UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-KSB



[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT

OF 1934



For the fiscal year ended September 30, 2004



[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND

EXCHANGE ACT OF 1934



For the transition period from _____ to_____



Commission File No. 333-104132



Benacquista Galleries, Inc.





(Name of Small Business Issuer as specified in its charter)



|Nevada                                         71-0928242
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification No.)


15208 Jarrettsville Pike
Monkton, Maryland
21111
(410) 321-1799 Fax
(Address of principal executive offices)                (Zip Code)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(410) 303-9879

(Telephone Number)



Securities to be registered under Section 12(b) of the Act: None



Securities registered under Section

12(g) of the 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 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





1





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



State the 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 stock was sold, or the average bid and asked price of such, as of a specified date within the past 60 days: $639 based on the price at which the stock was sold.



State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date. 10,000,000 common stock shares, par value $0.001, as of December 31, 2004.





DOCUMENTS INCORPORATED BY REFERENCE

NONE



Transitional Small Business Disclosure Format YES [ ] NO [X]





2



|TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS ..............................................  4
--------------------------

PART I
ITEM 1.       DESCRIPTION OF BUSINESS....................................  4

ITEM 2.       DESCRIPTION OF PROPERTY....................................  7

ITEM 3.       LEGAL PROCEEDINGS..........................................  7

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF

SECURITY HOLDERS...........................................  7


PART II.

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED

STOCKHOLDER MATTERS........................................  7

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR

PLAN OF OPERATION..........................................  8

ITEM 7.       FINANCIAL STATEMENTS....................................... 13

ITEM 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE..................... 22


ITEM 8A.      CONTROLS AND PROCEDURES.................................... 22

PART III

ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH

SECTION 16(a)OF THE EXCHANGE ACT........................... 22

ITEM 10.      EXECUTIVE COMPENSATION..................................... 23


ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT...................................... 24


ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS............................................... 25

ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K........................... 25

ITEM 14.      PRINCIPAL ACCOUNTANT FEES AND SERVICES..................... 25
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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FORWARD-LOOKING STATEMENTS



In addition to historical information, this Report contains forward-looking statements. Such forward-looking statements are generally accompanied by words such as "intends," "projects," "strategies," "believes," "anticipates," "plans," and similar terms that convey the uncertainty of future events or outcomes. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in ITEM 6 of this Report, the section entitled "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION." Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof and are in all cases subject to the Company's ability to cure its current liquidity problems. There is no assurance that the Company will be able to generate sufficient revenues from its current business activities to meet day-to-day operation liabilities or to pursue the business objectives discussed herein.



The forward-looking statements contained in this Report also may be impacted by future economic conditions. Any adverse effect on general economic conditions and consumer confidence may adversely affect the business of the Company.



Benacquista Galleries, Inc. undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission, including without limitation those identified in the "Risk Factors" section of the Company's Registration Statement filed with the Securities and Exchange Commission (the "SEC") on July 23, 2004 on Form SB-2/A.



PART I.



ITEM 1. DESCRIPTION OF BUSINESS.



BUSINESS DEVELOPMENT



Benacquista Galleries, Inc. is a development stage Nevada Corporation formed on January 17, 2003 for the purpose of offering collectable artwork and accessories through a chain of retail galleries and a fully interactive e-commerce and auction-enabled website.  To date, the artwork offering remains incomplete, only the basic interim website is operational, we have no galleries and we have no customers.



Currently, we have very limited operations, no full-time employees, one part time employee (sole officer and director James Price), no interactive e-commerce and auction website, no retail gallery space and no contracts with any providers of the same.   We have recently launched our basic interim website., which features our current, limited art inventory. We have developed a plan of operations that could allow us to sell art through at least one retail gallery location and over the internet.

We have primary areas of our business that we intend to develop over the next six to twelve months:



·

Relationships with several artists for exclusive artwork offerings through Benacquista Galleries;

·

A fully interactive e-commerce and auction enabled website;

·

At least one gallery opening in a strategic location;

·

A sales and marketing capability sufficient to handle all website inquiries and gallery traffic.



History and form of organization



Benacquista Galleries, Inc. is a development stage Nevada Corporation formed on January 17, 2003 for the purpose of offering collectable artwork and accessories through a chain of retail galleries and a fully interactive e-commerce and auction-enabled website.  To date, the artwork offering remains incomplete, only the basic interim website is operational, we have no galleries and we have no customers.



4



Benacquista Galleries's principal products and services



We have developed and launched a basic interim website which displays some of our current art inventory for sale.  You can visit our website at www.benacquistagalleries.com.  Because our interim website was done on a limited budget, it contains basic company information as well as displays several art pieces for sale and information on the artists.

Our limited interim site functions as follows: Our site lists an email address where customers can send an email enquiring about our artwork for sale or artwork that will be posted on the site.  We email customers back and then initiate an email or telephone conversation regarding their inquiry.  We then negotiate sales and prices with our customers via email or telephone and consummate the transaction using checks, wire transfer or PayPal and physical delivery of the art with a common carrier.  We also intend to sell certain items in our inventory on eBay and can advise people via email to bid on our art in that forum.  In this sense, our website is functioning more as an advertisement and in the future, as a catalogue, than as a traditional e-commerce site.  If we have the financial resources, we intend to upgrade the site to a more comprehensive ecommerce site.



In February of 2005, we also intend to begin development of a fully interactive e-commerce and auction enabled website developed by Cybergroup, Inc. The website will include visual displays of art inventory and a full on-line auction and purchase capacity. The website will serve two primary functions for our company:

·

developing customer awareness of our brand, offerings, featured artists, retail locations and available artwork to potential purchasers who will then be more likely to visit our retail location; and

·

providing an on-line opportunity to purchase art viewed on our website or at one of our retail galleries.





Distribution and marketing methods



Presently, Benacquista Galleries has no salespeople or distributors of its artwork, accessories or services.  We anticipate that our chief executive officer, James Price, will use his network of professional and business contacts in the art industry to sign on our first artists and reach our proposed customer base through traditional forms of advertising and through our existing website as well as contacts made through our planned e-commerce website..  Mr. Price established his network of professional and business contacts in the art industry as an amateur collector of art over the past 15 years, attending auctions and visiting international and domestic galleries.  During these visits and in the course of his purchasing for his own private collection, Mr. Price made acquaintances in the industry, including artists, gallery owners, auction personnel and suppliers and service providers to the art trade. We intend to market our artwork via industry trade shows, in trade publications and through on-line search engines.





