property  rights  that have
resulted in significant and often protracted and expensive litigation.  There is
currently  no pending  intellectual  property  litigation  against us. We cannot
guarantee,  however,  that  our  technologies  or  products  do not and will not
infringe the patents or proprietary  rights of third  parties.  The risk of such
claims may  increase as the number of products and  competitors  in our industry
segment grows and the  functionality of products in different  industry segments
overlaps.  Any such  claims,  with or without  merit,  could be  time-consuming,
result in costly litigation,  cause product shipment delays,  preclude or hinder
new  product  development  or  require us to enter  into  royalty  or  licensing
agreements.  Such  agreements,  if  required,  may  not be  available  on  terms
acceptable to us or at all. A successful challenge to our plasma antenna patents
or our plasma sound reduction  patent would have a materially  adverse effect on
our  business  prospects.  We are  required  to  pay  certain  royalties  to the
companies that sold us our  technology.  Any dispute that may arise between such
company and us could adversely affect our business.

         Competition and obsolescence could preclude us from realizing revenues.
The market for communication and jet engine technology is extremely competitive.
Many companies  produce antenna  products and noise  reduction  systems that are
competitive to the products or systems we intend to develop. These companies are
larger and have  substantially  greater resources than we do. We may not be able
to compete  successfully in this market.  In addition,  these  companies  expend
significant funds on research and development. They or others may have


                                       19
<PAGE>

developed or may succeed in  developing  technology  and products  that are more
effective  than those  proposed by us. There can be no assurance that we will be
able  to  compete   successfully   with  such  competitors  or  that  additional
competition will not have a material adverse effect on our business.

         The  communications  market and jet engine markets are highly regulated
and we may be subject to  environmental  regulations.  The transmission of radio
frequency  signals  and jet engine  noise  emissions  are highly  regulated  and
controlled in most major markets throughout the world.  Communications equipment
and jet engine equipment,  including our proposed products, must be manufactured
and tested to meet strict  standards and often must be certified for use.  These
factors  increase the time and risk of introducing  new  technology.  Our future
licensees  or we may not be able to  obtain  timely  regulatory  approvals.  The
failure to obtain any necessary  approvals would adversely  impact our business.
Our plasma  antenna  technology  was at one time  classified  secret by the U.S.
government.  There  can  be  no  assurance  that  future  improvements,   patent
applications or embodiments of the technology will not be classified  secret and
limit the market available to us to approved government entities.

         Federal,  state and local  regulations  impose various  controls on the
storage, handling, discharge and disposal of certain substances that may be used
in anticipated antenna manufacturing  processes. We intend to conform and expect
any contractors or licensees to conform to governmental  regulations  applicable
to operations and  facilities,  including those related to  environmental,  land
use, public utility utilization and fire code matters. There can be no assurance
that such  governmental  regulations  will not  impose  the need for  additional
capital  equipment  or other  process  requirements  or restrict  our ability to
continue or expand our operations.

         We may be subject to product  liability and recall claims exceeding any
future insurance coverage.  Although we intend to rely on strategic partners for
the  manufacture  and  sale  of  antenna  and jet  engine  products  or  systems
incorporating our technology,  we may become subject to product liability claims
and lawsuits from time to time. We face risk of product  liability claims in the
event that the use of such products results in personal injury. We also face the
possibility  that  defects in the design or  manufacture  of products or systems
might  necessitate  a  recall.  There  can be no  assurance  that  we  will  not
experience  losses due to product  liability,  claims or recalls in the  future.
There  can  be no  assurance  that  insurance  coverage  will  be  available  on
acceptable  terms or at all, or that any insurance  coverage will be adequate to
cover such losses. A product liability or other judgment against us in excess of
future  insurance  coverage,  if any is  obtained,  or a  product  recall  could
adversely affect our business.

         Our officers,  directors and  consultants  devote only part-time to our
business  resulting  in  possible   conflicts.   Our  officers,   directors  and
consultants  devote  only  part-time  services  to our  company  and have  other
employment  and  business  interests  to which they  devote  attention  and will
continue to do so, resulting in potential conflicts of interest. There can be no
assurance these conflicts or the unavailability of full-time management will not
adversely impact our operations and chances for success.

         We may issue  additional  shares of authorized  common stock and future
preferred stock. Our Articles of Incorporation authorize up to 11,000,000 shares
of  stock,  par  value of  $0.02  per  share,  of which  10,000,000  shares  are
designated common stock and 1,000,000 shares are designated preferred stock. The
Board of Directors  has the power without  prior  stockholder  approval to issue
additional shares of previously  authorized and unissued common stock and one or
more  series  of  preferred  stock  with  such  rates of  dividends,  redemption
provisions,  liquidation preferences,  voting rights,  conversion privileges and
any other  characteristics  as the Board may deem  necessary.  This power  would
include the right to issue  preferred  stock with  rights to receive  dividends,
liquidating  distributions and other benefits that may be superior to the rights
of holders of common stock.  If any  subsequent  issuance of preferred  stock is
approved, such preferred stock could adversely affect the holders of outstanding
common stock. In addition,  the authority to issue  additional  shares of common
stock and preferred  stock could  discourage,  delay or prevent a takeover of us
and could have a depressive effect on the market price for our securities.

         There is no public  market  for our common  stock.  There is no present
active public market for our common stock. Although we have filed an application
for trading of our common stock on the NASD OTC Electronic Bulletin Board, there
is no  assurance  that the  application  will be granted or if  granted,  that a
market will develop.  f we establish a trading market there is no assurance that
there will be any market  liquidity or that we can maintain a trading  market in
the future.


                                       20
<PAGE>

Item 7. Financial Statements

Our financial statements required to be included in this Item 7 are set forth in
a separate  section of this report and commence  immediately  following page 27.
The financial statements include for this filing two years of balance sheets and
three years of statements of operations, cash flows and stockholders' equity.

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

We engaged McGladrey & Pullen, LLP in December 2000 and during the two preceding
years the Company had no  independent  accountant.  There were no  disagreements
with accountants or reportable events under this item.


