U.S. SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C. 20549

                                Form 10-KSB

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

For the fiscal year ended December 31, 2003

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

             For the Transition Period from_______ to _______

                      Commission File Number 0-27177

                GALTECH SEMICONDUCTOR MATERIALS CORPORATION
              (Name of small business issuer in its charter)


              UTAH                                        87-0427597
              ----                                        ----------
     (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                  Identification Number)


                               P.O. Box 1953
                             Orem, Utah 84057
                             ----------------
                 (Address of principal executive offices)

      Issuer's telephone number, including area code: (801) 373-5690

           Securities registered under Section 12(b) of the Act:


                                            Name of each exchange
              Title of each Class           on which registered

                      None                        None

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

                     Common Stock, $0.00025 Par Value
                              (Title of Class)

                                    N/A
       (Former Name or Former Address, if changed since last Report)

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 Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

(1) Yes [X] No [ ] (2) Yes [X] No [ ]

Check if there is no disclosure of delinquent files in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company'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: December 31, 2003 -
$0.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.

March 18, 2004 - $5,238. There are approximately 20,951,089 shares of common
voting stock of the Registrant held by non-affiliates. Because there is no
"established trading market" for our shares, these shares have been
arbitrarily valued at par value of $0.00025 per share.

                 (ISSUERS INVOLVED IN BANKRUPTCY
             PROCEEDINGS DURING THE PAST FIVE YEARS)

                         Not Applicable.

             (APPLICABLE ONLY TO CORPORATE ISSUERS)

State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date.

                         March 18, 2004

                           20,951,089

               DOCUMENTS INCORPORATED BY REFERENCE

A description of "Documents Incorporated by Reference" is contained in Item 13
of this report.

Transitional Small Business Disclosure Format (check one): Yes [X] No [ ]

                             PART I

ITEM 1. Description of Business.

                      Business Development.

For a discussion of the business development of Galtech Semiconductor
Materials Corporation, a Utah corporation ("Galtech"), from inception through
December 31, 2003, see our Annual Report on Form 10-KSB for the calendar year
ended December 31, 2001, which was filed with the Securities and Exchange
Commission on May 6, 2002, and which is incorporated herein by reference. See
the Exhibit Index, Part III, Item 13 of this Report.

                            Business.

Our principal operations focus on the development and commercial exploitation
of a new and more economical method of growing cadmium telluride and related
compounds with zinc and mercury semiconductor compounds.
Prior to a 1990 fire in our facilities, we had successfully produced cadmium
telluride crystal wafers of up to four to six square inches. Previous
commercially manufactured cadmium telluride wafers had been only one to two
square inches. In addition, we were able to produce round wafers, rather than
the customary D-shaped and rectangular wafers. Industry users prefer round
wafers.

We are now concentrating our efforts on refining our methods for producing
cadmium telluride and cadmium zinc telluride wafers and reproducing our
earlier production results. In the future, depending on the success of our
research and development efforts, market conditions and our success with our
principal operations, we will consider developing similar crystals made from
the following compounds: indium phosphide; indium antimonide; gallium
antimonide; and gallium arsenide.

                Principal Products and Services.

We are attempting to develop a reliable and repeatable process for growing
large area, single crystal, cadmium telluride semiconductor material. Each
class of semiconductor material has its own unique properties that make it
useful for specific applications. Cadmium telluride and cadmium zinc telluride
are useful as photo cathodes -- the detector part of the device -- in night
vision instruments, focal plane arrays for aerospace guidance and imaging
devices and as radiation detectors for medical imaging equipment, to name a
few uses. In these applications, the cadmium telluride is used to convert
different parts of the light spectrum, such as infrared light, x-rays and
gamma rays, into an electronic signal that is used by computers to produce an
image for the operator. The market for these devices has traditionally been
military due to the high production costs of the cadmium telluride crystals.
As the production costs decrease and these devices are adapted for consumer
use, we expect the market for cadmium telluride and cadmium telluride
compounds of mercury and zinc to expand.

Worth P. Allred, our senior scientist for crystal research and development,
was able to produce large -- four centimeters by three centimeters --
crystalline wafers of cadmium telluride with rocking curve measurements of 9.6
to 20 arc seconds. Arc seconds measure the amount of scatter when a gamma ray
is projected onto a material. The lower the reading, the better. Rocking curve
measurements indicate how uniform the crystal lattice is in the material. The
more uniform the lattice, the fewer flaws in the material and the better the
material is at performing its intended function. Previous best measurements
were 34 to 50 arc seconds. Washington State University's independent analyses
of material produced by Mr. Allred documented the high quality of these
wafers. (Khan, A.A., et al., Growth and Structural Properties of Low Defect,
Sub-Grain Free CdTe Substrates Grown by the Horizontal Bridgman Technique.
Journal of Electronic Materials, Vol. 15, Number 3, 1986. Mr. Allred was one
of six co-authors of this paper.)

Cadmium telluride and cadmium zinc telluride are semiconductor materials used
in electronic equipment such as infrared detectors, weapons guidance systems,
satellite surveillance, solar cells, deep space communications, infrared night
vision devices, tumor detectors, nuclear radiation and gamma detectors,
spectrometers for chemical identification, nuclear medicine, astronomy and
related applications. (Whitaker, T., Picture This, Compound Semiconductor,
Vol. 4 Number 4, 17-20, May 1998).

A Discover Magazine article cited a July 1997 award to Sandia National
Laboratories for development of a compact cadmium zinc telluride sensor. The
following is quoted from the award citation: "Since these sensors are compact
and work at room temperature, they could be used not only for monitoring
plutonium but also for detecting environmental radioactivity, exploring for
minerals, and helping doctors find tumors."

Cadmium telluride can be used in high capacity solar cells. (Galloway, S.A,
Characterization of Thin Film Cds/cdte Solar Cells Using Electron and Optical
Beam Induced Current, Solar Energy Materials and Solar Cells, Vol. 57 pp. 61-
74, 1999.) Cadmium telluride can also be used in high temperature infrared and
near infrared sensors. (Mullins, J.T., Carles, J. and Brinkman,
A.W., High temperature optical properties of cadmium telluride, Journal of
Applied Physics, Vol. 81, No. 9, pp. 6374-6379, 1997.)

Cadmium telluride, cadmium zinc telluride and cadmium mercury telluride are
difficult to grow in high quality crystalline structures, but are popular in
spite of these limitations because of their superior properties in infrared
sensing applications. (Whitaker, T., Picture This, Compound Semiconductor,
Vol. 4 Number 4, 17-20, May 1998), (Rogalski, A. Optical Engineering. Vol. 36,
Pg. 1994.)

Most of our target markets are in the United States, but potential
opportunities are global. The major areas of concentration outside of the
United States are Japan, Taiwan, China, Korea, the United Kingdom, Germany,
France and Italy. (Private Communication with Sanghamitra Sen, Santa Barbara
Research Center, Raytheon, Goleta CA, August, 1998).

Presently, the only suppliers of specialty semiconductor materials such as
cadmium telluride are supplying at extremely high prices and in very small and
inconsistent quantities. (Private Communication with Sanghamitra Sen, Santa
Barbara Research Center, Raytheon, Goleta CA, August, 1998). Users of this
material have expressed a desire for additional suppliers to supplement or
improve their current sources of material. (Private Communication with
Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August,
1998). Our goal will be to provide cadmium telluride materials in wafer form
at lower cost and in larger amounts than other suppliers. If we are successful
in doing this, we expect the interest in cadmium telluride material to
increase not only in military and aerospace applications but also in a number
of non-military applications, the most notable of which is the medical imaging
device area.

While the military and aerospace markets continue to be attractive markets for
us because of the high prices being paid for the cadmium telluride material
for focal plane arrays, these markets appear to be less robust and growing at
a lower rate than the non-military and non-aerospace markets. While the
civilian aerospace demand is growing, the military requirements have been
dropping on a year-to-year basis due to cutbacks in government military
spending. As a result, we believe that our product will allow us to compete
effectively in these important markets where cost and quality are increasingly
important.

The medical imaging market is undergoing a dramatic change and moving beyond
X-film technologies. This change involves the use of floroscopic techniques
that reduce the x-ray dosage to the patient while providing high definition
images. The high degree of clarity in this technology allows the equipment to
be used in cardiac procedures on a beating heart as well as standard vascular
procedures. Currently, cesium iodide receptors are used in this application.
The problem with cesium iodide is that receptors made from this material can
only be used in a curved receptor that distorts the image and requires special
correction of the image to allow the physician to perform the procedure. Even
with correction, the image remains distorted to some degree.

Cadmium telluride has several advantages over cesium iodide. A flat panel
receptor is possible with cadmium telluride detectors. These detectors produce
a receptor with reduced size, thickness and weight. A true flat image receptor
gives a more constant amount of illumination and is a much better detector for
medical procedures. The potential market for devices using this type of
receptor is about $750 million dollars per year, with the semiconductor
material used in the receptor device being a large part of this value.
(Private communication, Market Analysis report-Medical Imaging Market, Ross
Riches, Consultant, Angola, IN, May 2000).

        Distribution Methods of the Products or Services.

In the military and aerospace markets, companies such as Rockwell; Raytheon
(Santa Barbara Research); Texas Instruments; Hewlett-Packard; ITT; McDonnell
Douglas; General Electric and NASA have done work in cadmium telluride device
development or production. Each of these companies would be a potential
customer for Galtech. In the medical imaging area, companies such as GE
Medical Systems; Philips Medical Systems; Siemens Medical Systems; Fischer
Imaging; Fluoroscan Imaging Systems; Lunar Corp.; Ziehm International Medical
Systems and Xiscan Medical are all potential customers and users of this
semiconductor material. (Private communication, Market Analysis report-Medical
Imaging Market, Ross Riches, Consultant, Angola, IN, May 2000).

If we are successful in our research and development methods for producing
high quality, single crystal cadmium telluride, we expect the cost and the
market price of cadmium telluride based products to decrease. We believe this
will present us with additional market opportunities.

We plan to use both an in-house sales force and contract brokers to market our
products. In our experience, the best and most enduring sales in the
semiconductor industry are made through personal contacts and visits to the
customer's plant. These will be handled by regional representatives.

    Status of any Publicly Announced New Product or Service.

None; not applicable.

                Competitive Business Conditions.

Crystal growth yields; wafer size and quality; and overhead costs are the
three problems that beleaguer each of the companies providing semiconductor
materials. As a result, prices range from $900 to $1200 per square inch for a
20 to 30 thousandths inch thick wafer. Due the lack of domestic suppliers
capable of supplying consistent high quality material,most military and
civilian contractors are forced to grow much of their own cadmium telluride
material. They have told us that they would welcome other suppliers of this
material. (Private Communication with Sanghamitra Sen, Santa Barbara Research
Center, Raytheon, Goleta CA, August, 1998).

Yields. Our present competitors have difficulty growing monocrystalline
structures, or wafers with a single crystal. (Private Communication with
Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August,
1998). The proprietary process that we are developing is designed to provide
large area, single crystal cadmium telluride wafers more efficiently, more
cost effectively and of a higher quality than our current competitors.

Wafer Size and Quality. Due to the current small size of cadmium telluride
wafers, many device manufacturers have begun experimenting with other wafer
materials that could replace cadmium telluride. These manufacturers have met
with moderate success, but would prefer to use a cadmium telluride wafer if it
was available in sufficient quantities and qualities. (Private Communication
with Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA,
August, 1998).

