U.S. SECURITIES AND EXCHANGE COMMISSION  Washington, D.C. 20549  Form 10-KSB  xANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended December 31, 2004  o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the Transition Period from_______ to _______  Commission File Number 0-27177  GALTECH SEMICONDUCTOR MATERIALS CORPORATION (Name of small business issuer in its charter)   UTAH
        
        87-0427597(State or other jurisdiction of
        
        (I.R.S. Employerincorporation or organization)
        
        Identification Number)   25308 SE 35th Street Issaquah, WA 98029-7728 (Address of principal executive offices)  Issuers telephone number, including area code: (425) 417-6968  Securities registered under Section 12(b) of the Act:  Name of each exchangeTitle of each Class
        
        on which registeredNone
        
        None   Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $0.00025 Par Value (Title of Class) N/A (Former Name or Former Address, if changed since last Report)  Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  (1) Yes o No [X ] (2) YesxNo o        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. o  State Issuers revenues for its most recent fiscal year: December 31, 2004 - $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.  December 28, 2006 - $20,949. There are approximately 83,794,919 shares of common voting stock of the Registrant held by non-affiliates. Because there is no established trading market for our shares, these shares have been arbitrarily valued at par value of $0.00025 per share.  (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)  Not Applicable.  (APPLICABLE ONLY TO CORPORATE ISSUERS)  State the number of shares outstanding of each of the Issuers classes of common equity, as of the latest practicable date.  February 16, 2007  71,948,419  DOCUMENTS INCORPORATED BY REFERENCE  A description of Documents Incorporated by Reference is contained in Item 13 of this report.  Transitional Small Business Disclosure Format (check one): YesxNo o  2        PART I  ITEM 1. Description of Business.  Business Development.  For a discussion of the business development of Galtech Semiconductor Materials Corporation, a Utah corporation (Galtech), from inception through December 31, 2004, see our Annual Report on Form 10-KSB for the calendar year ended December 31, 2001, which was filed with the Securities and Exchange Commission on May 6, 2002, and which is incorporated herein by reference. See the Exhibit Index, Part III, Item 13 of this Report.  Business.  Our principal operations focus on the development and commercial exploitation of a new and more economical method of growing cadmium telluride and related compounds with zinc and mercury semiconductor compounds. Prior to a 1990 fire in our facilities, we had successfully produced cadmium telluride crystal wafers of up to four to six square inches. Previous commercially manufactured cadmium telluride wafers had been only one to two square inches. In addition, we were able to produce round wafers, rather than the customary D-shaped and rectangular wafers. Industry users prefer round wafers.  We are now concentrating our efforts on refining our methods for producing cadmium telluride and cadmium zinc telluride wafers and reproducing our earlier production results. In the future, depending on the success of our research and development efforts, market conditions and our success with our principal operations, we will consider developing similar crystals made from the following compounds: indium phosphide; indium antimonide; gallium antimonide; and gallium arsenide.  Principal Products and Services.  We are attempting to develop a reliable and repeatable process for growing large area, single crystal, cadmium telluride semiconductor material. Each class of semiconductor material has its own unique properties that make it useful for specific applications. Cadmium telluride and cadmium zinc telluride are useful as photo cathodes -- the detector part of the device -- in night vision instruments, focal plane arrays for aerospace guidance and imaging devices and as radiation detectors for medical imaging equipment, to name a few uses. In these applications, the cadmium telluride is used to convert different parts of the light spectrum, such as infrared light, x-rays and gamma rays, into an electronic signal that is used by computers to produce an image for the operator. The market for these devices has traditionally been military due to the high production costs of the cadmium telluride crystals. As the
production costs decrease and these devices are adapted for consumer use, we expect the market for cadmium telluride and cadmium telluride compounds of mercury and zinc to expand.  Worth P. Allred, formerly 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.)  3        Cadmium telluride and cadmium zinc telluride are semiconductor materials used in electronic equipment such as infrared detectors, weapons guidance systems, satellite surveillance, solar cells, deep space communications, infrared night vision devices, tumor detectors, nuclear radiation and gamma detectors, spectrometers for chemical identification, nuclear medicine, astronomy and related applications. (Whitaker, T., Picture This, Compound Semiconductor, Vol. 4 Number 4, 17-20, May 1998).  A Discover Magazine article cited a July 1997 award to Sandia National Laboratories for development of a compact cadmium zinc telluride sensor. The following is quoted from the award citation: Since these sensors are compact and work at room temperature, they could be used not only for monitoring plutonium but also for detecting environmental radioactivity, exploring for minerals, and helping doctors find tumors.  Cadmium telluride can be used in high capacity solar cells. (Galloway, S.A, Characterization of Thin Film Cds/cdte Solar Cells Using Electron and Optical Beam Induced Current, Solar Energy Materials and Solar Cells, Vol. 57 pp. 61-74, 1999.) Cadmium telluride can also be used in high temperature infrared and near infrared sensors. (Mullins, J.T., Carles, J. and Brinkman, A.W., High temperature optical properties of cadmium telluride, Journal of Applied Physics, Vol. 81, No. 9, pp. 6374-6379, 1997.)  Cadmium telluride, cadmium zinc telluride and cadmium mercury telluride are difficult to grow in high quality crystalline structures, but are popular in spite of these limitations because of their superior properties in infrared sensing applications. (Whitaker, T., Picture This, Compound Semiconductor, Vol. 4 Number 4, 17-20, May 1998), (Rogalski, A. Optical Engineering. Vol. 36, Pg. 1994.)  Most of our target markets are in the United States, but potential opportunities are global. The major areas of concentration outside of the United States are Japan, Taiwan, China, Korea, the United Kingdom, Germany, France and Italy. (Private Communication with Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August, 1998).  Presently, the only suppliers of specialty semiconductor materials such as cadmium telluride are supplying at extremely high prices and in very small and inconsistent quantities. (Private Communication with Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August, 1998). Users of this material have expressed a desire for additional suppliers to supplement or improve their current sources of material. (Private Communication with Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August, 1998). Our goal will be to provide cadmium telluride materials in wafer form at lower cost and in larger amounts than other suppliers. If we are successful in doing this, we expect the interest in cadmium telluride material to increase not only in military and aerospace applications but also in a number of non-military applications, the most notable of which is the medical imaging device area.  While the military and aerospace markets continue to be attractive markets for us because of the high prices being paid for the cadmium telluride material for focal plane arrays, these markets appear to be less robust and growing at a lower rate than the non-military and non-aerospace markets. While the civilian aerospace demand is growing, the military requirements have been dropping on a year-to-year basis due to cutbacks in government military spending. As a result, we believe that our product will allow us to compete effectively in these important markets where cost and quality are increasingly important.  The medical imaging market is undergoing a dramatic change and moving beyond X-film technologies. This change involves the use of floroscopic techniques that reduce the x-ray dosage to the patient while providing high definition images. The high degree of clarity in this technology allows the equipment to be used in cardiac procedures on a beating heart as well as standard vascular procedures. Currently, cesium iodide receptors are used in this application. The problem with cesium iodide is that receptors made from this material can only be used in a curved receptor that distorts the image and requires special correction of the image to allow the physician to perform the procedure. Even with correction, the image remains distorted to some degree.  4        Cadmium telluride has several advantages over cesium iodide. A flat panel receptor is possible with cadmium telluride detectors. These detectors produce a receptor with reduced size, thickness and weight. A true flat image receptor gives a more constant amount of illumination and is a much better detector for medical procedures. The potential market for devices using this type of receptor is about $750 million dollars per year, with the semiconductor material used in the receptor device being a large part of this value. (Private communication, Market Analysis report-Medical Imaging Market, Ross Riches, Consultant, Angola, IN, May 2000).  Distribution Methods of the Products or Services.  In the military and aerospace markets, companies such as Rockwell; Raytheon (Santa Barbara Research); Texas Instruments; Hewlett-Packard; ITT; McDonnell Douglas; General Electric and NASA have done work in cadmium telluride device development or production. Each of these companies would be a potential customer for Galtech. In the medical imaging area, companies such as GE Medical Systems; Philips Medical Systems; Siemens Medical Systems; Fischer Imaging; Fluoroscan Imaging Systems; Lunar Corp.; Ziehm International Medical Systems and Xiscan Medical are all potential customers and users of this semiconductor material. (Private communication, Market Analysis report-Medical Imaging Market, Ross Riches, Consultant, Angola, IN, May 2000).  If we are successful in our research and development methods for producing high quality, single crystal cadmium telluride, we expect the cost and the market price of cadmium telluride based products to decrease. We believe this will present us with additional market opportunities.  We plan to use both an in-house sales force and contract brokers to market our products. In our experience, the best and most enduring sales in the semiconductor industry are made through personal contacts and visits to the customers plant. These will be handled by regional representatives.  Status of any Publicly Announced New Product or Service.  None; not applicable.  Competitive Business Conditions.  Crystal growth yields; wafer size and quality; and overhead costs are the three problems that beleaguer each of the companies providing semiconductor materials. As a result, prices range from $900 to $1200 per square inch for a 20 to 30 thousandths inch thick wafer. Due the lack of domestic suppliers capable of supplying consistent high quality material,most military and civilian contractors are forced to grow much of their own cadmium telluride material. They have told us that they would welcome other suppliers of this material. (Private Communication with Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August, 1998).  Yields. Our present competitors have difficulty growing monocrystalline structures, or wafers with a single crystal. (Private Communication with Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August, 1998). The proprietary process that we are developing is designed to provide large area, single crystal cadmium telluride wafers more efficiently, more cost effectively and of a higher quality than our current competitors.  Wafer Size and Quality. Due to the current small size of cadmium telluride wafers, many device manufacturers have begun experimenting with other wafer materials that could replace cadmium telluride. These manufacturers have met with moderate success, but would prefer to use a cadmium telluride wafer if it was available in sufficient quantities and qualities. (Private Communication with Sanghamitra Sen, Santa Barbara Research Center, Raytheon, Goleta CA, August, 1998).  Overhead Costs. Using its production protocol, management believes that the manufacturing costs of Galtechs semiconductor compound materials will be approximately one-fourth of the overhead and capital equipment costs of its competitors methods. We have calculated that we will be able to operate our facility in the near term with four to five people, which should significantly reduce our overhead.   5       Major competitors in the production of cadmium telluride are II-VI, Inc., located in Saxonburg, Pennsylvania; and Nippon Mining, Ltd., of Japan. II-VI, Inc., employs approximately 150 people and controls approximately 75 percent of the market for cadmium telluride of one to three square centimeters. Its product is generally cut from large three-inch multi-crystal ingots. Nippon Mining is a major supplier of cadmium telluride to the Japanese market. It also ships to United States users and its materials are reported to be of good quality. We estimate Nippon Minings market share at approximately five to 10 percent.  Sources and Availability of Raw Materials.  Our source of cadmium telluride is Alfa Aesar, a Johnston Matthey Company, located in Ward Hill, Massachusetts. Alfa Aesar provides cadmium telluride in a variety of forms, including powder and lumps of various sizes. The product is available in purities of 99.999% and 99.99999%. Alfa Aesars most recent catalog lists a retail price of $1182 for 100 grams of cadmium telluride of 99.99999% purity, and $228 per 100 grams of 99.999% purity. We generally purchase in five kilogram quantities; an average production run uses approximately two kilograms. Cadmium telluride is reusable, with a loss of approximately five percent of the original material with each additional production run. Alfa Aesar is a well-established company and management believes that it will be able to provide as much raw material as Galtech requires.  Dependence on One or a Few Major Customers.  There is a worldwide shortage of quality cadmium telluride wafers. We expect that there will be sufficient demand for our products for the foreseeable future.  Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Payments or Labor Contracts.  In April, 1997, our wholly-owned subsidiary, Energy Research Corporation, an Arizona corporation, was assigned a U.S. patent (Patent No. 5,625,241) on a carousel electric generator that was invented by Russell R. Chapman, David R. Porter, and Harold E. Ewing. Galtech has no trademarks, licenses, franchises, concessions, royalty agreements or labor contracts. Because semiconductor material crystal growth patents are difficult to protect, the production processes are closely guarded. Galtech will allow only a select group of researchers access to its processes and each employee will be required to sign a nondisclosure agreement before receiving knowledge of Galtechs processes.  Need for Government Approval of Principal Products or Services.  Our management believes that our processes and products will not require governmental approval.  Effect of Existing or Probable Governmental Regulations on Business.  As with other manufacturing companies, Galtechs operations will have to comply with state and federal workplace safety and environmental emissions regulations. We intend to take all steps necessary to ensure compliance with these laws and regulations.  Cadmium telluride is a stable, odorless material when in a solid form. It has a melting point of 1905.8 degrees Fahrenheit. Heat, sparks and open flame can cause it to become unstable. Exposure to cadmium telluride can cause irritation to the eyes, skin and mucous membranes, as well as lung cancer and liver damage. Precautions for safe handling include the use of a respirator, chemical goggles and protective clothing. We will ensure that all employees that handle cadmium telluride comply with these workplace safety requirements. In addition, we have installed an air scrubber in our production furnace to remove cadmium telluride from the air Galtech intends to dispose of waste in accordance with federal, state and local regulations. Management believes that the costs of compliance with applicable regulations will be less than one percent of gross profits.  6        Research and Development.  During the calendar year ending December 31, 2001, we completed the setup and initial testing of the equipment needed to produce semiconductor materials at our new facility. Currently we are fine-tuning and adding additional production equipment. This equipment will enable us to proceed with production of semiconductor material for sale.  During the calendar year ended December 31, 2004, we spent $380 on research and development activities, as compared to $3,635 in the calendar year ended December 31, 2003.  Galtech received $50,000 in the first calendar quarter of 2000 to continue research on crystal growth. Subsequently, we received bridge financing which permitted us to pursue meaningful development of the crystal growth process through December 2003. Available resources allowed us to conduct no more than five crystal growth trials through that date. We had been working on the growth of single crystal cadmium telluride for approximately three years. During that time, we conducted four crystal growths. We only have one growth furnace, so any problem with the growth of a crystal will delay all progress until the problem is fixed. This lack of additional furnaces has greatly slowed the development of the process.  In 1999, the former president of Galtech and co-inventor of Galtechs motor technology purchased a used automobile, an electric conversion kit, and paid to convert the vehicle from gasoline to electric power. The vehicle was donated to Galtech for baseline testing, performance evaluation, and as a test bed for possible future development of the motor technology. Although we are not actively pursuing development of the technology, interested individuals are donating their time and effort to evaluate the current state of the art. We do not plan to spend any other significant funds on this project in the near term.  Costs and Effects of Compliance with Environmental Laws.  See the heading Effect of Existing or Probable Governmental Regulations on Business.  Number of Employees.  Other than its executive officers, Galtech has no employees.  Forward Looking Statements.  When used in this Form 10-KSB and in other filings by Galtech with the Securities and Exchange Commission, in Galtechs press releases or in other public or stockholder communications or oral statements made with the approval of an authorized executive officer of Galtech, the words or phrases would be, will allow, intends to, believes, plans, will likely result, are expected to, will continue, is anticipated, estimate, project, or similar expressions are intended to identify forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Galtech cautions readers not to place undue reliance on any forward looking statements, which speak only as of the date made, are based on certain assumptions and expectations which may or may not be valid or actually occur, and which involve risks of product demand, market acceptance, economic conditions, competitive products and pricing, difficulties in product development, commercialization, and technology, and other risks. In addition, sales and other revenues may not commence and /or continue as anticipated due to delays or otherwise. As a result, Galtechs actual results for future periods could differ materially from those anticipated or projected.  Galtech does not intend to update the forward looking statements contained in this report, except as may occur as part of its ongoing periodic reports filed with the Securities and Exchange Commission.  7       ITEM 2. Description of Property.  In April 1, 2002, we entered into a 36-month lease for our office space. We were to pay $1,850 per month at the beginning of every month. This facility consisted of 5,000 square feet of office space and production area, located at 450 South 1325 West, Orem, Utah. As of March 31, 2004 this lease terminated and we moved to a smaller, more cost effective space at a rate of $800 per month. This agreement terminated in December of 2005 and we vacated the building in February 2006. We currently have no permanent location and have effectively suspended operations for the time being.  Our equipment consists of a walk-in growth furnace area and computer equipment to monitor the crystal growth. It is currently in a prototype/research state. We are changing it constantly to incorporate new concepts and to make incremental improvements based on results to date. This will continue as the process is perfected.  ITEM 3. Legal Proceedings.  We are not a party to any pending legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or other person who may be deemed to be an affiliate of Galtech or owner of record or beneficially of more than five percent of our common stock is a party adverse to Galtech or has a material interest adverse to Galtech in any proceeding.  A judgment in the amount of $40,563 was entered against us in December, 1992. This amount was written off in June of 2004 as it was decided the liability was beyond the statute of limitations.  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 was 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.  8        STOCK QUOTATIONS  Closing BidQuarter ended:
        