                                       21
<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act

Directors and Officers

The  following  table sets forth  information  with respect to each director and
executive officer of ASI as of March 15, 2002:

Name                  Age    Position
----                  ---    --------
Jerry E. Polis        69     President and Director since 1973
Phil Carlino          75     Director since 1973
Eric M. Polis         31     Secretary, Treasurer and Director since August 2000
Dawayne R. Jacobs     59     Director since August 2000

There is no arrangement  between any of the directors or executive  officers and
any other person or persons,  pursuant to which he was or is to be selected as a
director or  executive  officer.  Jerry E. Polis is the father of Eric M. Polis.
There is no other blood relationship between or among the directors or executive
officers of ASI.

Each director  serves until the next annual meeting or until their  successor is
elected or appointed.

         Jerry E. Polis has been President and a director since 1973. Since 1963
         he has been  self-employed  primarily  in real estate  investment,  and
         since 1964 he has owned and  operated  Polis  Realty.  From 1968 to the
         sale of his  ownership in January  1997, he was active as a co-owner of
         the Taco  Bell  franchises  for the  State of  Nevada  (operated  under
         privately owned Las Cal Corporation).  In 1994 he co-founded Commercial
         Bank of Nevada,  an unlisted  publicly owned bank located in Las Vegas,
         Nevada,  which was sold  through a merger to a NYSE bank  group in June
         1998. He was a director of Commercial  Bank from 1994 and Chairman from
         May 1996  until  its  sale.  Mr.  Polis  was a  director  of  ValueStar
         Corporation, a publicly traded corporation,  from July 1995 to November
         2000. Mr. Polis graduated from Penn State University with a B.A. Degree
         in Commerce in 1953.

         Phil  Carlino  has been a  Director  since 1973 and until  August  2000
         serviced as Treasurer. Since 1963 he has served as President of Fremont
         Coin Company,  a wholesale  coin business in Las Vegas,  Nevada;  since
         1974 he has been President of Carlino & Carlino, an advertising agency,
         and since 1958 he has served as  President of Carlino  Silver  Company,
         which  buys and sells  gold and  silver  bullion.  Mr.  Carlino is also
         active in Nevada state health agency charities.

         Eric M. Polis has been  Secretary of the Company since July 2000. He is
         a licensed real estate agent in Nevada and since 1993 has been property
         manager for Polis Realty. He obtained a B.S. in Business Administration
         from the University of Arizona in 1993.

         Dawayne R. Jacobs founded Jacobs Marketing Inc., a general  merchandise
         manufacturing  representative  firm located in  Plymouth,  Minnesota in
         1982.  He has  served  as its  President  and CEO since  1982.  He also
         founded The Accessory Group, Henderson,  Nevada in 1995, a manufacturer
         and national  distributor  of proprietary  products,  and serves as its
         Chief  Executive  Officer.  In 1993 he founded  International  Rainwear
         Inc.,  Henderson,  Nevada, a national  distributor of rainwear that was
         sold in 1997.

Other Significant Consultants

We utilize the following consultants who are key consultants to our business:

         Dr. Igor Alexeff is past  President of the Nuclear and Plasma  Sciences
         Society  of  the  Institute  of  Electrical  and  Electronic  Engineers
         ("IEEE")  and a past  chairman of the Plasma  Science and  Applications
         Committee  ("PSAC").  He is a Professor  Emeritus at the  University of
         Tennessee  Electrical  and  Computer  Engineering  department.  He is a
         plasma  scientist,  inventor,  publisher and researcher and has led the
         prototyping work on our plasma antennas.


                                       22
<PAGE>

         Dr. Ted Anderson has a Ph.D in physics  from New York  University  with
         his  education  emphasizing  electrodynamics,  optoelectronics,  atomic
         physics  and fluid  dynamics.  He is  currently  a  professor  at Union
         College and the  Rensselaer  Polytechnic  Institute.  Dr.  Anderson has
         significant  antenna  experience  from his work with the Naval Undersea
         Warfare  Center  and  Norden  Systems.  He has  developed  many  of our
         mathematical models and has published on plasma antenna applications.

         Delmar  R.  Kintner  is Vice  President  of  Corporate  Development  of
         Emerging  Concepts,  Inc.  He obtained a Masters  Degree in  Electrical
         Engineering from George  Washington  University in 1967. He has over 20
         years  experience  in strategic  corporate  development  with  specific
         emphasis  on  military  projects.  He has  participated  in a number of
         engineering  studies for branches of the military  including  Air Force
         and Navy SBIR contracts, studies for NAVSEA and NraD. He is experienced
         in  military  antenna  and  communications  as well as ECM  (electronic
         counter measures), radar and stealth technologies. Mr. Kintner assisted
         Patriot in its initial two military projects.

These  consultants  have been engaged pursuant to written  agreements,  those of
which had an original  term,  such term has expired and the  engagement of these
consultants is effectively on a month to month basis.

Conflicts of Interest

Certain  conflicts of interest now exist and will  continue to exist  between us
and certain of our officers, directors and consultants due to the fact that they
have other employment or business  interests to which they devote some attention
and they are expected to continue to do so. We have not established  policies or
procedures  for the  resolution  of current or  potential  conflicts of interest
between us and management,  consultants or affiliated entities.  There can be no
assurance  that members of management  will resolve all conflicts of interest in
our favor.  Our officers and directors  are  accountable  to us as  fiduciaries,
which means that they are legally obligated to exercise good faith and integrity
in handling  our  affairs.  Failure by them to conduct our  business in our best
interests may result in liability to them.

It is  conceivable  that our areas of interest  could  overlap or conflict  with
other business  interests of our management or our consultants.  We believe that
the our areas of focus,  products  and  technology  directions  are  unique  and
distinct from other  businesses in which our management and  consultants  may be
involved  such that no conflict  in business  lines or  loyalties  will  result.
Because of this  unlikelihood,  no steps  have been  taken to  resolve  possible
conflicts,  and any such conflicts,  should they arise, will be addressed at the
appropriate time.

Section 16(a) Beneficial Ownership Reporting Compliance

During the prior three years none of the officers or  directors  have filed Form
3s, Form 4s or Form 5s. In March 2001 the officers and  directors  filed initial
reports on Form 3.