Overhead Costs. Using its production protocol, management believes that the
manufacturing costs of Galtech's semiconductor compound materials will be
approximately one-fourth of the overhead and capital equipment costs of its
competitors' methods. We have calculated that we will be able to operate our
facility in the near term with four to five people, which should significantly
reduce our overhead.

Major competitors in the production of cadmium telluride are II-VI, Inc.,
located in Saxonburg, Pennsylvania; and Nippon Mining, Ltd., of Japan. II-VI,
Inc., employs approximately 150 people and controls approximately 75 percent
of the market for cadmium telluride of one to three square centimeters. Its
product is generally cut from large three-inch multi-crystal ingots. Nippon
Mining is a major supplier of cadmium telluride to the Japanese market. It
also ships to United States users and its materials are reported to be of good
quality. We estimate Nippon Mining's market share at approximately five to 10
percent.

           Sources and Availability of Raw Materials.

Our source of cadmium telluride is Alfa Aesar, a Johnston Matthey Company,
located in Ward Hill, Massachusetts. Alfa Aesar provides cadmium telluride in
a variety of forms, including powder and lumps of various sizes. The product
is available in purities of 99.999% and 99.99999%. Alfa Aesar's most recent
catalog lists a retail price of $1182 for 100 grams of cadmium telluride of
99.99999% purity, and $228 per 100 grams of 99.999% purity. We generally
purchase in five kilogram quantities; an average production run uses
approximately two kilograms. Cadmium telluride is reusable, with a loss of
approximately five percent of the original material with each additional
production run. Alfa Aesar is a well-established company and management
believes that it will be able to provide as much raw material as Galtech
requires.

           Dependence on One or a Few Major Customers.

There is a worldwide shortage of quality cadmium telluride wafers. We expect
that there will be sufficient demand for our products for the foreseeable
future.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Payments or
Labor Contracts.

In April, 1997, our wholly-owned subsidiary, Energy Research Corporation, an
Arizona corporation, was assigned a U.S. patent (Patent No. 5,625,241) on a
carousel electric generator that was invented by Russell R. Chapman, David R.
Porter, and Harold E. Ewing. Galtech has no trademarks, licenses, franchises,
concessions, royalty agreements or labor contracts. Because semiconductor
material crystal growth patents are difficult to protect, the production
processes are closely guarded. Galtech will allow only a select group of
researchers access to its processes and each employee will be required to sign
a nondisclosure agreement before receiving knowledge of Galtech's processes.

      Need for Government Approval of Principal Products or Services.

Our management believes that our processes and products will not require
governmental approval.

    Effect of Existing or Probable Governmental Regulations on Business.

As with other manufacturing companies, Galtech's operations will have to
comply with state and federal workplace safety and environmental emissions
regulations. We intend to take all steps necessary to ensure compliance with
these laws and regulations.

Cadmium telluride is a stable, odorless material when in a solid form. It has
a melting point of 1905.8 degrees Fahrenheit. Heat, sparks and open flame can
cause it to become unstable. Exposure to cadmium telluride can cause
irritation to the eyes, skin and mucous membranes, as well as lung cancer and
liver damage. Precautions for safe handling include the use of a respirator,
chemical goggles and protective clothing. We will ensure that all employees
that handle cadmium telluride comply with these workplace safety requirements.
In addition, we have installed an air scrubber in our production furnace to
remove cadmium telluride from the air Galtech intends to dispose of waste in
accordance with federal, state and local regulations. Management believes that
the costs of compliance with applicable regulations will be less than one
percent of gross profits.

                    Research and Development.

During the calendar year ending December 31, 2001, we completed the setup and
initial testing of the equipment needed to produce semiconductor materials at
our new facility. Currently we are fine-tuning and addition additional
production equipment. This equipment will enable us to proceed with production
of semiconductor material for sale.

During the calendar year ended December 31, 2003, we spent $3,635 on research
and development activities, as compared to $2,757 in the calendar year ended
December 31, 2002.

Galtech received $50,000 in the first calendar quarter of 2000 to continue
research on crystal growth. We are receiving bridge financing which permits us
to pursue meaningful development of the crystal growth process through
December 2003. Our current resources will allow us to conduct no more than
five crystal growth trials through that date. We have been working on the
growth of single crystal cadmium telluride for approximately three years.
During that time, we conducted four crystal growths. We only have one growth
furnace, so any problem with the growth of a crystal will delay all progress
until the problem is fixed. This lack of additional furnaces has greatly
slowed the development of the process.

In 1999, the former president of Galtech and co-inventor of Galtech's motor
technology purchased a used automobile, an electric conversion kit, and paid
to convert the vehicle from gasoline to electric power. The vehicle was
donated to Galtech for baseline testing, performance evaluation, and as a test
bed for possible future development of the motor technology. Although we are
not actively pursuing development of the technology, interested individuals
are donating their time and effort to evaluate the current state of the art.
In 2000, we spent a total of $1,545 to update the charging system. We do not
plan to spend any other significant funds on this project in the near term.

         Costs and Effects of Compliance with Environmental Laws.

See the heading "Effect of Existing or Probable Governmental Regulations on
Business."

                           Number of Employees.

Other than its executive officers, Galtech has no employees. During the next
12 months, management expects that we will hire a maximum of five additional
employees.

                        Forward Looking Statements.

When used in this Form 10-KSB and in other filings by Galtech with the
Securities and Exchange Commission, in Galtech's press releases or in other
public or stockholder communications or oral statements made with the approval
of an authorized executive officer of Galtech, the words or phrases "would
be," "will allow," "intends to," "believes," "plans," "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project,"
or similar expressions are intended to identify "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.

Galtech cautions readers not to place undue reliance on any forward looking
statements, which speak only as of the date made, are based on certain
assumptions and expectations which may or may not be valid or actually occur,
and which involve risks of product demand, market acceptance, economic
conditions, competitive products and pricing, difficulties in product
development, commercialization, and technology, and other risks. In addition,
sales and other revenues may not commence and /or continue as anticipated due
to delays or otherwise. As a result, Galtech's actual results for future
periods could differ materially from those anticipated or projected.

Galtech does not intend to update the forward looking statements contained in
this report, except as may occur as part of its ongoing periodic reports filed
with the Securities and Exchange Commission.

ITEM 2. Description of Property.

In April 1, 2002, we entered into a 36-month lease for our office space. We
were to pay $1,850 per month at the beginning of every month. This facility
consists of 5,000 square feet of office space and production area, located at
450 South 1325 West, Orem, Utah. As of March 31, 2004 this lease will be
terminated. We will move to a smaller, more cost effective space at that time.

We have completed the relocation of all equipment, materials, test equipment,
administrative records and correspondence from our previous location to our
new facility. It should accommodate our needs over the next few years. If we
need additional space for growth, sufficient additional compatible facilities
are available in the immediate area.

Our equipment consists of a walk-in growth furnace area and computer equipment
to monitor the crystal growth. It is located at our facility in Orem, Utah. It
is currently in a prototype/research state. We are changing it constantly to
incorporate new concepts and to make incremental improvements based on results
to date. This will continue as the process is perfected.

ITEM 3. Legal Proceedings.

We are not a party to any pending legal proceeding. To the knowledge of
management, no federal, state or local governmental agency is presently
contemplating any proceeding against us. No director, executive officer or
other person who may be deemed to be an "affiliate" of Galtech or owner of
record or beneficially of more than five percent of our common stock is a
party adverse to Galtech or has a material interest adverse to Galtech in any
proceeding.

A judgment in the amount of $40,563 was entered against us in December, 1992.
This amount has been included as an account payable for December 31, 2003, in
our consolidated financial statements.

ITEM 4. Submission of Matters to a Vote of Security Holders.

None; not applicable.

                             PART II

ITEM 5. Market for Common Equity and Related Stockholder Matters.

                       Market Information.

Our common stock is quoted on the OTC Bulletin Board of the NASD, but there is
currently no established market for the stock. We can not assure you that one
will develop or be maintained. For any market that develops for our common
stock, the sale of "restricted securities" under Rule 144 of the Securities
and Exchange Commission may hurt our stock price.

Rule 144 requires that the selling stockholder has held his or her shares for
at least one year. The public must also have access to information about us.
Sellers under Rule 144 may not sell more than a certain number of shares
during any three month period. Their sales must be through unsolicited
broker's transactions, and the sellers must file with the Securities and
Exchange Commission a Notice of Sale on Form 144.

Pink Sheets LLC, formerly known as the "National Quotation Bureau, LLC,"
provided the following quotations. They do not represent actual transactions
and they do not reflect dealer markups, markdowns or commissions.

                        STOCK QUOTATIONS*


                                            Closing Bid

Quarter ended:                       High               Low
-------------                        ----               ---
March 31, 2001                       0.62               0.57
June 30, 2001                        0.375              0.3225
September 30, 2001                   0.26               0.2375
December 31, 2001                    0.205              0.1625
March 31, 2002                       0.16               0.09
June 30, 2002                        0.20               0.08
September 30, 2002                   0.18               0.045
December 31, 2002                    0.055              0.02

     Stockholders.
     -------------

As of the date of this Report, we have about 1,859 stockholders. This figure
does not include an indeterminate number of stockholders who may hold their
shares in "street name."

                           Dividends.

Galtech has not declared any cash dividends with respect to its common stock.
We do not intend to declare dividends in the foreseeable future. We will not
know our future dividend policy until we sell any of our products. We do not
have any material restrictions on our ability to pay dividends on our
securities. However, you should not invest in our shares if you need the
income that dividends provide.

            Recent Sales of Unregistered Securities.


                                    Date      Number of         Aggregate
    Name(1)                       Acquired     Shares         Consideration
    ----                          --------     ------         -------------

Todd Charl Proffitt                9/11/01     10,000       Services valued at
                                                            $0.17 per share

Verity Global Financial, L.L.C.    9/17/01     92,000       $23,000

Todd Charles Profitt              12/17/01     20,000       Services valued at
                                                            $0.13 per share

Philip Brown                      12/17/01     40,000       Services valued at
                                                            $0.13 per share

James Davis                       12/17/01     10,000       Services valued at
                                                            $0.13 per share

David Tracy                       12/17/01     74,000       Services valued at
                                                            $0.13 per share

Employees                          1/17/02     22,222       Option exercise at
                                                            $0.27 per share

Verity Global Financial, L.L.C.    3/15/02    100,000           (2)

                                   7/15/02     50,000       Services valued at
                                                            $0.13 per share

Three investors                    7/15/02    231,111       $24,000

Three investors                    7/25/02     77,555       Services valued at
                                                            $0.14 per share

Sheldon Player and                 8/19/02    215,800       Equipment valued
Donna Malone, JT                                            at $15,106

Sheldon Player and                  9/2/02    100,000       Equipment valued
Donna Malone, JT                                            at $9,000

Franz Staufer                       9/2/02     63,718       Services valued at
                                                            $5,735

McMahon Family Trust               1/28/03     45,000       Services valued at
                                                            $2,700

Rulon Cluff                        3/28/03  1,000,000       Services valued at
                                                            $80,000

Russell Chapman                    3/28/03  1,000,000       Services valued at
                                                            $80,000

William Tunnell                    3/31/03    750,000       Services valued at
                                                            $60,000

Philroy Brown                      3/31/03    500,000       Services valued at
                                                            $40,000

Richard Dean                       3/31/03    500,000       Services valued at
                                                            $40,000

