UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
[X]    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the fiscal year ended November 30, 2002

[X]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the transition period from ______________ to ______________

                         Commission file number: 0-32237

                            GALAXY INVESTMENTS, INC.
                 (Name of small business issuer in its charter)

            COLORADO                                       98-0347827
   (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                     Identification No.)

              1001 BRICKELL BAY DRIVE, SUITE 2202, MIAMI, FL 33131
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (305) 373-5725

       Securities registered under Section 12(b) of the Exchange Act: NONE

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

                         COMMON STOCK, $0.001 PAR VALUE
                                (Title of class)

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  no  disclosure  of  delinquent  filers  in  response  to  Item 405 of
Regulation S-B is 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:  $-0-

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price  at which the common equity
was sold, or the average  bid and asked  price of  such common equity, as  of  a
specified date within the past 60 days:  $19,391,910 AS OF FEBRUARY 28, 2003

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  31,235,262 AS OF FEBRUARY 28, 2003

Transitional Small Business Disclosure Format (Check one):    Yes     ; No  X
                                                                 -----    -----


<PAGE>

                 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         This report includes "forward-looking statements" within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.  All  statements  other  than
statements of historical  facts  included or  incorporated  by reference in this
report, including, without limitation, statements regarding our future financial
position,  business strategy,  budgets, projected costs and plans and objectives
of  management  for  future  operations,  are  forward-looking   statements.  In
addition,  forward-looking  statements generally can be identified by the use of
forward-looking   terminology  such  as  "may,"  "will,"   "expect,"   "intend,"
"project,"  "estimate,"  "anticipate,"  "believe," or "continue" or the negative
thereof or variations thereon or similar  terminology.  Although we believe that
the expectations reflected in such forward-looking statements are reasonable, we
cannot  give any  assurance  that  such  expectations  will  prove to have  been
correct.  Important factors that could cause actual results to differ materially
from our expectations ("Cautionary Statements") include, but are not limited to,
our  assumptions  about  energy  markets,  production  levels,  reserve  levels,
operating  results,  competitive  conditions,  technology,  the  availability of
capital resources,  capital expenditure  obligations,  the supply and demand for
oil and natural gas, the price of oil and natural gas,  currency exchange rates,
the weather,  inflation, the availability of goods and services, drilling risks,
future processing volumes and pipeline  throughput,  general economic conditions
(either  internationally  or nationally or in the  jurisdictions in which we are
doing  business),  legislative  or  regulatory  changes  (including  changes  in
environmental regulation, environmental risks and liability under federal, state
and foreign  environmental  laws and  regulations),  the  securities  or capital
markets and other factors disclosed under "Item 6.  Management's  Discussion and
Analysis or Plan of Operation,"  "Item 2. Description of Property" and elsewhere
in this  report.  All  subsequent  written and oral  forward-looking  statements
attributable to us, or persons acting on our behalf, are expressly  qualified in
their  entirety  by the  cautionary  statements.  We assume no duty to update or
revise our forward-looking  statements based on changes in internal estimates or
expectations or otherwise.


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         We are in the business of oil and gas  exploration  and  production and
are  currently  acquiring  and  developing  coal bed  methane  ("CBM") and other
unconventional  and  conventional  natural gas properties in Wyoming,  Texas and
other areas that offer attractive exploitation opportunities for natural gas.

BACKGROUND

         We were  incorporated in the State of Colorado on December 17, 1999, to
explore  for and, if  possible,  develop  mineral  properties  primarily  in the
Province of British Columbia,  Canada, and other parts of Canada. On November 1,
2002, we entered into an agreement and plan of  reorganization to acquire all of
the issued and outstanding capital stock of Dolphin Energy Corporation, a Nevada
corporation,  for  approximately  70%  of  our  outstanding  common  stock.  The
acquisition of the Dolphin Energy was completed as of November 13, 2002.

         Upon  completion of the  transaction,  Dolphin Energy became our wholly
owned  subsidiary.  However,  since this  transaction  resulted in the  existing
stockholders of Dolphin Energy acquiring control of the surviving  company,  for
financial  reporting  purposes the business  combination  was accounted for as a
reverse  acquisition  with  Dolphin  Energy as the  acquirer.  Accordingly,  all
financial information presented in this report for periods prior to November 13,
2002 represents the historical information of Dolphin Energy.

         On  November  15,  2002,  we  executed  a letter of  intent to  acquire
Pannonian  International,  Ltd., a Colorado  corporation,  solely for  2,000,000
shares of our common stock. As of the date of this report,  we have extended the
letter  of  intent  to April  30,  2003 and are  working  towards  a  definitive
agreement. See Item 12. Certain Relationships and Related Transactions.


                                       2
<PAGE>


DEVELOPMENT AND ACQUISITION CAPITAL EXPENDITURES

         During the fiscal year ended November 30, 2002, we incurred $873,797 in
identifying and acquiring petroleum and natural gas leases and prospect rights.

PRINCIPAL PRODUCTS

         We  conduct  exploration  activities  to locate  natural  gas and crude
petroleum.  Should we commence production of these products,  we anticipate that
generally  they will be sold at the wellhead to purchasers in the immediate area
where the products are produced.  We expect that the  principal  markets for oil
and gas will be refineries and transmission  companies that have facilities near
our producing properties.

COMPETITION

         Oil and gas exploration and acquisition of undeveloped  properties is a
highly competitive and speculative  business.  We compete with a number of other
companies,  including major oil companies and other independent  operators which
are more experienced and which have greater financial resources.  We do not hold
a significant competitive position in the oil and gas industry.

COMPLIANCE WITH GOVERNMENTAL REGULATIONS

         Our operations are subject to various levels of government controls and
regulations in the United States and internationally.

         UNITED STATES REGULATION.  In the United States,  legislation affecting
the oil and gas industry has been  pervasive  and is under  constant  review for
amendment or expansion.  Pursuant to such legislation,  numerous federal,  state
and local  departments and agencies have issued  extensive rules and regulations
binding on the oil and gas industry and its  individual  members,  some of which
carry  substantial  penalties for failure to comply.  Such laws and  regulations
have a significant  impact on oil and gas drilling,  gas  processing  plants and
production  activities,  increase the cost of doing business and,  consequently,
affect  profitability.  Inasmuch as new  legislation  affecting  the oil and gas
industry is commonplace and existing laws and regulations are frequently amended
or  reinterpreted,  we are  unable  to  predict  the  future  cost or  impact of
complying with such laws and regulations.

         We  consider  the cost of  environmental  protection  a  necessary  and
manageable  part of our  business.  We  believe  we will be able to plan for and
comply  with new  environmental  initiatives  without  materially  altering  our
operating strategies.

         EXPLORATION AND PRODUCTION. Our United States operations are or will be
subject to various types of  regulation at the federal,  state and local levels.
Such  regulation   includes   requiring  permits  for  the  drilling  of  wells;
maintaining   bonding   requirements   in  order  to  drill  or  operate  wells;
implementing  spill  prevention  plans;  submitting  notification  and receiving
permits  relating  to  the  presence,  use  and  release  of  certain  materials
incidental to oil and gas operations;  and regulating the location of wells, the
method of  drilling  and casing  wells,  the use,  transportation,  storage  and
disposal of fluids and materials used in connection with drilling and production
activities,  surface usage and the  restoration  of properties  upon which wells
have been drilled,  the plugging and abandoning of wells and the transporting of
production.  Our operations are or will be also subject to various  conservation
matters,  including the  regulation of the size of drilling and spacing units or
proration  units,  the number of wells  which may be drilled in a unit,  and the
unitization or pooling of oil and gas  properties.  In this regard,  some states
allow the forced  pooling or  integration  of tracts to  facilitate  exploration
while other states rely on voluntary pooling of lands and leases, which may make
it more  difficult  to  develop  oil  and gas  properties.  In  addition,  state
conservation  laws establish maximum rates of production from oil and gas wells,
generally  limit the venting or flaring of gas, and impose certain  requirements
regarding the ratable purchase of production. The effect of these regulations is
to limit the amounts of oil and gas we may be able to produce from our wells and
to limit the number of wells or the locations at which we may be able to drill.

         ENVIRONMENTAL AND OCCUPATIONAL REGULATIONS.  Various federal, state and
local laws and regulations concerning the discharge of incidental materials into
the environment, the generation, storage, transportation and

                                       3

<PAGE>


disposal of  contaminants  or  otherwise  relating to the  protection  of public
health, natural resources, wildlife and the environment, affect our existing and
proposed exploration, development, processing, and production operations and the
costs  attendant  thereto.  These  laws and  regulations  increase  our  overall
operating  expenses.  We plan to maintain  levels of insurance  customary in the
industry  to  limit  our  financial  exposure  in  the  event  of a  substantial
environmental   claim  resulting  from  sudden,   unanticipated  and  accidental
discharges of oil, salt water or other substances.  However, we do not intend to
maintain 100% coverage concerning any environmental  claim, and we do not intend
to maintain any coverage with respect to any penalty or fine required to be paid
by us because  of our  violation  of any  federal,  state or local  law.  We are
committed to meeting our responsibilities to protect the environment wherever we
operate  and  anticipate  making  increased  expenditures  of both a capital and
expense  nature as a result of the  increasingly  stringent laws relating to the
protection of the environment.  We cannot predict with any reasonable  degree of
certainty our future exposure  concerning such matters.  We consider the cost of
environmental  protection a necessary and  manageable  part of our business.  We
believe  we  will  be  able  to plan  for  and  comply  with  new  environmental
initiatives without materially altering our operating strategies.

         We are also  subject to laws and  regulations  concerning  occupational
safety and health.  Due to the continued  changes in these laws and regulations,
and the  judicial  construction  of same,  we are  unable  to  predict  with any
reasonable degree of certainty our future costs of complying with these laws and
regulations.  We consider the cost of occupational safety and health a necessary
and manageable part of our business.  We believe we will be able to plan for and
comply with new occupational  safety and health  initiatives  without materially
altering our operating strategies.

         INTERNATIONAL  REGULATION.  The oil  and gas  industry  is  subject  to
various types of regulation throughout the world.  Legislation affecting the oil
and gas industry has been pervasive and is under  constant  review for amendment
or  expansion.  Pursuant to such  legislation,  government  agencies have issued
extensive  rules and  regulations  binding on the oil and gas  industry  and its
individual  members,  some of which carry  substantial  penalties for failure to
comply.  Such  laws and  regulations  have a  significant  impact on oil and gas
drilling and  production  activities,  increase the cost of doing  business and,
consequently,  affect  profitability.  Inasmuch as new legislation affecting the
oil and gas  industry is  commonplace  and  existing  laws and  regulations  are
frequently amended or reinterpreted, we are unable to predict the future cost or
impact  of  complying  with  such  laws  and  regulations.   The  following  are
significant areas of regulation.

         EXPLORATION  AND  PRODUCTION.  Pannonian's  oil and gas concessions and
permits are granted by host  governments  and  administered  by various  foreign
government  agencies.  Such foreign governments require compliance with detailed
regulations  and orders  which  regulate,  among  other  matters,  drilling  and
operations  on areas  covered by  concessions  and permits and  calculation  and
disbursement  of  royalty  payments,   taxes  and  minimum  investments  to  the
government.

