<PAGE>


             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, 2000

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

     For the transition period from _____________ to ____________

                   Commission File No. 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 I.D. No.)
 incorporation or organization)

                          923 West 500 North
                          Lindon, Utah 84042
                          ------------------
                (Address of Principal Executive Offices)

            Issuer's Telephone Number:  (801) 785-6294


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

Securities Registered under Section 12(b) of the Exchange Act:   None
Name of Each Exchange on Which Registered:                       None
Securities Registered under Section 12(g) of the Exchange Act:   $0.00025
par
value common stock

     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, 2000 -
$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 13, 2001 - $2,868.56.  There are approximately 11,474,241 shares of
common voting stock of the Company held by non-affiliates.  During the past
two years there has been no "established public market" for shares of common
voting stock of the Company, so the Company has arbitrarily valued these
shares based on $0.00025 par value 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 13, 2001

                            14,844,018


               DOCUMENTS INCORPORATED BY REFERENCE

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

Transitional Small Business Issuer Format   Yes  X   No ___

<PAGE>

                              PART I

Item 1.  Description of Business.
         ------------------------

Business Development.
---------------------

          Galtech was organized on June 18, 1984, for the purpose of
investing "in new products, properties and/or businesses which may have
potential for profit."

          At inception, Galtech was authorized to issue 50,000,000 shares
of common voting stock, par value $0.001 per share, with fully-paid stock
not to be liable for further call or assessment.

          Charter Amendments
          ------------------

          Since its inception, Galtech has amended its Articles of
Incorporation as follows:

               On January 29, 1986, changed its name to "Galtech, Inc. and
               amended Article IV of the Articles of Incorporation to
               provide the authority to issue 200,000,000 shares of $0.00025
               par value common stock, with fully paid stock not to be
               liable for further call or assessment.

               On September 9, 1986, changed its name to "Galtech
               Semiconductor Materials Corporation.

               On February 24, 1995, effected a 20-to-one reverse split of
               its outstanding shares, with fractional shares rounded to a
               whole share.

          Unless otherwise indicated, all computations in this report take
into account these adjustments.

          General History
          ---------------

          Galtech began operating in approximately January, 1986.  We
conducted research and development of a process for manufacturing cadmium
telluride and the renovation of a manufacturing facility to produce our
products.  Cadmium telluride is a compound used in the production of
semiconductors.  A fire destroyed our facilities in 1990 and we have only
recently recommenced our semiconductor development activities.

          On February 28, 1995, we acquired all of the issued and
outstanding common stock of Commodity Recovery Corporation, a Utah
corporation, in exchange for 500,000 "unregistered" and "restricted" shares
of our common stock.  CRC was organized on October 31, 1994, for the purpose
of marketing products for destroying aflatoxin, a cancer-causing substance
found in grain and other foodstuffs.

          Also on February 28, 1995, we issued 4,200,000 "unregistered" and
"restricted" shares of common stock in exchange for all of the issued and
outstanding common stock of Energy Recovery Corporation, an Arizona
corporation.  ERC was incorporated on February 7, 1994, for the purpose of
developing and producing alternative energy sources.

          When we acquired them, neither CRC nor ERC had any assets or
operations.  After its acquisition, CRC developed a treatment method using
ammonia vapor to destroy aflatoxin.  In 1997, management decided to narrow
its focus to the development of its semiconductor materials and ceased
further development of its aflatoxin technology.  The State of Utah has
administratively dissolved CRC for failure to file its annual report.

          On April 29, 1997, ERC was awarded a patent on a carousel electric
generator that was designed to provide a high level of electrical power in a
compact structure.  We have conducted preliminary testing on the generator
and believe that it has potential for use in electric-powered vehicles.  We
have built an electric vehicle for additional testing.  However, due to
management's decision to focus on our semiconductor materials operations, we
do not plan to spend very much money on our generator project in the
foreseeable future.  The State of Arizona has administratively dissolved ERC
for failure to file its annual report.

          After reviewing the current market for semiconductor materials, in
1997, we began work on modernizing and redesigning our antiquated
semiconductor equipment for the purpose of developing a reliable and
repeatable process for growing large area, single crystal, bulk cadmium
telluride and cadmium zinc telluride semiconductor material.  Some of the
electronics and controls had not been updated for at least 15 years.
Updates to the prototype equipment have included installation of new
computers and software, power electronics and improvements to the crystal
growth equipment.  Future plans for expansion will depend on our success
with semiconductor growth.

          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 Lindon, 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.

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, Characterisation 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 communicaton, 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 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 communicaton, 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.
This 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 gms 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, ERC 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 (the Company's Secretary/Treasurer) and Harold E.
Ewing.  The Company 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.  The Company 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 the Company's
processes.

Need for Government Approval of Principal Products or Services.
---------------------------------------------------------------

          To the knowledge of management, 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, 1999, we spent
$25,411 on research and development, of which $7,986 was spent for crystal
growth research.  The remainder of research and development expenses for
1999 was donated equipment and effort associated with our motor technology
as discussed below.  During the calendar year ended December 31, 2000, we
spent $7,157 on research and development activities.

          Galtech received $50,000 in the first calendar quarter of 2000 to
continue research on crystal growth.  At the current level, and assuming no
additional funding from investors, Galtech has sufficient funds to pursue
meaningful development of the process through March 2001. 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 about two years.  During that time, we have conducted four
crystal growths.  We only have one growth furnace, so any problem with the
growth of a crystal will stop all progress until the problem is fixed.  This
lack of additional furnaces has greatly slowed the development of the
process.

          If successful with our growth trials before April 2001, we plan to
begin pilot production of material for the purpose of providing samples and,
if possible, low volume sales to interested customers.  We anticipate that
these customers will take from three to nine months to evaluate our material
and approve Galtech as a source of supply for cadmium telluride wafers.