        High
        
        LowMarch 31, 2004
        
        0.024
        
        0.021June 30, 2004
        
        0.046
        
        0.042September 30, 2004
        
        0.03
        
        0.03December 31, 2004
        
        0.05
        
        0.042March 31, 2005
        
        0.034
        
        0.028June 30, 2005
        
        0.032
        
        0.024September 30, 2005
        
        0.03
        
        0.018December 31, 2005
        
        0.024
        
        0.012March 31, 2006
        
        0.01
        
        0.01June 30, 2006
        
        0.009
        
        0.009September 30, 2006
        
        0.01
        
        0.01   Stockholders  As of the date of this Report, we have approximately 1,900 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.  9        Recent Sales of Unregistered Securities   Date
        Number of
        AggregateName(1)
        Acquired
        Shares
        ConsiderationTodd Charl Proffitt
        9/11/01
        10,000
        Services valued at$0.17 per shareVerity Global Financial, L.L.C.
        9/17/01
        92,000
        $23,000Todd Charles Profitt
        12/17/01
        20,000
        Services valued at$0.13 per sharePhilip Brown
        12/17/01
        40,000
        Services valued at$0.13 per shareJames Davis
        12/17/01
        10,000
        Services valued at$0.13 per shareDavid Tracy
        12/17/01
        74,000
        Services valued at$0.13 per shareEmployees
        1/17/02
        22,222
        Option exercise at$0.27 per shareVerity Global Financial, L.L.C.
        3/15/02
        100,000
        (2)7/15/02
        50,000
        Services valued at$0.13 per shareThree investors
        7/15/02
        231,111
        $24,000Three investors
        7/25/02
        77,555
        Services valued at$0.14 per shareSheldon Player and
        8/19/02
        215,800
        Equipment valuedDonna Malone, JT
        
        
        at $15,106Sheldon Player and
        9/2/02
        100,000
        Equipment valuedDonna Malone, JT
        