         Regulation  includes  requiring  permits  for the  drilling  of  wells;
maintaining   bonding   requirements   in  order  to  drill  or  operate  wells;
implementing  spill  prevention  plans;  submitting  notification  and receiving
permits  relating  to  the  presence,  use  and  release  of  certain  materials
incidental to oil and gas operations;  and regulating the location of wells, the
method of  drilling  and casing  wells,  the use,  transportation,  storage  and
disposal of fluids and materials used in connection with drilling and production
activities,  surface usage and the  restoration  of properties  upon which wells
have been drilled,  the plugging and abandoning of wells and the transporting of
production.  Pannonian's  operations are also subject to regulations,  which may
limit the number of wells or the locations at which Pannonian can drill.

         ENVIRONMENTAL  REGULATIONS.  Various  government  laws and  regulations
concerning  the  discharge of incidental  materials  into the  environment,  the
generation,  storage,  transportation  and disposal of contaminants or otherwise
relating to the protection of public health, natural resources, wildlife and the
environment,  affect  Pannonian's  exploration,   development,   processing  and
production operations and the costs attendant thereto. In general, this consists
of  preparing  Environmental  Impact  Assessments  in order to receive  required
environmental  permits to conduct  drilling  or  construction  activities.  Such
regulations also typically include  requirements to develop  emergency  response
plans,  waste management plans, and spill contingency  plans. In some countries,
the   application  of  worldwide   standards,   such  as  ISO  14000   governing
Environmental   Management   Systems,   are  required  to  be  implemented   for
international oil and gas operations.

                                       4

<PAGE>

EMPLOYEES

         As of February 28, 2003, we had a total of 4 full time employees and no
part-time employees. None of our employees is covered by a collective bargaining
agreement.


ITEM 2.  DESCRIPTION OF PROPERTY.

OIL AND GAS ASSETS

         POWDER  RIVER  BASIN  -  WYOMING.  On  August  28,  2002,  we  acquired
undeveloped  oil and gas leases  covering 1,440 gross acres in Sheridan  County,
Wyoming,  subject to a 15% net profits  interest.  We paid  $36,000 and must pay
$396,000 by August 28, 2003. If we fail to pay by that date,  the leases will be
transferred  back to the  seller.  The leases  are being held in escrow  pending
receipt of our payment.

         Effective  September 30, 2002, we entered into a lease  acquisition and
drilling  agreement  with  Pioneer  Oil,  a Montana  limited  liability  company
("Pioneer"),  which  entitles us to earn a 100%  working  interest and a 78% net
revenue interest in leases covering 15,657 acres in the Powder River Basin, near
Lieter, Wyoming. The project area is 20 to 30 miles west of the main north-south
CBM fairway in Campbell  County,  Wyoming,  and is approximately 9 miles west of
the nearest  established CBM production.  Most of our acreage  positioned  along
roads and pipelines.  There is 20-inch gas transmission line crossing our leased
property,  and U.S.  Highway  14 runs  through  the  project  area and  provides
year-round access.

         Six  producible  coal seams have been  identified  throughout the lease
area, which range from 10 feet to 35 feet in thickness and with depths of 600 to
3,200 feet below the  surface.  The  primary  targets  are coal beds in the Fort
Union Formation.  Drilling depths range from 2,100 to 2,500 feet. The Fort Union
Formation is expected to have about 130 feet of aggregate  coal separated into 8
to 12 widely spaced beds. The coals are widespread and have a nearly  continuous
distribution.  They are  expected to contain  substantial  gas  saturation  with
actual  gas  production  dependent  on  successful   completion  technology  and
dewatering of the gas bearing zones.

         Our goal is to start a continuous  drilling  program into the potential
productive  seams and to maintain  and  develop  the Lieter  field as long as it
produced  marketable  quantities  of gas.  We have  determined  that the initial
target will be the Pawnee seam. This thickness of this seam varies from 20 to 30
feet at a depth of 1,800 feet. Other candidates  include the Anderson  Formation
with a  thickness  of 20 to 25 feet at a depth of 600 feet  below  the  surface.
These wells have been  targeted as they are the least  expensive  to produce and
have manageable amounts of water and the highest quantities of gas.

         To acquire the leases to this acreage,  we were required to pay and did
pay  $100,000 by January  31,  2003.  We must pay  $1,650,000  by May 15,  2003,
deposit the estimated  costs to drill and complete 30 pilot wells into an escrow
account by May 15,  2003,  and drill at least 25 pilot wells by October 1, 2003.
We may also acquire a 100% interest in five natural gas wells, for $500,000,  by
May 15, 2003.

         Effective  October  1,  2002,  we  entered  into  a  Coal  Bed  Methane
Participation Agreement with Horizon Exploitation,  Inc., a Colorado corporation
("Horizon"), which provides funding for the development of our Pioneer leasehold
interests and establishes an area of mutual  interests in the Powder River Basin
located  in  Wyoming  and  Montana  for  future  projects  on the same  terms as
described below.

         Under the terms of the agreement,  Horizon may participate,  subject to
funding, in the development of up to 120 wells and also includes the purchase of
the five existing wells from Pioneer. Horizon's commitment to participate in the
development is subject to an initial funding by Horizon of $100,000,  a $500,000
payment for the  purchase  of the five  existing  wells,  and the  placement  of
$1,650,000, plus the estimated amount to drill and complete 30 pilot wells, into
escrow as a partial  payment  for a 30-well  pilot  project on or before May 15,
2003. The estimated AFE cost per well is $150,000

         We earn an  initial  15%  carried  interest  in all wells  drilled  and
purchased.  We also have an option to purchase  additional working interest from
Horizon at Horizon's initial well cost. After the completion of a 30-well


                                       5
<PAGE>

pilot program, we can purchase an additional 25% working interest in each of the
wells  at  Horizon's  initial  well  and  land cost.  An  additional  25% can be
purchased on the same terms from Horizon  within two years after the  completion
of the pilot program.

         Horizon  Exploitation is a Colorado corporation and the general partner
of a German-based fund, the Horizon  Exploitation Fund GmbH & Co. KG, managed by
Rhein Investors AG in Basil, Switzerland.

         TRAWICK  FIELD - EAST TEXAS.  As of November 30, 2002,  we have paid-up
leases covering  approximately 2,452 acres in the Trawick Field, located in Rusk
and  Nacogdoches  Counties,  Texas.  Leases  covering  637.5  acres  are  for  a
three-year term expiring in 2005, while the remaining leases are for a five-year
term expiring in 2007.  With the exception of one lease with an 18.75%  interest
covering 67 acres,  all of the leases  provide for a 16.67%  overriding  royalty
interest to the landowner.

         All of the leases are held by either Harbor  Petroleum,  LLC or Florida
Energy,  Inc. on behalf of Dolphin Energy Corporation and Dolphin is responsible
for payment of all of the acquisition costs and maintenance costs of the leases.
Both Harbor  Petroleum,  LLC and Florida Energy,  Inc. are related parties.  See
Item 12. Certain Relationships and Related Transactions. Dolphin Energy owns all
of the working interests  acquired under the leases,  except for a 2% overriding
royalty  interest,  shared  equally  by Harbor  Petroleum  and  Florida  Energy.
However,  with  respect  to 400  contiguous  acres to be  designated  by Florida
Energy,  Florida Energy shall have a 3.125% overriding  royalty interest instead
of a 1% overriding royalty interest.  In addition,  Dolphin Energy has agreed to
pay Florida Energy a bonus of $50,000 for identifying this lease play.

         Dolphin  Energy  has  agreed  that  the   geological  and   geophysical
information  acquired by our  operations on this acreage shall belong to Dolphin
as well as Harbor  Petroleum  and Florida  Energy.  Dolphin has also agreed that
Harbor  Petroleum  shall be the  operator for and shall have full control of all
operations  conducted  with respect to this  acreage;  provided,  however,  that
Dolphin or its nominee shall have the right to be named operator if and when the
leases are assigned to Dolphin or its nominee.

         JIU  VALLEY  -  ROMANIA.   Pannonian  International  has  a  concession
agreement  covering  21,538 gross acres for a term of 30 years in the Jiu Valley
Coal Basin, Romania. This acreage contains up to 18 coal seams with a cumulative
thickness  up to 52 meters at depths of 985 to 3,280 feet.  The main target seam
averages 22 meters in thickness in the concession  area. The concession from the
Romanian  government was issued October 22, 2002. During the first five years of
the concession,  the concession  holder is required to expend a specified amount
for  exploratory  work. If that  specified  amount is not spent,  the concession
holder must pay that amount to the Romanian  government.  If no payment is made,
the  concession  is  cancelled.   Pannonian's  minimum  exploration  expenditure
commitments are as follows:

           o        $2,000 by October 21, 2003
           o        $2,000 by October 21, 2004
           o        $252,000 by October 21, 2005
           o        $182, 000 by October 21, 2006
           o        $182,000 by October 21, 2007

Pannonian  has  already  spent  in  excess  of  $6,000,  thereby  satisfying its
requirements for the first two years.

         If funds are available,  Pannonian would like to drill a well in August
or September 2003, as Pannonian  management  believes that it has a drillsite in
close  proximity  to where an  earlier  well has  blown out  methane.  Pannonian
estimates that it would cost approximately  $475,000 to test and complete a well
as a producing  well. If Pannonian  could drill a successful  producing well, it
could then  attract  the  necessary  capital to drill other  offset  development
wells.

         The property is subject to a royalty interest of  approximately  7-1/2%
to the Romanian government and 2-1/2% to the coal mining company.


                                       6
<PAGE>


UNDEVELOPED ACREAGE

         The following table sets forth the undeveloped  leasehold  acreage,  by
area, held by us as of November 30, 2002.  Undeveloped  acres are acres on which
wells have not been  drilled  or  completed  to a point  that  would  permit the
production of commercial quantities of oil and gas, regardless of whether or not
such acreage contains proved reserves. Gross acres are the total number of acres
in which we have a working  interest.  Net  acres are the sum of our  fractional
interests owned in the gross acres. In certain leases,  our ownership is not the
same for all depths;  therefore,  the net acres in these  leases are  calculated
using the lowest ownership interest at any depth.

  -------------------------------------------------------------------------
                                   GROSS                          NET
  -------------------------------------------------------------------------
  Wyoming (1)                      1,440 (2)                     1,440
  -------------------------------------------------------------------------
  East Texas                       2,452                         2,452
  -------------------------------------------------------------------------
  Romania                         21,538 (3)                    21,538
  -------------------------------------------------------------------------
  Total acres                     25,430                        25,430
  -------------------------------------------------------------------------
  ----------------
   (1)   Does not include the 15,657 acres acquired in January 2003. See Item 2.
         Description of Property.
   (2)   If we do not make a payment of  $396,000 by August  28,  2003,  we will
         lose our rights to this property.
   (3)   Approximately 13,715 acres have 5 meters or more of coal under it.

DRILLING ACTIVITY

         We had no drilling activity during the year ended November 30, 2002.