          Upon receipt of the anticipated funding from Verity Global
Financial, LLC, Galtech will hire personnel and build additional crystal
growth equipment to increase the level of research and development effort.  We
anticipate that Galtech will have enough operating funds for 18 months of
intense development effort.  See the caption "Management's Discussion and
Analysis or Plan of Operation" for a discussion of our research and
development plans and our anticipated funding from Verity.

          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 $1545
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.
--------------------

          Galtech has nine unpaid part-time employees and no full-time
employees.  During the next 12 months, management expects that we will have
approximately three to four full-time employees and no part-time employees.

Item 2.  Description of Property.
         ------------------------

          Galtech is presently using the facilities of Patterned Fiber
Composites, Inc., which employs the Company's President and CEO, William F.
Pratt, and its Secretary/Treasurer, David R. Porter.  The facilities are
located in Lindon, Utah, and are provided rent-free.  They consist of
approximately 4,800 square feet, of which approximately 1600 square feet is
office space and 3,200 is a warehouse and production facility.  Patterned
Fiber Composites has a two-year lease on the facility, which expires March
31, 2001.  Following the expiration of the lease, the parties intend to
continue renting the property on a month-to-month basis.

          If Galtech is able to raise sufficient funds through its
fundraising efforts with Verity, it will enter into a lease with Patterned
Fiber Composites at a monthly rental of $450.  If Carbon Fiber Products'
lease is terminated or is not renewed after the end of the term, depending
on the success of its research and development efforts and the availability
of sufficient funds, we will seek out a facility of our own to rent or
purchase.

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 is included as an account payable in the
Company's 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.

<TABLE>
<CAPTION>
                             STOCK QUOTATIONS*

                                            CLOSING BID

Quarter ended:                        High                Low
--------------                        ----                ---

<S>                                   <C>                  <C>

March 31, 1999                        0.19                 0.08

June 30, 1999                         0.27                 0.10

September 30, 1999                    0.78125              0.19

December 31, 1999                     0.4375               0.19

March 31, 2000                        4.3125               0.44

June 30, 2000                         2                    0.75

September 30, 2000                    1.3125               0.75

December 31, 2000                     0.875                0.375

</TABLE>

Holders.
--------

          As of the date of this Report, we have about 1,623 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.
----------------------------------------

     Common Stock
     ------------

<TABLE>
                       Date              Number of           Aggregate
     Name            Acquired             Shares           Consideration
     ----            --------            ---------         -------------
<S>                   <C>                 <C>               <C>


William F. Pratt (1)  6/25/98             550,000         Services valued at
                                                          $0.12 per share

Worth P. Allred (1)   6/25/98             800,000         Services valued at
                                                          $0.12 per share

S. Kent Holt (1)      6/25/98             500,000         Services valued at
                                                          $0.12 per share

Flood Thomas (2)      6/25/98              50,000         Services valued at
                                                          $0.12 per share

Jay Reynolds (2)      6/25/98              20,000         Services valued at
                                                          $0.12 per share

Jim Whiting (2)       6/25/98              10,000         Services valued at
                                                          $0.12 per share

James G. and          6/25/98              20,000         Services valued at
Tracy Davis (2)                                           $0.12 per share

C. Greg Jensen (2)    6/25/98              20,000         Services valued at
                                                          $0.12 per share

Firm International    6/25/98           1,000,000         Services valued at
Group Trust (2)                                           $0.12 per share

David R. Porter (1)    7/6/99           1,000,000         Services valued at
                                                          $0.27 per share

William Tunnell (2)    7/6/99           2,000,000         Services valued at
                                                          $0.27 per share

Russell R. Chapman (2) 7/6/99           1,000,000         Debt and subscrip-
                                                          tion valued at
                                                          $0.27 per share

Verity Global         3/24/00             200,000         $50,000
Financial, LLC (3)

</TABLE>

           (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, because each was a
               director or executive officer of Galtech 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) Management believes that these sales were exempt from the
               registration requirements of the Securities Act of 1933, as
               amended, under Section 3(b) thereof and Rule 504 of
               Regulation D of the Securities and Exchange Commission.  At
               the time of this offering, Galtech did not have to meet the
               reporting requirements of Section 13 or 15(d) of the
               Securities Exchange Act of 1934, as amended, and the
               aggregate offering price of all securities sold in this
               offering did not exceed $1,000,000.  Management also believes
               that all offers and sales under this offering complied with
               Rules 501 and 502 of Regulation D, with the exception of Rule
               502(c) and 502(d), which do not apply to offerings under Rule
               504.

           (3) Under our Securities Purchase Agreement, Verity will also
               become obligated to buy 800,000 "unregistered" and
               "restricted" shares of our common stock on May 10, 2001,
               which is 90 days after the effective date of our SB-2
               registration statement.  The purchase price will be $200,000.

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

Item 6.  Management's Discussion and Analysis or Plan of Operation.
         ----------------------------------------------------------

Plan of Operation.
------------------

          During the next six months, following receipt of the anticipated
funding from Verity as discussed below, we plan to perform test production
runs.  Each production run requires approximately three to four weeks to
heat the metal in our furnace and allow it to cool.  We have a fully
instrumented, custom-designed control program that will allow us to acquire
and analyze production data and make appropriate adjustments in the
production process.

          In the second six month period after receipt of the anticipated
Verity funding, management expects to refocus our engineering effort from
the "proof-of-principle" effort of the preceding six months, to a pilot
production level.  We will seek sufficient funds to allow us to continue our
research and development efforts for two years without the need for
additional capital.  In this regard, on May 26, 2000, we executed the
Securities Purchase Agreement with Verity, by which Verity is to give us a
total of $500,000 in exchange for 2,000,000 shares of our common stock.