During the last fiscal year, Jerry E. Polis,  our chief executive  officer and a
director,  was  required  to  file a  Form  4  reflecting  changes  in  security
ownership. Mr. Polis' Form 4 for a December 2001 note conversion and purchase of
common  stock was filed in  January  2002 but not  within  the 10 day  reporting
period. In addition, stock options exercisable for 10,000 shares of common stock
were granted to each of our directors in December  2001.  Form 4s were not filed
for the month of December reflecting such grants but were filed for the month of
January when the directors received their executed stock option agreements.

James A. Barnes became a 10%  beneficial  shareholder in December 2001 and filed
an initial Form 3 in March 2002.

Item 10. Executive Compensation

There is shown below information  concerning the compensation of Jerry E. Polis,
our chief executive officer (the "Named Executive Officer"), for the years ended
December 31, 2001, 2000 and 1999. No other executive  officer's salary and bonus
exceeded $100,000 during the fiscal year ended December 31, 2001.


                                       23
<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                             Long Term
                                            Annual Compensation                              Compensation
                                                                                     `  Securities Underlying
Name and                        Fiscal                             Other Annual                Options
Principal Position              Year        Salary        Bonus    Compensation              (# of Shares)
------------------              ----        ------        -----    ------------              -------------
<S>                              <C>        <C>            <C>         <C>                        <C>
Jerry E. Polis, President        2001       $-0- (1)       $-0-        $200 (1)                   10,000
                                 2000       $-0- (1)       $-0-        $200 (1)                       -0-
                                 1999       $-0- (1)       $-0-        $200 (1)                       -0-
<FN>

(1)      Director fees. Mr. Polis received no  compensation as an officer of the
         corporation  for any  period.  The  Company  recorded  $10,000 in 1999,
         $20,000 in 2000 and  $24,000 in 2001 as  contributed  services  for Mr.
         Polis.
</FN>
</TABLE>

Option Grants

Shown below is further  information on grants of stock options in fiscal 2001 to
the Named Executive  Officer reflected in the Summary  Compensation  Table shown
above for the year 2001.

                 Option Grants for Year Ended December 31, 2001

<TABLE>
<CAPTION>
                                                 Percent of Total
                                                 Options Granted
                              Number of          to Employees in       Exercise     Expiration
         Name              Options Granted        Fiscal Year            Price        Date
         ----              ---------------        -----------            -----        ----
<S>                             <C>                  <C>               <C>           <C>
       Jerry E. Polis           10,000               10.0%             $0.50         11/19/06
</TABLE>

There were no options  exercised by the named officer or any other person during
2001.

On August 16, 2000 the  shareholders  approved  the 2000 Equity  Incentive  Plan
reserving an aggregate of 250,000  shares of common stock for issuance under the
plan. At December 31, 2001 there were 100,000  options granted by the directors,
which were  documented  by  agreements  provided to  optionees  in January  2002
pursuant to this plan.

Other than the 2000 Equity Incentive Plan, we do not have any stock appreciation
rights  plans in effect,  outstanding  warrants or rights and have no  long-term
incentive  plans,  as  those  terms  are  defined  in  Securities  and  Exchange
Commission regulations.

Director Compensation

The directors  receive  compensation  of $100 per meeting for their  services as
directors and Mr. Jerry E. Polis,  Chairman of the Board, receives $200 for each
meeting.  None of the  officers  currently  receive any  compensation  for their
services as officers of the Company.  We may begin compensating  management at a
future  date.  There are no  employment  contracts  with any of our  officers or
directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters.

The following table sets forth, as of March 15, 2002, the Common Stock ownership
of each of our directors and officers,  all our executive officers and directors
as a group,  and each person known by us to be a beneficial  owner of 5% or more
of our common stock.  Except as otherwise noted, each person listed below is the
sole beneficial  owner of the shares and has sole investment and voting power as
to such shares.


                                       24
<PAGE>

    Name and Address                       Amount & Nature
     of Beneficial                          of Beneficial             Percent
         Owner                                Ownership               of Class
         -----                                ---------               --------

Jerry E. Polis                                 814,911 (1)             24.3%
President and Director
980 American Pacific Drive, #111
Henderson, Nevada 89014

Phil Carlino,                                   40,000 (3)              1.2%
Director
3375 Glen Avenue, Suite 6
Las Vegas, Nevada 89121

Eric M. Polis                                   60,000 (3)              1.8%
Secretary, Treasurer and Director
980 American Pacific Drive, #111
Henderson, Nevada 89014

Dawayne R. Jacobs                              110,000 (2)              3.3%
Director
980 American Pacific Drive, #111
Henderson, Nevada 89014

Newport Pacific Ltd.                           200,000                  6.0%
1005A Lippo Center, Tower 1
89 Queensway
Hong Kong

James A. Barnes                                353,614 (4)             10.5%
8617 Canyon View Drive
Las Vegas, NV 89117

All directors and officers as a group        1,024,911                 30.3%
  (4 persons)
____________________________
(1)      Includes  611,614  shares  held by the Polis  Family  Trust and  63,000
         shares by Davric  Corporation,  a company controlled by Mr. Polis. Also
         includes  currently  exercisable  options  on  10,000  shares of common
         stock.
(2)      Shares  held by  family  trust.  Also  includes  currently  exercisable
         options on 10,000 shares of common stock.
(3)      Includes  currently  exercisable  options  on  10,000  shares of common
         stock.
(4)      Includes  318,614  shares  held by  Sunrise  Capital,  Inc.,  a company
         controlled  by Mr.  Barnes,  and 25,000  shares held by a family trust.
         Also includes currently  exercisable options on 10,000 shares of common
         stock.

Equity Compensation Plan Information

On August 16, 2000 the  shareholders  approved  the 2000 Equity  Incentive  Plan
reserving an aggregate of 250,000  shares of common stock for issuance under the
plan. At December 31, 2001 there were 100,000  options granted by the directors,
which were  documented  by  agreements  provided to  optionees  in January  2002
pursuant to this plan.