Jeffrey Marx                       3/31/03     33,333       $1,000
Joseph Malyniak                    3/31/03     25,000       $  750

Lindon Kunzler Trust               3/31/03    100,000       $3,000

Wolfgang Horn                      3/31/03    100,000       $3,000

Joseph Finger                      3/31/03    133,333       $4,000

Matthew Marx                       3/31/03     33,333       $1,000

Amanda Chang-Kue                   3/31/03     33,333       $1,000

David/Janet Marx                   3/31/03     33,333       $1,000

Edward Bloom                       3/31/03     20,000       $2,000

Craig Gunderson                    3/31/03     25,000       $2,500

Elaine Paul                        3/31/03     10,000       $1,000

Kim Miller                         3/31/03     10,000       $1,000

Brian Dodge                        3/31/03     20,000       $2,000

Peter Maunsell                     3/31/03     20,000       $2,000

Robert May                         3/31/03     20,000       $2,000

Gary/Julie Osyler                  3/31/03     20,000       $2,000

Adolfo Zavaio                      3/31/03     10,000       $1,000

Anita Petit                        3/31/03     10,000       $1,000

Mike Davey                         3/31/03     10,000       $1,000

Jeff Morris                        3/31/03     10,000       $1,000

Todd Proffitt                      3/31/03     50,000       Services valued at
                                                            $3,250

Edward Bloom                       5/02/03     18,500       Services valued at
                                                            $  925

McMahon Family Trust               7/01/03     18,500       Services valued at
                                                            $  740

David Gunderson                    9/26/03     40,000       $1,200

James Lawlor                       9/26/03    100,000       $3,000

Jimmie Holcomb                     9/26/03    100,000       $3,000

Verity                             3/16/04    900,000       Interest valued at
                                                            $10,000

(1) Management believes each of these persons was an "accredited investor" as
defined in Rule 501(a)(4) of Regulation D of the Securities and Exchange
Commission, or was a sophisticated investor when these shares were issued. We
believe these shares were exempt from the registration requirements of the
Securities Act of 1933, as amended, under the "safe harbor" provided by Rule
506 of Regulation D and Section 4(2) of the Securities and Exchange
Commission, as the number of unaccredited purchasers did not exceed 35 and
each purchaser had access to all material information about Galtech prior to
the offer, sale or issuance of these "restricted securities." Nor did the
offer or sale of these securities involve any general solicitation or general
advertising.

(2) On March 15, 2002, we entered into an agreement with Verity under which we
would receive $80,000 in cash in exchange for a promissory note in the amount
of $90,000, payable on March 15, 2003. These 100,000 shares, valued at
$12,000, were issued as further consideration for this financing, along with
options that we granted to Verity to purchase 400,000 shares of our common
stock at $0.15 per share. The note was also collateralized by 900,000 shares
of our common stock, which were issued March 16, 2004  pursuant to this
agreement upon default of payment.

We did not use an underwriter in connection with any securities sales listed
in the above table.

ITEM 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.

                       Plan of Operation.

This discussion contains "forward-looking" statements and information, all of
which is modified by reference to the caption "Risk Factors' contained in our
Registration Statement on Form SB-2, as amended, which is incorporated herein
by this reference.

Due to recent weak stock market and economic conditions, Verity Global
Financial, LLC, is unable to proceed with the terms of its initial Securities
Purchase Agreement with the Company. On July 14, 2001, the parties executed an
Addendum to the Agreement. Verity to provide the Company with bridge funding
of not less than $6,000 per month in exchange for registered shares of the
Company's common stock, at a price of $0.25 per share. These payments are to
be credited against the initial $450,000 funding amount under the original
Agreement. Verity further agreed to subordinate its interest to any new
financing that the Company may obtain.

Management believes that the bridge funding provided by Verity will allow the
Company to meet its administrative expenses over the next 12 months. However,
unless the Company is able to obtain substantial additional funding from
Verity or another source, it has insufficient funds to pursue meaningful
development of its process for production of semiconductor materials. The
Company will not have enough money to purchase cadmium telluride and other
crystal growth supplies until it obtains additional funding. We continue to
seek the needed funding to continue the commercial development of Galtech. Our
preference is to do this in a way that will minimize the number of additional
shares required to obtain these needed funds. The Company can provide no
assurance that it will ever be able to obtain sufficient funding to continue
with its research and development efforts.

Since our relocation to our new facilities we have completed the setup and
initial testing of the equipment needed to produce semiconductor materials. We
are currently fine-tuning and adding additional production equipment. This
will enable us to proceed with production of semiconductor material for sale.

With respect to the motor/generator technology that we own, we recognize the
importance of moving this technology forward. As a result of our current other
priorities, we have entered into an agreement with an investor group who has
established MagPower, Inc., a company created specifically to commercialize
this motor generator technology. MagPower has begun work and will be issuing
periodic reports on its progress. With the increasing need for more efficient
motor and generator technology we project a continued interest in this
technology.

Our goal is to produce high quality, round shaped, single crystal wafers with
a high yield process. If Verity or another entity provides full funding, we
will pursue four sub-projects in an effort to meet our goal:

               Finite Element Model Development -

Cadmium telluride crystal growth is a very slow process measured in weeks. A
system of testing ideas in computer simulation is much quicker and allows for
a greater variety of designs. No one has adequately applied a computer
simulation system to crystal growth. Our efforts in this area will build on
experience that we have gained in the past two years in modeling, refining,
and understanding the key parameters for our growth process. From this effort,
we expect to verify the growth model by:

* correlating results to our model predictions;

* making adjustments in the model to more accurately reflect actual
performance;

* investigating the effects of design changes in the configuration of the
growth furnace and the process; and

* finding a better furnace and process design.

                       Equipment Upgrade -

We have already upgraded much of the equipment that we use in the growth and
production of crystals. Our lack of funding has restricted the number of
furnaces and spare furnace parts available. We hope to use the results of our
research and development efforts to improve the components of the furnace. Our
goal is to have enough replacement parts to avoid project delays when a key
piece of equipment wears out under the extreme heat of the growth process.

                 Crystal Design of Experiments -

A design of experiments is the most efficient way to quickly determine the key
variables that affect any physical process. It is especially useful in when a
process only sporadically produces outstanding results. The purpose of a
design of experiments is to identify those variables that have the greatest
effect on the quality and reproducibility of the process. We have planned two
experiments for this sub-project.

With the resources that we have allocated for this phase, we should be able to
produce about 40 cadmium telluride boules, or lumps. In general, every actual
crystal growth will first be modeled and tested in a computer simulation many
times before we grow it in the laboratory.

Sixteen boules will be used in Design of Experiments 1. The goal of Design of
Experiments 1 will be to:

* verify and adjust the parameters of the computer model;

* identify the main factors affecting the growth process; and

* test two competing design improvements for the process.

We will combine information from Design of Experiments 1 with information from
our computer modeling efforts to adjust the process variables and growth
furnace design.

Galtech plans to use the second 16 boules in Design of Experiments 2, which
will take a more detailed look at the main factors identified in Design of
Experiments 1 and will attempt to determine the three or four main variables
to use in the production of cadmium telluride.

We will use the final eight boules to verify our selection of optimal process
variables from Design of Experiments 2 and to find out whether the process is
repeatable. We will perform eight confirmation runs using the best combination
of process variables that we identify from Design of Experiments 2 and from
our computer testing. Another goal of our confirmation runs will be to
establish production costs.

Galtech will thoroughly analyze each set of experiments, using accepted
techniques for assessing crystal quality. We will send parts of exceptional
boules to laboratories and potential customers for further analysis.

If we are successful with our research and development efforts during this
time period, we plan to begin pilot production of material for samples and low
volume sales to interested customers.

We have received preliminary results from tests on a boule of our material.
Results were delayed because Sandia National Laboratories, the U.S. government
laboratory conducting the tests, was not able to cut a boule as large as the
one we gave them. As a result, the material had to be sent to on outside firm
to be cut into wafers. Because of the quality and size of the single crystal
in the boule, Sandia felt compelled to spend more time and money on the
evaluation than previously anticipated.

Overall, Sandia evaluated the boule as being of moderately high to high
quality. This evaluation is based on a comparison of our material to material
that is currently available from other companies.

The boule contained areas of very large single crystal. Our own evaluation of
the material remaining from the boule after Sandia completed its test revealed
three crystals with no rotational twins, or crystals having the same crystal
orientation as the main crystal but with a 180 degree phase shift in one of
the crystal planes. The largest crystal accounts for about 70% of the total
volume of the sample. This means that we should be able to get higher yields
than the current industry average for high grade cadmium telluride. The
industry average is about 5% to 15%. We are also encouraged by the fact that
this test boule was not seeded. Seeding involves the use of an existing
crystal to cause a new crystal to solidify and develop the same orientation as
the seed crystal. We expect to get even better results in future runs of
boules that are not seeded.

The crystalline material in our boule showed high resistivity. It is unusual
for material grown only from cadmium telluride, without the addition of a
doping agent, to demonstrate high resistivity. Doping agents give a crystal a
positive or negative bias for use in semiconductor substrates. Resistivity is
an important characteristic for certain devices and detectors. Doping agents
such as zinc are generally added to increase this characteristic. We believe
that we will be able to increase the resistivity of our material even more
with the addition of a doping agent.

Sandia computed the rocking curve of our material as 15 arc seconds. We
believe this further supports the conclusion that the material was of high
quality. We will continue our research and development efforts to refine the
process. Although results to date have been encouraging, we have not yet
completed the development process and it is difficult to say when we can
expect success.

If our research and development efforts are successful, and if we are able to
raise sufficient capital, we expect to be able to begin full-scale production
in two years after funding. We can not assure you that we will be successful
in any of these endeavors.

                     Results of Operations.

We have not had any material operations since approximately 1990. We did not
receive any revenues during the years ended December 31, 2003 and 2002.
Operating expenses for those periods were $407,809 and $230,141, respectively.
We also had interest expense of $20,297 and $41,025 during those periods,
resulting in net losses of $446,879 and $271,166.

During the year ended December 31, 2003, our main expenses were as follows:

* General and administrative;

* Legal and professional;

* Depreciation; and

* Research and Development.

During the year ended December 31, 2002, our main expenses were as follows:

* General and administrative;

* Loss on impairment of inventory;

* Legal and professional;

* Depreciation; and

* Research and Development.

                Liquidity and Capital Resources.

We had total current assets as of December 31, 2003, of $1,871, of which
$1,850 was deposits and $21 was cash. As of December 31, 2003, our total
current liabilities were $202,109.

On March 15, 2002, we entered into an agreement with Verity under which we
would receive $80,000 in cash in exchange for a promissory note in the amount
of $90,000, payable on March 15, 2003. These 100,000 shares, valued at
$12,000, were issued as further consideration for this financing, along with
options that we granted to Verity to purchase 400,000 shares of our common
stock at $0.15 per share. The note is also collateralized by 900,000 shares of
our common stock. On March 16, 2004, which is subsequent to the period covered
by this Report, we had defaulted on the note, and issued the 900,000
collateral shares to Verity.

We will not be able to conduct any material research and development
activities until we receive substantial additional funding either from Verity
or from another source. We cannot assure you that we will be able to receive
any such funding.

                    Selected Financial Data.

The following selected financial data of Galtech as of December 31, 2003 and
December 31, 2002   , are derived from, and are qualified by reference to, the
financial statements of Galtech, included elsewhere in this Form 10-KSB. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Financial Statements and Notes thereto and other financial information
included elsewhere in this Form 10-KSB.


