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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended
June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 0-29049
RHOMBIC CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 86-0824125
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11811 N. Tatum Blvd. # 3031
Phoenix, Arizona 85028
(Address of principal executive offices (zip code)
(602) 953-7702
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at June 30, 2002
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Common Stock, par value $0.001 30,000,000
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENT
RHOMBIC CORPORATION
CONSOLIDATED BALANCE SHEET
(A DEVELOPMENT STAGE COMPANY)
JUNE 30, 2002
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 17,102
OTHER ASSETS:
Investments 12,042
Licensing Agreements and Technologies 281,258
Patents 734
-----------
Total assets $ 311,136
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LIABILITIES
CURRENT
Accounts Payable $ 31,612
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value,
1,000,000 shares authorized, none issued
Common stock, $.001 par value, 70,000,000 shares
authorized, 30,000,000 issued and outstanding 30,000
Additional paid-in capital 8,506,524
(Deficit) accumulated during the development stage (8,249,524)
Net unrealized holding (loss) on securities held for sale (7,476)
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Total stockholders' equity 279,524
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Total liabilities and stockholders' equity $ 311,136
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SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
RHOMBIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS FOR THE THREE MONTHS CUMULATIVE FROM
ENDED JUNE 30, ENDED JUNE 30, NOVEMBER 21, 1994
------------------------------ ------------------------------ (INCEPTION) TO
2002 2001 2002 2001 JUNE 30, 2002
------------ ------------ ------------ ------------ -------------
Royalty income $ 0 $ 0 $ 0 $ 0 $ 5,729
Interest income 0 80 0 0 6,954
------------ ------------ ------------ ------------ ------------
0 80 0 0 12,683
EXPENSES
Research and development expense (9,183) 5,781 (9,183) 0 688,563
Write down of Intellectual property 0 0 0 0 1,891,788
Legal & accounting 34,903 70,428 7,668 19,557 771,220
Transfer Agent Expenses 1,518 429 1,218 265 28,073
Consulting, related party 0 0 0 0 367,000
Consulting 0 875 0 0 2,876,830
Interest expense 120 2,917 120 2,665 3,037
Other general & administrative 2,659 184,609 (11,798) 98,217 1,565,407
------------ ------------ ------------ ------------ ------------
Total Expenses 30,017 265,039 (11,975) 120,704 8,191,918
OTHER REVENUES & EXPENSES
(Loss) on sale of Investments 0 0 0 0 (70,290)
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (30,017) $ (264,959) $ 11,975 $ (120,704) $ (8,249,525)
============ ============ ============ ============ ============
NET LOSS PER SHARE:
Basic $ (0.00) $ (0.01) $ (0.00) $ (0.00)
============ ============ ============ ============
Diluted $ (0.00) $ (0.01) $ (0.00) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 28,704,241 26,310,824 28,711,360 26,310,824
============ ============ ============ ============
Diluted 28,704,241 26,310,824 28,711,360 26,310,824
============ ============ ============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
RHOMBIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(Deficit) Net unrealized
Accumulated holding loss
Common Stock Additional During on available
--------------------- Paid-In Development securities
Shares Amount Capital Stage held for sale Total
---------- ------- ----------- ----------- ------------- ---------
Balance at December 31, 2000 26,286,100 $26,286 $ 8,043,540 $(7,236,754) $ 0 $ 833,072
Shares issued for services 290,000 290 59,710 0 0 60,000
Net (loss) for the quarter ended March 31, 2001 0 0 0 (144,255) 0 (144,255)
---------- ------- ----------- ----------- -------- ---------
Balance at March 31, 2001 26,576,100 26,576 8,103,250 (7,381,009) 0 748,817
Shares issued for services 400,000 400 91,600 0 0 92,000
Shares issued for debenture conversion 1,166,142 1,166 198,834 0 0 200,000
Costs of offering 0 0 (20,831) 0 0 (20,831)
Net (loss) for the quarter ended June 30, 2001 0 0 0 (120,704) 0 (120,704)
---------- ------- ----------- ----------- -------- ---------
Balance at June 30, 2001 28,142,242 $28,142 $ 8,372,853 $(7,501,713) 0 $ 899,282
========== ======= =========== =========== ======== =========
Balance at December 31, 2001 28,697,042 $28,697 $ 8,452,629 $(8,219,508) $ (7,476) $ 254,342