          The terms of the Verity funding are as follows:

          In March, 2000, Verity purchased 200,000 "unregistered" and
          "restricted" shares of our common stock for $50,000;

          The Registration Statement on Form SB-2 became effective February
          9, 2001, and Verity had 30 days to exercise a warrant to purchase
          600,000 shares at a price of $150,000;

          Beginning on May 10, 2001, Verity will have 30 days to exercise a
          warrant to purchase 400,000 shares at a price of $100,000;

          After May 10, 2001, Verity will purchase 800,000 "unregistered"
          and "restricted" shares of common stock for $200,000.

          Verity's exercise of the warrants and its purchase of the 800,000
shares for $200,000 were conditioned upon the registration statement
becoming effective; the registration statement was declared effective
February 9, 2001.  If we take a record of common stockholders for the
purpose of entitling them to receive a dividend payable in, or other
distribution of common stock, the number of warrant shares will be adjusted
so that Verity is entitled to purchase the same number of shares as a
stockholder who held the same number of shares immediately before the
distribution would own immediately after the distribution.  The exercise
price of each warrant will also be adjusted to equal (i) the current
exercise price multiplied by the number of warrants shares; divided by (ii)
the number of shares for which the warrant is exercisable immediately after
the adjustment.  These adjustment procedures will also apply if we conduct
any splits or reverse splits of our common stock.

          Also on May 26, 2000, we executed a Registration Rights Agreement
with Verity, under which we agreed to register the 1,000,000 shares of
common stock underlying the warrants.  These shares are all of the
securities covered by our SB-2 Registration Statement.

          We have allocated the proceeds from this funding to research and
development and working capital.

          Under the Securities Purchase Agreement, Verity is required to
purchase the 800,000 shares for $200,000, but it is not obligated to
exercise its warrants.  If we are unable to get the full funding from
Verity, and assuming no additional funding from other investors, we have
sufficient funds to pursue meaningful development of the process only
through March 2001. Unless we get funding from Verity, we do not expect to
have enough money to purchase cadmium telluride and other crystal growth
supplies after March 2001.  If our research and development is successful
during this time period, we plan to begin pilot production of material for
the purpose of providing samples and if possible, low volume sales to
interested customers.  We anticipate that these customers will take from
three to nine months to evaluate our material and approve Galtech as a
source of supply for cadmium telluride wafers.

          If we receive the anticipated funding from Verity, we will hire
personnel and build additional crystal growth equipment to increase the
level of research and development activity.  We expect that Galtech will
have enough operating funds for 18 months of intense development effort.
Management anticipates that at this increased level of effort we will spend
about $25,000 per month during this developmental period.  For every
$100,000 in additional funding received, we should be able to operate for
four months in our current facilities.

          As of the date of this Report, Verity has not yet exercised its
warrant to purchase 600,000 shares at a price of $150,000, and we can provide
no assurance that it will purchase any more securities under the Securities
Purchase Agreement.

          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 subprojects 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 subproject.

          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.

          This discussion contains "forward-looking" statements and
information, all of which is modified by reference to the caption "Risk
Factors."

Results of Operations.
---------------------

          We have not had any material operations since approximately
1990.  In anticipation of renewed operations, we have conducted four test
crystal growths in the last two years.  In January, 2000, we began another
experimental crystal growth.  The results of a government laboratory
analysis of our material are discussed above.

Liquidity.
----------

          We received no revenues during the calendar years ended December
31, 2000, and 1999.  Net loss for these periods were $425,384 and $729,731,
respectively.

          Russell R. Chapman has paid our costs for the preparation of our
SB-2 Registration Statement and related legal work.  On July 6, 1999, we
issued 1,000,000 "unregistered" and "restricted" shares of our common stock to
Mr. Chapman for debt and a subscription valued at $270,000.  As of December
31, 2000, this stock subscription had been fully expensed.

          Galtech is presently located in a facility leased by Patterned
Fiber Composites, Inc.  We use the facility rent-free.  We have sufficient
equipment, supplies and materials to continue our process improvements and
engineering analysis for the next six months after funding.  Current
operations may be characterized as a "proof-of-principle" effort, during
which we are testing and refining our production processes.  At the end of
this six month period, management expects that Galtech will need to raise
substantial additional capital from Verity or another source in order to allow
it to proceed to the pilot production level.

Item 7.  Financial Statements.
         ---------------------

          Consolidated Financial Statements for the
          years ended December 31, 2000, and 1999

          Independent Auditors' Report

          Consolidated Balance Sheet - December 31, 2000

          Consolidated Statements of Operations for the
          Years Ended December 31, 2000, and 1999, and
          from Inception on June 18, 1984, through
          December 31, 2000

          Consolidated Statements of Stockholders' Equity
          from Inception on June 18, 1984, to December 31,
          2000

          Consolidated Statements of Cash Flows for the
          Years Ended December 31, 2000, and 1999, and
          from Inception on June 18, 1984, through
          December 31, 2000

          Notes to Consolidated Financial Statements

<PAGE>
                 GALTECH SEMICONDUCTOR MATERIALS
                   CORPORATION AND SUBSIDIARIES

                  (A Development Stage Company)

                CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2000
<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. . . . . . . .  6

Consolidated Statements of Cash Flows. . . . . . . . . . . .   14

Notes to the Consolidated Financial Statements . . . . . . . . 16
<PAGE>
                   INDEPENDENT AUDITORS' REPORT



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

We have audited the accompanying consolidated balance sheet of Galtech
Semiconductor Materials Corporation and Subsidiaries (a development stage
company) as of December 31, 2000 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended December
31, 2000 and 1999 and from inception on June 18, 1984 through December 31,
2000.  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 generally accepted auditing
standards.  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement.  An audit includes examining,
on a test basis evidence supporting the amounts and disclosures in the
consolidated financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated 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, 2000 and the results of their
operations and their cash flows for the years ended December 31, 2000 and
1999 and from inception on June 18, 1984 through December 31, 2000, in
conformity with generally accepted accounting principles.