                                                The Years Ended December 31,
                                                   2003            2002
                                                   ----            ----

Revenue                                         $      -        $       --

Net (Loss)                                      $   (446,879)   $   (271,166)


Basic (Loss) per share                          $      (0.02)   $      (0.02)


Weighted Average Shares Outstanding               20,235,772      15,488,472


Cash Dividends Declared per Common Share              --                --

Summary Consolidated Balance Sheet Data

Working Capital (Deficit)                       $   (200,238)   $   (159,256)

Total Assets                                    $     17,428    $     58,043

Stockholder's Equity (Deficit)                  $   (184,681)   $   (107,036)

Accumulated (Deficit)                           $ (5,684,409)   $ (5,237,530)



ITEM 7. Financial Statements.

<PAGE>
                 GALTECH SEMICONDUCTOR MATERIALS
                   CORPORATION AND SUBSIDIARIES

                  (A Development Stage Company)

                CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003
<PAGE>
                         C O N T E N T S





Independent Auditors' Report . . . . . . . . . . . . . . . . .  3

Consolidated Balance Sheet . . . . . . . . . . . . . . . . . .  4

Consolidated Statements of Operations  . . . . . . . . . . . .  5

Consolidated Statements of Stockholders' Equity (Deficit). . .  6

Consolidated Statements of Cash Flows. . . . . . . . . . . .   18

Notes to the Consolidated Financial Statements . . . . . . . . 20

<PAGE>




                   INDEPENDENT AUDITORS' REPORT



Board of Directors and Stockholders
Galtech Semiconductor Materials Corporation
and Subsidiaries
(A Development Stage Company)
Orem, Utah

We have audited the accompanying consolidated balance sheet of Galtech
Semiconductor Materials Corporation and Subsidiaries (a development stage
company) as of December 31, 2003 and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 2003 and 2002 and from inception on June 18, 1984 through
December 31, 2003.  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 audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Galtech Semiconductor Materials Corporation and Subsidiaries (a development
stage company) as of December 31, 2003 and the results of their operations and
their cash flows for the years ended December 31, 2003 and 2002 and from
inception on June 18, 1984 through December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.

The financial statements have been prepared assuming that the Company will
continue as a going concern.  As discussed in Note 8 to the financial
statements, the Company is a development stage company with no significant
operating results to date.  These conditions raise substantial doubt about its
ability to continue as a going concern.  Management's plans in regard to these
matters are also described in Note 8.  The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.



/s/HJ & Associates, LLC
HJ & Associates, LLC
Salt Lake City, Utah
March 15, 2004
<PAGE>


           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
                    Consolidated Balance Sheet


                              ASSETS

                                              December 31,
                                                2003
CURRENT ASSETS

     Cash                                          $    21
     Deposits                                        1,850
                                                  --------
     Total Current Assets                            1,871

EQUIPMENT, NET (Note 2)                             15,557
                                                  --------
     TOTAL ASSETS                                 $ 17,428
                                                  ========

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


CURRENT LIABILITIES

     Accounts payable (Note 7)                    $ 43,052
     Stock subscription payable                     36,050
     Notes payable (Note 3)                         90,000
     Notes payable - related (Note 4)               20,411
     Accrued expenses                               12,596
                                                  --------
     Total Current Liabilities                     202,109
                                                  --------
COMMITMENTS AND CONTINGENCIES (Note 5)

STOCKHOLDERS' EQUITY (DEFICIT)

     Common stock, $0.00025 par value, 200,000,000
      shares authorized; 20,951,089 shares issued
      and outstanding                                5,238
     Additional paid-in capital                  5,494,490
     Deficit accumulated during the development
      stage                                     (5,684,409)
                                                ----------
      Total Stockholders' Equity (Deficit)        (184,681)
                                                ----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
     (DEFICIT)                                  $   17,428
                                                ==========

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-4
<PAGE>

           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
              Consolidated Statements of Operations


                                                       From
                                                       Inception on
                                                       June 18, 1984
                              For the Years Ended      Through
                                  December 31,         December 31,
                                2003           2002    2003

SALES                         $      -    $     -     $    599,609

COST OF PRODUCT SOLD                 -          -          676,198
                              --------    -------     -------------
GROSS MARGIN                         -          -          (76,589)
                              --------    -------     -------------
OPERATING EXPENSES

General and administrative    374,939     123,501        3,213,363
Legal and professional         19,548      13,772          918,224
Research and development        3,635       2,757          641,443
Depreciation                    9,687       4,403          437,258
Loss on impairment of inventory     -      85,708           85,708
                            ---------    --------     ------------
          Total Expenses      407,809     230,141        5,295,996
                            ---------    --------     ------------
Net Loss From Operations     (407,809)   (230,141)      (5,372,585)
                            ---------    --------     ------------
OTHER INCOME (EXPENSE)

Interest expense              (20,297)    (41,025)        (148,301)
Interest income                    26           -           94,008
Loss on disposal of assets    (18,799)          -         (260,037)
Miscellaneous                       -           -            2,506
                             --------    --------    -------------
          Total Other
            Income (Expense)  (39,070)    (41,025)        (311,824)
                             --------    --------    -------------
NET LOSS                    $(446,879)  $(271,166)   $  (5,684,409)
                             ========    ========    ==============
LOSS PER SHARE              $   (0.02)  $   (0.02)
                             ========    ========

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING        20,235,772  15,488,472
                           ==========  ==========

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-5
<PAGE>
<TABLE>
<CAPTION>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
    Consolidated Statements of Stockholders' Equity (Deficit)

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance, June 18, 1984                    -  $       - $         - $        -

Stock issued for cash at $0.0143
per share                           140,173         35       1,965          -
                                -----------  ---------  ----------  ---------
Balance December 31, 1984           140,173         35       1,965          -

Stock issued for cash at $0.05
per share                           400,000        100      19,900          -

Stock issuance costs                      -          -      (4,450)         -

Purchase of treasury stock                -          -           -          -

Sale of treasury stock at $2.11
per share                                 -          -     411,073          -

Stock issued to officers for
services at $0.005 per share        438,600        110       2,083          -

Net loss for the year ended
December 31, 1985                         -          -           -   (146,384)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1985          978,773  $     245  $  430,571  $(146,384)
                                -----------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                Treasury Stock    Subscription      Total
                              Shares    Amount     Receivable       Equity
<S>                          <C>        <C>       <C>           <C>
Balance, June 18, 1984                    -  $       - $         - $        -

Stock issued for cash at $0.0143
per share                                 -          -           -      2,000
                                -----------  ---------  ----------  ---------
Balance December 31, 1984                 -          -           -      2,000

Stock issued for cash at $0.05
per share                                 -          -           -     20,000

Stock issuance costs                      -          -           -     (4,450)

Purchase of treasury stock         (403,976)    (5,950)          -     (5,950)

Sale of treasury stock at $2.11
per share                           196,658      2,896           -    413,969

Stock issued to officers for
services at $0.005 per share              -          -           -      2,193

Net loss for the year ended
December 31, 1985                         -          -           -   (146,384)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1985         (207,318) $  (3,054) $        -  $ 218,378
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                6
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance forward                     978,773  $     245  $  430,571  $(146,384)

Purchase of treasury stock                -          -           -          -

Sale of treasury stock at $29.65
per share                                 -          -   1,838,032          -

Net loss for the year ended
December 31, 1986                         -          -           -   (542,930)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1986          978,773        245   2,268,603   (689,314)

Net loss for the year ended
December 31, 1987                         -          -           -   (509,693)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1987          978,773        245   2,268,603 (1,199,007)

Stock issued for services at
$.60 per share                       25,000          6      14,994          -

Net loss for the year ended
December 31, 1988                         -          -           -   (501,513)
                               ------------  ---------  ----------  ---------
Balance, December 31, 1988        1,003,773  $     251  $2,283,597$(1,700,520)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                Treasury Stock    Subscription      Total
                              Shares    Amount     Receivable       Equity
<S>                          <C>        <C>       <C>           <C>
Balance forward                    (207,318) $  (3,054) $        -  $ 218,378

Purchase of treasury stock          (13,997)   (13,500)          -    (13,500)

Sale of treasury stock at $29.65
per share                            62,000        768    (732,300) 1,106,500

Net loss for the year ended
December 31, 1986                         -          -           -   (542,930)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1986         (159,315)   (15,786)   (732,300)   831,448

Net loss for the year ended
December 31, 1987                         -          -           -   (509,693)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1987         (159,315)   (15,786)   (732,300)   321,755

Stock issued for services at
$0.60 per share                           -          -           -     15,000

Net loss for the year ended
December 31, 1988                         -          -           -   (501,513)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1988         (159,315) $ (15,786) $ (732,300)$ (164,758)
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                7
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance forward                   1,003,773  $     251  $2,283,597$(1,700,520)

Stock issued for cash at $2.00
per share                            10,000          3      19,997          -

Stock issued for cash at $0.575
per share                            20,000          5      11,495          -

Sale of treasury stock and
subscription receivable                   -          -     (34,786)         -

Net loss for the year ended
December 31, 1989                         -          -           -   (306,612)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1989        1,033,773        259   2,280,303 (2,007,132)

Cancellation of shares                   (5)         -           -          -

Stock issued for cash at $0.10
per share                            25,000          6       2,494          -

Stock issued for cash at $0.005
per share                             3,150          1          15          -

Additional compensation for
treasury stock                            -          -      34,701          -
                                -----------  ---------  ----------  ---------
Balance                           1,061,918  $     266  $2,317,513$(2,007,132)
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                Treasury Stock    Subscription      Total
                              Shares    Amount     Receivable       Equity
<S>                          <C>        <C>       <C>           <C>
Balance forward                    (159,315) $ (15,786) $ (732,300)$ (164,758)

Stock issued for cash at $2.00
per share                                 -          -           -     20,000

Stock issued for cash at $0.575
per share                                 -          -           -     11,500

Sale of treasury stock and
subscription receivable             159,315     15,786     732,300    713,300

Net loss for the year ended
December 31, 1989                         -          -           -   (306,612)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1989                -          -           -    273,430

Cancellation of shares                    -          -           -          -

Stock issued for cash at $0.10
per share                                 -          -           -      2,500

Stock issued for cash at $0.005
per share                                 -          -           -         16

Additional compensation for
treasury stock                            -          -           -     34,701
                                -----------  ---------  ----------  ---------
Balance                                   -  $       -  $        -  $ 310,647
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                8
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance                           1,061,918  $     266  $2,317,513$(2,007,132)

Net loss for the year ended
December 31, 1990                         -          -           -   (123,676)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1990        1,061,918        266   2,317,513 (2,130,808)

Stock issued for services at
$.12 per share                       20,400          5       2,395          -

Net loss for the year ended
December 31, 1991                         -          -           -   (207,142)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1991        1,082,318        271   2,319,908 (2,337,950)

Net loss for the year ended
December 31, 1992                         -          -           -          -
                               ------------  ---------  ----------  ---------
Balance, December 31, 1992        1,082,318        271  $2,319,908$(2,337,950)

Net loss for the year ended
December 31, 1993                         -          -           -          -
                               ------------  ---------  ----------  ---------
Balance, December 31, 1993        1,082,318        271  $2,319,908$(2,337,950)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                Treasury Stock    Subscription      Total
                              Shares    Amount     Receivable       Equity
<S>                          <C>        <C>       <C>           <C>
Balance                                   -  $       -  $        -  $ 310,647