Net (loss) for the quarter ended March 31, 2002 0 0 0 (41,992) 0 (41,992)
---------- ------- ----------- ----------- -------- ---------
Balance at March 31, 2002 28,697,042 28,697 8,452,629 (8,261,500) (7,476) 212,350
Shares issued for services 1,302,958 1,303 53,895 0 0 55,198
Net income for the quarter ended June 30, 2002 0 0 0 11,976 0 11,976
---------- ------- ----------- ----------- -------- ---------
Balance at June 30, 2002 30,000,000 $30,000 $ 8,506,524 $(8,249,524) $ (7,476) $ 279,524
========== ======= =========== =========== ======== =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
RHOMBIC CORPORATION
(A DEVLOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
FOR THE SIX MONTHS FOR THE THREE MONTHS CUMULATIVE FROM
ENDED JUNE 30, ENDED JUNE 30, NOVEMBER 21, 1994
-------------------------- -------------------------- (INCEPTION) TO
2002 2001 2002 2001 JUNE 30, 2002
----------- ----------- ----------- ----------- -------------
OPERATING ACTIVITIES
Net (loss) income for the period $ (30,017) $ (264,959) $ 11,975 $ (120,704) $(8,249,525)
Adjustments to reconcile net
cash used by operations:
Write down of intellectual property 0 0 0 0 1,891,788
Loss on sale of marketable securities 0 0 0 0 70,290
Rockford shares issued for services 0 0 0 0 32,275
Common stock issued for services 55,198 152,000 55,198 92,000 1,975,682
Fair value of options granted 0 0 0 0 2,000,912
(Increase) decrease in accounts receivable 0 (291) 0 (291) 0
(Increase) decrease in prepaid expenses 300 1,500 0 2,500 0
Increase (decrease) in accounts payable 3,784 (81,824) (5,517) (61,081) 24,444
Increase (decrease) in due to related parties (21,263) 0 (51,374) 0 7,169
----------- ----------- ----------- ----------- -----------
Net Cash (used) by operating activities 8,002 (193,574) (10,282) (87,576) (2,246,965)
FINANCING ACTIVITIES
Proceeds from private placements 0 0 0 0 1,347,830
Proceeds from convertible debenture 0 200,000 0 100,000 200,000
Offering costs 0 (20,831) 0 (10,831) 0
Proceeds from exercise of stock options 0 0 0 0 1,006,750
----------- ----------- ----------- ----------- -----------
Cash provided from financing activities 0 179,169 0 89,169 2,554,580
----------- ----------- ----------- ----------- -----------
INVESTING ACTIVITIES
Cost of patents 0 (47,365) 0 (33,245) (168,430)
Investment in Rockford Technologies 0 0 0 0 (217,756)
Proceeds from the sale of marketable securities 0 0 0 0 95,673
----------- ----------- ----------- ----------- -----------
Cash used in investment activities 0 (47,365) 0 (33,245) (290,513)
Increase in cash 8,002 (61,770) 10,282 (31,652) 17,102
Cash at beginning of period 9,100 93,384 6,820 63,266 0
----------- ----------- ----------- ----------- -----------
Cash at end of period $ 17,102 $ 31,614 $ 17,102 $ 31,614 $ 17,102
=========== =========== =========== =========== ===========
Interest expense $ 120 $ 2,917 $ 120 $ 2,665 $ 2,917
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock for licensing
agreements and technologies $ 0 $ 0 $ 0 $ 0 $ 2,005,350
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SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
RHOMBIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTERS ENED AND
SIX MONTHS ENDED JUNE 30, 2002 and 2001
The unaudited financial statements included herein were prepared from the
records of the Company in accordance with Generally Accepted Accounting
Principles. These financial statements reflect all adjustments which are, in the
opinion of management, necessary to provide a fair statement of the results of
operations and financial position for the interim periods. Such financial
statements generally conform to the presentation reflected in the Company's
Forms 10-KSB and 10-KSB filed with the Securities and Exchange Commission for
the year ended December 31, 2001. The current interim period reported herein
should be read in conjunction with the Company's Form 10-KSB subject to
independent audit at the end of the year.
The results of operations for the three months ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002.
Stockholders' Equity
During the second quarter of 2002, the Company issued 1,302,958 restricted
common shares as payment in full for general corporate and securities counsel,
officer fees and director fees at a deemed value of $55,198.
During the second quarter of 2001, the Company issued 400,000 restricted
common shares as payment in full for legal services regarding its patents. The
transaction had a deemed value of $ 92,000. It also issued 1,166,142 shares
under the terms of its debenture for $200,000 of cash advances.