Status of products and services



Currently, we have been working on developing  developed an interim website that only shows some of our current artwork for sale, provides general information to customers, and displays information regarding our business. We have not done any development on our final interactive e-commerce and auction website. However, we anticipate that 50% of the initial artwork that will be offered for viewing on the site has already been sold by Mr. Price to the company from his private collection.  We anticipate that we will have at least an equivalent number of works acquired from artists whom we intend to identify and with whom we intend to contract.  We plan to have these additional works in place by March 1, 2005.  The substantial majority of these works will be sold on consignment, meaning that we will generally not advance funds to individual artists until after the works are sold.  We intend to have most of the technological and hosting aspects of the site developed by consultants.  While no final software product for use on the site has been identified, Mr. Price is interviewing several website designers and hosting companies.   We do not currently have any other products or services to offer, though we intend to begin offering framing, consignment, appraisal and other art related products and services within the next twelve months.





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Revenues



Benacquista Galleries has derived revenues of $30,000 to date, which were derived in the three month period ending September 30, 2004 from the sale of artwork listed on our Website.



Competitive conditions, competitive position and methods of competition



The artwork industry in which we compete contains an old and established network of galleries and promoters. Intense competition exists for our galleries and artwork offerings.  The number of companies with which we compete is estimated in the hundreds and expanding. We expect competition with any galleries or Internet sales presence that we develop to increase over time as the market for our collectable and investment grade art grows. Competition may also increase as a result of industry consolidation.



Our chief competition comes from large established galleries and websites, such as:



·

P and C Art

·

Herndon Fine Art

·

Galleria De Sorrento

·

Art.com

·

Artvest.com



These companies tend to compete for clients by sales of services to existing clients, via word of mouth referrals, advertising, trade show presence and artist shows.  Our main method of competition is through product differentiation based on style, philosophical orientation, and gallery locations.  We intend to distinguish our service and artwork offerings by appealing to the collectors and investors at our specific gallery locations and via the Internet.    We believe that the philosophical orientation of our services will attract aspiring new artists to sign exclusive contracts with Benacquista to show their art.  This orientation will be reflected in the on-line artwork that we offer on the site and in the focus and direction of the variety of artwork and the customer service that we offer in our galleries.



We believe that our competitive position is that of vulnerable, new entrant and that the success of our artwork offering will be largely dependent on our ability to find new artists who are not currently affiliated with any other gallery or on-line artwork website.



Dependence on one customer



While we currently have only a few customers, we do not contemplate a dependence on one customer or one referral source for clients.



Research and development



We have not spent any money on research and development to date.  We anticipate that we will spend $100,000 on the development of our website, product descriptions, advertising materials and market research on our target demographic of purchasers and on availability, pricing and geographic preferences and retail art price differentials for our product offering.  Much of the development of the artwork offering and the selection and securing of retail gallery sites will be undertaken by James Price, our chief executive officer, without additional compensation.   Although Mr. Price is currently only spending 10-20 hours per week on Benacquista matters, he is available to spend as much time as necessary to commence our operations.  Mr. Price’s duties to commence operations include establishing relationships with artists and art collectors, selecting retail store sites, developing advertising materials, supervising the development of the website, interviewing and selecting retail sales staff and other incidental responsibilities.  Mr. Price believes that, due to the network of artists and art collectors with whom he is already acquainted due to his previous purchases of art over the last 15 years, he should be able to establish necessary relationships for Benacquista with a few such individuals with 20 hours of effort.  Mr. Price has already selected several possible retail sites.  He believes that final selection of a retail site and lease negotiation will take no more than 30 hours.  Mr. Price believes that developing advertising materials to a sufficient level to be printed professionally should take no more than 10 hours.  Mr. Price believes that his supervision of the development of the website will take no more than 20 hours.  Mr. Price believes that interviewing and selecting retail sales staff will take no more than 30 hours.  He believes that incidental matters related to commencement of operations will take no more than 20 hours.  These preliminary matters, therefore, should be accomplished with 140 hours, according to Mr. Price’s estimates.  At 20 hours per week, there would be ample time to complete these activities by March 2005 if Mr. Price’s assumptions are correct.   We have also provided this material in tabular format below:





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Activity

Number of Hours Estimated



Establishing Network Artists/Collectors

20

Retail Site Selection and Lease Negotiation

30

Development of Advertising Materials

10

Supervision of Website

20

Interviewing and Selecting Retail Staff

30

Incidental Matters

20



Total Hours Estimated

130



Proprietary rights and licensing



We rely primarily on a combination of copyrights, licenses, trade secret laws and restrictions on disclosure to protect our artist’s intellectual property and proprietary rights. We intend to enter into confidentiality agreements with our future employees, consultants and artists and to generally control access to and distribution of our internal documentation and other proprietary information.



Regulatory environment



There are two aspects of our business which face significant governmental regulation or are likely to face such regulation; our planned sales offering via the Internet and regulations which affect sales of retail art and collectibles in general.



Within the United States, the legal landscape for Internet privacy is new and rapidly evolving. Collectors and users of consumer information over the internet face potential tort liability for public disclosure of private information; and liability under  federal  and state fair trade  acts when  information  sharing practices  do  not  mirror  stated  privacy  policies.  Due to the  increasing popularity  and use of the internet,  it is likely that a growing number of laws and regulations will be adopted at the international,  federal,  state and local levels relating to the internet  covering issues such as user privacy,  pricing, content, copyrights,  distribution, antitrust and characteristics and quality of services.  Further, the growth and development of the market for activity on the internet may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business online.  The adoption  of any  additional  laws or  regulations  may impair the growth of the internet,  which  could,  in turn,  decrease  the  demand for our  services  and increase our cost of doing business. Moreover, the applicability to the internet of  existing  laws in various  jurisdictions  governing  issues such as property ownership,  sales and other taxes,  libel and personal  privacy is uncertain and may  take  years  to  resolve.  Any  such new  legislation  or  regulation,  the application  of  laws  and  regulations  from  jurisdictions  whose  laws do not currently  apply  to our  business  or the  application  of  existing  laws  and regulations to the internet could harm our business.



Sellers of retail art and collectibles are particularly susceptible to unscrupulous individuals selling forged or stolen goods.  There are significant local, state and federal penalties for merchants who sell forged or stolen goods, or goods that violate existing copyright interests.  Although we intend to make every effort to insure that our supply of goods comes from reputable artists and sources, we may nevertheless be liable under these regulations for sales of such articles.  Liability can include civil and criminal penalties, as well as forfeiture of the artwork without compensation.  We may be able to insure against the costs of some, but not all of these regulations, but do not currently maintain such insurance.  Liability under existing criminal or civil regulations for such sales could have a material, adverse impact on our business.



Employees and consultants



As of September 30, 2004 we had 1 employee.  We do not have any written employment agreement with our employee.  We believe that our relation with our employee is good.





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ITEM 2. DESCRIPTION OF PROPERTY.