PRESENT ACTIVITIES

         We  are  not  presently  conducting  any  drilling  operations.  We are
continuing  to  evaluate  and may acquire  leases in the Powder  River Basin and
Trawick Field. If Horizon is able to secure sufficient  funding, we will conduct
drilling  operations in the Powder River Basin.  If Horizon does not participate
in our coal bed methane project, we will have to obtain the capital necessary to
engage in a drilling  program.  We cannot  assure you that we will be able to do
so.

OFFICE SPACE

         Our principal executive offices are located at 1001 Brickell Bay Drive,
Suite 2202, Miami, Florida 33131, where we lease approximately 1,300 square feet
of space on a lease expiring June 30, 2005.


ITEM 3.  LEGAL PROCEEDINGS.

         None.


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

         None.



                                       7
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Our  common  stock has been  trading on the  over-the-counter  bulletin
board  ("OTCBB")  under the symbol "GAXI" since December 10, 2001. The following
table  sets  forth  the  range of high and low bid  quotations  for each  fiscal
quarter for the last two fiscal years.  These  quotations  reflect  inter-dealer
prices without retail mark-up, mark-down, or commissions and may not necessarily
represent actual transactions.

         FISCAL QUARTER ENDING                      HIGH BID         LOW BID

         February 28, 2002......................    $   --           $   --
         May 31, 2002...........................    $   1.00         $   0.56
         August 31, 2002........................    $   1.25         $   0.55
         November 30, 2002......................    $   1.51         $   0.78
         February 28, 2003......................    $   1.47         $   1.03

         On  February  28 , 2003,  the  closing  price for the common  stock was
$1.23.

         As of March 12, 2003, there were 54 record holders of our common stock.
Since our inception, no cash dividends have been declared on our common stock.

         As of November  13,  2002,  we issued  20,997,058  shares of our common
stock to the shareholders of Dolphin Energy Corporation to acquire that company.
We  relied  upon  the  exemption  from  registration  contained  in Rule  506 of
Regulation D under the Securities Act of 1933,  since there were no more than 35
non-accredited investors involved in the transaction.

         As of November 30, 2002, we did not have any equity compensation plans.


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

OVERVIEW

         Effective November 13, 2002 an arrangement was completed between Galaxy
Investments and Dolphin Energy Corporation,  a Nevada  corporation,  whereby the
shareholders  of  Dolphin  Energy  exchanged  all of  their  common  shares  for
20,997,058 shares of Galaxy's common stock.

         Following the  acquisition  the former  shareholders  of Dolphin Energy
held a majority  of our total  issued and  outstanding  common  shares;  Dolphin
Energy was thereby deemed to be the acquiror.  Accordingly,  the transaction has
been accounted for as a reverse  takeover using the purchase  method whereby the
assets and  liabilities of Galaxy have been recorded at their fair market values
and operating  results have been included in our financial  statements  from the
effective date of purchase.  The fair value of the net assets  acquired is equal
to their book values.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Our discussion  and analysis of our financial  condition and results of
operations are based upon our condensed consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America.  The preparation of these financial  statements
requires us to make estimates and judgments that affect the reported  amounts of
assets,   liabilities,   revenues  and  expenses,  and  related  disclosures  of
contingent  assets  and  liabilities.  On an  ongoing  basis,  we  evaluate  our
estimates,  including those related to impairment of long-lived  assets. We base
our estimates on historical  experience and on various other assumptions that we
believe to be reasonable under the circumstances,  the results of which form the
basis for making  judgments  about the carrying value of assets and  liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different  assumptions or conditions;  however, we believe
that  our  estimates,   including  those  for  the  above-described  items,  are
reasonable.


                                       8

<PAGE>


OIL AND GAS PROPERTIES

         We  follow  the  full  cost  method  of  accounting  for  oil  and  gas
operations.  Under this method,  all costs  related to the  exploration  for and
development  of oil and gas reserves  are  capitalized  on a  country-by-country
basis.  Costs  include  lease  acquisition  costs,  geological  and  geophysical
expenses,  overhead  directly related to exploration and development  activities
and costs of drilling both productive and  non-productive  wells.  Proceeds from
the sale of properties are applied against  capitalized costs,  without any gain
or loss being recognized,  unless such a sale would significantly alter the rate
of depletion and depreciation.

         Depletion of exploration  and  development  costs and  depreciation  of
production equipment is provided using the unit-of-production  method based upon
estimated  proven oil and gas  reserves.  The costs of  significant  unevaluated
properties  are excluded  from costs  subject to  depletion.  For  depletion and
depreciation  purposes,  relative volumes of oil and gas production and reserves
are converted at the equivalent conversion based upon relative energy content.

         In applying the full cost method, we perform a ceiling test whereby the
carrying  value  of oil and gas  properties  and  production  equipment,  net of
recorded future income taxes and the accumulated  provision for site restoration
and abandonment  costs,  is compared  annually to an estimate of future net cash
flow from the production of proven  reserves.  Costs related to undeveloped  oil
and gas  properties  are excluded from the ceiling  tests.  Discounted  net cash
flow,  utilizing a 10% discount rate, is estimated  using year end prices,  less
estimated future general and administrative expenses, financing costs and income
taxes.  Should this comparison  indicate an excess carrying value, the excess is
charged against earnings. At November 30, 2002, there were no reserves. Costs of
oil and gas properties are considered unevaluated at November 30, 2002.

IMPAIRMENT OF LONG-LIVED ASSETS.

         Our  long-lived  assets  include  property  and  equipment.  We  assess
impairment of long-lived  assets  whenever  changes or events  indicate that the
carrying value may not be recoverable. In performing our assessment we must make
assumptions regarding estimated future cash flows and other factors to determine
the fair value of the respective assets. If these estimates change in the future
we may be required to record impairment charges against these respective assets.

STOCK BASED COMPENSATION.

         Options  granted to employees under the Company's Stock Option Plan are
accounted for by using the intrinsic method under APB Opinion 25, Accounting for
Stock Issued to Employees  (APB 25). In October 1995,  the Financial  Accounting
Standards Board issued Statement No.123, Accounting for Stock-Based Compensation
(SFAS123),  which  defines a fair value  based  method of  accounting  for stock
options.  The accounting  standards  prescribed by SFAS 123 are optional and the
Company has continued to account for stock  options  under the  intrinsic  value
method specified in APB 25.

RESULTS OF OPERATIONS

         Dolphin  Energy  was  incorporated  on June  18,  2002.  It has not yet
generated any revenues.  For the period from  inception to November 30, 2002, we
incurred  operating  expenses of $1,140,066,  primarily for contract  services -
Resource Venture Management ($692,500),  consulting fees and payroll ($125,265),
legal  fees  ($103,314),  and  travel and  entertainment  ($102,479).  We expect
operating expenses to continue at that level due to our current activities.

LIQUIDITY AND CAPITAL RESOURCES

         At  November  30,  2002,  we  had  a  working  capital   deficiency  of
$1,012,916.  Of this amount,  $396,000 is a property  purchase payable due on or
before August 28, 2003, and $233,204 is an account payable to a related party.

         Since inception,  we have funded our activities through the sale of our
common stock,  raising  $850,500  through the period ended November 30, 2002. We
used  cash of  $432,478  for  our  operating  activities  and  $376,702  for our
investing activities. Most of our investing activities were additions to our oil
and gas properties ($351,883).

                                       9

<PAGE>


         The report of our independent  auditor on the financial  statements for
the period ended November 30, 2002,  includes an explanatory  paragraph relating
to the  uncertainty  of our  ability to  continue  as a going  concern.  We have
suffered losses from  operations and require  additional  financing.  We need to
obtain  additional  capital  through  the  sale of our  common  stock  or  other
securities.  Ultimately,  we need to  generate  revenues  and attain  profitable
operations.

PLAN OF OPERATION

         Since the end of the fiscal year, we have addressed our working capital
deficiency.  From December 1, 2002 through February 28, 2003, we raised $887,000
through the sale of our common stock.  These proceeds have been used for ongoing
operations and to pay accrued trade payables.  We are also negotiating with some
of our  creditors to convert  their debt into  equity.  As of February 28, 2003,
Resource  Venture  Management,  a  related  party,  has  agreed to  convert  its
outstanding  debt of $233,204,  plus  management fees for the three months ended
February 28, 2003 in the amount of $90,000,  to 323,204 restricted shares of our
common stock.

         Our plan of operation  currently depends upon the ability of Horizon to
fund the proposed 30-well pilot program.  If Horizon is unable to do so, we will
need to raise the capital through the sale of our debt and/or equity securities.
We cannot assure you that we will be successful in this effort.

         In addition to our obligations  under the Pioneer lease acquisition and
drilling agreement,  we are obligated to pay $396,000 by August 28, 2003 for our
leases in Sheridan County, Wyoming.

         We plan to acquire Pannonian International by April 30, 2003. While the
acquisition  is to be implemented  through the issuance of our common stock,  we
anticipate that we will need approximately $200,000 of cash during the remainder
of the fiscal  year ending  November  30,  2003,  to satisfy  Pannonian's  trade
payables in the ordinary  course of business and cover the additional  overhead.
Pannonian currently has 2 employees and an office in Denver, Colorado.


ITEM 7.  FINANCIAL STATEMENTS.

         See pages beginning with page F-1.


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

         On November 15, 2002,  our  directors  approved the election of Wheeler
Wasoff,  P.C.  to audit the  financial  statements  for the  fiscal  year  ended
November  30, 2002.  Our board of directors  recommended  Wheeler  Wasoff,  P.C.
because  that firm is the  existing  certifying  accountant  for Dolphin  Energy
Corporation,  which  is now  the  accounting  survivor  due  to the  acquisition
described in Item 1.  Description of Business above.  During the two most recent
fiscal years and the  subsequent  interim  period,  neither we nor anyone on our
behalf consulted  Wheeler Wasoff,  P.C.  regarding the application of accounting
principles to a specific completed or contemplated  transaction,  or the type of
audit opinion that might be rendered on our financial statements.

         Andersen Andersen & Strong,  L.C. had audited our financial  statements
for the fiscal year ended November 30, 2001.  The report of Andersen  Andersen &
Strong, L.C. did not contain an adverse opinion or disclaimer of opinion and was
not modified as to uncertainty,  audit scope, or accounting  principles.  During
the two most recent fiscal years and the subsequent  interim period,  there were
no  disagreements  with  Andersen  Andersen  &  Strong,  L.C.  on any  matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or  procedure  which,  if not  resolved  to the  satisfaction  of Andersen
Andersen & Strong,  L.C.,  would have caused it to make reference to the subject
matter of the disagreement in connection with its report.


                                       10

<PAGE>


                                    PART III

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

     Our executive officers and directors are:

     NAME                            AGE     POSITION
     ----                            ---     --------
     Marc E. Bruner                   30     President and Director
     Carmen Lotito                    58     Chief Financial Officer, Treasurer
                                             and Director
     A. Shane Bruner                  24     Secretary
     Dr. James M. Edwards             58     Director
     Thomas G. Fails                  75     Director
     Cecil D. Gritz                   59     Director
     Chris D. Wright                  45     Director

         Our  shareholders  elect  our  directors  annually  and  our  board  of
directors appoints our officers  annually.  Vacancies in our board are filled by
the  board  itself.  Set  forth  below  are  brief  descriptions  of the  recent
employment and business experience of our executive officers and directors.