Net loss for the year ended
December 31, 1990                         -          -           -   (123,676)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1990                -          -           -    186,971

Stock issued for services at
$0.12 per share                           -          -           -      2,400

Net loss for the year ended
December 31, 1991                         -          -           -   (207,142)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1991                -          -           -    (17,771)

Net loss for the year ended
December 31, 1992                         -          -           -          -
                                -----------  ---------  ----------  ---------
Balance, December 31, 1992                -          -           -    (17,771)

Net loss for the year ended
December 31, 1993                         -          -           -          -
                                -----------  ---------  ----------  ---------
Balance, December 31, 1993                -          -           -    (17,771)
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                9
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance, December 31, 1993        1,082,318        271  $2,319,908$(2,337,950)

Net loss for the year ended
December 31, 1994                         -          -           -    (10,964)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1990        1,082,318        271   2,319,908 (2,348,914)

Stock issued for Commodity
Recovery Corporation valued at
predessor cost or $0.00             500,000        125        (125)         -

Stock issued for Energy Research
Corporation valued at predessor
cost of $0.00                     4,200,000      1,050      (1,050)         -

Conversion of debt to equity              -          -       3,500          -

Net loss for the year ended
December 31, 1995                         -          -           -    (89,740)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1995        5,782,318  $   1,446  $2,322,233$(2,438,654)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                Treasury Stock    Subscription      Total
                              Shares    Amount     Receivable       Equity
<S>                          <C>        <C>       <C>           <C>
Balance, December 31, 1993                -          -           -    (17,771)

Net loss for the year ended
December 31, 1994                         -          -           -    (10,964)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1994                -          -           -    (28,735)

Stock issued for Commodity
Recovery Corporation valued
at predessor cost of $0.00                -          -           -          -

Stock issued for Energy
Research Corporation valued at
predessor cost of $0.00                   -          -           -          -

Conversion of debt to equity              -          -           -      3,500

Net loss for the year ended
December 31, 1995                         -          -           -    (89,740)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1995                -  $       -  $        -  $(114,975)
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                10
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance, December 31, 1995        5,782,318  $   1,446  $2,322,233$(2,438,654)

Stock issued for cash at $0.60
per share                           150,000         38      89,962          -

Stock issued for services valued
at $1.00 per share                  288,000         73     287,927          -

Stock subscription receivable at
$0.50 per share                      40,000         10      19,990          -


Net loss for the year ended
December 31, 1996                         -          -           -   (400,501)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1996        6,260,318      1,567   2,720,112 (2,839,155)

Stock issued for cash at
$0.50 per share                   1,163,700        291     575,773          -

Stock issued for services
valued at $0.50                     250,000         63     124,937          -

Receipt of stock subscription             -          -           -          -

Net loss for the year ended
December 31, 1997                         -          -           -   (290,549)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1997        7,674,018  $   1,921  $3,420,822$(3,129,704)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                     Treasury Stock   Subscription  Total
                                     Shares  Amount     Receivable  Equity
<S>                              <C>        <C>       <C>           <C>
Balance, December 31, 1995                -  $       -  $        -  $(114,975)

Stock issued for cash at $0.60
per share                                 -          -           -     90,000

Stock issued for services valued
at $1.00 per share                        -          -           -    288,000

Stock subscription receivable at
$0.50 per share                           -          -     (20,000)         -

Net loss for the year ended
December 31, 1996                         -          -           -   (400,501)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1996                -          -     (20,000)  (137,476)

Stock issued for cash at
$0.50 per share                           -          -           -    576,064

Stock issued for services valued
at $0.50 per share                        -          -           -    125,000

Receipt of stock subscription             -          -      20,000     20,000

Net loss for the year ended
December 31, 1997                         -          -           -   (290,549)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1997                -  $       -  $        -  $(293,039)
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                11
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance, December 31, 1997        7,674,018  $   1,921  $3,420,822$(3,129,704)

Stock issued for services valued
at $0.12 per share                2,970,000        742     355,658          -

Contribution of capital by
shareholder                               -          -      29,243          -

Net loss for the year ended
December 31, 1998                         -          -           -   (464,211)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1998       10,644,018      2,663   3,805,723 (3,593,915)

Stock issued for services
valued at $0.27 per share         1,000,000        250     269,750          -

Stock issued for services to
be rendered valued at $0.27
per share                         2,000,000        500     539,500          -

Stock issued for debt and
subscription valued at $0.27
per share                         1,000,000        250     269,750          -

Net loss for the year ended
December 31, 1999                         -          -           -   (729,731)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1999       14,644,018  $   3,663  $4,884,723$(4,323,646)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                     Treasury Stock   Subscription  Total
                                     Shares  Amount     Receivable  Equity
<S>                              <C>        <C>       <C>           <C>
Balance, December 31, 1997                -  $       -  $        -  $ 293,039

Stock issued for services valued
at $0.12 per share                        -          -           -    356,400

Contribution of capital by
shareholder                               -          -           -     29,243

Net loss for the year ended
December 31, 1998                         -          -           -   (464,211)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1998                -          -           -   214,471

Stock issued for services valued
at $0.27 per share                        -          -           -    270,000

Stock issued for services to be
rendered valued at $0.27 per share        -          -    (180,000)   360,000

Stock issued for debt and
subscription valued at $0.27
per share                                 -          -    (208,002)    61,998

Net loss for the year ended
December 31, 1999                         -          -           -   (729,731)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1999                -  $       -  $ (388,002) $ 176,738
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                12
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance, December 31, 1999       14,644,018  $   3,663  $4,884,723$(4,323,646)

Stock issued for cash valued
at $0.25 per share                  200,000         50      49,950          -

Receipt of stock subscription             -          -           -          -

Expense of stock subscription             -          -           -          -

Net loss for the year ended
December 31, 2000                         -          -           -   (425,384)
                                -----------  ---------  ----------  ---------
Balance, December 31, 1998       14,844,018      3,713   4,934,673 (4,749,030)

Common stock issued for services
valued at $0.17 per share            10,000          2       1,698          -

Common stock issued for cash
at $0.25 per share                   92,000         23      22,977          -

Common stock issued for services
valued at $0.13 per share            20,000          5       4,995          -


Common stock issued for services
valued at $0.13 per share            40,000         10       9,990          -

Common stock issued for services
valued at $0.13 per share            10,000          2       2,498          -

Common stock issued for services
valued at $0.13 per share            74,000         18      18,482          -

Net loss for the year ended
December 31, 2001                         -          -           -   (217,334)
                                -----------  ---------  ----------  ---------
Balance, December 31, 2001       15,090,018  $   3,773  $4,995,313$(4,966,364)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                     Treasury Stock   Subscription  Total
                                     Shares  Amount     Receivable  Equity
<S>                              <C>        <C>       <C>           <C>
Balance, December 31, 1999                -  $       -  $ (388,002) $ 176,738

Stock issued for cash valued
at $0.25 per share                        -          -           -     50,000

Receipt of stock subscription             -          -      25,000     25,000

Expense of stock subscription             -          -     363,002    363,002

Net loss for the year ended
December 31, 2000                         -          -           -   (425,384)
                                -----------  ---------  ----------  ---------
Balance, December 31, 2000                -          -           -    189,356

Common stock issued for services
at $0.17 per share                        -          -           -      1,700

Common stock issued for cash
at $0.25 per share                        -          -      (6,000)    17,000

Common stock issued for services
at $0.13 per share                        -          -           -      5,000

Common stock issued for services
at $0.13 per share                        -          -           -     10,000

Common stock issued for services
at $0.13 per share                        -          -           -      2,500

Common stock issued for services
at $0.13 per share                        -          -           -     18,500

Net loss for the year ended
December 31, 2001                         -          -           -   (217,334)
                                -----------  ---------  ----------  ---------
Balance, December 31, 2001                -  $       -  $   (6,000) $  26,722
                                -----------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                13
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance, December 31, 2001       15,090,018  $   3,773  $4,995,313$(4,966,364)

January 12, 2002, received
cash payment on subscription
receivable                                -          -           -          -

January 17, 2002, employee options
exercised at $0.27 per share         22,222          6       5,994          -

March 15, 2002, stock issued for
loan costs at $0.12 per share       100,000         25      11,975          -

March 15, 2002, options issued
at market value                           -          -      28,329          -

July 11, 2002, common stock issued
for services at $0.135 per share     50,000         12       6,738          -

July 15, 2002, common stock issued
for cash at $0.09 to $0.12 per
share                               231,111         58      23,942          -

July 15, 2002, options issued at
market value                              -          -       4,880          -

July 25, 2002, common stock issued
for services at $0.14 per share      77,555         19      10,839          -
                                -----------  ---------  ----------  ---------
Balance forward                  15,570,906  $   3,893  $5,088,010$(4,966,364)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                     Treasury Stock   Subscription  Total
                                     Shares  Amount     Receivable  Equity
<S>                              <C>        <C>       <C>           <C>
Balance, December 31, 2001                -  $       -  $   (6,000) $  26,722

January 12, 2002, received
cash payment on subscription
receivable                                -          -       6,000      6,000

January 17, 2002, employee options
exercised at $0.27 per share              -          -           -      6,000

March 15, 2002, stock issued for
loan costs at $0.12 per share             -          -           -     12,000

March 15, 2002, options issued
at market value                           -          -           -     28,329

July 11, 2002, common stock issued
for services at $0.135 per share          -          -           -      6,750

July 15, 2002, common stock issued
for cash at $0.09 to $0.12 per
share                                     -          -           -     24,000

July 15, 2002, options issued at
market value                              -          -           -      4,880

July 25, 2002, common stock issued
for services at $0.14 per share           -          -           -     10,858
                                -----------  ---------  ----------  ---------
Balance forward                           -  $       -  $        -  $ 125,539
                               ------------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                14
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance forward                  15,570,906  $   3,893  $5,088,010$(4,966,364)

August 19, 2002, common stock
issued for equipment at $0.07
per share                           215,800         54      15,052          -

September 2, 2002, common stock
issued for services at $0.09 per
share                                63,718         16       5,719          -

September 2, 2002, common stock
issued for equipment at $0.09
per share                           100,000         25       8,975          -

Services contributed during
the year ended December 31,
2002                                      -          -       8,750          -

Net loss for the year ended
December 31, 2002                         -          -           -   (271,166)
                                -----------  ---------  ----------  ---------
Balance forward                  15,950,424  $   3,988  $5,126,506$(5,237,530)
                               ------------  ---------  ----------  ---------
</TABLE>
[continued]
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                     Treasury Stock   Subscription  Total
                                     Shares  Amount     Receivable  Equity
<S>                              <C>        <C>       <C>           <C>
Balance forward                           -  $       -  $        -  $ 125,539

August 19, 2002, common stock
issued for equipment at $0.07
per share                                 -          -           -     15,106

September 2, 2002, common stock
issued for services at $0.09 per
share                                     -          -           -      5,735

September 2, 2002, common stock
issued for equipment at $0.09
per share                                 -          -           -      9,000

Services contributed during
the year ended December 31,
2002                                      -          -           -      8,750

Net loss for the year ended
December 31, 2002                         -          -           -   (271,166)
                                -----------  ---------  ----------  ---------
Balance forward                           -  $       -  $        -  $(107,036)
                               ------------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                15
<PAGE>
<TABLE>
<CAPTION>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance Forward               15,950,424     $3,988 $5,126,506   $(5,237,530)