The financial statements have been prepared assuming that the Company will
continue as a going concern.  As discussed in Note 6 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 6.  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 5, 2001
<PAGE>
<TABLE>     GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                   (A Development Stage Company)
                    Consolidated Balance Sheet
<CAPTION>

                               ASSETS

                                                              December 31,
                                                               2000
<S>                                                            <C>
CURRENT ASSETS

  Cash                                                $             45,155
  Inventory                                                        176,843

     Total Current Assets                                          221,998

EQUIPMENT, NET (Note 2)                                             22,560

     TOTAL ASSETS                                     $            244,558

               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable (Note 5)                           $             46,074
  Notes payable - related (Note 3)                                   8,289
  Accrued expenses                                                     839

     Total Current Liabilities                                      55,202

COMMITMENTS AND CONTINGENCIES (Note 5)

STOCKHOLDERS' EQUITY

  Common stock, $0.00025 par value, 200,000,000 shares authorized;
    14,844,018 shares issued and outstanding                         3,713

  Additional paid-in capital                                     4,934,673
  Deficit accumulated during the development stage              (4,749,030)

      Total Stockholders' Equity                                   189,356

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $            244,558
</TABLE>
<PAGE>
<TABLE>     GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                   (A Development Stage Company)
               Consolidated Statements of Operations
<CAPTION>
                                                                 From
                                                             Inception on
                                                            June 18, 1984
                                     For the Years Ended        Through
                                         December 31,        December 31,
                                       2000         1999         2000
<S>                                <C>          <C>           <C>
SALES                              $        -    $       -      $ 599,609

COST OF PRODUCT SOLD                        -            -        676,198

GROSS MARGIN                                -            -        (76,589)

OPERATING EXPENSES

 General and administrative             373,267      636,755    2,658,730
 Legal and professional                   7,883       31,256      838,711
 Research and development                 7,157       25,411      543,256
 Depreciation                            36,237       36,237      400,608

  Total Expenses                       (424,544)     729,659    4,441,305

Net Loss From Operations               (424,544)    (729,659)  (4,517,894)

OTHER INCOME (EXPENSE)

 Interest expense                          (840)         (72)     (85,831)
 Interest income                            -            -         93,427
 Loss on disposal of assets                 -            -       (241,238)
 Miscellaneous                              -            -          2,506

  Total Other Income (Expense)             (840)         (72)    (231,136)

NET LOSS                             $ (425,384)   $(729,731) $(4,749,030)

BASIC AND FULLY DILUTED LOSS
 PER SHARE                           $    (0.03)   $   (0.06)

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                  14,806,313   12,605,662
</TABLE>
<PAGE>
                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                      AND SUBSIDIARIES
                               (A Development Stage Company)
                      Consolidated Statements of Stockholders' Equity



                                             Additional
                         Common Stock         Paid-in         Accumulated
                        Shares     Amount     Capital           Deficit

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)



<Continued>

<TABLE>
<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)        -        281,378

</TABLE>
<PAGE>

                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                    AND SUBSIDIARIES
                              (A Development Stage Company)
                    Consolidated Statements of Stockholders' Equity

[CAPTION]
<TABLE>

                                             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 $0.60
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)


<Continued>

                        Treasury Stock      Subscription       Total
                    Shares        Amount      Receivable       Equity

<S>                   <C>          <C>          <C>          <C>

Balance forward       (207,318)    $   (3,054) $      -      $   281,378


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>
<PAGE>
<TABLE>

                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                    AND SUBSIDIARIES
                              (A Development Stage Company)
               Consolidated Statements of Stockholders' Equity (Continued)

<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)

<Continued>

                        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>
<PAGE>
<TABLE>

                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                    AND SUBSIDIARIES
                              (A Development Stage Company)
               Consolidated Statements of Stockholders' Equity (Continued)

<CAPTION>

                                             Additional
                         Common Stock         Paid-in         Accumulated
                        Shares     Amount     Capital           Deficit
<S>                <C>         <C>           <C>                <C>
Balance forward     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 $0.12 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)

<Continued>

                        Treasury Stock      Subscription       Total
                    Shares        Amount      Receivable       Equity

<S>                   <C>          <C>          <C>          <C>

Balance forward       $     -      $     -      $      -     $      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>
<PAGE>
<TABLE>


                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                    AND SUBSIDIARIES
                              (A Development Stage Company)
               Consolidated Statements of Stockholders' Equity (Continued)

<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, 1994   1,082,318        271         2,319,908       (2,348,914)

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

Stock issued for
Energy Research
Corporation valued
at predecessor 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)

<Continued>

                        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 predecessor cost
of $0.00                   -             -           -                 -

Stock issued for
Energy Research
Corporation valued
at predecessor 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>
<PAGE>
<TABLE>


                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                    AND SUBSIDIARIES
                              (A Development Stage Company)
               Consolidated Statements of Stockholders' Equity (Continued)

<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
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 at
$0.50 per share       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)

<Continued>

                        Treasury Stock      Subscription       Total
                    Shares        Amount      Receivable       Equity

<S>                   <C>          <C>          <C>          <C>

Balance,
December 31, 1995            -     $     -      $     -      $ (114,975)