MARC E. BRUNER, PRESIDENT AND DIRECTOR

         Marc E. Bruner became our  President and director upon the  acquisition
of Dolphin Energy in November 2002. He has served as president of Dolphin Energy
since June 2002.  From September 1999 to June 2002],  he worked as an investment
banker and analyst for Resource  Venture  Management  AG, a  Swiss-based  energy
sector consulting firm. He was a senior account executive for J.B. Oxford & Co.,
a national  securities  firm, from February 1997 to January 1999; and an account
executive for GKN Securities,  Boca Raton,  Florida,  from June 1996 to November
1996. Mr. Bruner holds a B.S.  degree in accounting from the University of Notre
Dame.

CARMEN LOTITO, CHIEF FINANCIAL OFFICER, TREASURER AND DIRECTOR

         Carmen  Lotito  became  our  Chief  Financial  Officer,  Treasurer  and
director upon the  acquisition of Dolphin Energy in November 2002. He has been a
director  and the  chairman of the audit and  compensation  committees  of Gasco
Energy,  Inc., a  publicly-traded  natural gas and  petroleum  exploitation  and
development company based in Englewood, Colorado, since April 2001. He served as
vice president,  chief financial officer and director of Coriko  Corporation,  a
private business development company,  from November 2000 to August 2002. He has
also been a member of Equistar  Capital LLC, an investment  banking firm located
in Salt Lake City,  Utah,  since December 1999.  From July 1998 to October 1999,
Mr. Lotito served as director of marketing and business  development  for Impact
Web  Development,  Salt Lake City,  Utah. Prior to joining Coriko from Utah Clay
Technology,  Inc., Mr. Lotito was  self-employed as a financial  consultant.  In
1988, Mr. Lotito joined ConAgra, Inc., in San Antonio, Texas as a brand manager,
where he developed product lines, which grossed $50 million over a period of two
years. In 1966, Mr. Lotito joined the firm of Pannell,  Kerr Forester & Co. as a
senior accountant in management and audit services for the company's Los Angeles
and San Diego,  California  offices.  Mr. Lotito holds a BS degree in Accounting
from the University of Southern California. Mr. Lotito is the stepfather of Marc
E. Bruner and A. Shane Bruner.

A. SHANE BRUNER, SECRETARY

         A. Shane Bruner became our Secretary  upon the  acquisition  of Dolphin
Energy in November 2002. He has had various experiences with different phases of
the oil and gas  business  throughout  his life.  Mr.  Bruner holds a bachelor's
degree from the  University of Miami.  A. Shane Bruner is the brother of Marc E.
Bruner.

DR. JAMES M. EDWARDS, DIRECTOR

         Dr. James M. Edwards became a director upon the  acquisition of Dolphin
Energy in November 2002. He has been actively  involved in international oil and
gas exploration and  exploitation for more than 27 years. He has participated in
oil and gas  discoveries  in Australia,  Columbia,  Equatorial  Guinea,  France,
Norway, Trinidad,


                                       11

<PAGE>


Thailand,  the United  Kingdom,  and the United States.  Dr. Edwards  previously
worked as chief geologist for Triton Energy  Corporation.  While with Triton, he
participated  in the discovery  efforts of the  Cusiana/Cupiagua  Field Complex,
Columbia. Since June 1991, he has been the president of Equinox Energy Corp., an
oil and gas  consulting  company  located in Dallas,  Texas.  Dr.  Edwards holds
advanced  degrees in geology,  including a Master of Science from the University
of Georgia and a Ph.D. from Rice University.

THOMAS G. FAILS, DIRECTOR

         Thomas G.  Fails  became a  director  upon the  acquisition  of Dolphin
Energy in November  2002.  Thomas G. Fails' career spans four decades in the oil
and gas  industry.  Mr.  Fails has  worked as a senior  geologist  for Shell Oil
Company  and  numerous  other   international   oil  and  gas   exploration  and
exploitation  companies.  He is a past  president of the  American  Institute of
Professional Geologists. Since January 1997, Mr. Fails has been self-employed as
an independent  petroleum geologist and consultant.  Mr. Fails has also been the
president of Pannonian International,  Ltd. since its inception in January 2000.
Pannonian   International  is  a  coal  bed  methane  development  company  with
properties  in Europe and  Australia.  Mr.  Fails holds  advanced  degrees  from
Colorado School of Mines and Columbia  University,  and is a certified petroleum
geologist and certified professional geologist.

CECIL D. GRITZ

         Cecil D.  Gritz has  worked in the oil and gas  industry  for more than
three  decades and holds  advanced  degrees in  petroleum  engineering  and is a
graduate of the  Colorado  School of Mines.  Mr.  Gritz worked as an engineer in
various  capacities  for Shell Oil Company from June 1966 to August 1973.  After
leaving  Shell Oil  Company,  he worked as a drilling  and  production  manager,
president of a drilling company, and petroleum engineer for companies in Denver,
Colorado.  He was the vice  president of  engineering  and  operations for Vista
Resources,  Inc.,  Denver,  Colorado,  from July 1977 to September 1982, and the
drilling and production manager for Trend Exploration Limited, Denver, Colorado,
from  September  1982 to September  1986. He provided  consulting  services as a
petroleum  engineer and project manager for David  Schlachter in Dallas,  Texas,
from  September  1986 to March 1988,  and was vice  president of operations  for
Dantex Oil & Gas, Inc., Dallas, Texas, from March 1988 to August 1993. Mr. Gritz
has been a manager and consulting  petroleum engineer for Harbor Petroleum,  LLC
in Granbury, Texas, since August 1993.

CHRIS D. WRIGHT

         Chris D. Wright founded one of Canada's most successful  junior oil and
gas producers,  Velvet  Exploration Ltd. Mr. Wright currently sits as a director
of a group of private and public  companies and operates an  investment  banking
firm. Mr. Wright holds a law degree from the University of Victoria.

CONFLICTS OF INTEREST

         Members of our management are associated with other firms involved in a
range  of  business  activities.  Consequently,  there  are  potential  inherent
conflicts of interest in their acting as officers and  directors of our company.
Insofar as the officers and directors are engaged in other business  activities,
we anticipate they will devote only a minor amount of time to our affairs.

         Our  officers  and  directors  are  now and  may in the  future  become
shareholders,  officers or directors of other companies, which may be formed for
the  purpose of  engaging in  business  activities  similar to us.  Accordingly,
additional  direct conflicts of interest may arise in the future with respect to
such individuals acting on behalf of us or other entities. Moreover,  additional
conflicts of interest may arise with respect to opportunities  which come to the
attention of such  individuals in the  performance of their duties or otherwise.
Currently,  we do not have a right of first refusal  pertaining to opportunities
that come to their attention and may relate to our business operations.

         Our  officers  and  directors  are, so long as they are our officers or
directors, subject to the restriction that all opportunities contemplated by our
plan of operation  which come to their  attention,  either in the performance of
their duties or in any other manner, will be considered opportunities of, and be
made available to us and the companies that they are affiliated with on an equal
basis. A breach of this  requirement will be a breach of the fiduciary duties of
the officer or  director.  If we or the  companies  with which the  officers and
directors are affiliated both desire to


                                       12

<PAGE>

take advantage of an opportunity, then said officers and directors would abstain
from  negotiating and voting upon the  opportunity.  However,  all directors may
still  individually  take advantage of  opportunities if we should decline to do
so.  Except as set forth  above,  we have not  adopted  any  other  conflict  of
interest policy with respect to such transactions.

         Our  audit,  compensation,  and  executive  committees  of our board of
directors are comprised as follows:
           o  Audit Committee - Chris Wright, Cecil Gritz, and James Edwards
           o  Compensation Committee - Carmen Lotito, James Edwards, and Chris
              Wright
           o  Executive Committee - Marc Bruner, Chris Wright, and James Edwards

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  our
officers,  directors,  and  persons  who  beneficially  own more than 10% of our
common  stock to file  reports  of  securities  ownership  and  changes  in such
ownership  with  the  Securities  and  Exchange  Commission  ("SEC").  Officers,
directors  and greater  than 10%  beneficial  owners are also  required by rules
promulgated by the SEC to furnish us with copies of all Section 16(a) forms they
file.

         Based solely upon a review of the copies of such forms furnished to us,
or written representations that no Form 5 filings were required, we believe that
during the fiscal year ended December 31, 2002,  there was  compliance  with all
Section 16(a) filing  requirements  applicable  to our  officers,  directors and
greater than 10% beneficial owners except as follows:

--------------------------------------------------------------------------------
REPORTING PERSON                 DATE REPORT DUE             DATE REPORT FILED
--------------------------------------------------------------------------------
Marc E. Bruner                 Form 3 due 11/23/02               12/27/02
--------------------------------------------------------------------------------
Carmen Lotito                  Form 3 due 11/23/02               12/24/02
--------------------------------------------------------------------------------
A. Shane Bruner                Form 3 due 11/23/02               01/02/03
--------------------------------------------------------------------------------
James M. Edwards               Form 3 due 11/23/02               01/06/03
--------------------------------------------------------------------------------
Thomas G. Fails                Form 3 due 11/23/02               01/02/03
--------------------------------------------------------------------------------
Cecil D. Gritz                 Form 3 due 11/23/02               12/27/02
--------------------------------------------------------------------------------
Chris D. Wright                Form 3 due 11/23/02               01/06/03
--------------------------------------------------------------------------------
Marc A. Bruner                 Form 3 due 11/23/02               12/23/02
--------------------------------------------------------------------------------


ITEM 10. EXECUTIVE COMPENSATION.

         The following table sets forth  information  about the  remuneration of
our chief executive officers for the last three completed fiscal years.

<TABLE>
<CAPTION>
                                                SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------


                                                                          LONG TERM COMPENSATION
                                                                   --------------------------------------
                                ANNUAL COMPENSATION                         AWARDS            PAYOUTS
                    -------------------------------------------------------------------------------------
                                                       OTHER        RESTRICTED   SECURITIES
    NAME AND                                           ANNUAL         STOCK      UNDERLYING      LTIP      ALL OTHER
    PRINCIPAL                                         COMPENSA-      AWARD(S)     OPTIONS/      PAYOUTS    COMPENSA-
    POSITION        YEAR    SALARY ($)    BONUS ($)    TION($)          ($)       SARS (#)        ($)        TION($)
---------------------------------------------------------------------------------------------------------------------
<S>                 <C>      <C>             <C>          <C>          <C>          <C>           <C>          <C>
 Marc E. Bruner     2002     $47,000         -0-          -0-          -0-          -0-           -0-          -0-
  President (1)<F1>
---------------------------------------------------------------------------------------------------------------------
   Gregory C.       2002        -0-          -0-          -0-          -0-          -0-           -0-          -0-
     Burnett        2001        -0-          -0-          -0-          -0-          -0-           -0-          -0-
  President (2)<F2> 2000        -0-          -0-          -0-          -0-          -0-           -0-          -0-
---------------------------------------------------------------------------------------------------------------------
----------------
<FN>
(1)<F1>     Mr. Bruner has been the President from November 13, 2002. The salary
            shown above includes consulting fees paid to Mr. Bruner.
(2)<F2>     Mr. Burnett was the President from December 17, 1999 to November 13,
            2002.
</FN>
</TABLE>


                                       13
<PAGE>


         There have been no grants of stock options,  stock appreciation rights,
benefits  under  long-term  incentive  plans  or  other  forms  of  compensation
involving our officers.