<TABLE>
<CAPTION>
------------------------------- ----------------------------- ---------------------------- -----------------------------
                                         Column (a)                   Column (b)                    Column (c)
------------------------------- ----------------------------- ---------------------------- -----------------------------
                                                                                           Number of securities
                                                                                           remaining available for
                                Number of securities to be    Weighted-average exercise    future issuance under
                                issued upon exercise of       price of outstanding equity  compensation plans
                                outstanding options,          options, warrants and        (excluding securities
        Plan Category           warrants and rights           rights                       reflected in column (a))
------------------------------- ----------------------------- ---------------------------- -----------------------------
<S>                                       <C>                            <C>                         <C>
Equity    compensation   plans
approved by security holders              100,000                        $0.50                       150,000
------------------------------- ----------------------------- ---------------------------- -----------------------------
Equity  compensation plans not
approved by security holders                -0-                           N/A                          -0-
------------------------------- ----------------------------- ---------------------------- -----------------------------
Total                                     100,000                        $0.50                       150,000
------------------------------- ----------------------------- ---------------------------- -----------------------------
</TABLE>

Other than the 2000 Equity Incentive Plan, we do not have any stock appreciation
rights  plans in effect,  outstanding  warrants or rights and have no  long-term
incentive  plans,  as  those  terms  are  defined  in  Securities  and  Exchange
Commission regulations.


                                       25
<PAGE>

Item 12. Certain Relationships and Related Transactions

Mr. Jerry E. Polis  advanced us $100,000 in August  1999,  the proceeds of which
were  used  to pay a  portion  of the  purchase  price  for our  plasma  antenna
technology  and to fund  continued  patent  research.  This  advance was applied
toward Mr. Polis'  purchase of 200,000 shares of our common stock in the private
placement completed in October 1999. Mr. Eric M. Polis purchased $25,000 (50,000
shares) of our common stock in the private placement.

During 2001 Mr. Jerry E. Polis  advanced  $185,000 to the Company as  short-term
advances of which  $150,000  was repaid.  The  balance of $35,000  plus  accrued
interest of $1,407 and an additional cash investment of $50,000 was converted to
172,814 shares of common stock in December 2001.

We currently share office space with Davric Corporation, an entity controlled by
Mr. Jerry E. Polis. We are paying Davric  Corporation  $500 per month for use of
this space and associated administrative costs.

                                       26
<PAGE>

Item 13. Exhibits and Reports on Form 8-K

(a) Exhibits

Each  exhibit  listed below is  incorporated  by reference to the exhibit of the
same  number  previously  filed by us in our 2000  Annual  Report on Form 10-KSB
filed on March 23, 2001.


   Exhibit
   Number                     Description of Exhibit
   ------                     ----------------------

     3.1          Restated   Articles  of   Incorporation   of  ASI   Technology
                  Corporation  as filed with the Secretary of State of Nevada on
                  September 1, 2000.

     3.2          Bylaws of the Company.

     4.1          Form of Certificate evidencing common stock of the Company.

     10.1         2000 Equity  Incentive  Plan ratified by the  shareholders  on
                  August 1, 2000.

     10.1.1       Standard form of stock option  agreement under the 2000 Equity
                  Incentive Plan.

     10.2         Purchase  Agreement  dated August 20, 1999 between the Company
                  and Patriot Scientific Corporation.

     10.3         Purchase Agreement dated December 29, 2000 between the Company
                  and American Technology Corporation.

----------------------------------

(b) Reports on Form 8-K.

None


                                       27
<PAGE>

                           ASI TECHNOLOGY CORPORATION
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 2001

                                    CONTENTS

          -----------------------------------------------------------------
          INDEPENDENT AUDITOR'S REPORT                                   1
          -----------------------------------------------------------------

            Balance sheets                                               2

            Statements of operations                                     3

            Statements of stockholders' equity                           4

            Statements of cash flows                                     5

            Notes to financial statements                             6-13
          -----------------------------------------------------------------
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
ASI Technology Corporation
Las Vegas, Nevada

We have audited the accompanying balance sheets of ASI Technology Corporation (a
development  stage  company)  as of  December  31, 2001 and 2000 and the related
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended December 31, 2001,  2000,  and 1999.  These  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our 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 audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  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 ASI Technology  Corporation as
of December 31, 2001 and 2000,  and the results of its  operations  and its cash
flows for the years ended December 31, 2001,  2000, and 1999 in conformity  with
accounting principles generally accepted in the United States of America.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue as a going  concern.  As  discussed  in Note 10 to the  financial
statements,  the Company has suffered  recurring  losses from  operations and is
likely to require  additional  capital in order to fund the  development  of its
technologies.  This  raises  substantial  doubt about the  Company's  ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  Note  10.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.


/s/ McGladrey & Pullen, LLP

Las Vegas, Nevada
January 23, 2002


                                       F-1
<PAGE>

ASI Technology Corporation
(A Development Stage Company)

BALANCE SHEETS
December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                                          2001                2000
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                 <C>
ASSETS
Current Assets
Cash  and cash equivalents                                                             $ 180,674           $ 153,968
Accounts receivable (Note 4)                                                              20,352              80,304
Note receivable - current (Note 5)                                                         4,805               4,393
Prepaid expenses                                                                               -              13,045
                                                                                   ----------------------------------
Total current assets                                                                     205,831             251,710

Note receivable - less current portion (Note 5)                                           10,400              15,575
                                                                                   ----------------------------------

                                                                                       $ 216,231           $ 267,285
                                                                                   ==================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                                                         $ 5,514            $ 43,530
Unearned revenue (Note 4)                                                                      -               7,870
Contract obligation payable (Note 3)                                                           -             100,000
                                                                                   ----------------------------------
Total current liabilities                                                                  5,514             151,400
                                                                                   ----------------------------------
Commitments (Note 3)

Stockholders' Equity (Notes 6 and 7)
Common stock, $.02 par value; 10,000,000 shares authorized,
issued and outstanding 2001, 3,307,722; 2000, 2,711,664                                   66,154              54,233
Additional paid-in capital                                                             3,340,900           3,025,292
Accumulated deficit                                                                   (3,196,337)         (2,963,640)
                                                                                   ----------------------------------
                                                                                         210,717             115,885
                                                                                   ----------------------------------

                                                                                       $ 216,231           $ 267,285
                                                                                   ==================================
</TABLE>

See Notes to Financial Statements.