We are currently hosted out of the residence of our chief executive officer in Monkton, Maryland. We believe that these existing facilities are adequate to meet our current, foreseeable requirements or that suitable additional or substitute space will be available on commercially reasonable terms.



ITEM 3. LEGAL PROCEEDINGS.



The Company is not involved in any legal proceedings.



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



No matters were submitted during the fourth quarter of the fiscal year covered by this Report to a vote of security holders, through the solicitation of proxies or otherwise.



PART II.



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



There is no trading market for our common stock at present and there has been no trading market to date. Management has undertaken a discussion with Pennaluna securities of Wallace, Idaho regarding sponsorship of an application to quote our stock on the OTC Bulletin board and such an application is pending before the NASD. We cannot guarantee that a trading market will ever develop or if a market does develop, that it will continue.





As of September 30, 2004 there are:



·

No options outstanding to purchase shares of our common stock except for warrants to purchase 1,000,000 shares of our common stock at $1.00 per share  held by XCL Partners;

·

No options to purchase our common stock that are authorized and available for grant;

·

A total of 8,969,100  shares of common stock were issued to our sole officer and director, James Price, all of which are restricted securities, as defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Securities Act. Under Rule 144, these shares can only be publicly sold, subject to volume restrictions and restrictions on the manner of sale. In addition, we currently have 26,800 shares, , which have been held for over a year and could be sold by the respective holders of such shares at any time pursuant to Rule 144 under the Securities Act of 1933, subject to restrictions on the manner of sale.

·

313 holders of record of our shares of common stock;

·

No dividends that have been paid on our common stock to date; and

·

No plans to pay dividends on our common stock in the foreseeable future.



The Securities and Exchange Commission has adopted a rule that established the definition of a "penny stock," for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offering and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent



8



disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As a result, if trading in our common stock is determined to be subject to the above rules, a stockholder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our securities.



Where you can find additional information



For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedule that were filed with our registration statement SB-2/A, filed on July 23, 2004.



In addition, in accordance with the requirements of the Securities Exchange Act of 1934, we file periodic reports and other information with the Securities and Exchange Commission. These periodic reports and other information will be available for inspection and copying at the regional offices, public reference facilities and website of the Securities and Exchange Commission referred to above, at www.sec.gov.



You may read and copy all materials, which we file with the Securities and Exchange Commission at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. You may also visit our website for further information at www.benacquistagalleries.com.



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



The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements.





Overview



We currently have no full-time employees, one part-time employee, less than $30,302 in cash, a few customers, a limited offering of artwork on our website, no completed website.





Benacquista Galleries, Inc. is a development stage Nevada Corporation formed on January 17, 2003 for the purpose of offering collectable artwork and accessories through a chain of retail galleries and a fully interactive e-commerce and auction-enabled website.  To date, the artwork offering remains incomplete, only the basic interim website is operational, we have no galleries and we have no customers.



Currently, we have very limited operations, no full-time employees, one part time employee (sole officer and director James Price), no interactive e-commerce and auction website, no retail gallery space and no contracts with any providers of the same.   We have recently launched our basic interim website., which features our current, limited art inventory. We have developed a plan of operations that could allow us to sell art through at least one retail gallery location and over the internet.

We have primary areas of our business that we intend to develop over the next six to twelve months:



·

Relationships with several artists for exclusive artwork offerings through Benacquista Galleries;

·

A fully interactive e-commerce and auction enabled website;

·

At least one gallery opening in a strategic location;

·

A sales and marketing capability sufficient to handle all website inquiries and gallery traffic.





9



We have targeted locations for potential gallery openings during the next 18 months.  These locations are in Pennsylvania, Virginia, Nevada and Maryland.  The locations are in shopping malls which have been selected due to the number of complementary luxury goods stores they contain.  We have also focused on properties which are highly selective with respect to their retail tenants.  These properties are amongst the most expensive retail locations per square foot in the United States.  It will be very difficult for us, as a development stage company without a significant operating history and with very limited cash reserves, to successfully secure a location in one or more of these malls.  In addition, significant expenditures of capital can be required to make a retail location operable as an art gallery.  While these expenses are often covered by a tenant improvement allowance offered by the mall landlord, there can be no assurance that we will receive such an allowance.  Although we will seek out space that requires as little improvement as possible, there can be no assurance that such a space will be available to us on terms which we qualify for and would be willing to accept. We intend to enter into lease agreements on four facilities. James Price, in a guarantee agreement, has agreed to execute lease guarantees on each of these locations, if necessary, for a maximum lease liability of $500,000 per lease.



We have developed and launched a basic interim website which displays some of our current art inventory for sale.  You can visit our website at www.benacquistagalleries.com.  Because our interim website was done on a limited budget, it contains basic company information as well as displays several art pieces for sale and information on the artists.

Our limited interim site functions as follows: Our site lists an email address where customers can send an email enquiring about our artwork for sale or artwork that will be posted on the site.  We email customers back and then initiate an email or telephone conversation regarding their inquiry.  We then negotiate sales and prices with our customers via email or telephone and consummate the transaction using checks, wire transfer or PayPal and physical delivery of the art with a common carrier.  We also intend to sell certain items in our inventory on eBay and can advise people via email to bid on our art in that forum.  In this sense, our website is functioning more as an advertisement and in the future, as a catalogue, than as a traditional e-commerce site.  If we have the financial resources, we intend to upgrade the site to a more comprehensive ecommerce site.



In February of 2005, we also intend to begin development of a fully interactive e-commerce and auction enabled website developed by Cybergroup, Inc. The website will include visual displays of art inventory and a full on-line auction and purchase capacity. The website will serve two primary functions for our company:

·

developing customer awareness of our brand, offerings, featured artists, retail locations and available artwork to potential purchasers who will then be more likely to visit our retail location; and

·

providing an on-line opportunity to purchase art viewed on our website or at one of our retail galleries.



We believe that it will cost between $40,000 and $75,000 to launch our e-commerce and auction website and to develop adequate advertising materials.  We believe that it will cost an additional $25,000 for advertising and marketing for the website sufficient to drive adequate traffic.  We intend to accomplish this by means of outside consultants and by the efforts of James Price.  We believe that these materials will be completed within 90 days of our receipt of $100,000 through revenues generated by our interim website, proceeds generated by the exercise of the warrant or other methods such as the sale of art through other galleries or eBay or loans from our sole officer and director. Mr. Price is not legally obligated to make such loans nor do we know under what terms and conditions such loans might be available.  Our art inventory is valued at $915,450, not including two pieces of the company’s art that were not appraised. Therefore, whether we sell our art inventory on our interim website or through other galleries or on eBay, we would likely be able to raise enough proceeds to launch our e-commerce and auction website. It is our hope that the website and marketing plan be completed no later than March 2005. Although we currently do not have an agreement with any other gallery, we are in the negotiation process.  If the warrant is exercised, the funds received will be used first to launch the e-commerce and auction website. However, there is no assurance that the warrant will ever be exercised.