         We  reimburse  our  officers  and  directors  for  reasonable  expenses
incurred  during the course of their  performance.  We have not paid our outside
directors  fees for  their  services.  However,  we  propose  to pay them in the
future.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

         The following table provides certain information as to the officers and
directors  individually  and as a group,  and the holders of more than 5% of the
Common Stock of the Company, as of February 28, 2003:

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

NAME AND ADDRESS OF BENEFICIAL           AMOUNT AND NATURE OF        PERCENT OF
OWNER (1)                                BENEFICIAL OWNERSHIP         CLASS (2)
--------------------------------------------------------------------------------
Marc A. Bruner                               11,721,734 (3)             37.5%
29 Blauenweg
Metzerlen, Switzerland 4116
--------------------------------------------------------------------------------
Resource Venture Management                   5,221,734                 16.7%
29 Blauenweg
Metzerlen, Switzerland 4116
--------------------------------------------------------------------------------
Bruner Group, LLP                             4,500,000                 14.4%
1775 Sherman Street #1375
Denver, Colorado 80203
--------------------------------------------------------------------------------
Marc E. Bruner                                1,500,000                  4.8%
1001 Brickell Bay Drive #2202
Miami, Florida 33131
--------------------------------------------------------------------------------
Alan Shane Bruner                             1,500,000                  4.8%
1001 Brickell Bay Drive #2202
Miami, Florida 33131
--------------------------------------------------------------------------------
Carmen Lotito                                 1,000,000                  3.2%
9 Exchange Place, Suite 1113
Salt Lake City, Utah 84111
--------------------------------------------------------------------------------
Dr. James Edwards
184 Classen Drive                                 0                       --
Dallas, Texas 75218
--------------------------------------------------------------------------------
Thomas G. Fails
4101 E. Louisiana Avenue, Suite 412               0                       --
Denver, Colorado 80246
--------------------------------------------------------------------------------
Cecil D. Gritz
602 South Harbor Court                            0                       --
Granbury, Texas 76048
--------------------------------------------------------------------------------


                                       14

<PAGE>


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

NAME AND ADDRESS OF BENEFICIAL           AMOUNT AND NATURE OF        PERCENT OF
OWNER (1)                                BENEFICIAL OWNERSHIP         CLASS (2)
--------------------------------------------------------------------------------
Chris D. Wright
#1320 - 925 West Georgia Street                   0                       --
Vancouver, British Columbia, Canada V6C 3L2
--------------------------------------------------------------------------------

All officers and directors as a group         4,000,000                  12.8%
(7 persons)
--------------------------------------------------------------------------------
----------------
(1)  To our  knowledge,  except as  set forth in the footnotes to this table and
     subject to applicable community property  laws,  each  person  named in the
     table has sole voting and investment power  with  respect to the shares set
     forth opposite such person's name.

(2)  This table is based on 31,235,262 shares of Common Stock  outstanding as of
     February 28, 2003. If a person listed on this table has the right to obtain
     additional  shares of Common  Stock  within  sixty (60) days from  February
     28, 2003,  the  additional  shares  are  deemed to  be outstanding  for the
     purpose of computing the percentage of class owned  by such person, but are
     not deemed to be outstanding for the purpose of computing the percentage of
     any other person.

(3)  Included  in Mr.  Bruner's  share  ownership  are shares owned of record by
     Resource  Venture  Management and Bruner  Family  Trust.  Mr. Bruner  is  a
     control person of both these entities.

CHANGES IN CONTROL

         There are no agreements known to management that may result in a change
of control of our company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Other than as disclosed below, none of our present directors,  officers
or principal shareholders,  nor any family member of the foregoing,  nor, to the
best of our information and belief, any of our former directors, senior officers
or  principal  shareholders,  nor any family  member of such  former  directors,
officers or principal shareholders,  has or had any material interest, direct or
indirect,  in  any  transaction,  or  in  any  proposed  transaction  which  has
materially affected or will materially affect us.

         RESOURCE  VENTURE  MANAGEMENT.  At November 30, 2002,  we owed Resource
Venture Management $233,204. We have agreed to pay Resource Venture Management a
total of $692,500 for monthly  management fees of $162,000  through November 30,
2002, for finding oil and gas projects in Wyoming ($100,000),  for reimbursement
of costs and expenses ($230,500),  and for services rendered  ($200,000),  which
were paid by issuing  4,000,000  shares of our common stock.  As of February 28,
2003,  Resource  Venture  Management  agreed to convert its outstanding  debt of
$233,204,  plus  management fees for the three months ended February 28, 2003 in
the amount of $90,000, to 323,204 shares of our common stock.

         We have  agreed to enter  into a  consulting  agreement  with  Resource
Venture  Management  to provide  future  consulting  services for a fee of up to
$30,000  per  month.  Resource  Venture  Management  is  one  of  our  principal
shareholders  and is  controlled  by Marc  A.  Bruner,  who is  also  one of our
principal  shareholders.  Marc A.  Bruner is the father of Marc E. Bruner and A.
Shane Bruner, who are serve as our officers and directors.

         PANNONIAN  INTERNATIONAL,  LTD. On  November  15,  2002,  we executed a
letter  of  intent  to  acquire  Pannonian   International,   Ltd.,  a  Colorado
corporation,  solely for 2,000,000  shares of our common stock.  Thomas G. Fails
became one of our directors on November 13, 2002. Mr. Fails is the president and
a director of Pannonian International, Ltd.

         As of November 30, 2002, Pannonian International owed us $25,000 for an
advance made in contemplation of the acquisition transaction.


                                       15
<PAGE>


         HARBOR  PETROLEUM,  LLC AND FLORIDA ENERGY,  INC. From May 2002 through
the present,  Dolphin Energy has advanced funds to Harbor Petroleum, LLC for the
purposes  of  acquiring  oil,  gas and  mineral  interest  leases  in  Rusk  and
Nacogdoches   Counties,   Texas.  As  of  November  30,  2002,  leases  covering
approximately  2,452 acres had been acquired.  While the leases are in the names
of Harbor  Petroleum or Florida Energy,  Inc., such leases are held on behalf of
Dolphin Energy. Harbor Petroleum is 50%-owned and managed by Cecil Gritz, one of
our directors.  Florida Energy is owned and controlled by Stephen E. Bruner, the
brother of Marc A. Bruner, our controlling shareholder, and the uncle of Marc E.
Bruner and A. Shane Bruner, our officers and directors.

         An agreement  dated March 6, 2003 confirms that Dolphin is  responsible
for payment of all of the acquisition costs and maintenance costs of the leases.
Dolphin  Energy owns all of the  working  interests  acquired  under the leases,
except for a 2% overriding royalty interest,  shared equally by Harbor Petroleum
and  Florida  Energy.  However,  with  respect  to 400  contiguous  acres  to be
designated  by Florida  Energy,  Florida  Energy shall have a 3.125%  overriding
royalty  interest  instead of a 1%  overriding  royalty  interest.  In addition,
Dolphin  Energy  has  agreed  to pay  Florida  Energy  a bonus  of  $50,000  for
identifying  this lease play. This bonus obligation is evidenced by a promissory
note due March 7, 2004 and bears interest at the annual rate of 7-1/2%.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

--------------------------------------------------------------------------------
 REGULATION
 S-B NUMBER                                 EXHIBIT
--------------------------------------------------------------------------------
    2.1        Agreement and Plan of Reorganization dated as of November 1, 2002
               by and among Galaxy Investments, Inc., Dolphin Acquisition
               Corporation and Dolphin Energy Corporation (1)
--------------------------------------------------------------------------------
    2.1        Agreement and Plan of Reorganization dated as of November 1,
               2002, by and among Galaxy Investments, Inc., Dolphin Acquisition
               Corporation, and Dolphin Energy Corporation (1)
--------------------------------------------------------------------------------
    3.1        Articles of Incorporation (2)
--------------------------------------------------------------------------------
    3.2        Bylaws (2)
--------------------------------------------------------------------------------
   10.1        Escrow Instructions and Agreement dated as of August 28, 2002
--------------------------------------------------------------------------------
   10.2        Lease Acquisition and Drilling Agreement dated as of September
               30, 2002, as amended
--------------------------------------------------------------------------------
   10.3        Coal Bed Methane Participation Agreement dated as of October 1,
               2002, as amended
--------------------------------------------------------------------------------
   10.4        Letter agreement among Dolphin Energy Corporation, Harbor
               Petroleum, LLC and Florida Energy, Inc. dated March 6, 2003
--------------------------------------------------------------------------------
    21         Subsidiaries of the registrant
--------------------------------------------------------------------------------
   99.1        Certification of Principal 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        Certification 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
--------------------------------------------------------------------------------

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

(1)  Incorporated  by  reference  to  the exhibits to the  registrant's  current
     report on Form 8-K dated November 13, 2002, file number 0-32237.
(2)  Incorporated by reference to the exhibits to the  registrant's registration
     statement on Form 10-SB, file number 0-32237.


                                       16
<PAGE>

         Reports on Form 8-K: A report on Form 8-K dated  November  13, 2002 was
filed  on  December  6,  2002,  reporting,  under  Items  1,  2, 4,  and 5,  the
acquisition  of Dolphin  Energy  Corporation.  Financial  statements  of Dolphin
Energy  Corporation  and pro forma  financial  statements  were  filed  with the
report.


ITEM 14. CONTROLS AND PROCEDURES

         Under the  supervision  and with the  participation  of our management,
including our Chief Executive Officer and Chief Financial Officer,  we conducted
an evaluation of the effectiveness of our disclosure  controls and procedures as
defined in Rule 13a-14(c)  promulgated under the Securities Exchange Act of 1934
within 90 days of the filing date of this report. Based on their evaluation, our
Chief Executive  Officer and Chief Financial  Officer  concluded that the design
and operation of our disclosure controls and procedures were effective as of the
date of the evaluation.

         There have been no significant  changes  (including  corrective actions
with regard to significant  deficiencies or material weaknesses) in our internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to the date of the evaluation referenced in the preceding paragraph.












                                       17

<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.

                                          GALAXY INVESTMENTS, INC.



Date:  March 13, 2003                      By:      /s/ MARC E. BRUNER
                                              ----------------------------------
                                              Marc E. Bruner, President


         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.