January 17, 2003, common
stock issued for services
at $0.055 per share               84,000         21      4,597             -

January 27, 2003, common
stock issued for services at
$0.06 per share                   45,000         11      2,689             -

February 13, 1003, common
stock issued for services
at $0.08 per share             3,750,000        937    299,063             -

February 15, 2003, common
stock issued for cash at
$0.03 and $0.10 per share        676,665        168     33,082             -

March 13, 2003, common
stock issued for services
at $0.0065 per share              50,000         13      3,237             -

March 17, 2003, common
stock issued for services
at $0.0065 per share              70,000         18      4,533             -
                              ----------     ------ ----------   -----------
Balance forward               20,626,089     $5,156 $5,473,707   $(5,237,530)
                              ----------     ------ ----------   -----------
</TABLE>
[CONTINUED]
<TABLE>
<CAPTION>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                     Treasury Stock   Subscription  Total
                                     Shares  Amount     Receivable  Equity
<S>                              <C>        <C>       <C>           <C>
Balance forward                           -  $       -  $        -  $(107,036)

January 17, 2003, common
stock issued for services
at $0.055 per share                       -          -           -      4,618

January 27, 2003, common
stock issued for services at
$0.06 per share                           -          -           -      2,700

February 13, 1003, common
stock issued for services
at $0.08 per share                        -          -           -    300,000

February 15, 2003, common
stock issued for cash at
$0.03 and $0.10 per share                 -          -           -     33,250

March 13, 2003, common
stock issued for services
at $0.0065 per share                      -          -           -      3,250

March 17, 2003, common
stock issued for services
at $0.0065 per share                      -          -           -      4,551
                                  ---------   --------   ---------  ---------
Balance forward                           -          -           -  $ 241,333
                                  ---------   --------   ---------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                               F-16
<PAGE>
<TABLE>
<CAPTION>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

                                                       Additional
                                    Common Stock        Paid-in   Accumulated
                                  Shares     Amount     Capital      Deficit
<S>                            <C>          <C>       <C>         <C>
Balance Forward                  20,626,089  $   5,156  $5,473,707$(5,237,530)

April 10, 2003, common
stock issued for cash
at $0.03 per share                   48,000         12      11,988          -

April 15, 2003, common
stock issued for services at
$0.05 per share                      18,500          5         920          -

June 10, 1003, common
stock issued for services
at $0.04 per share                   18,500          5         735          -

July 1, 2003, common
stock issued for cash at
$0.03 per share                     240,000         60       7,140          -

Net loss for the year
ended December 31, 2003                   -          -           -   (446,879)
                                 ----------   --------  ---------- ----------
Balance, December 31, 2003       20,951,089   $  5,238  $5,494,490$(5,684,409)
                                 ==========   ========  ========== ===========



</TABLE>
[CONTINUED]
<TABLE>
<CAPTION>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                     Treasury Stock   Subscription  Total
                                     Shares  Amount     Receivable  Equity
<S>                              <C>        <C>       <C>           <C>
Balance forward                           -  $       -  $        -  $ 241,333

April 10, 2003, common
stock issued for cash
at $0.03 per share                        -          -           -     12,000

April 15, 2003, common
stock issued for services at
$0.05 per share                           -          -           -        925

June 10, 1003, common
stock issued for services
at $0.04 per share                        -          -           -        740

July 1, 2003, common
stock issued for cash at
$0.03 per share                           -          -           -      7,200

Net loss for the year
ended December 31, 2003                   -          -           -   (446,879)
                                 ----------   --------  ---------- ----------
Balance, December 31, 2003                -   $      -  $        - $ (184,681)
                                 ==========   ========  ========== ===========



</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                               F-17
<PAGE>
<TABLE>
<CAPTION>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
              Consolidated Statements of Cash Flows

                                                                     From
                                                                 Inception on
                                                                 June 18, 1984
                                           For the Years Ended      Through
                                              December 31,        December 31,
                                             2003      2002           2003
<S>                                      <C>          <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     Net loss                              $(446,879) $(271,166)  $(5,684,409)
     Adjustment to reconcile net loss to net
      cash used by operating activities:
          Depreciation                         9,687      4,403       437,258
          Amortization of interest and
            debt issue costs                   8,177     40,125        48,302
          Common stock issued for
          services                           316,784     28,223     1,782,107
          Loss on disposal of property             -          -       241,238
          Loss on impairment of inventory          -     85,708        85,708
          Contributed services                     -      8,750         8,750
          Stock subscription expensed              -          -       388,002
     Changes in operating assets and liabilities:
          (Increase) decrease in inventory     3,635     (3,635)      (85,708)
          (Increase) decrease in deposits          -     (1,850)       (1,850)
          Increase (decrease) in accounts
          payable                             (4,064)    (2,138)        2,487
          Increase (decrease) in accrued
          liabilities                         10,016        900        72,267
                                           ---------   --------   -----------
               Net Cash Used by
               Operating Activities         (102,644)  (110,680)   (2,705,848)
                                           ---------   --------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES

     Capital expenditures                     18,799    (24,340)     (723,732)
     Purchase of treasury stock                    -          -       (19,450)
     Stock subscription                            -          -      (732,300)
                                           ---------  ---------   -----------
               Net Cash Provided (Used)
               by Investing Activities        18,799    (24,340)   (1,475,482)
                                           ---------  ---------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES

     Proceeds from note payable                2,027     80,000        82,027
     Proceeds from note payable - related      9,001      7,000        63,786
     Repayments of note payable - related     (4,000)         -      (447,761)
     Sale of treasury stock                        -          -     1,911,183
     Stock subscription                       24,050     18,000       774,350
     Common stock issued for cash             52,450     30,000     1,297,766
                                           ---------  ---------   -----------
          Net Cash Provided by
          Financing Activities             $  83,528  $ 135,000   $ 4,181,351
                                           ---------  ---------   -----------
                               F-18

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
        Consolidated Statements of Cash Flows (Continued)

                                                                     From
                                                                 Inception on
                                                                 June 18, 1984
                                           For the Years Ended      Through
                                              December 31,        December 31,
                                             2003      2002           2003
<S>                                      <C>          <C>       <C>
INCREASE (DECREASE) IN CASH             $    (317)  $   (20)  $       21

CASH AT BEGINNING OF PERIOD                   338       358            -

CASH END OF PERIOD                      $       21   $   338   $       21

     SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION

CASH PAID DURING THE YEAR FOR

 Interest                               $        -   $     -   $   85,687
 Income taxes                           $       -   $     -   $        -


SCHEDULE OF NON-CASH FINANCING ACTIVITIES

     Common stock issued for services     $  316,784   $28,223   $1,782,108
     Common stock issued for debt         $        -   $     -   $   61,997
     Common stock issued for loan costs   $        -   $40,329   $   40,329
     Common stock issued for equipment    $        -   $24,106   $   24,106
     Contributed services                 $        -   $ 8,750   $    8,750

                               F-19

</TABLE>
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002


NOTE 1 -  SIGNIFICANT ACCOUNTING POLICIES

     The consolidated financial statements presented are those of Galtech
     Semiconductor Materials Corporation (the Company) and its wholly-owned
     subsidiaries Energy Research Corporation (ERC) and Commodity Recovery
     Corporation (CRC).  The Company was incorporated on June 18, 1984 under
     the laws of the State of Utah as Versa tech, Inc.  On April 30, 1985,
     the Company changed its name to Galtech, Inc., and on June 18, 1986, the
     Company changed its name to Galtech Semiconductor Materials Corporation.
     The Company was engaged in the manufacture of compound semiconductor
     materials, but ceased all operations in 1990 when a fire destroyed the
     Company's research and development as well as the Company's operations
     center.  Principal operations have not yet resumed.  On February 28,
     1995, the Company issued 500,000 shares of common stock in exchange for
     100% of the issued and outstanding common stock of CRC.  On February 28,
     1995, the Company issued 4,200,000 shares of common stock in exchange
     for 100% of the issued and outstanding shares of ERC.  (Note 5)

     Energy Research Corporation (ERC) was incorporated on February 7, 1994
     under the laws of the State of Arizona.  ERC was incorporated to develop
     and produce alternative sources of energy.

     Commodity Recovery Corporation (CRC) was incorporated on October 31,
     1994 under the laws of the State of Utah.  CRC was incorporated to
     develop and market products relating to the decontamination of
     aflatoxin.

     At the time of acquisition of CRC and ERC, the Company was essentially
     inactive, with no operations and minimal assets.  Neither CRC or ERC had
     any assets or operations.  As such, the acquisition was recorded at
     predessor cost which was $0.  The Company is the continuing entity for
     accounting and legal purposes.

     a.  Accounting Methods

     The Company's financial statements are prepared using the accrual method
     of accounting.  The Company has elected a December 31 year end.

     b.  Equipment

     Depreciation of equipment is provided using the straight-line method
     over the estimated lives of five years.

     Maintenance and repairs of the equipment that do not improve or extend
     the lives of the respective assets are charged to expense as incurred.
     Major renewals and betterments are treated as capital expenditures and
     depreciated accordingly.

     When assets are retired or otherwise disposed of, or become fully
     depreciated, the cost of the assets and the related accumulated
     depreciation are removed from the accounts with any gain or loss on
     disposition reflected in the statement of operations.
                               F-20
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002

NOTE 1 -  SIGNIFICANT ACCOUNTING POLICIES (Continued)

     c.  Income Taxes

     Deferred taxes are provided on a liability method whereby deferred tax
     assets are recognized for deductible temporary differences and operating
     loss and tax credit carryforwards and deferred tax liabilities are
     recognized for taxable temporary differences.  Temporary differences are
     the differences between the reported amounts of assets and liabilities
     and their tax bases.  Deferred tax assets are reduced by a valuation
     allowance when, in the opinion of management, it is more likely that not
     that some portion or all of the deferred tax assets will not be
     realized.  Deferred tax assets and liabilities are adjusted for the
     effects of changes in tax laws and rates on the date of enactment.