Stock issued
for cash
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 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>
<PAGE>
<TABLE>

                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                    AND SUBSIDIARIES
                              (A Development Stage Company)
               Consolidated Statements of Stockholders' Equity (Continued)

<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)



<Continued>

                        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>
<PAGE>
<TABLE>


                       GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                                    AND SUBSIDIARIES
                              (A Development Stage Company)
               Consolidated Statements of Stockholders' Equity (Continued)

<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 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 30, 2000   14,844,018  $    3,713    $   4,934,673     $(4,749,030)


<Continued>

                        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 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 30, 2000             -   $       -    $       -     $    189,356

</TABLE>
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
              Consolidated Statements of Cash Flows
<CAPTION>
                                                                 From
                                                             Inception on
                                                            June 18, 1984
                                     For the Years Ended        Through
                                         December 31,        December 31,
                                       2000         1999         2000
<S>                                <C>          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES

 Net loss                          $  (425,384) $  (729,731)  $ (4,749,030)
 Adjustment to reconcile net loss to
  net cash used by operating
  activities:
  Depreciation                          36,237       36,237        400,608
  Common stock issued for services           -      630,000      1,399,400
  Loss on disposal of property               -            -        241,238
  Stock subscription expensed          388,002            -        388,002
 Changes in operating assets and
 liabilities:
  (Increase) in inventory              (16,843)           -       (176,843)
  Increase (decrease) in accounts
  payable                                5,510            -          5,510
  Increase (decrease) in accrued
  liabilities                              768           72         60,510

   Net Cash (Used) by Operating
   Activities                          (11,710)     (63,422)    (2,430,605)

CASH FLOWS FROM INVESTING ACTIVITIES

 Capital expenditures                        -            -       (718,191)
 Purchase of treasury stock                  -            -        (19,450)
 Stock subscription                          -            -       (732,300)

   Net Cash (Used) from Investing
   Activities                                -            -     (1,469,941)

CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from note payable - related    6,865       63,422        547,663
 Repayments of note payable - related        -            -       (443,761)
 Sale of treasury stock                      -            -      1,911,183
 Cancellation of stock subscription          -            -        732,300
 Common stock issued for cash           50,000            -      1,198,316

  Net Cash (Used) Provided by Financing
   Activities                         $ 56,865     $ 63,422    $ 3,945,701
<PAGE>
              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,
                                       2000         1999         2000
<S>                                <C>          <C>           <C>
INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS             $      45,155  $     -      $   45,155

CASH AND CASH EQUIVALENTS
 AT BEGINNING OF PERIOD                       -        -               -

CASH AND CASH EQUIVALENTS
 END OF PERIOD                    $      45,155  $     -      $   45,155


          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 $           -  $ 630,000    $1,399,400
 Common stock issued for debt     $           -  $  61,998    $   61,998
</TABLE>
<PAGE>     GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2000 and 1999


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 4)

       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.
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2000 and 1999


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

       c.  Income Taxes

       At December 31, 2000, the Company had net operating loss
       carryforwards of approximately $4,700,000 that may be offset
       against future taxable income through 2020.  No tax benefits has
       been reported in the financial statements, because the potential
       tax benefits of the net operating loss carry forwards are offset by
       a valuation allowance of the same amount.

       The income tax benefit differs from the amount computed at federal
       statutory rates of approximately 38% as follows:

                                               For the Years Ended
                                                   December 31,
                                                2000         1999

  Income tax benefit at statutory rate         $ 1,804,631 $ 1,642,985
  Change in valuation allowance                 (1,804,631) (1,642,985)

                                               $         - $         -

  Deferred tax assets (liabilities) are comprised of the following:

                                               For the Years Ended
                                                   December 31,
                                                2000         1999

  Income tax benefit at statutory rate         $   161,646 $   277,298
  Change in valuation allowance                   (161,646)   (277,298)

                                               $         - $         -

  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.
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2000 and 1999


NOTE 1 -SIGNIFICANT ACCOUNTING POLICIES (Continued)

       e.  Basic Loss Per Share

                                  For the Year Ended
                                  December 31, 2000

                       Loss              Shares      Per Share
                    (Numerator)       (Denominator)   Amount

                    $    (425,384)      14,806,313  $  (0.03)

                                  For the Year Ended
                                  December 31, 1999

                       Loss              Shares      Per Share
                    (Numerator)       (Denominator)   Amount

                    $    (729,731)      12,605,662  $  (0.06)

       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
       generally accepted accounting principles requires management to
       make estimates and assumptions that affect the reported amounts of
       assets and liabilities and disclosure of contingent assets and
       liabilities at the date of the financial statements and the
       reported amounts of revenues and expenses during the reporting
       period.  Actual results could differ from those estimates.
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2000 and 1999


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

       h.  Inventory

       The inventory of raw materials for crystal growing is stated at the
       lower of cost or market and is accounted for on a first-in-first-
       out basis.

       i.  Revenue Recognition

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

NOTE 2 - EQUIPMENT

                                               December 31,
                                                  2000

    Equipment consists of the following:

    Research equipment
                                             $   181,187
    Less: accumulated depreciation              (158,627)

    Net Equipment                            $    22,560

    Amounts charged to depreciation expense were $36,237 and $36,237
    for the years ended December 31, 2000 and 1999, respectively.

NOTE 3 - RELATED PARTY TRANSACTIONS

    The former president of the Company has provided advances to the
    Company to cover operating expenses as well as equipment
    acquisitions which have been recorded as a note payable - related.
    This note is unsecured, non-interest bearing and is due upon
    demand.  The advances are repaid as the Company's cash needs allow.
    During the year ended December 31, 1998, the former President
    advanced $13,000 to the Company, was repaid $31,933 and contributed
    the balance of the advance payable to him of $29,243, to the
    Company.