         SIGNATURE                       TITLE                       DATE


                                President and Director
/s/ MARC E. BRUNER              (Principal Executive Officer)    March 13, 2003
------------------------------
Marc E. Bruner



                                Chief Financial Officer,
/s/ CARMEN LOTITO               Treasurer and Director           March 13, 2003
------------------------------
Carmen Lotito



/s/ JAMES M. EDWARDS            Director                         March 14, 2003
------------------------------
Dr. James M. Edwards



/s/ THOMAS G. FAILS             Director                         March 13, 2003
------------------------------
Thomas G. Fails



/s/ CECIL D. GRITZ              Director                         March 13, 2003
------------------------------
Cecil D. Gritz



/s/ CHRIS D. WRIGHT             Director                         March 14, 2003
------------------------------
Chris D. Wright


                                       18

<PAGE>



                                  CERTIFICATION

I, Marc E. Bruner, certify that:

1.   I  have  reviewed  this annual report on Form 10-KSB of Galaxy Investments,
     Inc.;

2.   Based  on  my  knowledge,  this  annual  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the  statements  made,  in light of the circumstances under which such
     statements were made, not misleading with respect  to the period covered by
     this annual report;

3.   Based  on my  knowledge,  the  financial  statements,  and  other financial
     information included in this annual report, fairly  present in all material
     respects  the financial  condition,  results of  operations  and cash flows
     of the  registrant  as  of, and  for, the periods  presented in this annual
     report;

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)    designed  such  disclosure  controls  and  procedures  to ensure that
           material  information  relating  to  the  registrant,  including  its
           consolidated  subsidiaries,  is made  known  to us by  others  within
           those  entities,  particularly during the period in which this annual
           report is being prepared;

     b)    evaluated the effectiveness of the registrant's  disclosure  controls
           and procedures as of a date within  90 days  prior to the filing date
           of this annual report (the "Evaluation Date"); and

     c)    presented   in   this   annual  report  our  conclusions   about  the
           effectiveness of the disclosure  controls and procedures based on our
           evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to  the  registrant's  auditors and the audit
     committee of  registrant's  board of directors  (or persons  performing the
     equivalent functions):

     a)    all significant  deficiencies  in the design or operation of internal
           controls  which could  adversely affect the  registrant's  ability to
           record,  process,  summarize  and  report  financial  data  and  have
           identified  for  the registrant's auditors any material weaknesses in
           internal controls; and

     b)    any fraud, whether or not material, that involves management or other
           employees  who  have  a significant role in the registrant's internal
           controls; and

6.   The registrant's  other certifying  officers and I have  indicated  in this
     annual  report whether there were significant changes in internal  controls
     or  in  other factors  that  could  significantly  affect internal controls
     subsequent  to  the  date  of  our  most  recent evaluation,  including any
     corrective  actions  with  regard  to significant deficiencies and material
     weaknesses.


Date: March 13, 2003


                                       /s/ MARC E. BRUNER
                                       -----------------------------------------
                                       Marc E. Bruner, President
                                       (principal executive officer)



                                       19
<PAGE>



                                  CERTIFICATION

I, Carmen Lotito, certify that:

1.   I  have  reviewed  this annual report on Form 10-KSB of Galaxy Investments,
     Inc.;

2.   Based on  my  knowledge,  this  annual  report  does not contain any untrue
     statement of a material  fact or omit to  state a material  fact  necessary
     to make the  statements  made,  in light of the  circumstances  under which
     such  statements  were  made,  not  misleading  with  respect to the period
     covered by this annual report;

3.   Based  on  my  knowledge,  the  financial statements,  and  other financial
     information included in this annual report, fairly  present in all material
     respects  the financial  condition,  results of  operations  and cash flows
     of the  registrant  as of, and for, the  periods  presented  in this annual
     report;

4.   The  registrant's  other certifying  officers  and  I  are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,   including  its
          consolidated  subsidiaries,  is  made  known  to us by  others  within
          those entities, particularly  during  the  period in which this annual
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in   this   annual   report   our  conclusions  about  the
          effectiveness of the disclosure  controls and  procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to  the  registrant's  auditors and the audit
     committee of registrant's  board of directors  (or persons  performing  the
     equivalent functions):

     a)   all significant  deficiencies  in the design or operation  of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,  summarize  and  report  financial  data  and   have
          identified  for  the  registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves  management or other
          employees who have a significant  role  in  the  registrant's internal
          controls; and

6.   The registrant's other certifying  officers  and I have  indicated  in this
     annual report whether  there were significant changes in internal  controls
     or in other factors  that  could  significantly  affect  internal  controls
     subsequent  to  the  date  of our  most  recent evaluation,  including  any
     corrective  actions  with  regard  to significant deficiencies and material
     weaknesses.


Date: March 13, 2003

                                     /s/ CARMEN LOTITO
                                     -------------------------------------------
                                     Carmen Lotito, Chief Financial Officer



                                       20


<PAGE>











                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED FINANCIAL STATEMENTS
                      PERIOD FROM INCEPTION (JUNE 18, 2002)
                              TO NOVEMBER 30, 2002









<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS






Independent Auditor's Report                                                 F-2

Consolidated Balance Sheet
   November 30, 2002                                                         F-3

Consolidated Statement of Operations
  Period from Inception (June 18, 2002) to November 30, 2002                 F-4

Consolidated Statement of Stockholders' (Deficit)
  Period from Inception (June 18, 2002) to November 30, 2002                 F-5

Consolidated Statement of Cash Flows                                         F-6
  Period from Inception (June 18, 2002) to November 30, 2002

Notes to Consolidated Financial Statements                            F-7 - F-15














                                      F-1


<PAGE>



                          INDEPENDENT AUDITOR'S REPORT


To The Board of Directors and Stockholders
Galaxy Investments, Inc.


We  have  audited  the  accompanying   consolidated   balance  sheet  of  Galaxy
Investments, Inc. (a development stage company) as of November 30, 2002, and the
related consolidated statements of operations,  stockholders' (deficit) and cash
flows for the period from inception (June 18, 2002) to November 30, 2002.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Galaxy Investments,
Inc. as of November 30,  2002,  and the results of its  operations  and its cash
flows for the period from  inception  (June 18,  2002) to  November  30, 2002 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going  concern.  As discussed in Note 2, the
Company has not commenced principal operations and has incurred operating losses
since inception.  These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern.  Management's  plans in regard
to these  matters  are  described  in Note 2. The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.




                                    /s/ WHEELER WASOFF, P.C.

                                    Wheeler Wasoff, P.C.


Denver, Colorado
March 6, 2003





                                      F-2



<PAGE>


                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                                NOVEMBER 30, 2002

                                     ASSETS

CURRENT ASSETS
   Cash                                                             $    41,320
                                                                     -----------

      Total Current Assets                                               41,320
                                                                     -----------

UNDEVELOPED OIL & GAS PROPERTIES                                        873,797
                                                                     -----------

FURNITURE AND EQUIPMENT                                                   3,247
                                                                     -----------

OTHER ASSETS
   Due from Pannonian International Ltd.                                 25,000
   Other                                                                 10,975
                                                                     -----------

                                                                         35,975
                                                                     -----------
TOTAL ASSETS                                                        $   954,339
                                                                     ===========

                     LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
   Accounts payable - trade                                         $   425,032
   Accounts payable - related (Note 5)                                  233,204
   Property purchase payable (Note 3)                                   396,000
                                                                     -----------

      Total Current Liabilities                                       1,054,236
                                                                     -----------

NOTE PAYABLE (NOTE 9)                                                    50,000
                                                                     -----------

COMMITMENTS AND CONTINGENCIES (NOTES 3 & 8)

STOCKHOLDERS' (DEFICIT)
   Preferred stock, $.001 par value
      Authorized - 25,000,000 shares
      Issued - none
   Common stock, $.001 par value
      Authorized - 100,000,000 shares
      Issued and outstanding - 30,025,058 shares                         30,025
   Capital in excess of par value                                       960,144
   (Deficit) accumulated during the development stage                (1,140,066)
                                                                     -----------

      Total Stockholders' (Deficit)                                    (149,897)
                                                                     -----------

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)                        $  954,339
                                                                      ==========


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




                                      F-3

<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF OPERATIONS
           PERIOD FROM INCEPTION (JUNE 18, 2002) TO NOVEMBER 30, 2002






REVENUE                                              $          -
                                                      ------------

OPERATING EXPENSES
   General and administrative expenses (Note 5)         1,140,066
                                                      ------------

NET (LOSS)                                           $ (1,140,066)
                                                      ============

NET (LOSS) PER COMMON SHARE - BASIC & DILUTED        $     (  .04)
                                                      ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING - BASIC AND DILUTED                     27,837,822
                                                      ============













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


                                      F-4

<PAGE>


                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
           PERIOD FROM INCEPTION (JUNE 18, 2002) TO NOVEMBER 30, 2002


<TABLE>
<CAPTION>
                                                                                                            (DEFICIT)
                                                                                                           ACCUMULATED
                                                                                       CAPITAL IN          DURING THE
                                                                 COMMON STOCK           EXCESS OF          DEVELOPMENT
                                                             SHARES        AMOUNT       PAR VALUE             STAGE
<S>                                                      <C>             <C>           <C>                <C>

BALANCE, JUNE 18, 2002 (INCEPTION)                                -      $     -       $       -          $          -

   Issuance of common stock for
    services at $.05 per share                            4,000,000        4,000         196,000                     -
   Sale of common stock for cash at:
    $.001 per share                                      11,500,000       11,500               -                     -
    $.02 per share                                          500,000          500           9,500                     -
    $.05 per share                                        3,000,000        3,000         147,000                     -
    $.34 per share                                        1,997,058        1,997         677,003                     -
   Recapitalization of shares
    issued prior to merger                                9,028,000        9,028         (69,359)                    -
   Net (loss)                                                     -            -               -            (1,140,066)
                                                         ----------      -------       ----------         -------------

BALANCE, NOVEMBER 30, 2002                               30,025,058      $30,025       $ 960,144          $ (1,140,066)
                                                         ==========      =======       ==========         =============
</TABLE>





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



                                      F-5

<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
           PERIOD FROM INCEPTION (JUNE 18, 2002) TO NOVEMBER 30, 2002



CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)                                                         $ (1,140,066)
Adjustments to reconcile net (loss) to
   net cash (used) by operating activities
      Stock for services                                                200,000
Changes in assets and liabilities
   Increase in accounts payable - trade                                 284,344
   Increase in accounts payable - related                               233,204
   Other                                                                 (9,960)
                                                                    ------------

Net cash (used) by operating activities                                (432,478)
                                                                    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Additions to oil and gas properties                                 (351,883)
   Purchase of furniture and equipment                                   (2,793)
   Advance to affiliate                                                 (25,000)
   Cash received upon recapitalization and merger                         2,974
                                                                    ------------

Net cash (used) by investing activities                                (376,702)
                                                                    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from sale of common stock                                   850,500
                                                                    ------------

Net cash provided by financing activities                               850,500
                                                                    ------------

NET INCREASE IN CASH                                                     41,320

CASH, BEGINNING OF PERIOD                                                     -
                                                                    ------------

CASH, END OF PERIOD                                                $     41,320
                                                                    ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES

   Debt incurred for oil and gas properties                        $    446,000
                                                                    ============

   Stock issued for services                                       $    200,000
                                                                    ============



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



                                      F-6
<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 1 - ORGANIZATION AND BUSINESS COMBINATION

         Galaxy  Investments,  Inc. (the "Company") was  incorporated  under the
         laws of the State of Colorado on December 17, 1999,  for the purpose of
         acquiring and developing  mineral  properties.  The Company is a public
         company  that had no  operations.  On November  13,  2002,  the Company
         completed an agreement  (the  "Agreement  and Plan of  Reorganization")
         whereby it issued  20,997,058 shares of its common stock to acquire all
         of the  shares of Dolphin  Energy  Corporation  ("Dolphin"),  a private
         corporation  incorporated on June 18, 2002, under the laws of the State
         of Nevada.  Dolphin is an  independent  energy  company  engaged in the
         exploration,  development  and acquisition of crude oil and natural gas
         reserves in the western  United  States and is considered a development
         stage company as defined by Statement of Financial Accounting Standards
         (SFAS) No. 7. Dolphin is an  exploration  stage oil and gas company and
         has not earned any production  revenue,  nor found proved  resources on
         any of its properties. Dolphin's principal activities have been raising
         capital  through  the  sale  of  its  securities  and  identifying  and
         evaluating potential oil and gas properties.