9



Although there are no assurances that either the interim website will generate revenues or the warrant will be exercised, we believe if we receive sufficient funds from the sources above we will be able to offer for sale our existing inventory of artwork on-line and through our first gallery opening by September 2005.   Although our existing inventory of artwork was sold by our chief executive officer, James Price, from his private collection and does not represent any continuing on-going relationship with a particular artist, we believe that the inventory will be sufficiently interesting to attract art buyers to our gallery and site while we continue to negotiate contracts with individual artists.   We expect that we will spend about $10,000 over 30 days on outside consultants to integrate our artwork inventory into our website presence.  We have no present source for these funds other than the revenues expected from our interim website or the  proceeds from the exercise of the warrant. There are no assurances that either the warrant will be exercised or the interim website will generate revenues.  It is our hope that at least one new artist and our current inventory will be available for sale on our e-commerce and auction website no later than March 2005.



Sales and marketing will be critical to the success of our business.  Our business model relies heavily on our ability to cause collectors and investors to visit our galleries and our website.  We intend to accomplish this goal through a combination of methods.  We intend to hire a full-time sales and marketing director as soon as funding permits.  We believe that we can obtain a suitable candidate for an annual salary of $65,000, without having to offer insurance or other benefits.  We would need to support this individual with a marketing budget of approximately $35,000.  This budget would be used for travel to and attendance at industry trade shows and for advertisements in trade publications and websites.  We believe that this combination of efforts together with the efforts of our chief executive officer, James Price, in approaching colleagues and leaders in the art field will be sufficient.  We intend to commence hiring the marketing director and beginning sales and marketing activities as soon as funds are available.   We have no present source for these funds other than the revenues expected from our interim website or the proceeds from the exercise of the warrant.  There are no assurances that either the interim website will generate revenues or the warrant will be exercised.



We believe it will take 3 months for us to identify and hire such an individual.  We believe it will take another 6 to 8 months for the sales and marketing efforts to yield profits high enough to open our second gallery.



There can be no assurance that any of the above alternative strategies will achieve our intended goals.  If we are unsuccessful in securing resources by any of the above outlined means, then our organization will cease to be able to carry out any alternative plan of operation and we will cease operations, resulting in a total loss of investment for all shareholders.

Benacquista currently has a limited inventory of art of 43 pieces purchased from our chief executive officer.  Although we plan to sell this artwork along with other artwork that we plan to acquire, we have not yet negotiated with any suppliers or artists regarding such other artwork.  We plan to acquire new artwork from individual artists and wholesalers and to sell this artwork on an Internet site we intend to build as well as in retail galleries that we intend to open.





Sales and marketing. We expect sales and marketing expenses to increase sharply to between $25,000 and $50,000 by March of 2005, assuming that we receive sufficient funding to initiate our interactive web site and to commence our marketing plan.



General and administrative. General and administrative expenses were $48,458 during the year ended September 30, 2004 and $36,412 during period from inception on January 17, 2003 through September 30, 2003. General and administrative expenses increased during the period ended December 31, 2003 as compared to the comparable fiscal 2003 period due mainly to the recognition of expenses related to our selling shareholder registration statement on form SB-2.



Financial Condition



For the year ended September 30, 2004, Benacquista Galleries had a net loss of $94,564 while for the period ended September 30, 2003, the Company had a net loss of $68,150. Also, for the period ended September 30, 2004, the Company had a working capital deficit of $78,254 while for the period ended September 30, 2004, the Company had a working capital deficit of $31,800.



10



Benacquista Galleries' current financial condition makes it difficult to commence more than a limited product offering or derive additional revenue until additional funding is received. Although our chief executive officer is willing to continue product development and marketing without a salary until additional funding is received, we will not have the resources to strengthen our product offering until we receive additional cash either from the sale of existing artwork in our inventory, additional investments by our chief executive officer, the sale of equity or debt securities or some combination thereof, none of which can be assured.



Liquidity and capital resources



Net cash used in operating activities for the year ended September 30, 2004 and the period ended September 30, 2003 was $18,287 and $35,871 respectively. As of September 30, 2004, we had $30,302 in cash. Net cash used in operating activities for the year ended September 30, 2004 was primarily the result of a net loss on sales of artwork as well as operating expenses due to our registration statement filed on form SB-2 offset partially by revenue from the sale of artwork. Net cash used in operating activities for the period ended September 30, 2003 was primarily the result of a net loss.



Net cash provided by financing activities was $48,110 for the year ended September 30, 2004. Net cash used in financing activities was $36,350 for the period ended September 30, 2003. Net cash provided by financing activities for the year ended September 30, 2004 was the result of proceeds from a capital contribution of our majority shareholder. Financing activities for the period ended September 30, 2003 were attributable to proceeds from the sale of common stock and from a capital contribution of our majority shareholder.



As of September 30, 2004 our principal commitments consisted of our obligations outstanding for accrued interest and our long term obligations related to a note owed by us to our controlling shareholder. We have no material commitments for capital expenditures. We expect no significant capital expenditures or lease commitments during the next fiscal quarter.



We believe that our current cash balances, including cash and cash equivalents, are insufficient to meet our working capital and capital expenditure requirements. We have very limited working capital. We will need to receive an infusion of capital from our chief executive officer or receive funding from another source in order to continue operations beyond current levels.



We need to secure additional cash as soon as possible. We may seek to sell additional equity or debt securities or to obtain a credit facility; however, at the present time, we have not entered into any arrangements or understandings with respect to any such financings. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders. The incurrence of indebtedness would result in an increase in our fixed obligations and could result in operating covenants that would restrict its operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. If financing is not available when required or is not available on acceptable terms, we may be unable to develop or enhance our products or services. In addition, we may be unable to take advantage of business opportunities or respond to competitive pressures. Any of these events could have a material and adverse effect on our business, results of operations and financial condition.



Benacquista Galleries's short-term prospects are challenging considering our lack of financial resources.. Without raising any additional cash or being approached by a strategic partner willing to finance further product development, Benacquista Galleries's short-term and long-term prospects for growth are minimal over and above incremental sales of its existing art inventory on its website.



Cash requirements



Presently, without additional cash, we will only be able to continue our presently limited operations. We have very limited working capital. Our continued operation is therefore dependent upon our ability to secure additional cash. We need to raise additional funds as soon as practicable, through the sale of equity or debt securities in the company or through the sale of artwork in our existing inventory or some combination thereof. We presently have no arrangements or understandings with any investors or potential investors with respect to an investment in





11



Benacquista Galleries. We have not decided at what price or under what terms we will raise such additional funds.

