U.S. SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C. 20549

                               Form 10-KSB

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

    For the fiscal year ended December 31, 2002

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

    For the Transition Period from_______ to _______

                      Commission File Number 0-27177

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


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


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

      Issuer's telephone number, including area code: (801) 226-4490

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

                              Name of each exchange
Title of each Class           on which registered

        None                        None

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

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

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

     Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

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

     Check if there is no disclosure of delinquent files in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]

     State Issuer's revenues for its most recent fiscal year: December 31,
2002 - $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.

     April 8, 2003 - $4,802.  There are approximately 19,207,969 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.

                          April 2, 2003

                            20,542,089

               DOCUMENTS INCORPORATED BY REFERENCE

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

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

<PAGE>

                             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, 2001, see our Annual Report on Form 10-KSB for the calendar year
ended December 31, 2001, which was filed with the Securities and Exchange
Commission on May 6, 2002, and which is incorporated herein by reference.  See
the Exhibit Index, Part III, Item 13 of this Report.

     Business.
     ---------

     Our principal operations focus on the development and commercial
exploitation of a new and more economical method of growing cadmium telluride
and related compounds with zinc and mercury semiconductor compounds.

      Prior to a 1990 fire in our facilities, we had successfully produced
cadmium telluride crystal wafers of up to four to six square inches. Previous
commercially manufactured cadmium telluride wafers had been only one to two
square inches. In addition, we were able to produce round wafers, rather than
the customary D-shaped and rectangular wafers. Industry users prefer round
wafers.

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

     Principal Products and Services.
     --------------------------------

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

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

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

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

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

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

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

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

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

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

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

     Distribution Methods of the Products or Services.
     -------------------------------------------------

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

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

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

     Status of any Publicly Announced New Product or Service.
     --------------------------------------------------------

     None; not applicable.

     Competitive Business Conditions.
     --------------------------------

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

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

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

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

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

     Sources and Availability of Raw Materials.
     ------------------------------------------

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

     Dependence on One or a Few Major Customers.
     -------------------------------------------

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

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

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

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

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

     Effect of Existing or Probable Governmental Regulations on Business.
     --------------------------------------------------------------------

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

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

     Research and Development.
     -------------------------

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

     During the calendar year ended December 31, 2002, we spent $2,757 on
research and development activities, as compared to $91,795 in the calendar
year ended December 31, 2001.






     Galtech received $50,000 in the first calendar quarter of 2000 to
continue research on crystal growth. We are receiving bridge financing which
permits us to pursue meaningful development of the crystal growth process
through December 2002. Our current resources will allow us to conduct no more
than five crystal growth trials through that date. We have been working on the
growth of single crystal cadmium telluride for approximately three years.
During that time, we conducted four crystal growths. We only have one growth
furnace, so any problem with the growth of a crystal will delay all progress
until the problem is fixed. This lack of additional furnaces has greatly
slowed the development of the process.

If successful with our growth trials before June 2002, we plan to begin pilot
production of material for the purpose of providing samples and, if possible,
low volume sales to interested customers. We anticipate that these customers
will take from three to nine months to evaluate our material and approve
Galtech as a source of supply for cadmium telluride wafers.

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







     Costs and Effects of Compliance with Environmental Laws.
     --------------------------------------------------------

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

     Number of Employees.
     --------------------

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

     Forward Looking Statements.
     ---------------------------

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

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

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

     ITEM 2. Description of Property.
     --------------------------------

     In April 1, 2002, we entered into a 36-month lease for our office space.
We pay $1,850 per month at the beginning of every month.  This facility
consists of 5,000 square feet of office space and production area, located at
450 South 1325 West, Orem, Utah.

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

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

     ITEM 3. Legal Proceedings.
     --------------------------

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

     A judgment in the amount of $40,563 was entered against us in December,
1992.  This amount has been included as an account payable for December 31,
2002, in our consolidated financial statements.

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

     None; not applicable.