    In 1999, the former president paid expenses of $61,998 toward the
    stock subscription of $270,000.  the subscription has been fully
    expensed as of December 31, 2000.

    In 2000, the current officers made advances to the Company of
    $8,289 which bear interest at 10%, are unsecured and due on demand.

NOTE 4 - 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.
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2000 and 1999


NOTE 4 - STOCK TRANSACTIONS (Continued)

    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.

    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.
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2000 and 1999


NOTE 5 - COMMITMENTS AND CONTINGENCIES

    On December 18, 1992, a judgment was entered against the Company
    for $40,563 for non-payment of an account payable.  This amount has
    been included in the accounts payable for December 31, 2000.  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.

NOTE 6 - GOING CONCERN

    The Company's financial statements are prepared using the generally
    accepted accounting principles 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.
<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.

                                 PART III

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

Identification of 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.

<TABLE>
<CAPTION>
                                  Date of         Date of
                    Positions    Election or     Termination
Name                  Held       Designation   or Resignation
----                  ----       -----------   --------------
<S>                   <C>             <C>            <C>

William F. Pratt      CEO             8/98            *
                      President       8/98            *

S. Kent Holt          Executive VP    8/98            *
                      Director        8/98            *

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

David R. Porter       Secretary/      8/98            *
                      Treasurer       8/98            *
                      Director        8/98            *

</TABLE>

          *    These persons presently serve in the capacities
               indicated.

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

          William F. Pratt, Chief Executive Officer and President.  Dr.
Pratt is 53 years old.  He received his undergraduate engineering degree in
1970 from the United States Military Academy at West Point.  He also holds a
Masters in Engineering Management degree from the Brigham Young University
Marriott School of Management and a Ph.D. in Mechanical Engineering from
Brigham Young University.  Dr. Pratt consulted for the Defense Advanced
Research Projects Agency, Metron, Cimetrix and Galtech from 1995 to August
1998.  Dr. Pratt has invented several patent-pending technologies dealing
with composite materials and machine design.  He is the President of
Patterned Fiber Composites, Inc., a startup software and engineering company
that is developing products for the aerospace and sports equipment markets.
He started that company in November 1997.  Dr. Pratt has successfully
negotiated and obtained two Small Business Innovative Research Contracts
with the United States government to do leading edge research in damped
composite structural materials.  He has developed analysis software,
production machinery, test equipment and prototype products dealing with
this new and innovative material.  Dr. Pratt closely supervises and oversees
all aspects of company business including marketing, technology development,
financial statement preparation and human resources.  He holds several
patents relating to the composite technology.  This technology is not
directly related to Galtech's business.

          S. Kent Holt, Executive Vice President and Director.  Mr. Holt,
age 47, holds an executive MBA degree from Washington University in St.
Louis and Bachelor of Science degrees in Nutrition and Food Science and
Business Administration from Utah State University.  From 1995 to August
1998, Mr. Holt was Director, New Products with the Corn Products Division of
CPC International, where he directed the New Product Marketing, Product
Development and Applications Research groups and directed cross-functional
product development teams vital to creating new business for the company.

          Worth P. Allred, Vice President, Research and Development,
Director.  Mr. Allred is 74 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.

          David R. Porter, Secretary/Treasurer and Director.  Mr. Porter,
age 44, worked for the Maricopa County Facilities Department in Phoenix
Arizona, from 1991 to 1997, in addition to consulting with Galtech in the
development of a crystal growth furnace and software for control systems.
Mr. Porter is currently employed by Patterned Fiber Composites, Inc. as shop
foreman.  Patterned Fiber Composites shares its facilities with Galtech.  He
continues to direct our manufacturing facilities development.  Galtech has
the exclusive license to distribute, use, make and sublease U. S. Patent No.
5,625,241, which Mr. Porter co-invented.  This technology relates to a
carousel electric motor generator system.  We are not currently using the
license for the patent, and we have no immediate plans to do so.

Time Commitments by Management.
-------------------------------

          Dr. Pratt and David Porter currently devote about 10 hours per
week to Galtech's business, for which they are not compensated.  Dr. Pratt
has committed to spend 20 or more hours per week on Galtech's business once
we have received full funding.  Once we have received funding, Mr. Porter
has also committed to spend 20 or more hours per week assisting Dr. Pratt in
the development and management of our technology.  Dr. Pratt and Mr. Porter
will adjust their time commitments upward as necessary.  Kent Holt is
currently managing our marketing efforts on a part-time basis and will
devote five or more hours per week as necessary.  Worth Allred serves as a
senior scientist for crystal growth technology and has committed to spend up
to 20 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.
---------------------

          There are no 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.

Item 10. Executive Compensation.
         -----------------------

Cash Compensation
-----------------

          The following table sets forth the aggregate compensation that
Galtech has paid for services rendered during the periods indicated:

<TABLE>
<CAPTION>
                         SUMMARY COMPENSATION TABLE

                           Long Term Compensation

                    Annual Compensation   Awards  Payouts

(a)             (b)   (c)   (d)   (e)   (f)   (g)         (h)    (i)

                                              Secur-
                                              ities              All
Name and   Year or               Other  Rest- Under-       LTIP  Other
Principal  Period   Salary Bonus Annual rictedlying        Pay-  Comp-
Position   Ended      ($)   ($)  Compen-Stock Options      outs  ensat'n
------------------------------------------------------------------------
<S>         <C>       <C>   <C>   <C>   <C>    <C>         <C>   <C>