The factors that we will utilize in making such a decision include: our success in developing strategic partners for Benacquista Galleries, the market valuation of our competitors, the availability of investments generally for development stage start-up companies, and the feedback that we receive from potential investors. We intend to target potential customers and potential strategic partners as possible investors in Benacquista Galleries, though we have not received any indications of interest so far. Benacquista Galleries has identified acquaintances of our officers and directors who are interested in providing debt or equity financing for Benacquista Galleries. Benacquista Galleries has not reached any terms with such prospective investors in which such financing would be forthcoming.



Research and development

We have a present intention to spend substantial resources on research or development over the next 12 months, consisting primarily in the development of our website.  We anticipate that, funding permitting, we would spend up to $99,000 on the development of our website during the next 12 months.

Plant and equipment

We currently have an office in Monkton, Maryland inside the home of our chief executive officer. We believe our currently available space will be insufficient for our operations for the next 12 months, but do not anticipate leasing any additional space for at least 9 months.

Employees

We intend to hire additional personnel to staff our physical galleries and assist us in the marketing of our on-line gallery.  We anticipate hiring such personnel in approximately 9 months and would hire no more than 9 people.





12



ITEM 7. FINANCIAL STATEMENTS.







BENACQUISTA GALLERIES, INC.

(A Development Stage Enterprise)





TABLE OF CONTENTS





Page



Report of Independent Registered Public Accounting Firm

F-2



Balance Sheets as of September 30, 2004 and 2003

F-3



Statements of Operations for the Year Ended September 30, 2004,

for the period from January 17, 2003 (Date of Inception) through

September 30, 2003 and for the Period from January 17, 2003

(Date of Inception) through September 30, 2004

F-4



Statements of Stockholders’ Deficit for the Period from

January 17, 2003 (Date of Inception) through September 30, 2003

and for the year ended September 30, 2004

F-5



Statements of Cash Flows for the Year Ended September 30, 2004 and

For the Period January 17, 2003 (Date of Inception) through

September 30, 2003 and for the Period from January 17, 2003

(Date of Inception) through September 30, 2004

F-6



Notes to Financial Statements

F-7





F-1

HANSEN, BARNETT& MAXWELL

A Professional Corporation

CERTIFIED PUBLIC ACCOUNTANTS

5 Triad Center, Suite 750

Salt Lake City, UT 84180-1128

Phone: (801) 532-2200

Fax: (801) 532-7944

www.hbmcpas.com







REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and Stockholders

Benacquista Galleries, Inc





We have audited the accompanying balance sheets of Benacquista Galleries, Inc. (a development stage enterprise) as of September 30, 2004 and 2003, and the related statements of operations, stockholders’ deficit, and cash flows for the year ended September 30, 2004, for the period from January 17, 2003 (Date of Inception) through September 30, 2003 and for the period from January 17, 2003 (Date of Inception) through September 30, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Benacquista Galleries, Inc. as of September 30, 2004 and 2003, and the results of its operations and its cash flows for the year ended September 30, 2004, for the periods January 17, 2003 (Date of Inception) through September 30, 2003 and 2004 in conformity with U.S. generally accepted accounting principles.



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s lack of operating history raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





HANSEN, BARNETT & MAXWELL



Salt Lake City, Utah

December 9, 2004



F-2





|BENACQUISTA GALLERIES,INC.       |  |  | 
|-------------------------------- |  |  | 
|(A Development Stage Enterprise) |  |  | 
|BALANCE SHEETS                   |  |  | 
|                                 |  |  | 

| | September 30,
| | -------------

|                                                               | 2004            |  | 2003           
|-------------------------------------------------------------- | --------------- |  | ---------------
|ASSETS                                                         |                 |  |                
|Current Assets                                                 |                 |  |                
|Cash                                                           | $       30,302  |  | $           479
|Inventory                                                      | 826,127         |  | 862,127        
|Total Current Assets                                           | 856,429         |  | 862,606        
|Total Assets                                                   | $     856,429   |  | $     862,606  
|                                                               |                 |  |                
|LIABILITIES AND STOCKHOLDERS' DEFICIT                          |                 |  |                
|Current Liabilities                                            |                 |  |                
|Accounts payable                                               | $           713 |  | $           541
|Accrued interest                                               | 71,843          |  | 31,738         
|Total Current Liabilities                                      | 72,556          |  | 32,279         
|Long-Term Liabilities                                          |                 |  |                
|Note payable to related party                                  | 862,127         |  | 862,127        
|Total Liabilities                                              | 934,683         |  | 894,406        
|                                                               |                 |  |                
|Stockholders' Deficit                                          |                 |  |                
|Common stock - $0.001 par value; 50,000,000 shares authorized; |                 |  |                
|10,000,000 shares issued and outstanding, respectively         | 10,000          |  | 10,000         
|Additional paid-in capital                                     | 74,460          |  | 26,350         
|Deficit accumulated during the development stage               | (162,714)       |  | (68,150)       
|Total Stockholders' Deficit                                    | (78,254)        |  | (31,800)       
|Total Liabilities and Stockholders' Deficit                    | $     856,429   |  | $     862,606  
|                                                               |                 |  |                





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



F-3



|BENACQUISTA GALLERIES,INC.                    |                 |  |                   |   |               
|--------------------------------------------- | --------------- |  | ----------------- | - | --------------
|(A Development Stage Enterprise)              |                 |  |                   |   |               
|STATEMENTS OF OPERATIONS                      |                 |  |                   |   |               
|                                              |                 |  |                   |   | Cumulative    
|                                              |                 |  | January 17,       |   | January 17,   
|                                              |                 |  | 2003 (Date of     |   | 2003 (Date of 
|                                              | For The         |  | Inception)        |   | Inception)    
|                                              | Year Ended      |  | through           |   | through       
|                                              | September 30,   |  | September 30,     |   | September 30, 
|                                              | 2004            |  | 2003              |   | 2004          
|Revenue                                       | $       30,000  |  | $               - |   | $       30,000
|Cost of Goods Sold                            | 36,000          |  | -                 | - | 36,000        
|Gross Margin                                  | (6,000)         |  |                   |   | (6,000)       
|General and administrative expense            | (48,458)        |  | (36,412)          |   | (84,870)      
|Interest expense                              | (40,106)        |  | (31,738)          |   | (71,844)      
|Net Loss                                      | $     (94,564)  |  | $     (68,150)    |   | $   (162,714) 
|                                              |                 |  |                   |   |               
|Basic and Diluted Loss per Share              | $        (0.01) |  | $        (0.01)   |   |               
|Weighted Average Number of Shares Outstanding | 10,000,000      |  | 9,883,721         |   |               
|                                              |                 |  |                   |   |               