        
        at $9,000Franz Staufer
        9/2/02
        63,718
        Services valued at$5,735McMahon Family Trust
        1/28/03
        45,000
        Services valued at$2,700Rulon Cluff
        3/28/03
        1,000,000
        Services valued at$80,000Russell Chapman
        3/28/03
        1,000,000
        Services valued at$80,000William Tunnell
        3/31/03
        750,000
        Services valued at$60,000Philroy Brown
        3/31/03
        500,000
        Services valued at$40,000Richard Dean
        3/31/03
        500,000
        Services valued at$40,000Jeffrey Marx
        3/31/03
        33,333
        $1,000Joseph Malyniak
        3/31/03
        25,000
        $  750Lindon Kunzler Trust
        3/31/03
        100,000
        $3,000Wolfgang Horn
        3/31/03
        100,000
        $3,000Joseph Finger
        3/31/03
        133,333
        $4,000Matthew Marx
        3/31/03
        33,333
        $1,000Amanda Chang-Kue
        3/31/03
        33,333
        $1,000David/Janet Marx
        3/31/03
        33,333
        $1,000Edward Bloom
        3/31/03
        20,000
        $2,000Craig Gunderson
        3/31/03
        25,000
        $2,500Elaine Paul
        3/31/03
        10,000
        $1,000   10        Kim Miller
        3/31/03
        10,000
        $1,000Brian Dodge
        3/31/03
        20,000
        $2,000Peter Maunsell
        3/31/03
        20,000
        $2,000Robert May
        3/31/03
        20,000
        $2,000Gary/Julie Osyler
        3/31/03
        20,000
        $2,000Adolfo Zavaio
        3/31/03
        10,000
        $1,000Anita Petit
        3/31/03
        10,000
        $1,000Mike Davey
        3/31/03
        10,000
        $1,000Jeff Morris
        3/31/03
        10,000
        $1,000Todd Proffitt
        3/31/03
        50,000
        Services valued at$3,250Edward Bloom
        5/02/03
        18,500
        Services valued at$  925McMahon Family Trust
        7/01/03
        18,500
        Services valued at$  740David Gunderson
        9/26/03
        40,000
        $1,200James Lawlor
        9/26/03
        100,000
        $3,000Jimmie Holcomb
        9/26/03
        100,000
        $3,000818 Group
        1/12/04
        4,000,000
        Services valued at$60,000Verity
        1/16/04
        900,000
        Debt valued at$10,000Christopher Bell
        3/15/04
        6,667
        $200James Wolfe
        3/15/04
        40,000
        $1,200William Tunnell
        3/15/04
        13,333
        $400Timothy Woodring
        3/15/04
        13,333
        $400Manusell
        3/15/04
        13,333
        $400Craig Gunderson
        3/15/04
        20,000
        $600Yellow Banks
        3/15/04
        133,333
        $4,000Joe Finger
        3/15/04
        180,000
        $5,400Richard Lamp
        3/15/04
        20,000
        $600Edward Bloom
        3/15/04
        23,333
        $600David Gunderson
        3/15/04
        40,000
        $1,200Glen Wood
        3/15/04
        26,666
        $600Allan Meyer
        3/15/04
        21,666
        $650Gary Oyster
        3/15/04
        20,000
        $600James Wolf II
        3/15/04
        20,000
        $600Ed Rohmer
        3/15/04
        20,000
        $600Jimmie Holcomb
        3/15/04
        100,000
        $3,000James Lawlor
        3/15/04
        100,000
        $3,000Enterprise Group
        3/15/04
        166,000
        $5,000Enterprise Group
        3/15/04
        700,000
        $14,500Todd Proffitt
        3/19/04
        87,500
        Services valued at$1,488Edward Bloom
        3/19/04
        500,000
        Services valued at$8,500Tierra Group
        3/19/04
        500,000
        Services valued at$8,500Rulon Cluff
        5/12/04
        1,000,000
        Debt of $23,000Philroy Brown
        5/12/04
        500,000
        Services valued at$11,500Worth Allred
        5/12/04
        800,000
        Debt of $18,400   11        Enterprise Group
        5/12/04
        1,050,000
        $10,500William Tunnell
        5/12/04
        1,000,000
        Services valued at$15,000Edward Bloom
        5/12/04
        1,000,000
        Services valued at$15,000Russ Chapman
        5/12/04
        1,500,000
        Services valued at$22,500Harold Roberts
        5/12/04
        1,000,000
        Services valued at$15,000Enterprise Group
        5/12/04
        220,000
        $2,200Enterprise Group
        5/12/04
        1, 000,000
        Services valued at$15,000Philroy Brown
        5/27/04
        1,000,000
        Services valued at$15,000Jack Meacham
        7/09/04
        8,000,000
        UnsuccessfulAcquisition attemptOf ArtisanMagneticsValued at $280,000Jack Meacham
        8/16/04
        2,000,000
        UnsuccessfulAcquisition attemptOf ArtisanMagneticsValued at $50,000Jim Monday
        8/16/04
        2,000,000
        UnsuccessfulAcquisition attemptOf ArtisanMagneticsValued at $50,000Bastrob, Heritage & Oaks
        8/16/04
        16,000,000
        UnsuccessfulAcquisition attemptOf ArtisanMagneticsValued at $400,000Enterprise Group
        8/23/04
        1,550,000
        $15,500Verity
        9/23/04
        (48,000)
        Shares cancelledEnterprise Group
        11/20/04
        450,000
        $4,499Enterprise Group
        12/10/04
        660,000
        $6,600   (1) Management believes each of these persons was an accredited investor as defined in Rule 501(a)(4) of Regulation D of the Securities and Exchange Commission, or was a sophisticated investor when these shares were issued. We believe these shares were exempt from the registration requirements of the Securities Act of 1933, as amended, under the safe harbor provided by Rule 506 of Regulation D and Section 4(2) of the Securities and Exchange Commission, as the number of unaccredited purchasers did not exceed 35 and each purchaser had access to all material information about Galtech prior to the offer, sale or issuance of these restricted securities. Nor did the offer or sale of these securities involve any general solicitation or general advertising.  (2) On March 15, 2002, we entered into an agreement with Verity under which we would receive $80,000 in cash in exchange for a promissory note in the amount of $90,000, payable on March 15, 2003. These 100,000 shares, valued at $12,000, were issued as further consideration for this financing, along with options that we granted to Verity to purchase 400,000 shares of our common stock at $0.15 per share. The note was also collateralized by 900,000 shares  12      of our common stock, which were issued March 16, 2004  pursuant to this agreement upon default of payment.  13       (3) On June 11, 2004, the Company entered into a Stock Exchange Agreement (the Agreement), pursuant to which the Company agreed to purchase all of the issued and outstanding shares of common stock of Artisan Magnetics, Inc., an Alabama corporation (Artisan). The Agreement was amended on September 3, 2004. According to the terms of the Agreement, the Company acquired all of the issued and outstanding shares of common stock of Artisan, in exchange for 8,000,000 shares of the Companys common stock, which was valued on the date of issuance at $280,000. Additionally, the Company assumed all of Artisans debt as of the date of the acquisition. Artisan operates as a design development and manufacturing house for power conversion and energy storage electronic components.  On November 8, 2005 the Companys Board of Directors voted to reverse the Artisan Magnetics, Inc. acquisition due to Artisans failure to timely solve problems in supplying required audit information to Galtechs auditors. Galtech will return all of its Artisan stock to Jack Meacham, and Mr. Meacham will return all Galtech stock he is holding to Galtech. In addition, Galtech stock given to James Monday and to Bastrop, Heritage Oaks, Ltd in payment of Artisan debt will also be returned to Galtech. This will result in the return of 28,000,000 shares of stock that will be returned to Galtechs treasury, and reduce the amount of outstanding Galtech stock by the same amount.  We did not use an underwriter in connection with any securities sales listed in the above table.  ITEM 6. Managements Discussion and Analysis of Financial Condition and Results of Operations.  Plan of Operation.  This discussion contains forward-looking statements and information, all of which is modified by reference to the caption Risk Factors contained in our Registration Statement on Form SB-2, as amended, which is incorporated herein by this reference.  Since the reorganization of the Companys board of directors which occurred March 19, 2004, there has been a new synergy within the company. We have had a history of Research and Development in the manufacturing/growth and refinement of exotic materials for science and industry. We are attempting to get the efforts of this division more focused on delivering a specific product to the customer. We plan to acquire new and unique growth equipment which, hopefully, will facilitate a larger and more pure growth material product.  The acquisition attempt of Artisan Magnetics during 2004 has proved problematic for the Company. On November 8, 2005 the Companys Board of Directors voted to reverse the Artisan Magnetics, Inc. acquisition due to Artisans failure to timely solve problems in supplying required audit information to Galtechs auditors. Galtech will return all of its Artisan stock to Jack Meacham, and Mr. Meacham will return all Galtech stock he is holding to Galtech. In addition, Galtech stock given to James Monday and to Bastrop, Heritage Oaks, Ltd in payment of Artisan debt will also be returned to Galtech. This will result in the return of 28,000,000 shares of stock that will be returned to Galtechs treasury, and reduce the amount of outstanding Galtech stock by the same amount. Following the reversal  we will have reduced our ownership of Artisan to just 19% of its outstanding stock, which will
allow some continued ownership but allow Artisan to operate without direct Galtech involvement.  Results of Operations.  We have not had any material operations since approximately 1990. We did not receive any revenues during the years ended December 31, 2004 and 2003. Operating expenses for those periods were $235,521 and $407,809, respectively. We also had interest expense of $3,641 and $20,297 during those periods, resulting in net losses of $135,865 and $446,879.  14       During the year ended December 31, 2004, our main expenses were as follows:  
        General and administrative; 
        Legal and professional; and 
        Depreciation.  During the year ended December 31, 2003, our main expenses were as follows:  
        General and administrative; 
        Legal and professional; 
        Depreciation; and 
        Research and Development.  Liquidity and Capital Resources.  We had total current assets as of December 31, 2004, of $1,778, all of which was cash. As of December 31, 2004, our total current liabilities were $20,362.  On March 15, 2002, we entered into an agreement with Verity under which we would receive $80,000 in cash in exchange for a promissory note in the amount of $90,000, payable on March 15, 2003. These 100,000 shares, valued at $12,000, were issued as further consideration for this financing, along with options that we granted to Verity to purchase 400,000 shares of our common stock at $0.15 per share. The note was also collateralized by 900,000 shares of our common stock. On March 16, 2004, which is subsequent to the period covered by this Report, we had defaulted on the note, and issued the 900,000 collateral shares to Verity.  We will not be able to conduct any material research and development activities until we receive substantial additional funding either from Verity or from another source. We cannot assure you that we will be able to receive any such funding.   15       Selected Financial Data.  The following selected financial data of Galtech as of December 31, 2004 and December 31, 2003  , are derived from, and are qualified by reference to, the financial statements of Galtech, included elsewhere in this Form 10-KSB. The information set forth below should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations, the Financial Statements and Notes thereto and other financial information included elsewhere in this Form 10-KSB.   The Years Ended December 31,2004
        
        
        
        2003Revenue
        
        $
        
        
        
        
        $
        Net (Loss)
        
        $
        (135,865
        )
        
        
        $
        (446,879
        )Basic (Loss) per share
        
        $
        (0.00
        )
        
        
        $
        (0.02
        )Weighted Average Shares Outstanding
        
        
        45,548,948
        
        
        
        
        20,235,772Cash Dividends Declared per Common Share
        
        $
        
        
        
        
        $
        Summary Consolidated Balance Sheet DataWorking Capital (Deficit)
        
        $
        (18,584
        )
        
        
        $
        (200,238
        )Total Assets
        
        $
        21,454
        
        
        
        $
        17,428Stockholders Equity (Deficit)
        
        $
        1,092
        
        
        
        $
        (184,681
        )Accumulated (Deficit)
        
        $
        (5,820,274
        )
        
        
        $
        (5,684,409
        )   ITEM 7. Financial Statements.   16                GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES  (A Development Stage Company)  CONSOLIDATED FINANCIAL STATEMENTS  December 31, 2004   17        C O N T E N T SReport of Independent Registered Public Accounting Firm
        18Consolidated Balance Sheet
        19Consolidated Statements of Operations
        20Consolidated Statements of Stockholders Equity (Deficit)
        21Consolidated Statements of Cash Flows
        34Notes to the Consolidated Financial Statements
        36   18       REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   To the Board of Directors and Stockholders of Galtech Semiconductor Materials Corporation Issaquah, Washington  We have audited the accompanying consolidated balance sheet of Galtech Semiconductor Materials Corporation (a development stage company) as of December 31, 2004 and the related consolidated statements of operations, stockholders equity (deficit) and cash flows for the years ended December 31, 2004 and 2003 and from inception on June 18, 1984 through December 31, 2004. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.  In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Galtech Semiconductor Materials Corporation and subsidiaries (a development stage company) as of  December 31, 2004 and the results of its operations and its cash flows for the years ended December 31, 2004 and 2003 and from inception on June 18, 1984 through December 31, 2004, in conformity with United States generally accepted accounting principles.  The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has generated significant losses from operations, has an accumulated deficit of $5,820,274 and has a working capital deficit of $18,584 at December 31, 2004, which together raises doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  /s/ HJ & Associates, LLC HJ & Associates, LLC Salt Lake City, Utah January 23, 2007  19       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Balance Sheet  December 31,
2004ASSETSCURRENT ASSETSCash
     $1,778Total Current Assets
     1,778EQUIPMENT, NET (Note 2)
     18,801OTHER ASSETS
     875TOTAL ASSETS
     $21,454LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccounts payable (Note 7)
     $7,748Notes payable - related (Note 4)
     8,411Accrued expenses
     4,203Total Current Liabilities
     20,362COMMITMENTS AND CONTINGENCIES (Note 5)STOCKHOLDERS' EQUITYCommon stock, $0.00025 par value, 200,000,000 shares authorized;69,298,919 shares issued and outstanding
     17,325Additional paid-in capital
     6,584,041Treasury stock receivable
     (780,000
        )Deficit accumulated during the development stage
     (5,820,274
        )Total Stockholders' Equity
     1,092TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
     $21,454   The accompanying notes are an integral part of these consolidated financial statements.  20       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Operations   For the Years Ended
December 31,
     