                                      F-2
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2001, 2000 and 1999 and For the Period from
Inception of Development Stage on January 1, 1999 to December 31, 2001

<TABLE>
<CAPTION>
                                                                                     From Inception
                                                                                     of Development
                                                                                        Stage on
                                                                                     January 1, 1999
                                                                                     to December 31,
                                             2001             2000           1999        2001
----------------------------------------------------------------------------------------------------
<S>                         <C>           <C>            <C>            <C>            <C>
Revenues
Development contracts (Note 4)            $    78,026    $   160,536    $      --      $   238,562

Operating Expenses
Research and development (Note 3)             157,709        422,107        303,946        883,762
Marketing and promotion                        60,538         67,585         30,238        158,361
General and administrative (Note 9)            92,473         62,029         20,441        174,943
                                          --------------------------------------------------------
                                              310,720        551,721        354,625      1,217,066
                                          --------------------------------------------------------

Loss from Operations                         (232,694)      (391,185)      (354,625)      (978,504)

Nonoperating Income (Expense)
Interest income                                 7,518         18,442          7,021         32,981
Interest expense (Note 9)                      (7,521)          --           (1,608)        (9,129)
                                          --------------------------------------------------------

Net Loss                                  $  (232,697)   $  (372,743)   $  (349,212)   $  (954,652)
                                          ========================================================

Basic and Diluted Loss per Common Share   $     (0.09)   $     (0.14)   $     (0.21)
                                          =========================================

Weighted Average Number of Common
Shares Outstanding                          2,727,927      2,711,664      1,625,198
                                          =========================================
</TABLE>

See Notes to Financial Statements


                                      F-3
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2001, 2000 and 1999 and For the Period from
Inception of Development Stage on January 1, 1999 to December 31, 2001

<TABLE>
<CAPTION>
                                                                                                                  Deficit
                                                                                                                Accumulated
                                                  Common Stock                                                   During the
                                           ---------------------------  Additional          Accumulated         Development
                                              Shares        Amount     Paid-In Capital  Deficit       Total        Stage
-----------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>        <C>           <C>           <C>              <C>        <C>
Balance, December 31, 1998                     1,181,664  $ 1,181,664   $ 1,087,861   $ (2,241,685)    $ 27,840   $        -

Sale of stock, net of offering costs of
$15,000 (Note 6)                               1,500,000      300,000       435,000              -      735,000            -

Stock issued for services (Note 6)                30,000        6,000         9,000              -       15,000            -

Contributed services (Note 6)                          -            -        20,000              -       20,000            -

Net loss                                               -            -             -       (349,212)    (349,212)    (349,212)
                                           ----------------------------------------------------------------------------------

Balance, December 31, 1999                     2,711,664    1,487,664     1,551,861     (2,590,897)     448,628     (349,212)

Contributed services (Note 6)                          -            -        40,000              -       40,000            -

Net loss                                               -            -             -       (372,743)    (372,743)    (372,743)

1 for 10 reverse stock split                           -   (1,433,431 )   1,433,431              -            -            -
                                           ----------------------------------------------------------------------------------

Balance, December 31, 2000                     2,711,664       54,233     3,025,292     (2,963,640)     115,885     (721,955)

Contributed services (Note 6)                          -            -        24,000              -       24,000            -

Stock options issued for services (Note 7)             -            -         5,500              -        5,500            -

Demand notes converted to stock
at $0.50 per share (Note 6)                      228,458        4,569       109,660              -      114,229            -

Sale of stock at $0.50 per share (Note 6)        367,600        7,352       176,448              -      183,800            -

Net loss                                               -            -             -       (232,697)    (232,697)    (232,697)

                                           ----------------------------------------------------------------------------------
Balance, December 31, 2001                     3,307,722     $ 66,154   $ 3,340,900   $ (3,196,337)   $ 210,717   $ (954,652)
                                           ==================================================================================
</TABLE>

See Notes to Financial Statements.


                                      F-4
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2001, 2000, and 1999 and For the Period from
Inception of Development Stage on January 1, 1999 to December 31, 2001

<TABLE>
<CAPTION>
                                                                                                 From Inception
                                                                                                 of Development
                                                                                                    Stage on
                                                                                                 January 1, 1999
                                                                                                 to December 31,
                                                        2001           2000            1999           2001
-----------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>            <C>             <C>
Cash Flows from Operating Activities
Net loss                                                $(232,697)     $ (372,743)    $ (349,212)     $ (954,652)
Adjustments to reconcile net loss to net
cash used in operating activities:
Contributed services                                       24,000          40,000         20,000          84,000
Common stock and options issued for services                5,500               -         15,000          20,500
Interest paid in common stock (Note 6)                      4,229               -              -           4,229
Acquired in-process research and development                    -         200,000        250,000         450,000
Changes in working capital components:
(Increase) decrease in accounts receivable                 59,952         (80,304)             -         (20,352)
(Increase) decrease in prepaid expenses                    13,045          (4,050)        (8,995)              0
Increase (decrease) in unearned revenue                    (7,870)          7,870              -               0
Increase (decrease) in accounts payable                   (38,016)         36,959          6,571           5,514
(Decrease) in due to related party                              -               -         (5,895)         (5,895)
                                                   --------------------------------------------------------------
Net cash used in operating activities                    (171,857)       (172,268)       (72,531)       (416,656)
                                                   --------------------------------------------------------------