The deemed value of the all shares issued was determined based upon the
trading value of the Company's common stock at the time of the issuance of the
stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion is intended to provide an analysis of the
Company's financial condition and Plan of Operation and should be read in
conjunction with the Company's financial statements and the notes thereto. The
matters discussed in this section, that are not historical or current facts,
deal with potential future circumstances and developments. Such forward-looking
statements include, but are not limited to the seeking of revenue producing
acquisitions, the development plans for the technologies of the Company, trends
in the results of the Company's development, anticipated development plans,
operating expenses and the Company's anticipated capital requirements and
capital resources. The Company's actual results could differ materially from the
results discussed in the forward-looking statements.
The Company has not generated revenue from operations during the first six
months of 2002 or since its inception. During the second quarter of 2002, the
Company began the quarter with $9,100 in cash and received a refund of
approximately $10,000 from a consultant for discontinued research.. At July 20,
2002, the Company had a working capital deficit. The Company had approximately
$5,000 in cash and trade payables of approximately $20,000 at that date.
During the second quarter 2002, the Company had no cash disbursements but
disbursed $11,672 during July 2002 for auditing costs, electronic filing fees
and transfer agent fees.
During the second quarter of 2001, the Company had cash disbursements of
approximately $50,000 in officer consulting fees, $22,000 in general counsel and
legal fees to submit its registration statement, $16,500 in travel expenses,
$12,000 in director fees, $10,500 for investor relation expenses, $5,500 for
office expenses, $3,000 for auditing costs, $2,665 in interest expense on the
debenture and approximately $8,000 on other general and administrative costs.
During the second quarter of 2002, directors personally incurred expenses
of $1,625 on behalf of the Company for patent renewal fees and office expenses.
On June 30,2002, the directors, officers and its general legal counsel reduced
their accrued fees of $112,000 to $55,198 and agreed not to charge any more fees
until the Company successfully acquires a revenue generating operation. The
Company eliminated the debt of $55,198 by issuing 1,302,958 restricted common
shares.
Also during the second quarter of 2002, all stock options to directors
expired leaving 500,000 options to a previous consultant remaining. All options
are priced significantly higher than the trading market of Company's stock and
the probability of their being exercised is low at this time.
The competition in the technology proliferation and transfer market is
highly intense and is based on product and technology recognition and
acceptance, novelty and marketability of an invention, price, and sales
expertise. The Company has placed its primary emphasis on product development,
dependability and commercial viability of its acquired technologies. Management
is currently determining the cost-benefit involved to develop its Excimer Lamp
intellectual property into commercial applications. To date, the Company has not
generated any revenues from any of its acquired intellectual property except
minimal royalties from Daimler Benz from the IEC Technology. Rhombic is
currently a development stage company and is operating at a loss. None of the
intellectual properties have been developed to commercialization. The Company is
not able to determine an approximate date for commercialization of any of its
intellectual property at this time. No assurances can be given that any of the
Company's intellectual property will ever be developed to a point of usefulness
or, if developed, that any will be commercially feasible.
Development of its intellectual property may be possible through joint
ventures where Rhombic contributes its intellectual property for an ownership
percentage in a joint venture and all costs are paid by the other joint venture
partners. In the event Rhombic had an opportunity to raise cash, it would pay
for a marketing study and development plan for the Excimer Lamp. An 18-month
budget of approximately $ 350,000 to develop a prototype with patent protection.
The Company is currently in discussions with potential acquisition
candidates that are revenue producing that would bring value to the
shareholders.
The Company does not have any employees and uses consultants for matters
pertaining to coordinating technology development and administration. The
Company may hire employees during the next twelve months depending upon its
success in developing prototype applications for sale and financing more
development.
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Exchange Act
of 1934. Although the Company believes that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, it can give no assurance that such
expectations and assumptions will prove to be correct.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company is
unaware of any proceedings contemplated against it.
ITEM 2. CHANGES IN SECURITIES
The following information is given with respect to all unregistered
securities sold or issued by Rhombic in the period covered by this report:
(1) Effective June 30,2002, 1,302,958 restricted common shares were issued
to the Company's general legal counsel and its directors and officers as payment
in full for services pertaining to corporate administration and director fees.
The deemed value of the shares issued was $55,198 which was determined based
upon the trading value of the Company's common stock at the time of the issuance
of the stock and the agreement. These shares were issued by the Company pursuant
to the exemption found in Section 4(2)of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Certificate of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
99.2 Certificate of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RHOMBIC CORPORATION
August 14, 2002 By: /s/ Albert Golusin
--------------- ---------------------------------
Date Chief Financial Officer,
Principal Financial Officer