     From
Inception on
June 18, 1984
Through
December 31,2004
     
     2003
     
     2004SALES
     
     
     $-
        
     $-
        
     $599,609COST OF PRODUCT SOLD
     -
        
     -
        
     676,198GROSS MARGIN
     -
        
     -
        
     (76,589
        )OPERATING EXPENSESGeneral and administrative
     208,116
        
     374,939
        
     3,421,479Legal and professional
     21,922
        
     19,548
        
     940,146Research and development
     380
        
     3,635
        
     641,823Depreciation
     5,103
        
     9,687
        
     442,361Loss on impairment of inventory
     -
        
     -
        
     85,708Total Expenses
     235,521
        
     407,809
        
     5,531,517Net Loss From Operations
     (235,521
        )
     (407,809
        )
     (5,608,106
        )OTHER INCOME (EXPENSE)Interest expense
     (3,641
        )
     (20,297
        )
     (151,942
        )Interest income
     -
        
     26
        
     94,008Loss on disposal of assets
     -
        
     (18,799
        )
     (260,037
        )Gain on release of debt
     40,563
        
     -
        
     40,563Gain on extinguishment of debt
     62,734
        
     -
        
     62,734Miscellaneous
     -
        
     -
        
     2,506Total Other Income (Expense)
     99,656
        
     (39,070
        )
     (212,168
        )NET LOSS
     $(135,865
        )
     $(446,879
        )
     $(5,820,274
        )LOSS PER SHARE
     $(0.00
        )
     $(0.02
        )WEIGHTED AVERAGE NUMBER OFSHARES OUTSTANDING
     45,548,948
        
     20,235,772    The accompanying notes are an integral part of these consolidated financial statements.  21       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity  Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance, June 18, 1984
        
        
        
        $
        
        
        $
        
        
        $
        
        
        
        
        
        $
        
        
        $
        
        
        $
        Stock issues for cash at $0.0143 per share
        
        140,173
        
        
        35
        
        
        1,965
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,000Balance, December 31, 1984
        
        140,173
        
        
        35
        
        
        1,965
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,000Stock issued for cash at $0.05 per share
        
        400,000
        
        
        100
        
        
        19,900
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        20,000Stock issuance costs
        
        
        
        
        
        
        
        (4,450)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (4,450)Purchase of treasury stock
        
        
        
        
        
        
        
        
        
        
        
        
        
        (403,967)
        
        
        (5,950)
        
        
        
        
        
        
        
        
        (5,950)Sake if treasury stock at $2.11 per share
        
        
        
        
        
        
        
        411,073
        
        
        
        
        
        196,685
        
        
        2,896
        
        
        
        
        
        
        
        
        413,969Stock issued to officers for
services at $0.005
per share
        
        438,600
        
        
        110
        
        
        2,083
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,193Net loss  for the year ended
December 31, 1985
        
        
        
        
        
        
        
        
        
        
        (146,384)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (146,384)Balance, December 31, 1985
        
        978,733
        
        $
        245
        
        $
        430,571
        
        $
        (146,384)
        
        $
        (207,318)
        
        $
        (3,054)
        
        $
        
        
        $
        
        
        $
        281,378        The accompanying notes are an integral part of these consolidated financial statements.   22       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance forward
        
        978,773
        
        $
        245
        
        $
        430,571
        
        $
        (146,384)
        
        
        (207,318)
        
        $
        (3,054)
        
        $
        
        
        $
        
        
        $
        281,378Purchase of treasury stock
        
        
        
        
        
        
        
        
        
        
        
        
        
        (13,997)
        
        
        (13,500)
        
        
        
        
        
        
        
        
        (13,500)Sale of treasury stock at $29.65 per share
        
        
        
        
        
        
        
        1,838,032
        
        
        
        
        
        62,000
        
        
        768
        
        
        (732,300)
        
        
        
        
        
        1,106,500Net loss for the year ended December 31, 1986
        
        
        
        
        
        
        
        
        
        
        (542,930)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (542,930)Balance, December 31,1986
        
        978,773
        
        
        245
        
        
        2,268,603
        
        
        (689,314)
        
        
        (159,315)
        
        
        (15,786)
        
        
        (732,300)
        
        
        
        
        
        831,448Net loss for the year ended December 31, 1987
        
        
        
        
        
        
        
        
        
        
        (509,693)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (509,693)Balance, December 31, 1987
        
        978,773
        
        
        245
        
        
        14,994
        
        
        (1,199,007)
        
        
        (159,315)
        
        
        (15,786)
        
        
        (732,300)
        
        
        
        
        
        321,755Stock issued for services at $0.60 per share
        
        25,000
        
        
        6
        
        
        2,083
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        15,000Net loss  for the year ended
December 31, 1988
        
        
        
        
        
        
        
        
        
        
        (501,513)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (501,513)Balance, December 31, 1988
        
        1,003,773
        
        $
        251
        
        $
        2,283,597
        
        $
        (1,700,520)
        
        $
        (159,315)
        
        $
        (15,786)
        
        $
        (732,300)
        
        $
        
        
        $
        (164,758)    The accompanying notes are an integral part of these consolidated financial statements.   23       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance forward
        
        1,003,773
        
        $
        251
        
        $
        2,283,597
        
        $
        (1,700,520)
        
        
        (159,315)
        
        $
        (15,786)
        
        $
        (732,300)
        
        $
        
        
        $
        (164,758)Stock issued for cash at $2.00 per share
        
        10,000
        
        
        3
        
        
        19,997
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        20,000Stock issued for cash at $0.575 per share
        
        20,000
        
        
        5
        
        
        11,495
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        11,500Sale of treasury stock and subscription receivable
        
        
        
        
        
        
        
        (34,786)
        
        
        
        
        
        159,315
        
        
        15,786
        
        
        732,300
        
        
        
        
        
        713,300Net loss for the year ended December 31, 1989
        
        
        
        
        
        
        
        
        
        
        (306,612)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        306,612Balance, December 31, 1989
        
        1,033,773
        
        
        259
        
        
        2,280,303
        
        
        (2,007,132)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        273,430Cancellation of shares
        
        (5)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        Stock issued for cash
at $0.10 per share
        
        25,000
        
        
        6
        
        
        2,494
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,500Stock issued for cash at
$0.005 per share
        
        3,150
        
        
        1
        
        
        15
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        16Additional compensation
for treasury stock
        
        
        
        
        
        
        
        34,701
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        34,701Balance Forward
        
        1,061,918
        
        $
        266
        
        $
        2,317,513
        
        
        (2,007,132)
        
        
        
        
        
        
        
        $
        
        
        $
        
        
        $
        301,647    The accompanying notes are an integral part of these consolidated financial statements.   24       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued)  Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance forward
        
        1,061,918
        
        $
        266
        
        $
        2,317,513
        
        $
        (2,007,132)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        310,647Net loss for the year ended December 31, 1990
        
        
        
        
        
        
        
        
        
        
        (123,676)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (123,676)Balance, December 31, 1990
        
        1,061,918
        
        
        266
        
        
        2,317,513
        
        
        (2,130,808)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        186,971Stock issued for services at
$0.12 per share
        
        20,400
        
        
        5
        
        
        2,395
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,400Net loss for the year ended December 31,1991
        
        
        
        
        
        
        
        
        
        
        (207,142)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (207,142)Balance, December 31, 1991
        
        1,082,318
        
        
        281
        
        
        2,319,908
        
        
        (2,337,950)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (17,771)Net loss for the year ended December 31, 1992
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        Balance, December 31, 1992
        
        1,082,318
        
        
        271
        
        
        2,319,908
        
        
        (2,337,950)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        17,771Net loss for the year ended
December 31, 1993
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        Balance, December 31, 1993
        
        1,082,318
        
        $
        271
        
        $
        2,319,908
        
        $
        (2,337,950)
        
        $
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (17,771)     The accompanying notes are an integral part of these consolidated financial statements.   25       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued)  Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance, December 31, 1993
        
        1,082,318
        
        $
        271
        
        $
        2,319,908
        
        $
        (2,337,950)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (17,771)Net loss for the year ended December 31, 1994
        
        
        
        
        
        
        
        
        
        
        (10,964)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (10,964)Balance, December 31, 1994
        
        1,082,318
        
        
        271
        
        
        2,318,914
        
        
        (2,348,914)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (28,735)Stock issued for Commodity Recovery Corporation valued at Predessor cost of $0.00
        
        500,000
        
        
        125
        
        
        (125)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        Stock issued for Energy Research Corporation Valued at predessor cost of $0.00
        
        4,200,000
        
        
        
        
        
        
        
        
        (207,142)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        Conversion of debt to equity
        
        
        
        
        
        
        
        3,050
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        3,500Net loss for the year ended December 31, 1995
        
        
        
        
        
        
        
        
        
        
        (89,740)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (89,740)Balance, December 31, 1992
        
        1,082,318
        
        
        271
        
        
        2,319,908
        
        
        (2,337,950)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        17,771Net loss for the year ended
December 31, 1995
        
        5,782,318
        
        $
        1,446
        
        $
        2,322,233
        
        $
        (2,438,654)
        
        $
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (114,975)    The accompanying notes are an integral part of these consolidated financial statements.   26       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance, December 31, 1995
        
        5,782,18
        
        $
        1,446
        
        $
        2,322,233
        
        $
        (2,438,654)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (114,975)Stock issued for cash at at $0.60 per share
        
        150,000
        
        
        38
        
        
        89,962
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        90,000Stock issued for services valued at $1.00 per share
        
        288,000
        
        
        73
        
        
        287,927
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        288,000Stock subscription receivable at $0.50 per share
        
        40,000
        
        
        10
        
        
        19,990
        
        
        
        
        
        
        
        
        
        
        
        (20,000)
        
        
        
        
        
        Net loss for the year ended
December 31, 1996
        
        
        
        
        
        
        
        
        
        
        (400,501)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (400,501)Balance, December 31, 1996
        
        6,260,318
        
        
        1,567
        
        
        2,720,112
        
        
        (2,839,155)
        
        
        
        
        
        
        
        
        (20,000)
        
        
        
        
        
        (137,476)Stock issued for cash at $0.50 per share
        
        1,163,700
        
        
        291
        
        
        575,733
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        576,064Stock issued for services a $0.50 per share
        