Cash Flows from Investing Activities
Increase in notes receivable                             (150,000)              -              -        (150,000)
Payments on note receivable                               154,763           3,685          3,686         162,134
Purchase of in-process research and development          (100,000)       (100,000)      (250,000)       (450,000)
                                                   --------------------------------------------------------------
Net cash used in investing
activities                                                (95,237)        (96,315)      (246,314)       (437,866)
                                                   --------------------------------------------------------------
Cash Flows from Financing Activities
Proceeds from demand notes                                110,000               -              -         110,000
Proceeds from related party loan                                -               -        100,000         100,000
Proceeds from bank debt                                         -               -        100,000         100,000
Payments on bank debt                                           -               -       (100,000)       (100,000)
Net proceeds from sale of common stock                    183,800               -        635,000         818,800
                                                   --------------------------------------------------------------
Net cash provided by financing activities                 293,800               -        735,000       1,028,800
                                                   --------------------------------------------------------------

Net increase (decrease) in cash
and cash equivalents                                       26,706        (268,583)       416,155         174,278

Cash and cash equivalents, beginning of year              153,968         422,551          6,396         582,915
                                                   --------------------------------------------------------------

Cash and cash equivalents, end of year                  $ 180,674      $  153,968     $  422,551      $  757,193
                                                   ==============================================================

Supplemental Cash Flow Information
Cash paid during the year for:
Interest                                                $   3,292      $        -     $    1,608

Supplemental Schedule of Noncash Investing and
Financing Activities
Purchased technology financed by seller obligation              -      $  100,000     $        -
Contributed services                                    $  24,000      $   40,000     $   20,000
Common stock and stock options issued for services      $   5,500      $        -     $   15,000
Related party loan applied toward the purchase
of common stock                                         $       -      $        -     $  100,000
Demand notes and accrued interest converted to
common stock                                            $ 114,229      $        -     $        -
</TABLE>

See Notes to Financial Statements.


                                      F-5
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 1. Nature of Business

ASI Technology Corporation, a Nevada Corporation ("Company") acquired two plasma
technologies  in  August  1999 and  December  2000,  each in an  early  stage of
development.  The Company is engaged in the development and commercialization of
the  technologies.  From 1995 until  December  1998,  the Company was  inactive,
engaged only in collecting  proceeds from prior asset sales,  reducing debts and
paying  corporate  costs.  At the  beginning of 1999 the Company  commenced  its
strategy,  seeking to acquire and develop new  technologies  for licensing.  The
deficit incurred during the development stage represents the accumulated deficit
since January 1, 1999, the inception of the Company's current activities.

Because the Company has  devoted  most of its efforts  since  January 1, 1999 to
research  and  development,  and  its  planned  principal  operations  have  not
commenced, the Company is considered to be in the development stage.

Formerly  ASI,  the  Company  changed  its  name to ASI  Technology  Corporation
effective on September 1, 2000 in connection with a capital reorganization which
included  a 1 for 10  reverse  stock  split.  The  effect of the stock  split is
presented within the statement of stockholders' equity by transferring an amount
equal to the par  value  for the  reduction  in  shares  to  additional  paid in
capital. All references in the financial statements to shares, share prices, per
share amounts and stock plans have been adjusted retroactively for the split.

Note 2. Summary of Significant Accounting Policies

The  following  is a summary  of  significant  accounting  policies  used in the
preparation of these financial statements:

Use of estimates

The preparation of financial  statements  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.

Financial instruments and concentration of credit risk

The Company's financial instruments that are exposed to concentrations of credit
risk consist primarily of cash.

The Company's cash is maintained in bank deposit  accounts which, at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts.  The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.


                                      F-6
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 2.       Summary of Significant Accounting Policies (continued)

Financial instruments and concentration of credit risk (continued)

The carrying values of financial  instruments including cash, accounts and notes
receivable,  accounts payable and contract obligation payable  approximated fair
market  value  because  of  the  immediate  or  short-term   maturity  of  these
instruments.  Management  believes the carrying value of the note  receivable is
not materially different from its fair value.

Revenue recognition

Revenue resulting from development  contracts is recognized under the percentage
of completion  method based upon costs incurred relative to total contract costs
or when the related  contractual  obligations  have been  fulfilled and fees are
billable.  Costs associated with development  contracts are included in research
and development.

Patents

Patent  costs  related to the  acquired  technology  were  expensed  as incurred
because the technology being developed has not reached technological feasibility
and requires further development, refinement and testing.

Research and development costs

Research and development costs are expensed as incurred.

Income taxes

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards  ("SFAS") No. 109. Temporary  differences are differences  between the
tax basis of assets and liabilities and their reported  amounts in the financial
statements that will result in taxable or deductible  amounts in future years. A
valuation  allowance  is recorded by the Company to the extent it is more likely
than not that a deferred tax asset will not be realized.


                                       F-7
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 2. Summary of Significant Accounting Policies (continued)

Stock options

The Company applies APB Opinion 25,  "Accounting for Stock Issued to Employees,"
and related  Interpretations in accounting for stock options issued to employees
which  requires  recognition  of expense  when the option price is less than the
fair value of the underlying common stock at the date of grant.

The Company has adopted the  disclosure-only  provisions  of SFAS  Statement No.
123,  "Accounting  for  Stock-Based  Compensation."  To provide the required pro
forma  information for employees,  the Company  estimates the fair value of each
stock option at the grant date by using the Black-Scholes  option-pricing model.
Under SFAS No. 123, compensation cost is recognized for stock options granted to
nonemployees using the Black-Scholes Option-pricing model.

Statement of cash flows

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  investments  purchased with an original maturity of three months or less
to be cash equivalents.

Loss per common share

Basic  loss  per  share  is  computed  by  dividing  loss  available  to  common
stockholders,  by the weighted  average number of common shares  outstanding for
the year.  Diluted loss per share reflects the potential  dilution of securities
that could  share in the loss of an entity.  There were no  dilutive  securities
outstanding during any of the years presented.

Comprehensive loss

The Company follows SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes  standards for reporting and display of comprehensive income and its
components in a full set of general-purpose  financial statements.  There was no
difference  between the  Company's net loss and its  comprehensive  loss for the
period presented in the accompanying consolidated statements of operations.