         As a  result  of  this  transaction,  Dolphin  became  a  wholly  owned
         subsidiary  of the  Company.  Since this  transaction  resulted  in the
         former  shareholders of Dolphin acquiring  control of the Company,  for
         financial reporting purposes the business combination was accounted for
         as an additional  capitalization of the Company (a reverse  acquisition
         with  Dolphin  as the  accounting  acquirer).  In  accounting  for this
         transaction:

           i.    Dolphin  was  deemed to be the purchaser and parent company for
                 financial reporting purposes.  Accordingly, its net assets were
                 included in the  consolidated balance sheet at their historical
                 book value;
          ii.    Control  of  the  net  assets  and  business of the Company was
                 acquired effective  November 13, 2002 for no consideration; and
         iii.    The consolidated statements of operations, stockholders' equity
                 and  cash  flows  include  Dolphin's  results of operations and
                 changes in cash flow for the period  from  inception,  June 18,
                 2002, to November 30, 2002.

         The Company's fiscal year end is November 30.

         The fair value of the assets acquired and liabilities  assumed pursuant
         to the transaction with Dolphin are as follows:

           Net cash acquired            $       2,974
           Liabilities assumed                (63,305)
                                         -------------

           Common stock issued          $     (60,331)
                                         =============






                                      F-7



<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF ACCOUNTING

         The accompanying  financial  statements have been prepared on the basis
         of  accounting  principles   applicable  to  a  going  concern,   which
         contemplates   the   realization  of  assets  and   extinguishment   of
         liabilities in the normal course of business.

         The Company is in the development  stage and has not realized  revenues
         from its planned  operations.  Additional  funding  will be required to
         complete the Company's  participation in the  acquisition,  exploration
         and  development  of interests in oil and gas  properties.  In order to
         meet  the  Company's  continuing  financing  needs,  management  of the
         company  intends to raise  working  capital  through the sale of common
         stock or other securities, or through other financing.

         The  Company's  financial  statements  do not include  any  adjustments
         related  to the  realization  of the  carrying  value of  assets or the
         amounts  and  classification  of  liabilities  that might be  necessary
         should the Company be unable to continue in existence.

         The ability of the Company to continue operations as a going concern is
         dependent  upon its success in  obtaining  capital  through the sale of
         common stock or other  securities and ultimately  achieving  profitable
         operations.

         BASIS OF PRESENTATION

         The accompanying  consolidated financial statements include the Company
         for the period from  November 13, 2002 to November  30,  2002,  and its
         wholly owned subsidiary,  Dolphin, for the period from June 18, 2002 to
         November 30, 2002. All significant intercompany  transactions have been
         eliminated upon consolidation.

         OIL AND GAS PROPERTIES

         Capitalized Costs

         The Company follows the full cost pool method of accounting for oil and
         gas operations.  Under this method all costs related to the exploration
         for and  development  of oil  and gas  reserves  are  capitalized  on a
         country-by-country   basis.  Costs  include  lease  acquisition  costs,
         geological  and  geophysical  expenses,  overhead  directly  related to
         exploration  and  development  activities  and costs of  drilling  both
         productive  and  non-productive   wells.  Proceeds  from  the  sale  of
         properties are applied against  capitalized costs,  without any gain or
         loss being recognized, unless such a sale would significantly alter the
         rate of depletion and depreciation.




                                      F-8

<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Depletion and Depreciation

         Depletion of exploration  and  development  costs and  depreciation  of
         production  equipment is provided using the  unit-of-production  method
         based  upon  estimated  proven  oil  and gas  reserves.  The  costs  of
         significant  unevaluated  properties are excluded from costs subject to
         depletion. For depletion and depreciation purposes, relative volumes of
         oil and gas  production  and reserves are  converted at the  equivalent
         conversion based upon relative energy content.

         Ceiling Test

         In applying the full cost pool method,  the Company  performs a ceiling
         test  whereby  the  carrying  value  of  oil  and  gas  properties  and
         production  equipment,  net of  recorded  future  income  taxes and the
         accumulated  provision for site  restoration and abandonment  costs, is
         compared  annually  to an  estimate  of  future  net cash flow from the
         production of proven reserves. Costs related to undeveloped oil and gas
         properties  are excluded from the ceiling  tests.  Discounted  net cash
         flow,  utilizing  a 10%  discount  rate,  is  estimated  using year end
         prices,  less  estimated  future general and  administrative  expenses,
         financing costs and income taxes.  Should this  comparison  indicate an
         excess  carrying  value,  the excess is charged  against  earnings.  At
         November  30,  2002  there  were  no  reserves.  Costs  of oil  and gas
         properties are considered unevaluated at November 30, 2002.

         PROPERTY AND EQUIPMENT

         Furniture  and  equipment  is recorded at cost.  Depreciation  is to be
         provided by use of the  straight-line  method over the estimated useful
         lives of the related assets.  Expenditures for replacements,  renewals,
         and betterments are capitalized. Maintenance and repairs are charged to
         operations  as  incurred.  Long-lived  assets,  other  than oil and gas
         properties,  are  evaluated  for  impairment  to  determine  if current
         circumstances  and market  conditions  indicate the carrying amount may
         not be  recoverable.  The Company  has not  recognized  any  impairment
         losses on non oil and gas long-lived assets.

         REVENUE RECOGNITION

         The Company will  recognize  oil and gas revenues from its interests in
         producing wells as oil and gas is produced and sold from these wells.

         IMPAIRMENT

         The Company has adopted SFAS 144,  "Accounting  for the  Impairment and
         Disposal of Long-Lived  Assets," which requires that long-lived  assets
         to be held and used be  reviewed  for  impairment  whenever  events  or
         changes in circumstances  indicate that the carrying amount of an asset
         may not be recoverable.  Oil and gas properties accounted for using the
         full cost method of accounting,  a method utilized by the Company,  are
         excluded from this requirement,  but will continue to be subject to the
         ceiling test limitations.

                                      F-9
<PAGE>


                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         INCOME TAXES

         The Company has adopted the  provisions  of SFAS 109,  "Accounting  for
         Income   Taxes."  SFAS  109  requires   recognition   of  deferred  tax
         liabilities  and assets for the  expected  future tax  consequences  of
         events  that have been  included  in the  financial  statements  or tax
         returns.  Under this method,  deferred tax  liabilities  and assets are
         determined based on the difference between the financial  statement and
         tax basis of assets and  liabilities  using enacted tax rates in effect
         for the year in which the differences are expected to reverse.

         At November 30, 2002, the Company had a net operating loss carryforward
         of  approximately  $1,125,000 that may be offset against future taxable
         income through 2022. These  carryforwards  are subject to review by the
         Internal Revenue Service.

         The  Company  has fully  reserved  the  $214,000  tax  benefit  of this
         operating loss because the likelihood of realization of the tax benefit
         cannot be determined. The entire tax benefit is attributable to 2002.

         Temporary  differences  between the time of reporting certain items for
         financial and tax reporting  purposes consist  primarily of exploration
         costs on oil and gas properties.

         USE OF ESTIMATES

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

         The oil and gas industry is subject,  by its nature,  to  environmental
         hazards  and  clean-up  costs.  At this  time,  management  knows of no
         substantial costs from environmental  accidents or events for which the
         Company may be currently liable. In addition, the Company's oil and gas
         business makes it vulnerable to changes in wellhead prices of crude oil
         and natural gas.  Such prices have been volatile in the past and can be
         expected to be volatile in the future.  By definition,  proved reserves
         are based on current oil and gas prices and estimated  reserves.  Price
         declines reduce the estimated  quantity of proved reserves and increase
         annual amortization expense (which is based on proved reserves).

         (LOSS) PER COMMON SHARE

         (Loss) per  common  share is  computed  based on the  weighted  average
         number of common shares outstanding during the period.



                                      F-10


<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         SHARE BASED COMPENSATION

         In October 1995, SFAS 123,  "Accounting for Stock-Based  Compensation,"
         was  issued.  This  standard  defines  a fair  value  based  method  of
         accounting for an employee  stock option or similar equity  instrument.
         This  statement   gives  entities  a  choice  of  recognizing   related
         compensation  expense  by  adopting  the new fair  value  method  or to
         continue to measure  compensation  using the intrinsic  value  approach
         under  Accounting  Principles  Board  Opinion  No. 25 ("APB  25").  The
         Company  has  elected  to  utilize  APB 25 for  measurement;  and will,
         pursuant to SFAS 123, disclose  supplementally the pro forma effects on
         net income and earnings per share of using a new measurement criteria.

         CASH EQUIVALENTS

         For purposes of  reporting  cash flows,  the Company  considers as cash
         equivalents  all highly  liquid  investments  with a maturity  of three
         months or less at the time of purchase.  On  occasion,  the Company may
         have cash in banks in excess of federally insured amounts.

         CONCENTRATION OF CREDIT RISK

         Financial  instruments,   which  potentially  subject  the  Company  to
         concentrations  of credit risk,  consist of cash. The Company maintains
         cash accounts at one financial  institution.  The Company  periodically
         evaluates  the  credit  worthiness  of  financial   institutions,   and
         maintains   cash  accounts   only  in  large  high  quality   financial
         institutions.

         FAIR VALUE

         The carrying amount reported in the balance sheet for cash and accounts
         payable and accrued liabilities  approximates fair value because of the
         immediate or short-term maturity of these financial instruments.

         Recent Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board ("FASB"), issued
         SFAS 143,  "Accounting  for  Asset  Retirement  Obligations."  SFAS 143
         addresses financial accounting and reporting for obligations associated
         with the  retirement of tangible  long-lived  assets and the associated
         asset  retirement  costs.  SFAS  143  generally  requires   obligations
         associated  with  asset  retirements  to  be  recognized   earlier  and
         displayed   as   liabilities   rather   than  as   contra-assets.   The
         pronouncement is effective for financial  statements  issued for fiscal
         years beginning  after June 15, 2002.  Management does not believe that
         the adoption of SFAS 143 will have any impact on its financial position
         or results of operations.