        250,000
        
        
        63
        
        
        124,937
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        125,000Receipt of stock subscription
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        20,000
        
        
        
        
        
        20,000Net loss for the year ended December 31, 1997
        
        
        
        
        
        
        
        
        
        
        (290,549)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (290,549)Balance, December 31, 1997
        
        7,674,018
        
        $
        1,921
        
        $
        3,420,822
        
        $
        (3,129,704)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (293,039)    The accompanying notes are an integral part of these consolidated financial statements.   27       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance, December 31, 1997
        
        7,674,018
        
        $
        1,921
        
        $
        3,420,822
        
        $
        (3,129,704)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        293,039Stock issued for services  valued at $0.12 per share
        
        2,970,000
        
        
        742
        
        
        355,658
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        356,400Contribution of capital by shareholder
        
        
        
        
        
        
        
        29,243
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        29,243Net loss for the year ended
December 31, 1998
        
        
        
        
        
        
        
        
        
        
        (464,211)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (464,211)Balance, December 31, 1998
        
        10,644,018
        
        
        2,663
        
        
        3,805,723
        
        
        (3,593,915)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        214,471Stock issued for services valued at $0.27 per share
        
        1,000,000
        
        
        250
        
        
        269,750
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        270,000Stock issued for services to be rendered valued at $0.27 per share
        
        2,000,000
        
        
        500
        
        
        539,500
        
        
        
        
        
        
        
        
        
        
        
        (208,002)
        
        
        
        
        
        61,998Stock issued for debt and subscription valued at $0.27 per share
        
        1,000,000
        
        
        250
        
        
        269,750
        
        
        
        
        
        
        
        
        
        
        
        20,000
        
        
        
        
        
        20,000Net loss for the year ended December 31, 1999
        
        
        
        
        
        
        
        
        
        
        (729,731)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (729,731)Balance, December 31, 1999
        
        14,664,018
        
        $
        3,663
        
        $
        4,884,723
        
        $
        (4,323,646)
        
        
        
        
        $
        
        
        $
        (388,002)
        
        $
        
        
        $
        176,738     The accompanying notes are an integral part of these consolidated financial statements.   28       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance, December 31, 1999
        
        14,644,018
        
        $
        3,663
        
        $
        4,884,723
        
        $
        (4,323,646)
        
        
        
        
        $
        
        
        $
        (388,002)
        
        $
        
        
        $
        176,738Stock issued for cash valued at $0.25 per share
        
        200,000
        
        
        50
        
        
        49,950
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        50,000Receipt of stock subscription
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        25,000
        
        
        
        
        
        25,000Expense of stock subscription
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        363,002
        
        
        
        
        
        363,002Net loss for the year ended December 31, 2000
        
        
        
        
        
        
        
        
        
        
        (425,384)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (425,384)Balance, December 31, 2000
        
        14,844,018
        
        
        3,713
        
        
        4,934,673
        
        
        (4,749,030)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        189,356Common stock issued for services at $0.17 per share
        
        10,000
        
        
        2
        
        
        1,698
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        1,700Common stock issued for cash at $0.25 per share
        
        92,000
        
        
        23
        
        
        22,977
        
        
        
        
        
        
        
        
        
        
        
        (6,000)
        
        
        
        
        
        17,000Common stock issued for services at $0.13 per share
        
        20,000
        
        
        5
        
        
        4,995
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (5,000)Common stock issued for $0.13 per share
        
        40,000
        
        
        10
        
        
        9,990
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        10,000Common stock issued for services at $0.13 per share
        
        10,000
        
        
        2
        
        
        2,498
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,500Common stock issued for services at $0.13 per share
        
        74,000
        
        
        18
        
        
        18,482
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        18,500Net loss for the year ended December 31, 2001
        
        
        
        
        
        
        
        
        
        
        (217,334)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (217,334)Balance, December 31, 2001
        
        15,090,017
        
        $
        3,773
        
        $
        4,995,313
        
        $
        (4,966,364)
        
        
        
        
        
        
        
        $
        (6,000)
        
        $
        
        
        $
        26,722    The accompanying notes are an integral part of these consolidated financial statements.   29       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance, December 31, 2001
        
        15,090,018
        
        $
        3,773
        
        $
        4,995,313
        
        $
        (4,966,364)
        
        
        
        
        $
        
        
        $
        (6,000)
        
        $
        
        
        $
        26,722January 12, 2002, received cash payment on subscription receivable
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        6,000
        
        
        
        
        
        6,000January 17, 2002, employee options exercised at $0.27 per share
        
        22,222
        
        
        6
        
        
        5,994
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        6,000March 15, 2002, stock issued for loan costs at $0.12 per share
        
        100,000
        
        
        25
        
        
        11,975
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        12,000March 15, 2002, options issued at market value
        
        
        
        
        
        
        
        28,329
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        38,329July 11, 2002, common stock issued for services at $0.135 per share
        
        50,000
        
        
        12
        
        
        6,738
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        6,750July 15, 2002, common stock issued for cash at $0.09 to $0.12 per share
        
        231,111
        
        
        58
        
        
        23,942
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        24,000July 15, 2002, options issued at market value
        
        
        
        
        
        
        
        4,880
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        4,880July 25, 2002, common stock issued for services at $0.14 per share
        
        77,555
        
        
        19
        
        
        10,839
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        10,858Balance  Forward
        
        15,570,906
        
        $
        3,893
        
        $
        5,088,010
        
        $
        (4,966,.364)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        125,539    The accompanying notes are an integral part of these consolidated financial statements.   30       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued)  Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance Forward
        
        15,570,906
        
        $
        3,893
        
        $
        5,088,010
        
        $
        (4,966,364)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        125,539August 19, 2002, common stock issued for equipment at $0.07 per share
        
        215,800
        
        
        54
        
        
        15,052
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        15,106September 2, 2002, common stock issued for services at $0.09 per share
        
        63,718
        
        
        16
        
        
        5,719
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        5,735September 2, 2002, common stock issued for equipment at $0.09.per share
        
        100,000
        
        
        25
        
        
        8,975
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        9,000Services contributed during the year ended December 31, 2002
        
        
        
        
        
        
        
        8,750
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        8,750Net loss for the year ended December 31, 2002
        
        
        
        
        
        
        
        
        
        
        (271,166)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (271,166)Balance, December 31, 2002
        
        15,950,424
        
        $
        3,988
        
        $
        5,126,506
        
        $
        (5,237,530)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (107,036)    The accompanying notes are an integral part of these consolidated financial statements.   31       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued)  Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance Forward
        
        15,950,424
        
        $
        3,988
        
        $
        5,126,506
        
        $
        (5,237,530)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (107,063)January 17, 2003, common stock issued for services at $0.055 per share
        
        84,000
        
        
        21
        
        
        4,597
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        4,618January 27, 2003, common stock issued for services at $0.06 per share
        
        45,000
        
        
        11
        
        
        2,689
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,700February 13, 2003, common stock issued for services at $0.08 per share
        
        3,750,000
        
        
        937
        
        
        299,063
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        300,000February 15, 2004, common stock issued at $0.03 and $0.10 per share
        
        676,665
        
        
        168
        
        
        33,082
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        33,250March 13, 2003, common stock issued for services at $0.0065 per share
        
        50,000
        
        
        13
        
        
        3,237
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        3,250March 17, 2003, common stock issued for services at $0.0065 per share
        
        70,000
        
        $
        3,988
        
        
        18
        
        
        4,533
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        4,551Balance forward
        
        20,626,089
        
        $
        5,156
        
        $
        5,473,707
        
        $
        (5,237,530)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        241,333     The accompanying notes are an integral part of these consolidated financial statements.   32       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued)  Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance Forward
        
        20.626.089
        
        $
        5,156
        
        $
        5,473,707
        
        $
        (5,473,530)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        241,333April 10, 2002, common stock issued for cash at $0.03 per share
        
        48,000
        
        
        12
        
        
        11,988
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        12,000April 15, 2003, common stock issued for services at $0.05 per share
        
        18,500
        
        
        5
        
        
        920
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        925June 10, 2003, common stock issued for services at $0.04 per share
        
        18,500
        
        
        5
        
        
        735
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        740July 1, 2003, common stock issued for cash at $0.03 per share
        
        240,000
        
        
        60
        
        
        7,140
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        7,200Net loss for the year ended December 31, 2003
        
        
        
        
        
        
        
        
        
        
        (446,879)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (446,879)Balance December 31, 2003
        
        20,951,089
        
        $
        5,238
        
        $
        5,494,490
        
        $
        (5,684,409)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (184,681)     The accompanying notes are an integral part of these consolidated financial statements.   33       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued)  Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance, December 31, 2003
        
        20,951,089
        
        $
        5,238
        
        $
        5,494,490
        
        $
        (5,684,409)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        (184,681)January 12, 2004, common stock issued for services at $0.015 per share
        
        4,000,000
        
        
        1,000
        
        
        59,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        60,000January 16, 2004, common stock for dent at $0.011 per share
        
        900,000
        
        
        225
        
        
        9,675
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        9,900March 15, 2004, common stock issued for stock subscription payable
        
        1,678,330
        
        
        419
        
        
        43,131
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        43,550March 19, 2004, common stock issued for services at $0.017 per share
        
        1,087,500
        
        
        272
        
        
        18,216
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        18,488May 12, 2004, common stock issued for debt at $0.023 per share
        
        1,180,000
        
        
        450
        
        
        40,950
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        41,400May 12, 2004, common stock issued for services at $0.023 per share
        
        6,000,000
        
        
        1,500
        
        
        92,500
        
        
        
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        94,000May 12, 2004, common stock issued for stock subscription payable
        
        1,270,000
        
        
        318
        
        
        12,383
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        12,701Balance forward
        
        37,686,919
        
        $
        9,422
        
        $
        5,770,345
        
        $
        (5,684,409)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        95.358     The accompanying notes are an integral part of these consolidated financial statements.   34       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders Equity (Continued) Additional
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        TotalCommon
        
        
        Stock
        
        
        Paid-in
        
        
        Accumulated
        
        
        Treasury
        
        
        Stock
        
        
        Subscription
        
        
        Treasury
        
        
        EquityShares
        
        
        Amount
        
        
        Capital
        
        
        Deficit
        
        
        Shares
        
        
        Amount
        
        
        Receivable
        
        
        Receivable
        
        
        (Deficit)Balance Forward
        
        37.686.919
        
        $
        9,422
        
        $
        5,770,345
        
        $
        (5,684,409)
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        95,358May 27, 2004, common stock issued for services at $0.015 per share
        
        1,000,000
        
        
        250
        
        
        14,750
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        15,000July 9, 2004, common stock issued for the unsuccessful acquisition attempt of Artisan Magnetics
        
        8,000,000
        
        
        2,000
        
        
        278,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (280,000)
        