William F.    12/31/98  -0-  -0-  -0-   550,000 -0-        -0-  -0-
Pratt         12/31/99  -0-  -0-  -0-   -0-     -0-        -0-  -0-
CEO, Pres.    12/31/00  -0-  -0-  -0-   -0-     -0-        -0-  -0-
and Director

S. Kent Holt  12/31/98  -0-  -0-  -0-   500,000 500,000 (1)-0-  -0-
Exec. Vice    12/31/99  -0-  -0-  -0-   -0-     -0-        -0-  -0-
President     12/31/00  -0-  -0-  -0-   -0-     -0-        -0-  -0-
and Director

Worth P.      12/31/98  -0-  -0-  -0-   800,000 -0-        -0-  -0-
Allred        12/31/99  -0-  -0-  -0-   -0-     -0-        -0-  -0-
Vice Pres.,   12/31/00  -0-  -0-  -0-   -0-     -0-        -0-  -0-
R & D
and Director

David R.      12/31/98  -0-  -0-  -0-   -0-     -0-        -0-  -0-
Porter        12/31/99  -0-  -0-  -0-   -0-     -0-        -0-  -0-
Secretary/    12/31/00  -0-  -0-  -0-   -0-     -0-        -0-  -0-
Treasurer
and Director

</TABLE>

          (1) On July 1, 1998, we granted Mr. Holt options to purchase
              500,000 "unregistered" and "restricted" shares of our
              common stock at the average closing price of
              our stock for the 10 days immediately preceding the
              notification of our stockholders of Mr. Holt's
              appointment as a director and executive officer.  Based
              on this formula, the exercise price of the options is
              $0.27 per share.  Options to purchase 250,000 shares
              vested on July 1, 1999, and the options to purchase
              the remaining 250,000 shares vested on July 1, 2000.
              The options are exercisable for three years from the
              date of vesting.  Unless otherwise prohibited, Mr. Holt
              has had the right to vote all 500,000 shares since
              July 1, 1998.

          We did not grant any cash compensation, deferred compensation or
long-term incentive plan awards to our management during the years ended
December 31, 2000, or 1999.  Other than Mr. Holt's options, we have not
granted any member of management any option or stock appreciation rights.

          The following table shows the number and value of our outstanding
options on December 31, 2000.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR
                                 VALUES


<TABLE>
<CAPTION>

(a)               (b)               (c)              (d)            (e)

<S>               <C>               <C>              <C>            <C>
                                                  Number of
                                                  Securities     Value of
                                                  Underlying     Unexercised
                                                  Unexercised   In-the-Money
                                                  Options/SARs  Options/SARs
                                                  at FY End (#) at FY End($)
                 Shares Acquired    Value         Exercisable/  Exercisable/
Name (1)         on Exercise (#)    Realized ($)  UnexercisableUnexercisable
----------------------------------------------------------------------------

S. Kent Holt            -0-            -0-        250,000        $88,750 (2)
                                                  exercisable

                                                  250,000        $88,750 (2)
                                                  unexercisable

     (1)    S. Kent Holt is the only officer to whom we have granted options
            in the last three calendar years, or since then.

     (2)    Calculated based on the $0.625 average closing bid price of
            Galtech's common stock during the quarterly period ended December
            31, 2000, less the exercise price of $0.27 per share.

Bonuses and Deferred Compensation
---------------------------------

          None.

Compensation Pursuant to Plans
------------------------------

          None.

Pension Table
-------------

          None; not applicable.

Other Compensation
------------------

          None.

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.

Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------

          Each of our directors and executive officers filed a Form 3
Initial Statement of Beneficial Ownership of Securities with the Securities
and Exchange Commission on February 8, 2000.  On September 11, 2000, David R.
Porter filed a Form 4 Statement of Changes in Beneficial Ownership of
Securities, reflecting his sale of 22,500 shares of our common stock.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
         ---------------------------------------------------------------

          The following table sets forth the share holdings of our directors
and executive officers and those persons who owned more than five percent of
our common stock as of March 13, 2001:


</TABLE>
<TABLE>
<CAPTION>
                      Number of Shares           Percentage
Name and Address     Beneficially Owned           of Class (1)
----------------     ------------------           --------

<S>                        <C>                       <C>

William F. Pratt           1,000,000                  6.2%
1184 East 830 South
Pleasant Grove, Utah
84062

S. Kent Holt                 382,560 (2)              2.4%
18320 Lochner Road
Spencerville, Indiana
46788

Worth P. Allred            1,000,000 (3)              6.2%
Post Office Box 120
Moroni, Utah
84646

David R. Porter              987,217                  6.0%
286 W. Thorneberry Way
Pleasant Grove, Utah
84062

William Tunnell             851,560 (4)               5.2%
20165 N. 67th Ave., #122A
Glendale, Arizona 85308

Russell R. Chapman           500,003                  3.0%
1242 N. Palm Springs Dr.
Gilbert, Arizona
85234

W. D. Newman               1,000,000                  6.2%
3647 Sky Harbor Drive
Coeur d'Alene, Idaho
83814

Bruce Chapman (5)          1,286,000                  7.9%
4104 East Broadway
Suite 2020
Mesa, Arizona 85206

Verity Global Financial,   1,600,000 (6)              9.8%
LLC
3621 Frankford Drive
Suite 328
Dallas, Texas 75287

</TABLE>

          (1) These figures take into account the potential issuance of
              1,400,000 shares of our common stock that Verity is required
              or entitled to purchase by May 10, 2001.  See footnote (6).

          (2) Does not include options to acquire an additional 500,000
              shares.  See the caption "Executive Compensation" of this
              Report.

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

          (4) 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."

          (5) A total of 786,000 of these shares are beneficially owned by
              Firm International Group Trust.  Bruce Chapman, the adult son of
              Russell R. 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.