                                      F-8
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 3. Purchase of Technology

Plasma antenna technology

On August 20,  1999 the Company  entered  into a purchase  agreement  to acquire
plasma antenna technology.  This technology purchase included one issued and one
pending  patent  (subsequently  issued)  and the results of prior  research  and
development  by the seller.  The cash purchase price of $250,000 was expensed as
there were no other identifiable assets acquired, commercial feasibility has not
been established, there are no current cash flows generated from this technology
and no future alternative uses of the patents or technology exist. Management is
unable to determine the fair value of the plasma antenna technology. There is no
ready market for the patents or  technology,  which is still in the early stages
of development. Management believes this technology is unique and no alternative
future uses of the technology  exist.  Furthermore,  management does not have an
estimate of the cost of  developing  the  technology  to the point of commercial
viability or how long such  development  may take. As a result,  future earnings
and cash flows are highly uncertain.  Traditional  valuation methods rely on the
market values of similar  assets,  replacement  costs or  projections  of future
earnings and cash flows.

The Company is also  obligated  to pay the seller a royalty of 5% of ASI's gross
revenues (as  defined)  from the  technology  for a period of five years up to a
maximum of $250,000 in royalties. There are no minimum royalties.

Although all of the Company's revenues since January 1, 1999 result from the use
of the plasma antenna  technology,  the technology is still in an early stage of
development and there can be no assurance that the planned commercial  viability
will be achieved.  The revenues  generated were related to development grants to
explore commercial uses of the technology.

Sound reduction technology

In December 2000, the Company entered into a purchase agreement to acquire sound
reduction  technology for jet engines.  This  technology  employs  techniques to
modulate the plasma in a jet engine to reduce noise.  This  technology  purchase
included one issued U.S. patent and multiple foreign patent applications and the
results of prior research and  development by the seller.  Of the aggregate cash
purchase  price of  $200,000,  a total of $100,000  was paid at closing with the
balance due in ten equal monthly  installments of $10,000 commencing February 1,
2001.  The  $200,000  purchase  price  was  expensed  as  there  were  no  other
identifiable assets acquired,  commercial  feasibility has not been established,
there are no current cash flows  generated  from this  technology  and no future
alternative  uses of the patents or  technology  exist.  Management is unable to
determine the fair value of the sound  reduction  technology.  There is no ready
market for these  patents or  technology,  which is still in the early stages of
development.  Management  believes this  technology is unique and no alternative
future uses of the technology  exist.  Furthermore,  management does not have an
estimate of the cost of  developing  the  technology  to the point of commercial
viability or how long such  development  may take. As a result,  future earnings
and cash flows are highly uncertain.  Traditional  valuation methods rely on the
market values of similar  assets,  replacement  costs or  projections  of future
earnings and cash flows.


                                      F-9
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 3. Purchase of Technology (continued)

The  Company  is also  obligated  to pay  royalties  starting  at 6% of  product
revenues in the first year, 5% in the second year and 4% thereafter for the term
of the initial patent. A royalty of 15% is due on license  revenues  received by
the Company and a fee of 10% of sale  proceeds is due on the further sale of the
technology. There are no minimum royalties.

The Company's sound reduction technology will require further development before
it can be commercialized into products or licensed to others and there can be no
assurance that commercial viability will be achieved.

Note 4. Development Contracts

In January  2000 and August  2000 the Company  obtained  two cost plus fixed fee
development  contracts as subcontracts with a prime government  contractor which
funded further development of the Company's  technology.  The first contract was
for an  aggregate  of  $89,710  which was  completed  in August  2000.  Accounts
receivable of $80,304 at December 31, 2000  represents  amounts billed under the
contracts and $7,870 represented deferred revenue at December 31, 2000.

In May  2001  the  Company  obtained  a fixed  fee  government  contract  for an
aggregate of $62,756 to fund further development of the Company's plasma antenna
technology.  This contract was completed in November  2001. In December 2001 the
Company was granted a three month  interim  contract  continuation  for $34,876.
Accounts  receivable of $20,352  represents $12,952 billed and $7,400 earned and
not yet billed at December 31, 2001.

Note 5. Note Receivable

The Company has an unsecured note receivable from the prior sale of assets. This
9% note is due in monthly  installments  of  principal  and interest of $500 and
matures in November 2004.

Note 6. Stockholders' Equity

On August 23, 2000 the Company's  shareholders  approved a reorganization of the
Company's  share  capital,  whereby each ten shares of common stock were reverse
split into one share of common stock of $0.02 par value. This reorganization was
effected  on  September  1,  2000  with  the  filing  of  restated  articles  of
incorporation  in the  State  of  Nevada.  As a  result  of this  share  capital
reorganization the Company has 11,000,000 shares authorized, $0.02 par value, of
which 10,000,000 are designated common stock and 1,000,000 shares are designated
preferred stock.  There were no issued or outstanding  shares of preferred stock
at December 31, 2001.

All share and per share data included in these  financial  statements  have been
retroactively adjusted to reflect the abovementioned reverse stock split.


                                      F-10
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 6. Stockholder's Equity (continued)

In October 1999,  the Company  completed the sale of 1,500,000  shares of common
stock at $0.50 per share for gross proceeds of $750,000.  Officers and directors
of the Company purchased an aggregate of 275,000 of these shares.

In December  1999,  the Company  issued  30,000  shares of common stock to three
consultants for services. These shares were valued at $15,000.

In December  2001,  the Company  completed the sale of 367,600  shares of common
stock at $0.50 per share for gross proceeds of $183,800.  Officers and directors
of the Company purchased an aggregate of 100,000 of these shares.

The Company also  completed a conversion  of debt to equity in December 2001 for
228,458  shares of common  stock at $0.50 per share for total debt of  $114,229,
including $4,229 of interest.  An officer/director of the Company converted debt
of $36,407 for an aggregate of 72,814 of these shares.

During  2001,  one  officer   contributed   services  to  the  Company   without
compensation.  During 2000 and 1999 two shareholders,  including one officer and
director,  contributed  services  to the  Company  without  compensation.  These
services,  valued at $24,000 in 2001,  $40,000 in 2000 and $20,000 in 1999, have
been expensed and treated as capital contributions.

Subsequent  to  December  31,  2001,  one  officer  and  director  purchased  an
additional  38,800 shares of common stock at $0.50 per share for total  proceeds
of $19,400.