        
        August 23, 2004, common stock issued for the unsuccessful acquisition attempt of Artisan Magnetics
        
        20,000,000
        
        
        5,000
        
        
        495,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (500,000)
        
        
        August 23, 2004, common stock issued for stock subscription payable
        
        1,550,000
        
        
        388
        
        
        15,112
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        15,500September 23, 2004, common stock cancelled
        
        (48,000)
        
        
        (12)
        
        
        12
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        November 20, 2004, common stock issued for stock subscription payable
        
        450,000
        
        
        112
        
        
        4,387
        
        
        
        
        
        
        
        $
        
        
        $
        
        
        $
        
        
        $
        4,499December 10, 2004, common stock issued for stock subscription payable
        
        660,000
        
        
        165
        
        
        6,435
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        6,600Net loss for the year ended December 31, 2004
        
        
        
        
        
        
        
        
        
        
        (135,865)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (135,865)Balance, December 31, 2004
        
        69,298,919
        
        $
        17,325
        
        $
        6,584,041
        
        $
        (5,820,274)
        
        
        
        
        $
        
        
        $
        
        
        $
        (780,000)
        
        $
        1,092    The accompanying notes are an integral part of these consolidated financial statements.   35       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Cash Flows  Inception onJune 18, 1984For The
        
        
        Years Ended
        
        
        Through2004
        
        
        2003
        
        
        2004CASH FLOWS FROM OPERATING ACTIVITIESNet loss
        
        $
        (135,865)
        
        $
        (446,879)
        
        $
        (5,820,274)Adjustment to reconcile net loss to netcash used by operating activities:Depreciation
        
        
        5,103
        
        
        9,687
        
        
        442,361Amortization of interest and debt issue costs
        
        
        
        
        
        8,177
        
        
        48,302Common stock issued for services
        
        
        187,488
        
        
        316,784
        
        
        1,969,595Loss on disposal of property
        
        
        
        
        
        
        
        
        241,238Loss on impairment of inventory
        
        
        
        
        
        
        
        
        85,708Contributed services
        
        
        
        
        
        
        
        
        8,750Stock subscription expensed
        
        
        
        
        
        
        
        
        388,002Gain on extinguishment of debt
        
        
        (62, 734)
        
        
        
        
        
        (62,734)Gain on release of debt
        
        
        (40,563)
        
        
        
        
        
        (40,563)Changes in operating assets and liabilities:(Increase) decrease in inventory
        
        
        
        
        
        3,635
        
        
        (85,708)(Increase) decrease in prepaid expenses
        
        
        1,850
        
        
        
        
        
        Increase (decrease) in accounts payable
        
        
        5,079
        
        
        (4,064)
        
        
        7,566Increase (decrease) in accrued liabilities
        
        
        3,821
        
        
        10,016
        
        
        76,088Net Cash Used by Operating Activities
        
        
        (35,821)
        
        
        (102,644)
        
        
        (2,741,669)CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
        
        
        (8,374)
        
        
        18,799
        
        
        (732,079)Purchase of treasury stock
        
        
        
        
        
        
        
        
        (19,450)Investment in subsidiary
        
        
        (875)
        
        
        
        
        
        (875)Stock subscription
        
        
        
        
        
        
        
        
        (732,300)Net Cash Provided (Used) byInvesting Activities
        
        
        (9,222)
        
        
        18,799
        
        
        (1,484,704)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from note payable
        
        
        
        
        
        2,027
        
        
        82,027Proceeds from note payable - related
        
        
        
        
        
        9,001
        
        
        563,786Repayments of note payable - related
        
        
        
        
        
        (4,000)
        
        
        (447,761)Sale of treasury stock
        
        
        
        
        
        
        
        
        1,911,183Stock subscription
        
        
        
        
        
        24,050
        
        
        774,350Common stock issued for cash
        
        
        46,800
        
        
        52,450
        
        
        1,344,566Net Cash Provided by Financing Activities
        
        $
        46,800
        
        $
        83,528
        
        $
        4,228,151    The accompanying notes are an integral part of these consolidated financial statements.  36       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Cash Flows (Continued)  Inception onJune 18, 1984For The
        
        
        Years Ended
        
        
        Through2004
        
        
        2003
        
        
        2004INCREASE (DECREASE) IN CASH
        
        $
        1,757
        
        $
        (317)
        
        $
        1,778CASH AT BEGINNING OF PERIOD
        
        $
        21
        
        $
        338
        
        $
        CASH END OF PERIOD
        
        
        1,778
        
        
        21
        
        
        1,7785,103
        
        
        9,687
        
        
        442,361SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION187,488
        
        
        316,784
        
        
        1,969,595CASH PAID DURING THE YEAR FOR
        
        
        
        
        
        
        
        
        Interest
        
        $
        
        
        $
        
        
        $
        85,687
        
        
        
        
        
        388,002SCHEDULE OF NON-CASH FINANCING ACTIVITIESCommon stock issued for services
        
        $
        187,488
        
        $
        316,784
        
        $
        1,969,595Common stock issued for debt
        
        $
        51,300
        
        $
        
        
        $
        163,997Common stock issued for loan costs
        
        $
        
        
        $
        
        
        $
        40,329Common stock issued for equipment
        
        $
        
        
        $
        
        
        $
        24,106Contributed services
        
        $
        
        
        $
        
        
        $
        8,750    The accompanying notes are an integral part of these consolidated financial statements.  37       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 1  SIGNIFICANT ACCOUNTING POLICIES  The consolidated financial statements presented are those of Galtech Semiconductor Materials Corporation (the Company) and its wholly-owned subsidiaries Energy Research Corporation (ERC) and Commodity Recovery Corporation (CRC). The Company was incorporated on June 18, 1984 under the laws of the State of Utah as Versa tech, Inc. On April 30, 1985, the Company changed its name to Galtech, Inc., and on June 18, 1986, the Company changed its name to Galtech Semiconductor Materials Corporation. The Company was engaged in the manufacture of compound semiconductor materials, but ceased all operations in 1990 when a fire destroyed the Companys research and development as well as the Companys operations center. Principal operations have not yet resumed. On February 28, 1995, the Company issued 500,000 shares of common stock in exchange for 100% of the issued and
outstanding common stock of CRC. On February 28, 1995, the Company issued 4,200,000 shares of common stock in exchange for 100% of the issued and outstanding shares of ERC. (Note 5)  Energy Research Corporation (ERC) was incorporated on February 7, 1994 under the laws of the State of Arizona. ERC was incorporated to develop and produce alternative sources of energy.  Commodity Recovery Corporation (CRC) was incorporated on October 31, 1994 under the laws of the State of Utah. CRC was incorporated to develop and market products relating to the decontamination of aflatoxin.  At the time of acquisition of CRC and ERC, the Company was essentially inactive, with no operations and minimal assets. Neither CRC or ERC had any assets or operations. As such, the acquisition was recorded at predessor cost which was $0. The Company is the continuing entity for accounting and legal purposes.  a. Accounting Methods  The Companys financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year end.  b. Equipment  Depreciation of equipment is provided using the straight-line method over the estimated lives of five years.  Maintenance and repairs of the equipment that do not improve or extend the lives of the respective assets are charged to expense as incurred. Major renewals and betterments are treated as capital expenditures and depreciated accordingly.  When assets are retired or otherwise disposed of, or become fully depreciated, the cost of the assets and the related accumulated depreciation are removed from the accounts with any gain or loss on disposition reflected in the statement of operations.   38       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (Continued)  c. Income Taxes  Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely that not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  Net deferred tax assets consist of the following components as of December 31, 2004 and 2003:  2004
        2003Deferred tax assets:NOL Carryover
        $ 1,520,035
        $ 1,530,400Depreciation
        
        6,420Total Deferred Tax Asset
        1,519,880
        1,536,820Deferred tax liabilities:Depreciation
        (155)
        Total Deferred Tax Liabilities
        (155)
        Valuation allowance
        (1,519,880)
        (1,536,820)Net deferred tax asset
        $               -
        $               -  The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate of 39% to pretax income from continuing operations for the years ended December 31, 2004 and 2003 due to the following:  2004
        2003Book loss
        $  (52,990)
        $(174,280)Depreciation
        (2,810)
        2,360Stock for services/options expense
        73,100
        123,545Related parties
        (165)
        1,955NOL utilization
        (17,160)
        Asset disposal
        