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



F-4





|BENACQUISTA GALLERIES,INC.       |  |  |  |  |  |  |  | 
|-------------------------------- |  |  |  |  |  |  |  | 
|(A Development Stage Enterprise) |  |  |  |  |  |  |  | 

|STATEMENTS OF STOCKHOLERS' DEFICIT |  |  |  |  |  | 
|---------------------------------- |  |  |  |  |  | 

| |  |  |  |  |            |  |             |  | 
| |  |  |  |  | ---------- |  | ----------- |  | 
| |  |  |  |  |            |  | Deficit     |  | 
| |  |  |  |  |            |  | Accumulated |  | 
| |  |  |  |  | Additional |  | During the  |  | 

| | Common Stock |  | Paid-in |  | Development |  | 
| | ------------ |  | ------- |  | ----------- |  | 

|                                  | Shares     |  | Amount          |  | Capital         |  | Stage           |  | Total          
|--------------------------------- | ---------- |  | --------------- |  | --------------- |  | --------------- |  | ---------------
|Balance - January 17, 2003 (date  |            |  |                 |  |                 |  |                 |  |                
|of inception)                     | -          |  | $             - |  | $             - |  | $             - |  | $             -
|                                  |            |  |                 |  |                 |  |                 |  |                
|Shares Issued for cash            |            |  |                 |  |                 |  |                 |  |                
|January 2003 $0.001 per share     | 10,000,000 |  | 10,000          |  | -               |  | -               |  | 10,000         
|Capital contributions by majority |            |  |                 |  |                 |  |                 |  |                
|shareholder                       | -          |  | -               |  | 26,350          |  | -               |  | 26,350         
|Net loss                          | -          |  | -               |  | -               |  | (68,150)        |  | (68,150)       
|Balance - September 30, 2003      | 10,000,000 |  | 10,000          |  | 26,350          |  | (68,150)        |  | (31,800)       
|                                  |            |  |                 |  |                 |  |                 |  |                
|Capital contributions by majority |            |  |                 |  |                 |  |                 |  |                
|shareholder                       | -          |  | -               |  | 48,110          |  | -               |  | 48,110         
|Net loss                          | -          |  | -               |  | -               |  | (94,564)        |  | (94,564)       
|Balance - December 31, 2003       | 10,000,000 |  | $     10,000    |  | $     74,460    |  | $  (162,714)    |  | $   (78,254)   
|                                  |            |  |                 |  |                 |  |                 |  |                





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



F-5



|BENACQUISTA GALLERIES,INC.                          |                   |  |                 |  |               
|--------------------------------------------------- | ----------------- |  | --------------- |  | --------------
|(A Development Stage Enterprise)                    |                   |  |                 |  |               
|STATEMENTS OF CASHFLOWS                             |                   |  |                 |  |               
|                                                    |                   |  |                 |  | Cumulative    
|                                                    |                   |  | January 17,     |  | January 17,   
|                                                    |                   |  | 2003 (Date of   |  | 2003 (Date of 
|                                                    |                   |  | Inception)      |  | Inception)    
|                                                    |                   |  | through         |  | through       
|                                                    | September 30,     |  | September 30,   |  | September 30, 
|                                                    | 2004              |  | 2003            |  | 2004          
|Cash Flows From Operating Activities                |                   |  |                 |  |               
|Net loss                                            | $     (94,564)    |  | $     (68,150)  |  | $   (162,714) 
|Changes in operating assets and liabilities:        |                   |  |                 |  |               
|Inventory                                           | 36,000            |  |                 |  | 36,000        
|Accounts payable                                    | 172               |  | 541             |  | 713           
|Accrued interest                                    | 40,105            |  | 31,738          |  | 71,843        
|Net Cash Provided by Operating Activities           | (18,287)          |  | (35,871)        |  | (54,158)      
|                                                    |                   |  |                 |  |               
|Cash Flows From Investing Activities                | -                 |  | -               |  | -             
|Cash Flows From Financing Activities                |                   |  |                 |  |               
|Capital contributions from majority shareholder     | 48,110            |  | 26,350          |  | 74,460        
|Sale of common stock                                |                   |  | 10,000          |  | 10,000        
|Net Cash Used in Financing Activities               | 48,110            |  | 36,350          |  | 84,460        
|                                                    |                   |  |                 |  |               
|Net Change in Cash                                  | 29,823            |  | 479             |  | 30,302        
|Cash at Beginning of Year                           | 479               |  | -               |  | -             
|Cash at End of Year                                 | $       30,302    |  | $           479 |  | $       30,302
|                                                    |                   |  |                 |  |               
|Non Cash Financing Activities                       |                   |  |                 |  |               
|Acquisition of inventory by issuance of note payble |                   |  |                 |  |               
|to related party                                    | $               - |  | $     862,127   |  | $     862,127 
|                                                    |                   |  |                 |  |               





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



F-6



BENACQUISTA GALLERIES, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS





NOTE 1 – NATURE OF BUSINESS



Organization and Nature of Operations — On January 17, 2003, Benacquista Galleries, Inc. (the Company) was organized under the laws of the State of Nevada.  The Company is considered a development stage enterprise and is in the process of raising capital to fund operations. As such, the Company has since inception spent most of its efforts in developing its business plan, constructing core materials for eventual sale to customers and in raising capital to fund its operations. The Company has relied upon cash flows from equity issuances to sustain operations. The planned operations of the Company consist of selling art work through the internet.



NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Business Condition— The Company is a new company with no operating history. It has not yet been able to execute its business plan. This situation raises substantial doubt about its ability to continue as a going concern. The Company plans to fund its operations with revenues from the sale of art inventory on its interim website www.benacquistagalleries.com. However, it may also use proceeds from the exercise of a warrant to purchase up to 1,000,000 common shares which could generate up to $1,000,000. There is no guarantee that the warrant will be exercised. In the event that the Company does not generate these funds, the Company’s president has indicated that he will loan sufficient funds to cover operating needs for the next twelve months. However, there is no guarantee that these loans will be made.  The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.



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



Fair Value of Financial Instruments — The carrying amounts reported in the accompanying financial statements for current assets approximate fair values because of the immediate or short-term maturities of these financial instruments.





F-7



Income Taxes — The Company recognizes an asset or liability for the deferred tax consequences of all temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the asset or liabilities are recovered or settled.  Deferred tax assets or liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Deferred tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary.



Cash– Cash consists of a deposit with a bank.



Inventory —  Inventory is stated at the lower of cost or market.



Net Income Per Share-Basic and Diluted— Basic income (loss) per common share is computed on the basis of the weighted-average number of common shares outstanding during the period. Diluted income per share is computed on the basis of the weighted-average number of common shares and all potentially issuable common shares outstanding during the year. As of September 30, 2004 and September 30, 2003, there was an outstanding warrant to purchase up to 1,000,000 common shares that was not included in the computation of diluted net loss per share as the effect would be anti-dilutive.