     Net deferred tax assets consist of the following components as of
     December 31, 2003 and 2002:
                                      2003            2002
     Deferred tax assets:
          NOL Carryover            $1,530,400    $     1,484,165
          Depreciation                  6,420              8,480
                                   ----------    ---------------
     Total Deferred Tax Asset       1,536,820          1,492,645

     Deferred tax liabilities:              -                  -

     Valuation allowance           (1,536,820)        (1,492,645)
                                   ----------    ---------------
     Net deferred tax asset        $        -    $             -
                                   ==========    ===============

     The income tax provision differs from the amount of income tax
     determined by applying the U.S. federal income tax rate of 39% to pretax
     income from continuing operations for the years ended December 31, 2003
     and 2002 due to the following:

                                           2003           2002
     Book loss                          $(174,280)     $(106,500)
     Depreciation                           2,360         (4,050)
     Stock for services/options expense   123,545          9,300
     Related Parties                        1,955              -
     Asset Disposal                         2,890              -
     Other                                   (645)             -
     Valuation allowance                   44,175        101,250
                                        ---------      ---------
                                        $       -      $       -

     At December 31, 2003, the Company had net operating loss carryforwards
     of approximately $3,900,000 that may be offset against future taxable
     income from the year 2003 through 2023.  No tax benefit has been
     reported in the December 31, 2003 consolidated financial statements
     since the potential tax benefit is offset by a valuation allowance of
     the same amount.
                               F-21
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002


NOTE 1 -  SIGNIFICANT ACCOUNTING POLICIES (Continued)

     c.  Income Taxes (Continued)

     Due to the change in ownership provisions of the Tax Reform Act of 1986,
     net operating loss carryforwards for Federal income tax reporting
     purposes are subject to annual limitations.  Should a change in
     ownership occur, net operating loss carryforwards may be limited as to
     use in the future.

     d.  Cash Equivalents

     The Company considers all highly liquid investments with a maturity of
     three months or less when purchased to be cash equivalents.

     e.  Basic Loss Per Share

                              For the Year Ended
                              December 31, 2003
                    Loss            Shares             Per Share
                  (Numerator)    (Denominator)           Amount
                  -----------    -------------         ---------
                   $(446,879)      20,235,772            $(0.02)
                   =========       ==========            ======

                              For the Year Ended
                              December 31, 2002
                    Loss             Shares             Per Share
                 (Numerator)     (Denominator)           Amount
                 -----------     -------------          ---------
                  $(271,166)       15,488,472            $(0.02)
                  =========        ==========            ======

     The computations of basic loss per share of common stock is based on the
     weighted average number of shares outstanding during the period.

     f. Principles of Consolidation

     The consolidated financial statements include those of Galtech
     Semiconductor Materials Corporation (the Company) and its 100% owned
     subsidiaries Energy Research Corporation and Commodity Recovery
     Corporation.  All significant intercompany accounts and transactions
     have been eliminated.

      g. 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 the reported
     amounts of assets and liabilities and disclosure of contingent assets
     and liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period.  Actual
     results could differ from those estimates.
                               F-22
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002


NOTE 1 -  SIGNIFICANT ACCOUNTING POLICIES (Continued)

     h.  Stock Options

     As permitted by SFAS No. 123 and amended by SFAS No. 148, the Company
     elected to measure and record compensation cost relative to employee
     stock option costs in accordance with APB 25, and related
     interpretations and make proforma disclosures of net income and earnings
     per share as if the fair value method of valuing stock options had been
     applied.  Under APB 25, compensation cost is recognized for stock
     options granted to employees when the option price is less than the
     market price of the underlying common stock on the date of grant.

     i.  Revenue Recognition

     The Company currently has no source of revenues.  Revenue recognition
     policies will be determined when principal operations begin.

     j. Newly Issued Accounting Pronouncements

     During the year ended December 31, 2003, the Company adopted the
     following accounting pronouncements, which had no impact on the
     financial statements or results of operations:

               SFAS No. 143, Accounting for Asset Retirement Obligations;
               SFAS No. 145, Recision of FASB Statements 4,44, and 64,
               amendment of Statement 13, and Technical Corrections;
               SFAS No. 146, Accounting for Exit or Disposal Activities;
               SFAS No. 147, Acquisitions of certain Financial
               Institutions;
               SFAS No. 148, Accounting for  Stock Based Compensation;
               SFAS No. 149, Amendment of Statement 133 on Derivative
               Instruments and Hedging Activities, and;
               SFAS No. 150, Accounting for Certain Financial Instruments
               with Characteristics of both Liabilities and Equity.

     In addition,  during the year ended December 31, 2003, FASB
     Interpretations No. 45 and No. 46, along with various Emerging Issues
     Task Force Consensus (EITF) were issued and adopted by the Company and
     had no impact on its financial statements.

                               F-23
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002


NOTE 2 -  EQUIPMENT
                                          December 31,
                                             2003

     Equipment consists of the following:

     Research equipment                 $    200,205
     Furniture                                 3,205
     Leasehold improvements                    2,118
     Less: accumulated depreciation         (189,971)
                                       -------------
     Net Equipment                     $      15,557
                                       =============

     Amounts charged to depreciation expense were $9,687 and $4,403 for the
     years ended December 31, 2003 and 2002, respectively.

NOTE 3 -  NOTES PAYABLE

     On March 15, 2002 , the Company entered into a debt agreement with
     Varity Global, Inc., whereby the Company would receive $80,000 in cash
     in exchange for a $90,000 Promissory Note payable on March 15, 2003.  As
     the company was unable to pay back the promissory note when it was due,
     the note was reassigned to Enterprise Group, LLC as such, Enterprise
     Group paid Varity Global $90,000 and the current years note payable
     amount of $90,000 is now due to Enterprise Group, LLC. As further
     consideration for the financing, the Company also issued 100,000 shares
     of common stock valued at $12,000 and 400,000 options to purchase common
     shares at $0.15 per share.  The options have a Black-Scholes value of
     $28,329.  The Note is also collateralized by 900,000 shares of common
     stock which are to be issued upon default by the Company.

     The difference between the cash received and the amount of the
     promissory note, of $10,000, has been treated as prepaid interest
     expense and is recorded as a contra liability offsetting the promissory
     note.  The contra liability is being amortized over the life of the
     note, or one year.  During the year ended December 31, 2002, $7,973 has
     been recognized as interest expense related to the note.

     The 100,000 shares of common stock and the 400,000 options have been
     treated as capitalized loan costs, which will be amortized over the life
     of the note, or one year.  During the year ended December 31, 2002,
     $32,153 has been recognized as amortization expense related to the loan
     costs.
                               F-24
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002

NOTE 4 -  RELATED PARTY TRANSACTIONS

     In 2002, a current officer made an advance to the Company if $7,000
     which bears interest at 10%, is unsecured and due on demand.  This
     officer also contributed services valued at $8,750 to the Company.

     In 2003, a current officer paid for a number of company expenses in the
     amount of $5,000. Although no formal note was signed, the amount due the
     officer accrues interest at 10%.

NOTE 5 -  STOCK TRANSACTIONS

     On February 8, 1995, the Board of Directors approved a 20 to 1 reverse
     stock split.  All references to shares outstanding and earnings per
     share have been retroactively restated to reflect the reverse stock
     split.

     On February 28, 1995, the Board of Directors issued 500,000 shares of
     common stock to acquire Commodity Research Corporation (CRC).  CRC has
     no assets or operating history and the acquisition was valued at $0.

     On February 28, 1995, the Board of Directors issued 4,200,000 shares of
     common stock to acquire Energy Research Corporation (ERC).  ERC had no
     assets or operating history, and the acquisition was valued at
     predecessor cost of $0.

     In November 1995, the Company issued 125,000 shares of common stock for
     public relations services to be performed.  The contract was canceled in
     December, 1995 and the stock was returned and canceled.  Accordingly,
     the financial statements do not reflect the issuance and cancellation of
     the 125,000 shares.

     In 1996, the Company issued 150,000 shares of common stock for cash at
     $0.60 per share.

     In 1996, the Company issued 40,000 shares of common stock for a
     subscription receivable valued at $0.50 per share.

     In 1996, the Company issued 288,000 shares of common stock for legal and
     professional services rendered, valued at $1.00 per share.

     In 1997, the Company issued 1,163,700 shares of common stock for cash at
     $0.50 per share.

     In 1997, the Company issued 250,000 shares of common stock for services,
     valued at $0.50 per share.

     In 1998, the Company issued 2,970,000 shares of common stock for
     services valued at $0.12 per share.
                               F-25
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002

NOTE 5 -  STOCK TRANSACTIONS (Continued)

     In 1999, the Company issued 3,000,000 shares of common stock for
     services valued at $0.27 per share.

     In 1999, the Company issued 1,000,000 shares of common stock for debt
     and subscription valued at $0.27 per share.

     In 2000, the Company issued 200,000 shares of common stock for cash
     valued at $0.25 per share.

     In 2001, the Company issued 10,000 shares of common stock for services
     valued at $0.17 per share.

     In 2001, the Company issued 92,000 shares of common stock for cash
     valued at $0.25 per share.

     In 2001, the Company issued 144,000 shares of common stock for services
     valued at $0.13 per share.

     In 2002, the Company issued 100,000 shares of common stock for loan
     costs valued at $0.22 per share.

     In 2002, the Company issued 22,222 shares of common stock for employee
     options exercised at $0.27 per share.

     In 2002, the Company issued 191,273 shares of common stock for services
     valued at $0.09   $0.14 per share.

     In 2002, the Company issued 315,800 shares of common stock for equipment
     valued at $0.07 - $0.09 per share.

     In 2002, the Company issued 231,111 shares of common stock for cash
     valued at $0.09- $0.12 per share.

     In 2003, the Company issued 4,036,000 shares of common stock for
     services valued at $0.04 -$0.08 per share.

     In 2003, the Company issued 964,665 shares of common stock for cash
     valued at $0.03-$0.10 per share.

NOTE 6 -  STOCK OPTIONS

     During March 2002, the Company granted options to purchase 400,000
     shares of common stock.  The options have an exercise price of $0.15 per
     share, vested on April 1, 2002 and have a two-year term.

     During July 2002, the Company granted options to purchase 120,000 shares
     of common stock.  The options have an exercise price of $0.25 per share,
     vest immediately and have a one-year term.
                               F-26
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002


NOTE 6 -  STOCK OPTIONS (Continued)

     A summary of the status of the Company's outstanding stock options as of
     December 31, 2003 and 2002 and changes during the periods then ended is
     presented below:

                                          2003                    2002
                                             Weighted                Weighted
                                             Average                 Average
                                             Exercise                Exercise
                                   Shares    Price          Shares   Price

     Outstanding, beginning of
      year                         770,000   $0.27          500,000   $ 0.27
     Granted                             -       -          520,000     0.17
     Expired/Cancelled            (370,000)   0.26         (227,778)    0.27
     Exercised                           -       -          (22,222)    0.27
                                  --------   -----         --------    -----
     Outstanding end of year       400,000   $0.27          770,000   $ 0.20
                                  ========   =====         ========    =====
     Exercisable                   400,000   $0.27          770,000   $ 0.20
                                  ========   =====         ========    =====

                    Outstanding                   Exercisable

                              Weighted
                   Number     Average     Weighted     Number       Weighted
               Outstanding    Remaining   Average      Exercisable  Average
Range of       at Dec. 31, Contractual    Exercise     at Dec.31,   Exercise
Exercise Prices     2002      Life        Price          2003       Price
---------------   ----------- ----------- --------    ----------- --------
     $    0.15      400,000   0.50          0.15        400,000     0.15

NOTE 7 -  COMMITMENTS AND CONTINGENCIES

     On December 18, 1992, a judgment was entered against the Company for
     $40,563 for non-payment of an accounts payable.  This amount has been
     included in the accounts payable for December 31, 2003.  The Company has
     written off other accounts payable which were incurred prior to 1990.
     The Company's legal counsel has represented that the statute of
     limitations for collection of the payables which were written off has
     expired. The Company does not intend to pay the liabilities which were
     written off, however there is no assurance that the creditors will not
     make claims against the Company.

     In April 1, 2002, the Company entered into a thirty-six month lease for
     its office space.  The Company pays $1,850 per month at the beginning of
     the month. Rent expense for the year ended December 31, 2003 and 2002
     was $22,200 and $20,800, respectively.
                               F-26
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2003 and 2002

NOTE 8 -  GOING CONCERN

     The Company's financial statements are prepared using the accounting
     principles generally accepted in the United States of America applicable
     to going concern which contemplates the realization of assets and
     liquidation of liabilities in the normal course of business.  However,
     the Company has little cash and without realization of additional
     adequate financing, it would be unlikely for the Company to pursue and
     realize its objective of operating profitably.  The Company plans to
     continue the research and development process prior to the sales of its
     product.  In the interim, management has committed to covering the
     operating expenses of the Company.