        2,890Other
        25
        (645)Valuation allowance
        
        44,175$             
        $                 39        GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (Continued)  c. Income Taxes (Continued)  At December 31, 2004, the Company had net operating loss carryforwards of approximately $3,800,000 that may be offset against future taxable income from the year 2004 through 2024. No tax benefit has been reported in the December 31, 2004 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in the future.  d. Cash Equivalents  The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.  e.
        Basic Loss Per Share   For the Year EndedDecember 31, 2004Loss
        Shares
        Per Share(Numerator)
        (Denominator)
        Amount$(135,865)
        45,548,948
        $(0.00)For the Year EndedDecember 31, 2003Loss
        Shares
        Per Share(Numerator)
        (Denominator)
        Amount$(446,879)
        20,235,772
        $(0.02)   The computations of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period.  f. Principles of Consolidation  The consolidated financial statements include those of Galtech Semiconductor Materials Corporation (the Company) and its 100% owned subsidiaries Energy Research Corporation and Commodity Recovery Corporation. All significant intercompany accounts and transactions have been eliminated.  g. Use of Estimates  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   40       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (Continued)  h. Stock Options  As permitted by SFAS No. 123 and amended by SFAS No. 148, the Company elected to measure and record compensation cost relative to employee stock option costs in accordance with APB 25, and related interpretations and make proforma disclosures of net income and earnings per share as if the fair value method of valuing stock options had been applied. Under APB 25, compensation cost is recognized for stock options granted to employees when the option price is less than the market price of the underlying common stock on the date of grant.  i. Revenue Recognition  The Company currently has no source of revenues. Revenue recognition policies will be determined when principal operations begin.  j. Newly Issued Accounting Pronouncements  In November 2004, the FASB issued SFAS No. 151 Inventory Costs, an amendment of ARB No. 43, Chapter 4. The amendments made by Statement 151 clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The guidance is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning after November 23, 2004. The Company has evaluated the impact of the adoption of SFAS 151, and does not believe the impact will be significant to the Companys overall results of operations or financial position.  In December 2004, the FASB issued SFAS No.152, Accounting for Real Estate Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67 (SFAS 152) The amendments made by Statement 152 This Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. This Statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2.
This Statement is effective for financial statements for fiscal years beginning after June 15, 2005. The Company has evaluated the impact of the adoption of SFAS 152, and does not believe the impact will be significant to the Companys overall results of operations or financial position.    41       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (Continued)  In December 2004, the FASB issued SFAS No.153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions.The amendments made by Statement 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, Opinion 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. Opinion 29 provided an exception to its basic measurement principle (fair
value) for exchanges of similar productive assets. The Board believes that exception required that some nonmonetary exchanges, although commercially substantive, be recorded on a carryover basis. By focusing the exception on exchanges that lack commercial substance, the Board believes this Statement produces financial reporting that more faithfully represents the economics of the transactions. The Statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after the date of issuance. The provisions of this Statement shall be applied prospectively. The Company has evaluated the impact of the adoption of SFAS 153, and does not believe the impact will be significant to the Companys overall results of operations or financial position.  In December 2004, the FASB issued SFAS No.123 (revised 2004), Share-Based Payment. Statement 123(R) will provide investors and other users of financial statements with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. Statement 123(R) covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement 123, as originally issued in 1995, established
as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, that Statement permitted entities the option of continuing to apply the guidance in Opinion 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. Public entities (other than those filing as small business issuers) will be required to apply Statement 123(R) as of the first interim or annual reporting period that begins after June 15, 2005. The Company adopted Statement 123(R) in December of 2005.     42       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (Continued)  In December 2004, the Financial Accounting Standards Board issued two FASB Staff Positions - FSP FAS 109-1, Application of FASB Statement 109 Accounting for Income Taxes to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, and FSP FAS 109-2 Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. Neither of these affected the Company as it does not participate in the related activities.  During the year ended December 31, 2003, the Company adopted the following accounting pronouncements, which had no impact on the financial statements or results of operations:  
        SFAS No. 143, Accounting for Asset Retirement Obligations; 
        SFAS No. 145, Recision of FASB Statements 4,44, and 64, amendment of Statement 13, and Technical Corrections; 
        SFAS No. 146, Accounting for Exit or Disposal Activities; 
        SFAS No. 147, Acquisitions of certain Financial Institutions; 
        SFAS No. 148, Accounting for  Stock Based Compensation; 
        SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, and; 
        SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity  In addition, during the year ended December 31, 2003, FASB Interpretations No. 45 and No. 46, along with various Emerging Issues Task Force Consensus (EITF) were issued and adopted by the Company and had no impact on its financial statements.  NOTE 2  EQUIPMENT  December 31,2004Equipment consists of the following:Research equipment
        $ 208,551Furniture
        3,205Leasehold improvements
        2,118Less: accumulated depreciation
        (195,073)Net Equipment
        $   18,801  Amounts charged to depreciation expense were $5,103 and $9,687 for the years ended December 31, 2004 and 2003, respectively.    43       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 3  NOTES PAYABLE  On March 15, 2002 , the Company entered into a debt agreement with Varity Global, Inc., whereby the Company would receive $80,000 in cash in exchange for a $90,000 Promissory Note payable on March 15, 2003. As the company was unable to pay back the promissory note when it was due, the note was reassigned to Enterprise Group, LLC and Enterprise Group paid Varity Global $90,000. As further consideration for the financing, the Company also issued 100,000 shares of common stock valued at $12,000 and 400,000 options to purchase common shares at $0.15 per share. The options have a Black-Scholes value of $28,329. The Note was also collateralized by 900,000 shares of common stock which were issued to Enterprise Group upon default by the Company on January 16, 2004.  NOTE 4  RELATED PARTY TRANSACTIONS  In 2002, a former officer made an advance to the Company if $7,000 which bears interest at 10%, was unsecured and due on demand. This note, with interest, was paid May 12, 2004 with 1,000,000 shares of company stock.  In 2003, a former officer paid for a number of company expenses in the amount of $5,000. Although no formal note was signed, the amount due the officer accrued interest at 10%. The note, with interest, was paid May 12, 2004 with 800,000 shares of company stock.  In 2003, three small loans were made to the Company by related parties. These loans have no formal note and will probably be written off.  NOTE 5  STOCK TRANSACTIONS  On February 8, 1995, the Board of Directors approved a 20 to 1 reverse stock split. All references to shares outstanding and earnings per share have been retroactively restated to reflect the reverse stock split.  On February 28, 1995, the Board of Directors issued 500,000 shares of common stock to acquire Commodity Research Corporation (CRC). CRC has no assets or operating history and the acquisition was valued at $0.  On February 28, 1995, the Board of Directors issued 4,200,000 shares of common stock to acquire Energy Research Corporation (ERC). ERC had no assets or operating history, and the acquisition was valued at predecessor cost of $0.  In November 1995, the Company issued 125,000 shares of common stock for public relations services to be performed. The contract was canceled in December, 1995 and the stock was returned and canceled. Accordingly, the financial statements do not reflect the issuance and cancellation of the 125,000 shares.  In 1996, the Company issued 150,000 shares of common stock for cash at $0.60 per share.    44       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 5  STOCK TRANSACTIONS (continued)  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.  In 2001, the Company issued 10,000 shares of common stock for services valued at $0.17 per share.  In 2001, the Company issued 92,000 shares of common stock for cash valued at $0.25 per share.  In 2001, the Company issued 144,000 shares of common stock for services valued at $0.13 per share.  In 2002, the Company issued 100,000 shares of common stock for loan costs valued at $0.22 per share.  In 2002, the Company issued 22,222 shares of common stock for employee options exercised at $0.27 per share.  In 2002, the Company issued 191,273 shares of common stock for services valued at $0.09  $0.14 per share.  In 2002, the Company issued 315,800 shares of common stock for equipment valued at $0.07 - $0.09 per share.  In 2002, the Company issued 231,111 shares of common stock for cash valued at $0.09- $0.12 per share.   45       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 5  STOCK TRANSACTIONS (Continued)  In 2003, the Company issued 4,036,000 shares of common stock for services valued at $0.04 -$0.08 per share.  In 2003, the Company issued 964,665 shares of common stock for cash valued at $0.03-$0.10 per share.  In 2004, the Company issued 12,087,500 shares of common stock for services valued at $.015 - $.025 per share.  In 2004, the Company issued 2,700,000 shares of common stock for debt valued at $.011 - $.023 per share.  In 2004, the Company issued 5,608,330 shares of common stock for stock subscriptions.  In 2004, the Company issued 28,000,000 shares of common stock for the acquisition of Artisan Magnetics. On November 8, 2005 the Companys Board of Directors voted to reverse the Artisan Magnetics, Inc. acquisition due to Artisans failure to timely solve problems in supplying required audit information to Galtechs auditors. Galtech will return all of its Artisan stock to Jack Meacham, and Mr. Meacham will return all Galtech stock he is holding to Galtech. In addition, Galtech stock given to James Monday and to Bastrop, Heritage Oaks, Ltd in payment of Artisan debt will also be returned to Galtech. This will result in the return of 28,000,000 shares of stock that will be returned to Galtechs treasury, and reduce the amount of outstanding Galtech stock by the same amount.  In 2004, the Company cancelled 48,000 shares of common stock.  NOTE 6  STOCK OPTIONS  During March 2002, the Company granted options to purchase 400,000 shares of common stock. The options have an exercise price of $0.15 per share, vested on April 1, 2002 and had a two-year term.  A summary of the status of the Companys outstanding stock options as of December 31, 2004 and 2003 and changes during the periods then ended is presented below:        46       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 6  STOCK OPTIONS (continued)  2004
        2003Weighted
        