NOTE 3– INVENTORY



Value — Inventories are stated at the lower of cost or market.  When there is evidence that the inventory value is less than the original cost, the inventory is reduced to market value. The Company determines market value from periodic professional appraisals.  Appraisals are performed annually or more often as deemed appropriate.  On September 23, 2003, Ronald L. Brion appraised most of the works of art and provided an estimated current market value of $875,450.  Two pieces not included in the appraisal were previously appraised for $18,500 making the total art inventory fair value $893,950.



Composition— Inventory is composed of 41 pieces of art consisting of oil-on-canvas, lithograph and pastel paintings, bronze and ceramic sculptures and other miscellaneous items.



NOTE 4– STOCKHOLDERS’ EQUITY AND WARRANTS



Common Stock — In January 2003, the Company issued 10,000,000 shares of common stock to various individuals, including officers of the Company, for cash proceeds of $10,000 or $0.001 per share.



Additional Paid-in Capital — The majority shareholder made cash contributions totaling $48,110 and $26,350 for the year ended September 30, 2004 and the period January 17, 2003 (date of inception) through September 30, 2003.



Warrant— In January 2003, the Company issued a warrant to purchase up to 1,000,000 shares of common stock to an unaffiliated company. The following summarizes the outstanding warrant at September 30, 2003 and September 30, 2004:





F-8



Weighted-

Weighted-

Average

Average



Exercise

Remaining

Fixed Warrants

Warrants

Price              Contractual Life

Outstanding at January 17, 2003

—

$

—

—

Issuances

1,000,000

1.00



Outstanding at September 30, 2003

1,000,000

$

1.00

2.34 years



Issuances

—

—



Outstanding at September 30, 2004

1,000,000

$

1.00

1.34 years





NOTE 5 – RELATED PARTY TRANSACTIONS



In January 2003, the major shareholder sold certain pieces of his works of art to the Company for $862,127 represented by an unsecured note payable. The note bears interest at 5% per annum and is due in full on January 31, 2005 with no periodic payments required. The purchase price represents the shareholder’s original cost in the art which was originally acquired for cash.



NOTE 6 – INCOME TAXES



The Company has paid no federal or state income taxes since its incorporation. As of September 30, 2004 and September 30, 2003, the Company had net operating loss carry forwards for federal income tax reporting purposes of $162,714 and $68,150 which, if unused, will begin to expire in 2023. The net deferred tax asset consists of the following at September 30, 2004 and September 30, 2003:



September 30,  September 30,

2004

2003





Deferred tax asset – operating loss carryforwards

$

55,323

$

23,171

Valuation allowance

(55,323)

(23,171)



Total Deferred Income Tax Asset

$           —

$           —



The following is a reconciliation of the income tax computed using the federal statutory rate to the provision for income taxes:



Tax at federal statutory rate (34%)

$

(32,152)

$

(23,171)

Change in valuation allowance

32,152

23,171



Provision for Income Taxes

$           —

$           —





F-9





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



The Company has not changed accountants during the last two fiscal years; nor has the Company had any disagreements with the accountants on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures.



ITEM 8A. CONTROLS AND PROCEDURES.



(a) The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed within 90 days of the filing date of this report, the chief executive officer and the principal financial officer of the Company concluded that the Company's disclosure controls and procedures were inadequate.

(1)  The Company has identified a weakness in internal control over the processes of entering financial statement data which includes entering cash receipts, cash disbursements and general journal entries. Company management, is currently developing a plan to correct this weakness in internal control going forward. The plan will entail implementation of improved procedures and controls over recording accounting transactions. The plan will be reviewed and monitored by the management.

(b) Changes in internal controls. The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the chief executive officer and principal financial officer.

.



PART III



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



DIRECTORS AND EXECUTIVE OFFICERS



|Name               Age            Position                            Since
James Price           41             Chief Executive Officer,            2003
President, Director
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------





* James Price is our sole officer and director.



The following is a biographical summary of the experience of the directors and executive officers of the Company:



JAMES PRICE, 41 years old



James Price, chief executive officer, principal accounting officer and director.  Mr. Price currently serves as the president of Aero Financial, Inc. located in Monkton, Maryland, through which he provides public relations consulting services directly to executives and corporations.  He has served in this capacity at Aero Financial since February of 2002.  Mr. Price also serves as Sole Director and Chief Executive Officer of Wine Purveyors International, Inc. of Lutherville, MD, where he is the sole employee and has all management and operational responsibilities and has served in that capacity since January, 2003.  From December of 1997 until February of 2002, Mr. Price was chief executive officer of Columbia Financial Group, Inc. of Lutherville, Maryland, an investor relations firm, where he was responsible for developing an employee benefit plan and training program for Columbia’s employees and where he also developed and maintained corporate policies and procedures. From February of 1995 until December of 1997, Mr. Price was a  stockbroker employed by Global Financial in Bel Air, Maryland.   From September of 1980 until June of 1982, Mr. Price attended Eastern Washington University in Cheney, Washington, where he took general studies courses with an interest in art history.  Mr. Price is a veteran of the U.S Army, serving from September of 1982 until September of 1985.



Mr. Price currently spends 10-20 hours per week on Benacquista Galleries matters.  It is possible that Mr. Price’s outside business interests and his lack of full-time commitment to Benacquista Galleries may materially damage our financial prospects and prospects for commercial success with our business model.





12



SIGNIFICANT EMPLOYEES



The Company's sole significant employee is James Price, its Chief Executive Officer, Principal Accounting Officer and Director.



FAMILY RELATIONSHIPS



There are no family relationships between any directors or executive officers of the Company, either by blood or by marriage.



INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS



During the past five years, no director, person nominated to become a director, executive officer, promoter or control person of the Company:



(1) was a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time; The officers and directors of the Company due to the Operating Subsidiary filing a voluntary petition under Chapter 11 of the Bankruptcy Code.



(2) was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);



(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or



(4) was found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder require Benacquista Galleries's officers and directors, and persons who beneficially own more than ten percent of a registered class of Benacquista Galleries's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish Benacquista Galleries with copies.



Based on its reviews of the copies of the Section 16(a) forms received by it, or written representations from certain reporting persons, Benacquista Galleries, Inc. believes that all outstanding obligations by reporting persons have been met.



CODE OF ETHICS



Our Board of Directors has not yet adopted a written Code of Business Conduct and Ethics. However, we are currently in the process of applying for and maintaining the listing of our common stock on the OTC Bulletin Board. As part of the listing process, we expect to adopt a written Code of Business Conduct and Ethics.





13



ITEM 10. EXECUTIVE COMPENSATION.