          (6) This figure includes: (i) 200,000 shares that Verity currently
              owns; (ii) 600,000 shares that Verity became entitled to
              purchase on February 9, 2001; and (iii) 800,000 shares that
              Verity is required to purchase 90 days after February 9, 2001.
              Under the Securities Purchase Agreement, Verity also has the
              right to exercise a supplemental warrant to purchase 400,000
              shares of our common stock for 90 days after February 9, 2001.
              If it purchases these securities, it will beneficially own
              approximately 12% of our then-outstanding shares, assuming
              that we do not issue or cancel any shares in the meantime.  V.
              L. Farmer, who is the managing director and the sole control
              person of Verity, may be considered the beneficial owner of
              these securities.

Security Ownership of Management.
---------------------------------

          The following table sets forth the share holdings of the Company's
directors and executive officers as of the date hereof.  Information
regarding the capacities in which each person serves for the Company is
contained in Item 9.

<TABLE>
<CAPTION>

                          Number of Shares       Percentage of
Name and Address         Beneficially Owned        of Class
----------------         ------------------      -------------
<S>                         <C>                      <C>

William F. Pratt           1,000,000                  6.8%
1184 East 830 South
Pleasant Grove, Utah
84062

Worth P. Allred            1,000,000 (1)              6.8%
Post Office Box 120
Moroni, Utah
84646

David R. Porter              987,217                  6.7%
286 W. Thorneberry Way
Pleasant Grove, Utah
84062

S. Kent Holt                 382,560 (2)              2.6%
18320 Lochner Road
Spencerville, Indiana
46788

All directors and executive
officers as a group
(4 persons)                3,369,777                 22.9%

</TABLE>

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

          (2) Does not include options to acquire an additional 500,000
              shares.  See Item 10 of this Report.

Changes in Control
------------------

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

Item 12. Certain Relationships and Related Transactions.
         -----------------------------------------------

Transactions with Management and Others.
----------------------------------------

          During the past two years, the only transactions between 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 the Company are:

               We received advances totaling $80,691 from Russell Chapman to
               cover operating expenses and equipment acquisitions.  These
               advances have been recorded as a note payable which is
               unsecured, non-interest bearing and due upon demand.

               On July 6, 1999, we issued 1,000,000 shares of our common
               stock to David R. Porter in exchange for services valued at
               $270,000, or $0.27 per share.  These services have included
               work on our crystal growth process and executive services as
               our Secretary/Treasurer.  Mr. Porter worked full-time on
               these matters from July, 1996, to February, 1999, and has
               worked about 30 hours per month since then.

               On October 24, 2000, we entered into an Agreement for
               Financial Public Relations Services with William R. Tunnell.
               Under the Agreement, Mr. Tunnell is to provide various
               investor relations and fundraising services for us, in
               exchange for 2,000,000 "unregistered" and "restricted" shares
               of our common stock.  These shares are for services valued at
               $540,000, or $0.27 per share.  Since 1997, Mr. Tunnell has
               spent about 8,330 hours helping us with investor relations and
               investment banking matters, including placing us in contact
               with Verity for the purpose of fundraising.  Mr. Tunnell had a
               prior business acquaintance with V. L. Farmer, Verity's
               principal.  Mr. Tunnell's shares vest as follows:

                 500,000 shares on July 6, 1999;

                 500,000 shares upon signing of the Securities Purchase
                 Agreement with Verity; and

                 1,000,000 shares upon receipt of $500,000 in funding from
                 Verity.

               Mr. Tunnell has received his first 1,000,000 shares, and we
               are holding the remaining shares until we receive the Verity
               funding.  Mr. Tunnell helped us to locate Verity as a source
               of funding, but he has no other connection to Verity.

               On July 6, 1999, we issued 1,000,000 shares of our common
               stock to Russell R. Chapman.  These shares were valued at
               $270,000, or $0.27 per share.  Mr. Chapman has paid legal and
               other expenses for us, with these amounts being credited toward
               the purchase price of his stock.  As of December 31, 2000, the
               subscription has been fully expensed.  Under an agreement with
               Mr. Chapman, we are currently holding his shares until we
               receive a total of $500,000 in funding from Verity.  This
               arrangement is not evidenced by any written document.

          We valued the shares issued for services based on the approximate
value of these services if rendered by unrelated third parties in an arm's
length transaction.  See the caption "Security Ownership of Certain
Beneficial Owners and Management" of this Report.

          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 parents.

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

         Reports on Form 8-K
         -------------------

         None.

Exhibits*

          (i)
                                          Where Incorporated
                                            in this Report
                                            --------------


Registration Statement on Form SB-2,           Part I
as amended**


          (ii)

Exhibit
Number               Description

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

 None.

          *    Summaries of all exhibits contained within this
               Report are modified in their entirety by reference
               to these Exhibits.

          **   These documents and related exhibits have been
               previously filed with the Securities and Exchange
               Commission and are incorporated herein by reference.


                                SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.

                                       GALTECH SEMICONDUCTOR MATERIALS
                                       CORPORATION


Date: 4-2-01                         By /s/ William F. Pratt
     --------------                     -----------------------------------
                                        William F. Pratt
                                        CEO, President and Director

          Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Report has been signed below by the following persons
on behalf of the Company and in the capacities and on the dates indicated:

                                       GALTECH SEMICONDUCTOR MATERIALS
                                       CORPORATION


Date: 4-2-01                         By /s/ William F. Pratt
      --------------                    ----------------------------------
                                        William F. Pratt
                                        CEO, President and Director


Date: 4-2-01                         By /s/ David R. Porter
      --------------                    ----------------------------------
                                        David R. Porter
                                        Secretary/Treasurer and Director