        WeightedAverage
        
        AverageExercise
        
        ExerciseShares
        Price
        Shares
        PriceOutstanding, beginning of year
        400,000
        $0.27
        770,000
        $0.27Granted
        -
        -
        -
        -Expired/Cancelled
        (400,000)
        0.27
        (370,000)
        0.26Exercised
        -
        -
        -
        -Outstanding end of year
        -
        -
        400,000
        $0.27Exercisable
        -
        -
        400,000
        $0.27  NOTE 7  COMMITMENTS AND CONTINGENCIES  On December 18, 1992, a judgment was entered against the Company for $40,563 for non-payment of accounts payable. The Company has written off this amount and 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.  The Company was released from its lease for its office space during 2004. It moved to smaller facilities with a one year lease agreement. The Company pays $900 per month at the beginning of the month. Rent expense for the year ended December 31, 2004 and 2003 was $9,850 and $22,200, respectively.  NOTE 8  GOING CONCERN  The Companys financial statements are prepared using the accounting principles generally accepted in the United States of America applicable to going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has little cash and without realization of additional adequate financing, it would be unlikely for the Company to pursue and realize its objective of operating profitably. The Company plans to continue the research and development process prior to the sales of its product. In the interim, management has committed to covering the operating expenses of the Company.    47        GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 9  SIGNIFICANT EVENTS  On June 11, 2004, the Company entered into a Stock Exchange Agreement (the Agreement), pursuant to which the Company agreed to purchase all of the issuedand outstanding shares of common stock of Artisan Magnetics, Inc., an Alabama corporation (Artisan). The Agreement was amended on September 3, 2004. According to the terms of the Agreement, the Company acquired all of the issued and outstanding shares of common stock of Artisan, in exchange for 8,000,000 shares of the Companys common stock, which was valued on the date of issuance at $280,000. Additionally, the Company assumed all of Artisans debt as of the date of the acquisition. Artisan operates as a design development and manufacturing house for power conversion and energy storage electronic components.  On October 26, 2004, the Company formed a new subsidiary named International Amateur Sports Championships, Inc. (IASC). IASC is a Wyoming corporation with 100,000,000 common shares authorized, a par value of $0.00025, and 5,000 preferred shares authorized, par value of $1.00. IASC authorized the issuance of 16,000,000 shares of common stock to the Company and authorized a Private Placement of IASC common stock to raise up to $2,000,000 to fund IASC. Although IASC was formed on October 26, 2004, the initial organizational meeting was not held until December 14, 2004. The corporation was formed in order to purchase up to fifty one percent (51%) of United States Amateur Motocross Championships, Inc. (USAMXC), a privately held New Mexico corporation, and to engage in the business of organizing and promoting membership participation in various sports by sponsoring tournaments,
for amateur participants, along with USAMXC using their business model. The purchase price for the 51% ownership ofUSAMXC is $1,000,000. USAMXC is a start-up company that is currently organizing amateur motocross races throughout the Country.  NOTE 10  SUBSEQUENT EVENTS  On November 8, 2005 the Companys Board of Directors voted to reverse the Artisan Magnetics, Inc. acquisition due to Artisans failure to timely solve problems in supplying required audit information to Galtechs auditors. Galtech will return all of its Artisan stock to Jack Meacham, and Mr. Meacham will return all Galtech stock he is holding to Galtech. In addition, Galtech stock given to James Monday and to Bastrop, Heritage Oaks, Ltd in payment of Artisan debt will also be returned to Galtech. This will result in the return of 28,000,000 shares of stock that will be returned to Galtechs treasury, and reduce the amount of outstanding Galtech stock by the same amount.   48       GALTECH SEMICONDUCTOR MATERIALS CORPORATION AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2004 and 2003  NOTE 10  SUBSEQUENT EVENTS (continued)  On September 8, 2006 the Company entered into an agreement, to acquire all of the outstanding stock of CBM Group, Inc., a Nevada corporation, in exchange for approximately 63,000,000 shares of Galtech stock. The Agreement was subsequently challenged by parties asserting an interest in CBM assets. The Agreement was amended on October 5, 2006 such that the Agreement will be null and void if the assertions of the adversarial claimants are not disproved and nullified in a court of law. A summary judgment trial is scheduled for February 19, 2007, and the companys board is very confident the dispute will be resolved favorably.    49        ITEM 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.  During our two most recent calendar years, and since then, our principal independent accountant has not resigned or declined to stand for re-election, and we have not dismissed our principal independent accountant during that period. Galtech and its auditors have not disagreed on any items of accounting treatment or financial disclosure.  8A. Controls and Procedures The registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the registrants Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to the registrants management, including its Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of disclosure controls and procedures in Rule 13a-14(c). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures. Within 90 days prior to the date of this report, the registrant carried out an evaluation, under the supervision and with the participation of the Companys management, including the registrants Chief Executive Officer, of the effectiveness of the design and operation of the registrants disclosure controls and procedures. Based on the foregoing, the companys Chief Executive Officer concluded that the registrants disclosure controls and procedures were effective. There have been no significant changes in the registrants internal controls or in other factors that could significantly affect the internal controls subsequent to the date the registrant completed its evaluation.  PART III  ITEM 9. Directors and Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act.  Directors and Executive Officers.  The following table sets forth the names of all of our current directors and executive officers. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignations or terminations.   Date ofPositions
        Election orName
        Held*
        DesignationGarrett Quintana
        President
        3/19/04Director
        3/19/04Edward Bloom
        Secretary/
        3/19/04Treasurer
        3/19/04Director
        3/19/04Russ Chapman
        Executive VP
        3/19/04William Tunnell
        Director
        2/07/03    50         Business Experience.  Garrett Quintana has a B.S. in Biology. He successfully founded and managed his own oil and gas consulting firm. He was a general partner in a highly successful real estate and securities investment company, and was a co-founder, director and interim president of a small, but profitable national bank.  Edward Bloom has had a varied career. He was in Radio Intelligence Operations for the U.S. Army, taught at the University of Oklahoma, Air Traffic Control on a government contract, founded and managed SEA Enterprises, a coupon clearinghouse in Seattle, Washington. He holds a commercial pilots license and a real estate license in Washington State. He serves as an advisor to the State of Oklahoma for the development of thoroughbred horse racing. He is currently a Senior Radar Controller for the FAA.  Time Commitments by Management.  Garrett Quintana and Edward Bloom spend several hours each 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.  Board Meetings and Committees.  The Board of Directors held a total of four meetings during the calendar year ended December 31, 2004. The Compensation Committee, consisting of the Board of Directors, is primarily responsible for reviewing compensation of executive officers and overseeing the granting of stock options. Edward Bloom served as Chairman of the Audit Committee and convened four meetings of that Committee during the preceding fiscal year. No director attended fewer than 75% of all meetings of the Board of Directors during the 2004 fiscal year.  Compliance with Section 16(a) of the Securities and Exchange Act of 1934.  To the knowledge of management, Galtechs newest officers, Garrett Quintana and Edward Bloom, have not yet filed their Form 3 Initial Statements of Beneficial Ownership of Securities. To the knowledge of management, none of our other executive officers, directors or 10% stockholders have been delinquent in making any filing that is required under Section 16(a) of the Securities Exchange Act of 1934, as amended.   51        ITEM 10. Executive Compensation.  There were no officers or directors of Galtech at December 31, 2004, whose salary and bonus for all services in all capacities exceed $100,000 for the calendar year then ended.  The following table sets forth the aggregate compensation that Galtech has paid for services rendered during the periods indicated:  SUMMARY COMPENSATION TABLE   Long Term CompensationAnnual Compensation
        Awards
        Payouts(a)
        (b)
        (c)
        (d)
        (e)
        (f)
        (g)
        (h)
        (i)  Name and
        Years or
        Other
        Sharesprincipal
        periods
        Annual
        Restricted Option/  LTIP
        Issuedposition
        Ended
        $
        $
        Compen-  Stock
        SARs
        Payouts
        forSalary Bonus sation
        Awards$
        #
        $
        Services -----------------------------------------------------------------------------  Garrett Quintana President & Director
        12/31/04
        0
        0
        0
        0
        0
        0 $15,000  Edward Bloom Sec./Treas. & Director
        12/31/04
        0
        0
        0
        0
        0
        0 $23,500  William
        12/31/02
        0
        0
        0
        0
        0
        0
        0Tunnell
        12/31/03
        0
        0
        0
        0
        0
        0
        0Director
        12/31/04
        0
        0
        0
        0
        0
        0  15,000  S. Kent Holt 12/31/01
        0
        0
        0
        0
        0
        0
        0Former
        12/31/02
        0
        0
        0
        0
        0
        0
        0Acting
        12/31/03
        0
        0
        0
        0
        0
        0
        0Pres., CEO
        12/31/04
        0
        0
        0
        0
        0
        0
        0 and Director  Worth P.
        12/31/01
        0
        0
        0
        0
        0
        0
        0Allred
        12/31/02
        0
        0
        0
        0
        0
        0
        0Former VP
        12/31/03
        0
        0
        0
        0
        0
        0
        0and Director 12/31/04
        0
        0
        0
        0
        0
        0
        0  Rulon Cluff  12/31/01
        0
        0
        0
        0
        0
        0
        0Former
        12/31/02
        0
        0
        0
        0
        0
        0
        0Sec./Treas. 12/31/03
        0
        0
        0
        0
        0
        0
        0and Director 12/31/04
        0
        0
        0
        0
        0
        0
        0   We did not grant any cash compensation, deferred compensation or long-term incentive plan awards to our management during the year ended December 31, 2004, and none of our executive officers has exercised any options during that period.  Bonuses and Deferred Compensation.  None.   52        Compensation Pursuant to Plans.  None.  Pension Table.  None; not applicable.  Other Compensation.  On February 7, 2003, our Board of Directors resolved to issue 500,000 unregistered and restricted shares of our common stock to Philroy Brown, Jr. and Richard J. Dean in connection with their elections to serve as Vice Presidents of Galtech. These shares were issued March 28, 2003.  Compensation of Directors.  Galtech does not have any standard arrangements to compensate directors for their services as directors. We do not pay our directors for committee participation or special assignments.  Employment Contracts and Termination of Employment and Change in Control Arrangements.  We do not have any employment contracts, compensatory plans or arrangements, including payments to be received from us, with respect to any director or executive officer which would result in payments to that person because of his or her resignation, retirement or other termination of employment, any change in control of Galtech, or a change in the persons responsibilities following a change in control of Galtech.  ITEM 11. Security Ownership of Certain Beneficial Owners and Management.  The following table sets forth the shares of common stock beneficially owned as of February 16, 2007, by each person known by Galtech to be the beneficial owner of more the five percent of the common stock, by each director of Galtech, by the chief executive officer, and by all officers and directors of Galtech as a group. Unless noted otherwise, each person named has sole voting and investment power with respect to the shares indicated.  PercentageName and Address of
        Number of Shares
        of ClassBeneficial Owner
        Beneficially Owned
        Outstanding (1)Garrett QuintanaP.O. Box 667Santa Fe, New Mexico 87504
        29,242,666 (2,3)
        40.6%Edward Bloom25308 SE 35th StreetIssaquah, Washington 98029
        7,000,000
        9.7%William Tunnell20165 North 67th Ave., #122AGlendale, Arizona 85308
        6,763,333
        9.4%All directors and executiveofficers as a group (Three persons)
        43,005,999
        59.7%  (1) Based on 71,948,419 shares issued and outstanding on February 16, 2007. This figure takes into account: (i) the 69,298,919 shares issued and outstanding on that date; and (ii) the 900,000 shares issued to Verity as a result of our default on the $90,000 note to Verity.  (2) This figure includes: (i) 200,000 shares that Verity currently acquired in March, 2000; (ii) 92,000 shares it purchased during 2001; and (iii) 900,000 shares that issued as a result of our default on the $90,000 Verity note. Garrett Quintana, who is the managing director and the sole member of Verity, may be considered the beneficial owner of these securities.    53       (3) This figure also includes: (i) 7,036,666 shares issued to 818 Group for services and elimination of debt; (ii) 500,000 shares issued to Tierra Group for services; (iii) 3,660,000 shares issued to Enterprise Group for services and elimination of debt; and (iv) 16,000,000 shares issued to Bastrop, Heritage and Oaks, Ltd. for elimination of Artisan Magnetics debt. All of these entities are owned and controlled by Garrett Quintana.  Changes in Control.  To the knowledge of management, there are no present arrangements or pledges of Galtechs securities which may result in a change in control of Galtech.  ITEM 12. Certain Relationships and Related Transactions.  Transactions with Management and Others.  During the past two years, there have been no transactions, or series of transactions, between Galtech and members of management, nominees to become a director or executive officer, five percent stockholders, or promoters or persons who may be deemed to be parents of Galtech in which the amount involved exceeded $60,000.  Galtech has a policy that permits it to enter into transactions with affiliates on terms no less favorable to Galtech than would be available in similar arms length transactions with unaffiliated third parties.  Parents of the Issuer.  Galtech has no corporate parent.  ITEM 13. Exhibits and Reports on Form 8-K.  (a) Exhibits.  None.  (b) Reports on Form 8-K.  None.  ITEM 14. Controls and Procedures.  Within 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our President and our Secretary/Treasurer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our President and Secretary/Treasurer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic Securities and Exchange Commission reports. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. In addition, we reviewed our internal controls, and there have been no significant changes in our
internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation.  ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES  The following is a summary of the fees billed to Galtech Semiconductor Materials, Inc. by its principal accountants during the fiscal years ended December 31, 2004, and December 31, 2003:   Fee category
        2004
        2003Audit fees
        $37,500
        $10,568Audit related fees
        -
        -Tax fees
        570
        455All other fees
        -
        -Total fees
        $38,070
        $11,023  Audit fees. Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and the review of financial statements included in our Forms 10-QSB or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.  Audit-related fees. Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under Audit fees.  Tax fees. Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.  All other fees. Consists of fees for products and services provided by our principal accountants, other than the services reported under Audit fees, Audit-related fees and Tax fees above.  54    SIGNATURES  In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.  GALTECH SEMICONDUCTOR MATERIALS CORPORATION   Date: 02/27/07
        By: /s/ Garrett QuintanaGarrett QuintanaPresident and Director   In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.  1. By its principal executive officer.  Date: 02/27/07
        By: /s/ Garrett QuintanaGarrett QuintanaPresident and Director   2. And by its principal financial officer and accounting officer.  Date: 02/27/07
        By: /s/ Edward BloomEdward Bloom, Secretary/Treasurer and Director   55