         In August 2001, FASB issued SFAS 144, "Accounting for the Impairment or
         Disposal of Long-Lived Assets." SFAS 144 addresses financial accounting
         and reporting for the impairment or disposal of long-lived assets. SFAS
         144 establishes a single  accounting model for long-lived  assets to be
         disposed of by sale.  The  pronouncement  is  effective  for  financial
         statements  issued for fiscal years  beginning after December 15, 2001.
         Management does not believe that the adoption of SFAS 144 will have any
         impact on its financial position or results of operations.


                                      F-11

<PAGE>


                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         In June 2002, FASB issued SFAS 146,  "Accounting  for Costs  Associated
         with  Exit  or  Disposal  Activities."  SFAS  146  addresses  financial
         accounting  and  reporting for costs  associated  with exit or disposal
         activities  and  nullifies  Emerging  Issues Task Force Issue No. 94-3,
         "Liability  Recognition for Certain Employee  Termination  Benefits and
         Other  Costs  to Exit an  Activity."  SFAS  146  generally  requires  a
         liability for a cost associated with an exit or disposal activity to be
         recognized  and  measured  initially at its fair value in the period in
         which the  liability is incurred.  The  pronouncement  is effective for
         exit  or  disposal  activities   initiated  after  December  31,  2002.
         Management does not believe that the adoption of SFAS 146 will have any
         impact on its financial position or results of operations.

NOTE 3 - OIL AND GAS PROPERTIES

         WYOMING

         In  August  2002,  the  Company  entered  into  an  agreement  for  the
         acquisition of undeveloped  oil and gas leases in Wyoming  subject to a
         15% net profits interest. Under the terms of the agreement, the Company
         paid  $36,000  and is  obligated  to pay an  additional  $396,000 on or
         before August 28, 2003.  The leases are being held in escrow until such
         time as the Company  fulfills its obligation  under the  agreement.  At
         November   30,  2002,   capitalized   lease   acquisition   costs  were
         approximately $468,000.

         The Company  entered into a lease  acquisition  and drilling  agreement
         with Pioneer Oil, a Montana  limited  liability  company,  ("Pioneer"),
         effective  September  30, 2002.  Under the terms of the  agreement  the
         Company,  by November 30,  2002,  may acquire,  for  $100,000,  certain
         leases encompassing  approximately 15,000 acres in Wyoming. The Company
         paid the initial  $100,000 due under the agreement in January 2003. The
         Company may also acquire a 100% interest in five natural gas wells, for
         $500,000, by May 15, 2003.

         TEXAS

         The  Company  is  engaged in an ongoing  leasing  program  with  Harbor
         Petroleum LLC ("Harbor") and Florida Energy,  Inc.  ("Florida") for the
         acquisition  of oil,  gas and  mineral  leases in Rusk and  Nacogdoches
         Counties in the State of Texas. Under the terms of the program,  Harbor
         and  Florida  are  acquiring  leases  in their  name on  behalf  of the
         Company.  The  managing  member  of  Harbor is a member of the Board of
         Directors of the Company and  Florida's  President is a relative of the
         President of the Company. (See Note 9.)

         As of November 30, 2002,  the Company has  incurred  lease  acquisition
         costs of approximately $405,800.







                                      F-12

<PAGE>

                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 4 - COMMON STOCK

         During the period ended November 30, 2002, the Company issued shares of
         its common stock as follows:

            o    11,500,000  shares  at inception to officers/directors/founders
                 for cash at $.001 per share
            o    500,000 shares for cash at $.02 per share
            o    4,000,000  shares  to  Resource  Venture  Management  (RVM), an
                 entity  owned  by  a  founder  of  the  Company,  for  services
                 rendered, valued at $200,000 ($.05 per share)
            o    3,000,000 shares for cash at $.05 per share
            o    1,997,058 shares for cash at $.34 per share

         Effective  November 13, 2002, the Company  completed the acquisition of
         Dolphin  (Note 1). In  conjunction  with the  acquisition,  the Company
         exchanged  20,997,058  shares  of its  common  stock  for  100%  of the
         outstanding  common shares of Dolphin.  The 9,028,000  shares of common
         stock  of the  Company  outstanding  at the  date of  acquisition  were
         recapitalized  at the net asset  value of the  Company  at that date of
         $(60,331).  For financial statement reporting purposes this transaction
         was treated as a reverse acquisition whereby Dolphin was considered the
         surviving  and  reporting  entity.  For  legal  purposes,  the  Company
         remained as the surviving entity;  therefore,  the capital structure of
         the Company was accordingly restated.

NOTE 5 - RELATED PARTY TRANSACTIONS

         During the period ended  November  30,  2002,  the Company (i) incurred
         consulting fees for services rendered by its  officers/directors in the
         aggregate amount of $102,000,  of which $38,000 is included in accounts
         payable;  and (ii) agreed to pay RVM an  aggregate  $692,500,  of which
         $233,204 is due as of November 30, 2002 (see Note 9), as follows:

            o    $162,000 for monthly management fees through November 30, 2002;
            o    $100,000 for finding oil and gas projects in Wyoming;
            o    $230,500 for reimbursement of costs and expenses;
            o    $200,000 for services rendered paid in common stock (Note 4).

         The Company has agreed to enter into a consulting agreement with RVM to
         provide  future  consulting  services  for a fee of up to  $30,000  per
         month.

         As of November  30,  2002,  the Company  advanced  $25,000 to Pannonian
         International Ltd. in contemplation of a merger (Note 8).

NOTE 6 - SEGMENT REPORTING

         In June 1997, SFAS 131, "Disclosure about Segments of an Enterprise and
         Related  Information," was issued,  which amends the requirements for a
         public enterprise to report financial and descriptive information about
         its reportable  operating segments.  Operating segments,  as defined in
         the pronouncement, are components of an enterprise about which separate
         financial  information is available and that are evaluated regularly by
         the Company in  deciding  how to allocate  resources  and in  assessing
         performance.  The financial  information  is required to be reported on
         the basis that is used  internally for evaluating  segment  performance
         and deciding how to allocate resources to segments.


                                      F-13
<PAGE>


                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 6 - SEGMENT REPORTING (CONTINUED)

         The Company has one reportable segment, the exploration and development
         of oil and gas properties. The Company has concentrated its oil and gas
         exploration and development activities in the United States,  primarily
         Texas and Wyoming.

NOTE 7 - COMPREHENSIVE INCOME

         There are no  adjustments  necessary  to the net (loss) as presented in
         the accompanying statement of operations to derive comprehensive income
         in accordance with SFAS 130, "Reporting Comprehensive Income."

NOTE 8 - COMMITMENTS AND CONTINGENCIES

         a)   The Company  may be subject  to  various  possible  contingencies,
              which  are  derived  primarily  from  interpretations  of  federal
              and  state  laws  and  regulations  affecting  the  oil  and   gas
              industry.  Although  management  believes it has complied with the
              various laws and regulations,  new rulings and interpretations may
              require the Company to make future adjustments.

         b)   In  October  2002,  the  Company  entered  into a lease for office
              facilities in Miami,  Florida,  through June 30,  2005.  Under the
              terms  of the lease the Company paid a deposit of $9,960.  Minimum
              payments due under this lease are as follows:

              Year ending November 30,

                        2003     $  44,101
                        2004        45,490
                        2005        26,738

              Rent expense for the period ended November 30, 2002, was $3,924.

         c)   On November  15, 2002,  as  amended,  the Company  entered  into a
              Letter  of  Intent  ("LOI")  with   Pannonian  International  Ltd.
              ("Pannonian")  whereby  the  Company  will  acquire  all  of   the
              outstanding  capital stock of Pannonian in exchange for  2,000,000
              shares of the Company's common  stock.  The President and majority
              shareholder of Pannonian  is a member of the Board of Directors of
              the  Company.  Under  the LOI it is contemplated that a definitive
              agreement would be completed by April 30, 2003.

         d)   Effective  October  1, 2002,  the Company  entered into a Coal Bed
              Methane  Participation  Agreement  ("CBM  Agreement") with Horizon
              Exploitation,  Inc.  ("Horizon")  which  provides  funding for the
              development  of  the  Company's  Pioneer  leasehold  interests and
              establishes an AMI (Area of Mutual  Interests) in the Powder River
              Basin located in Wyoming and Montana  for future  projects  on the
              same terms as described below.



                                      F-14


<PAGE>
                            GALAXY INVESTMENTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002

NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         Under the terms of the agreement,  Horizon may  participate  subject to
         funding in the  development  of up to 120 wells and also  includes  the
         purchase  of five  existing  CBM  wells  located  in  Sheridan  County,
         Wyoming.  Horizon's  commitment to  participate  in the  development is
         subject to an  initial  funding  by  Horizon  of  $100,000,  a $500,000
         payment for the purchase of the five  existing  wells and the placement
         of  $1.650  million  dollars,  plus the  estimated  amount to drill and
         complete thirty (30) pilot wells into escrow as a partial payment for a
         30 well pilot project on or before May 15, 2003. The estimated AFE cost
         per well is $150,000.

         The Company earns an initial 15% carried  interest in all wells drilled
         and  purchased.  It also has an option to purchase  additional  working
         interest  from  Horizon's  at Horizon's  initial  well cost.  After the
         completion  of a 30 well pilot  program  the  Company  can  purchase an
         additional  25%  working  interest  in each of the  wells at  Horizon's
         initial well and land cost. An  additional  25% can be purchased on the
         same terms from Horizon  within two years after the  completion  of the
         pilot program.

NOTE 9 - SUBSEQUENT EVENTS

         a)   In  February  2003,  the  Company  completed  the  sale of 887,000
              shares of its common  stock at a price of  $1.00  per  share  in a
              private  placement exempt from  registration  with the  Securities
              and   Exchange   Commission   pursuant   to  Section  4(2) of  the
              Securities  Act of 1933 and Rule 506 of  Regulation  D promulgated
              thereunder.

         b)   On February 28, 2003, RVM agreed to convert its  outstanding  debt
              of $233,204, plus management fees for the period  December 1, 2002
              to  February 28, 2003 in the amount of $90,000,  to 323,204 shares
              of the Company's common stock, valued at $1.00 per share.

         c)   On March 6, 2003, the  Company, Harbor and Florida entered into an
              agreement  which  formalized  their understanding  with respect to
              the  ongoing  leasing  program  for  acquisition  of  oil, gas and
              mineral leases  in the State  of Texas (Note 3). The  agreement is
              effective   retroactively   with   commencement   of   the   lease
              acquisitions by Harbor and Florida in 2002. Under the terms of the
              agreement,  Florida  and Harbor will each  retain a 1%  overriding
              royalty  interest in the  acquired  leases, including those leases
              acquired as of the date of the agreement.  The Company  has agreed
              to pay Florida a  bonus  of  $50,000 for  identifying  the leases,
              payable  by  a  promissory  note  in  the  amount  of $50,000 with
              interest at 7.5% per annum,  due March 7, 2004.  The  Company  has
              recorded this  obligation as of November 30, 2002. The term of the
              agreement is for a period of one year through March 6, 2004.



                                      F-15