Note 7. Stock Option Plan

The Company's  shareholders approved the 2000 Equity Incentive Plan (the "Plan")
on August 23, 2000 under which the Company is authorized to grant  incentive and
nonstatutory  stock  options to acquire  up to 250,000  shares of the  Company's
common stock to employees and consultants. The term of the Plan is ten years and
the term of  options  granted  may not  exceed ten years from the date of grant.
Options may be granted at a price no less than 100% of the fair market value.

As of December 31, 2000, the Company had not granted any options under the Plan.

During 2001 the Company granted options on 100,000 common shares  exercisable at
$0.50 per share until  November  19, 2006.  At December  31,  2001,  all 100,000
options are outstanding and exercisable. The Company recorded $5,500 as the fair
value of 50,000  options  granted  to five  consultants  who are not  directors,
officers,  or  employees  of the  Company  for  services  rendered.  Because the
Company's  stock is not traded,  the amount  recorded was  determined  using the
minimum value method under the Black-Scholes  Option-pricing model assuming a 5%
risk free interest  rate, a 5 year expected life, and a 0% dividend rate. At the
grant date,  the minimum value per option granted was $.11. The pro forma effect
of the other 50,000  options  granted  would be to increase the net loss for the
year ended December 31, 2001 by $5,500.


                                      F-11
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 7. Stock Option Plan (continued)

At December  31, 2001 the options on 100,000  shares were fully vested and had a
weighted  average  life of 4.9 years and a weighted  average  exercise  price of
$0.50 per common share. .

At December 31, 2001, 150,00 options remain available to be granted.

Note 8. Income Taxes

Net deferred tax assets  consist of the following  components as of December 31,
2001 and 2000:

                                                2001             2000
                                              --------         --------
Deferred tax assets:
Research and development costs                $ 89,000         $159,000
Contributed services                             7,000           21,000
Loss carryforwards                             252,000           87,000
                                              --------         --------
                                               348,000          267,000
Less valuation allowance                       348,000          267,000
                                              --------         --------
                                              $    --          $    --
                                              ========         ========

A valuation  allowance  is required  for those  deferred tax assets that are not
likely to be realized.  Realization is dependent upon future earnings during the
period loss carryforwards are expected to be available. Because of the uncertain
nature of the ultimate realization of tax losses, a complete valuation allowance
is recorded against the deferred tax asset arising from net operating losses.

For tax purposes,  the Company has loss carryforwards of approximately  $718,000
as of December 31, 2001 that expire  between  December 31, 2007 and December 31,
2021.

The income tax  provision  differs from the amount of income tax  determined  by
applying  the U.S.  federal  income  tax rate to  pretax  loss  from  continuing
operations for the years ended December 31, 2001, 2000 and 1999.

                                                2001         2000        1999
                                             ---------    ---------   ---------
Computed "expected" tax (credit)             $ (81,000)   $(130,000)  $(122,000)
Increase (decrease) in income taxes
resulting from:
Expiration of loss carryforward                   --        171,000
Increase (decrease) in valuation allowance      81,000      130,000     (46,000)
Other                                             --           --        (3,000)
                                             ---------    ---------   ---------
                                             $    --      $    --     $   --
                                             =========    =========   =========


                                      F-12
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 9. Related Party Transactions

Commencing in September 1999, the Company began paying a company affiliated with
its  President an aggregate of $500 per month for office rent,  bookkeeping  and
administrative services with such payments aggregating $6,000 in 2001, $6,000 in
2000 and $1,500 in 1999.  During  2001,  2000 and 1999,  the  Company  also paid
companies  affiliated with its President a total of $5,148,  $15,283 and $2,419,
respectively as reimbursements for travel and related costs.

During 2001, the Company  incurred  interest of $3,292 in connection  with short
term loans from related parties.

Note 10. Ability to Continue as a Going Concern

The Company's  financial  statements have been presented on the basis that it is
able to continue as a going  concern,  which  contemplates  the  realization  of
assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred  significant  losses in connection with the acquisition
and  development  of its technology and has limited funds with which to operate.
Management anticipates receiving additional contracts for further development of
it  technology;  however,  there can be no assurance that such contracts will be
obtained.  Consequently,  additional capital resources are likely to be required
to  further  develop  the  Company's   technology  to  the  point  where  it  is
commercially  viable.  The Company also plans to use resources to strengthen and
expand its  patents,  establish  certain  strategic  relationships  and identify
primary market opportunities.  Shortly thereafter,  the Company expects to begin
licensing  its product,  which  management  believes  will  generate  sufficient
revenue to continue the  Company's  operations.  However,  there is no assurance
that the Company will be able to successfully  commercialize  its products or be
able to generate  sufficient  revenue  through the  licensing  of its product to
provide sufficient working capital.

Management  does not have an estimate of the  additional  capital  necessary  to
develop the technology to the point of commercial viability.

The accompanying financial statements do not include any adjustments which would
be  necessary  should the Company be unable to  continue as a going  concern and
therefore be required to realize its assets and  discharge  its  liabilities  in
other than the normal  course of business  and at amounts  different  from those
reflected in the accompanying financial statements.


                                      F-13
<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.

                                        ASI TECHNOLOGY CORPORATION


                                        By: /s/ JERRY E. POLIS
                                            ------------------
                                            Jerry E. Polis
                                            President

Date:  March 15, 2002

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.

<TABLE>
<CAPTION>
         Name                              Position                                  Date
         ----                              --------                                  ----
<S>                                <C>                                           <C>
/s/ JERRY E. POLIS                 President                                     March 15, 2002
    --------------                 and Director
    Jerry E. Polis                 (principal executive officer)


/s/ ERIC M. POLIS                  Secretary, Treasurer and Director             March 15, 2002
    -------------                  (principal financial and accounting officer)
    Eric M. Polis

/s/ PHIL CARLINO                   Director                                      March 15, 2002
    ------------
    Phil Carlino

/s/ DAWAYNE R. JACOBS              Director                                      March 15, 2002
    -----------------
    Dawayne R. Jacobs
</TABLE>


                                       42