EXECUTIVE COMPENSATION



The following table sets forth certain information with respect to the compensation that was paid in the 2004 fiscal year to the Company's executive officers and the aggregate compensation paid by the Company for services rendered during the periods indicated:



|Summary Compensation Table

Long Term Compensation
Annual compensation                                            Awards                      Payouts
------------------------------                        -------------------------------------------------------
(a)                   (b)        (c)         (d)          (e)                 (f)             (g)          (h)              (i)
Name,                                                     Other              Restricted    Securities
Principal                                                 annual             stock         underlying       LTIP           All other
Position              Year      Salary($)    Bonus($)     compensation($)    award(s)($)   options/SA Rs(#) Payouts($)     Comps ($)
James Price,          2004      $0 *         0            0                  0              0                  0              0
CEO, Principal
Accounting Officer,
Director
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





**James Price has not yet drawn any salary from Benacquista Galleries.  It is anticipated that Mr. Price will begin taking a salary of $60,000 beginning March 31, 2005; however, Mr. Price does not intend to begin taking or accruing a salary until the 1,000,000 shares underlying the warrant held by XCL Partners have been exercised at $1.00 per share.  As there can be no assurance that this will ever happen, Mr. Price may serve indefinitely without a salary.



Option grants since inception and aggregate option exercises during last fiscal year and fiscal year-end option values.



Since inception, we have not granted any stock options to any individual, including our chief executive officer, except that we have granted warrants to purchase 1,000,000 shares of our common stock to XCL Partners at an exercise price of $1.00 per share.  We anticipate granting options to various employees, directors and consultants. Any such grants will be made at an exercise price equal to the fair market value of our common stock as determined by our board of directors.



We have no employment agreements with any of our employees.



DIRECTOR COMPENSATION



For the fiscal year ended September 30, 2004, our sole director, James Price was not compensated for his services.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.



The following table sets forth the beneficial ownership of shares of Common Stock as of September 30, 2004, for (i) each person who is known by the Company to be the beneficial owner of more than a 5% interest in the Company, (ii) directors of the Company, (iii) the sole "named executive officer" of the Company, as defined in Item 402(a)(2) of SEC Regulation S-B, and (iv) the directors and named executive officer of the Company as a group. Unless otherwise indicated in the footnotes, all such interests are owned directly, and the indicated person or entity has sole voting and investment power. Addresses are provided only for 5% or greater owners.



Executive Officers and Directors as a group as of September 30, 2004.



|Beneficial Ownership
|--------------------

|Title of Class | Name and Address of Beneficial Owner                                   | Amount and Nature of Beneficial Owner | Percent of Class
|-------------- | ---------------------------------------------------------------------- | ------------------------------------- | ----------------
|Common         | James Price (1)
15208 Jarrettsville Pike, Monkton, Maryland 21111      | 8,969,100                             | 89.69% (3)      
|Common         | Timothy J. Rieu (2)
3325 Great Valley Drive,
West Friendship, MD 21794 | 1,400,000 (4)                         | 13.09% (4)      

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(1)

Mr. Price is the only officer and director. His address is 15208 Jarrettsville Pike, Monkton, Maryland 21111.

(2)

Mr. Rieu is the principal of XCL Partners, who is located at 3325 Great Valley Drive, West Friendship, MD 21794. Timothy J. Rieu is the sole proprietor of XCL Partners.

(3)

The 89.69% of class is calculated using 10,000,000 shares of common stock outstanding. This does not include the issuance of 1,000,000 shares of common stock upon the exercise of the warrant held by XCL Partners.

(4)

There are currently 10,000,000 shares of issued and outstanding stock. The exercise of the warrant will result in the issuance of another 1,000,000 common shares. The 13.09 % of class assumes the issuance of the 1,000,000 shares under the warrant reflecting XCL Partners ownership on a fully dilutive basis (based on 11,000,000 shares outstanding) in addition to the 400,000 issued shares Mr. Rieu currently owns (based on 10,000,000 currently outstanding shares).





ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



There has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are to be a party in which the amount involved exceeds $60,000, and in which any director, executive officer, holder of more than 5% of our common stock or any member of the immediate family of any of these people had or will have a direct or indirect material interest except as listed below:



On January 31, 2003, chief executive officer James Price sold a number of individual works of art to us for a purchase price of $862,127.25.  We issued a note for the amount of the purchase price, payable to Mr. Price.  The note bears interest at an annual rate of 5%.  The principal and interest under the note are due and payable on January 31, 2005.  There is no penalty for prepayment.  Mr. Price paid $862,127.25 for the art.





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



(a) LIST OF EXHIBITS



List of Exhibits



|3.1   Articles of Incorporation of registrant as filed previously with the
Commission on Form SB-2, dated March 31, 2003

3.2   Bylaws of registrant as filed previously with the Commission on Form SB-2,
dated March 31, 2003.

31.1  Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002

32.1  Certification of the Company's Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





(b) REPORTS ON FORM 8-K



The following reports on Form 8-K were filed by the Company during the fiscal quarter ended September 30, 2004:



None





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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.



Audit fees. Total annual audit fees billed for professional services rendered by Hansen, Barnett & Maxwell, during the 2004 and 2003 fiscal years for the audit of our annual financial statements and the review of the financial statements included in our quarterly reports on Form 10-QSB, or services that are normally provided by Hansen, Barnett & Maxwell, P.C. in connection with statutory and regulatory filings or engagements for those fiscal years, totaled approximately $6,304 and $ 5,723 respectively.



Audit-related Fees. Total aggregate audit fees billed during the 2004 and 2003 fiscal years for assurance and related services by Hansen, Barnett & Maxwell,  that are reasonably related to the performance of the audit or review of Benacquista Galleries, Inc.'s financial statements and not reported in the paragraph above under "Audit Fees" were $11,443 and $9,925, respectively.  These fees were primarily for services provided with the company’s registration statements.



Tax Fees. The total fees billed during the 2004 and 2003 for professional services rendered by Hansen, Barnett & Maxwell,  for tax compliance, tax advice, and tax planning services were approximately $158 and $0, respectively. Specifically, these services involved preparation of the consolidated tax returns and guidance on tax accruals.



All Other Fees. There were no fees billed by Hansen, Barnett & Maxwell, during our 2004 and 2003 fiscal years for any other services rendered to Benacquista Galleries, Inc. other than the amounts set forth above.





SIGNATURE



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.



Benacquista Galleries, Inc.



|/s/ James Price
-----------------------------
James Price
Chief Executive Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
|----------------------------------------------------------------------------------------------------------------------------------------------------------





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







/s/ James Price

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

James Price

Chief Executive Officer

(Duly Authorized Officer and Principal

Financial and Accounting Officer)





Dated: January 5, 2005





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|





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