                               F-27
<PAGE>
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

During our two most recent calendar years, and since then, our principal
independent accountant has not resigned or declined to stand for re-election,
and we have not dismissed our principal independent accountant during that
period. Galtech and its auditors have not disagreed on any items of accounting
treatment or financial disclosure.

                            PART III

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

                Directors and Executive Officers.

The following table sets forth the names of all of our current directors and
executive officers. These persons will serve until the next annual meeting of
the stockholders or until their successors are elected or appointed and
qualified, or their prior resignations or terminations.


                                                         Date of
                            Positions                  Election or
Name                        Held*                      Designation
----                        ----                       -----------

Worth P. Allred             VP, Research
                            & Development                 9/91
                            Director                      9/91

Rulon Cluff                 Secretary/                   7/10/01
                            Treasurer                    7/10/01
                            Director                      2/7/03

Philroy Brown, Jr.          VP, Production &             2/07/03
                            Product Development
                            & Sales
                            Acting President             4/15/03

Richard J. Dean             Executive VP                 2/07/03

William Tunnell             Director                     2/07/03

     Business Experience.
     --------------------

Worth P. Allred, Vice President, Research and Development, Director. Mr.
Allred is 77 years of age. He has over 40 years of experience in semiconductor
compound materials and is one of the world's leading experts in the field of
crystal growth. Mr. Allred received a Masters degree in Nuclear Physics from
Brigham Young University in 1953. He has spent the past five years conducting
research in cadmium telluride and cadmium zinc telluride crystal growth at
Galtech. Mr. Allred has published over 33 papers in the area of crystal
growth.

Rulon Cluff, Secretary/ Treasurer and Director. Mr. Cluff is 75 years of age.
Mr. Cluff has over 20 years experience in the semiconductor compound materials
field in management positions as president and director and in marketing
capacities. For the past eight months, Mr. Cluff has served as a member of the
transition team for Galtech. During the past five years, Mr. Cluff has been
active in civil aviation education and training and has also served as an
advisor to Galtech and more recently, as Secretary/Treasurer.

Philroy Brown, Jr., Acting President, Vice President, Production & Product
Development & Sales, and Director. Mr. Brown, age 55, has been the Laboratory
Manager of Electrical Engineering at Brigham Young University for the past
nine years.

Richard J. Dean, Executive Vice President and Director. Mr. Dean, 74 years
old,  retired from the practice of dentistry in 1976. Since 1992, he has been
involved in the development of mining properties in Utah.

                 Time Commitments by Management.

Worth Allred serves as a senior scientist for crystal growth technology and
has committed to spend 35 to 40 hours per week on our business, as necessary.

                     Significant Employees.

We do not currently have any employees who are not executive officers, but who
are expected to make a significant contribution to our business.

                      Family Relationships.

Mr. Allred and Mr. Cluff are brothers-in-law. There are no other family
relationships between any director or executive officer.

            Involvement in Certain Legal Proceedings.

During the past five years, no present or former director, executive officer
or person nominated to become a director or an executive officer of Galtech:

(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;

(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
Commission 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.

                 Board Meetings and Committees.

The Board of Directors held a total of three meetings during the calendar year
ended December 31, 2003. The Compensation Committee, consisting of the Board
of Directors, is primarily responsible for reviewing compensation of executive
officers and overseeing the granting of stock options. Rulon Cluff served as
Chairman of the Audit Committee and convened three meetings of that Committee
during the preceding fiscal year. No director attended fewer than 75% of all
meetings of the Board of Directors during the 2003 fiscal year.

Compliance with Section 16(a) of the Securities and Exchange Act of 1934.

To the knowledge of management, Galtech's newest officers, Philroy Brown, Jr.,
and Richard J. Dean, have not yet filed their Form 3 Initial Statements of
Beneficial Ownership of Securities, and Worth Allred has not yet filed a Form
4 Statement of Change of Beneficial Ownership with respect to the disposition
of Galtech securities. To the knowledge of management, none of our other
executive officers, directors or 10% stockholders have been delinquent in
making any filing that is required under Section 16(a) of the Securities
Exchange Act of 1934, as amended.

ITEM 10. Executive Compensation.

There were no officers or directors of Galtech at December 31, 2003, whose
salary and bonus for all services in all capacities exceed $100,000 for the
calendar year then ended.

The following table sets forth the aggregate compensation that Galtech has
paid 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 and     Years or              Other                               All
principal    periods               Annual   Restricted Option/  LTIP   Other
position     Ended       $     $   Compen-  Stock      SAR's   Payouts Compen-
                      Salary Bonus sation   Awards$    #       $       sation
------------------------------------------------------------------------------

S. Kent Holt 12/31/01    0     0     0         0           0      0       0
Former       12/31/02    0     0     0         0           0      0       0
Acting       12/31/03    0     0     0         0           0      0       0
Pres., CEO
and Director

Worth P.     12/31/01    0     0     0         0           0      0       0
Allred       12/31/02    0     0     0         0           0      0       0
VP R & D     12/31/03    0     0     0         0           0      0       0
and Director

Rulon Cluff  12/31/01    0     0     0         0           0      0       0
Sec./Treas.  12/31/02    0     0     0         0           0      0       0
and Director 12/31/03    0     0     0         0           0      0       0


We did not grant any cash compensation, deferred compensation or long-term
incentive plan awards to our management during the year ended December 31,
2003, and none of our executive officers has exercised any options during that
period.

               Bonuses and Deferred Compensation.

None.

                 Compensation Pursuant to Plans.

None.

                         Pension Table.

None; not applicable.

                       Other Compensation.

On February 7, 2003,  our Board of Directors resolved to issue 500,000
"unregistered" and "restricted" shares of our common stock to Philroy Brown,
Jr. and Richard J. Dean in connection with their elections to serve as Vice
Presidents of Galtech. These shares were issued March 28, 2003.

                   Compensation of Directors.

Galtech does not have any standard arrangements to compensate directors for
their services as directors. We do not pay our directors for committee
participation or special assignments.

Employment Contracts and Termination of Employment and Change in Control
Arrangements.

We do not have any employment contracts, compensatory plans or arrangements,
including payments to be received from us, with respect to any director or
executive officer which would result in payments to that person because of his
or her resignation, retirement or other termination of employment, any change
in control of Galtech, or a change in the person's responsibilities following
a change in control of Galtech.

ITEM 11. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth the shares of common stock beneficially owned
as of March 18, 2004, by each person known by Galtech to be the beneficial
owner of more the five percent of the common stock, by each director of
Galtech, by the chief executive officer, and by all officers and directors of
Galtech as a group. Unless noted otherwise, each person named has sole voting
and investment power with respect to the shares indicated.


                                                                 Percentage
Name and Address of Beneficial         Number of Shares           of Class
Owner                                  Beneficially Owned      Outstanding (1)
-----                                  ------------------      ---------------

Worth P. Allred                            800,000 (2)           3.6%
Post Office Box 120
Moroni, Utah  84646

Rulon Cluff                                  15,005              0.07%
1080 East Elm Ave.
Provo, Utah  84604

William Tunnell                             851,560 (3)           3.8%
20165 North 67th Ave., #122A
Glendale, Arizona 85308

Philroy Brown, Jr.                          540,000               2.4%
1750 South 50 East
Orem, Utah  84058

Richard J. Dean                             520,000               2.3%
1365 Oak Crest Lane
Provo, Utah  84604
                                          ---------              -----
All directors and executive               2,726,565              12.1%
officers as a group (Five persons)

Bruce Chapman                             1,286,000 (4)           5.7%
4104 East Broadway
Suite 2020
Mesa, Arizona  85206

Verity Global Financial, LLC              1,192,000 (5)           5.3%
3621 Frankford Drive
Suite 328
Dallas, Texas 75287

(1) Based on 22,442,089 shares issued and outstanding on April 8, 2003. This
figure takes into account: (i) the 20,542,089 shares issued and outstanding on
that date; (ii) the 900,000 shares issued to Verity as a result of our default
on the $90,000 note to Verity; and (iii) the 1,000,000 "unregistered" and
"restricted" shares issued to Messrs. Brown and Dean. See the subheading
"Liquidity and Capital Resources" of the caption "Management's Discussion and
Analysis or Plan of Operation," Part II, Item 6, and the subheading "Other
Compensation," Part II, Item 10 of this Report.

(2) A total of 800,000 of these shares are held in joint tenancy with Mr.
Allred's wife.

(3) We are holding these shares until Mr. Tunnell performs certain obligations
under our Agreement for Financial Public Relations Services. See the caption
"Certain Relationships and Related Transactions."

(4) A total of 786,000 of these shares are beneficially owned by Firm
International Group Trust. Mr. Chapman is the sole trustee of Firm
International Group Trust. No other person has control over this entity. Bruce
Chapman's brothers and sisters and their children are the sole beneficiaries
of Firm International Group Trust.

(5) This figure includes: (i) 200,000 shares that Verity currently acquired in
March, 2000; (ii) 92,000 shares it purchased during 2001; and (iii) 900,000
shares that issued as a result of our default on the $90,000 Verity note. Gary
Quintana, who is the managing director and the sole member of Verity, may be
considered the beneficial owner of these securities.

                       Changes in Control.

To the knowledge of management, there are no present arrangements or pledges
of Galtech's securities which may result in a change in control of Galtech.

ITEM 12. Certain Relationships and Related Transactions.

            Transactions with Management and Others.

During the past two years, there have been no transactions, or series of
transactions, between Galtech and members of management, nominees to become a
director or executive officer, five percent stockholders, or promoters or
persons who may be deemed to be parents of Galtech in which the amount
involved exceeded $60,000.

Galtech has a policy that permits it to enter into transactions with
affiliates on terms no less favorable to Galtech than would be available in
similar arm's length transactions with unaffiliated third parties.

                     Parents of the Issuer.

Galtech has no corporate parent.

ITEM 13. Exhibits and Reports on Form 8-K.

(a) Exhibits.

None.

(b) Reports on Form 8-K.

None.

ITEM 14. Controls and Procedures.

Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our Acting CEO and our
Secretary/Treasurer of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our Acting CEO
and Secretary/Treasurer concluded that our disclosure controls and procedures
are effective in timely alerting them to material information required to be
included in our periodic Securities and Exchange Commission reports. It should
be noted that the design of any system of controls is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. In addition, we
reviewed our internal controls, and there have been no significant changes in
our internal controls or in other factors that could significantly affect
those controls subsequent to the date of their last evaluation.

                           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.

           GALTECH SEMICONDUCTOR MATERIALS CORPORATION



Date: 3-22-04                 By: /s/ Philroy Brown, Jr.
     --------                    ---------------------------------------------
                                  Philroy Brown, Jr.
                                  Acting President and Director




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.



Date: 3-22-04                 By: /s/ Philroy Brown, Jr.
     --------                    ---------------------------------------------
                                  Philroy Brown, Jr.
                                  Acting President and Director

Date: 3-22-04                 By: /s/ Rulon Cluff
     --------                    ---------------------------------------------
                                  Rulon Cluff, Secretary/Treasurer and
                                  Director

Date: 3-22-04                 By: /s/ Worth P. Allred
     --------                    ---------------------------------------------
                                  Worth P. Allred, VP, Research and
                                  Development and Director