                             PART II

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

     Market Information.
     -------------------

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

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

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

                               STOCK QUOTATIONS*

                                            Closing Bid

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

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

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

     Dividends.
     ----------

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

     Recent Sales of Unregistered Securities.
     ----------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     (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 is also collateralized by 900,000
shares of our common stock.

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

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

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

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

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

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

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

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

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

     Finite Element Model Development -

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

     * correlating results to our model predictions;

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

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

     * finding a better furnace and process design.

     Equipment Upgrade -

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

     Crystal Design of Experiments -

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

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

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

     * verify and adjust the parameters of the computer model;

     * identify the main factors affecting the growth process; and

     * test two competing design improvements for the process.

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

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

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

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

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

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

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

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

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

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

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

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

     We have not had any material operations since approximately 1990. We did
not receive any revenues during the years ended December 31, 2002 and 2001.
Operating expenses for those periods were $230,141 and $216,741, respectively.
We also had interest expense of $41,025 and $1,148 during those periods,
resulting in net losses of $271,166 and $217,334.

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

     *  General and administrative;

     *  Loss on impairment of inventory;

     *  Legal and professional;

     *  Depreciation; and

     *  Research and Development.
Expense.

     During the year ended December 31, 2001, our main expenses were:

     *  Research and development;

     *  General and administrative;

     *  Legal and professional; and

     *  Depreciation.

     Liquidity and Capital Resources.
     --------------------------------

     We had total current assets as of December 31, 2002, of $58,043, of which
$3,635 was inventory and $338 was cash.  As of December 31, 2002, our total
current liabilities were $165,079.

     On March 15, 2002, we entered into an agreement with Verity under which
we would receive $80,000 in cash in exchange for a promissory note in the
amount of $90,000, payable on March 15, 2003.  These 100,000 shares, valued at
$12,000, were issued as further consideration for this financing, along with
options that we granted to Verity to purchase 400,000 shares of our common
stock at $0.15 per share.  The note is also collateralized by 900,000 shares
of our common stock. As of April 8, 2003, which is subsequent to the period
covered by this Report, we had defaulted on the note, but had not yet issued
the 900,000 collateral shares to Verity.

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

     Selected Financial Data.
     ------------------------

     The following selected financial data of Galtech as of December 31, 2002
and December 31, 2001, 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,
                                                   2002            2001
                                                   ----            ----

Revenue                                         $      -        $       --

Net (Loss)                                      $   (271,166)   $   (217,334)


Basic (Loss) per share                          $      (0.02)   $      (0.01)


Weighted Average Shares Outstanding               15,488,472      14,879,048


Cash Dividends Declared per Common Share              --                --

Summary Consolidated Balance Sheet Data

Working Capital (Deficit)                       $   (159,256)   $     26,722

Total Assets                                    $     58,043    $     86,066

Stockholder's Equity (Deficit)                  $   (107,036)   $     26,722

Accumulated (Deficit)                           $ (5,237,530)   $ (4,966,364)

     ITEM 7. Financial Statements.
     -----------------------------

<PAGE>
                 GALTECH SEMICONDUCTOR MATERIALS
                   CORPORATION AND SUBSIDIARIES

                  (A Development Stage Company)

                CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2002
<PAGE>


                             CONTENTS

Independent Auditors' Report                                  3

Consolidated Balance Sheet                                    4

Consolidated Statements of Operations                         5

Consolidated Statements of Stockholders' Equity (Deficit)     6

Consolidated Statements of Cash Flows                        16

Notes to the Consolidated Financial Statements               18
<PAGE>




                   INDEPENDENT AUDITORS' REPORT



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

We have audited the accompanying consolidated balance sheet of Galtech
Semiconductor Materials Corporation and Subsidiaries (a development stage
company) as of December 31, 2002 and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 2002 and 2001 and from inception on June 18, 1984 through
December 31, 2002.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Galtech Semiconductor Materials Corporation and Subsidiaries (a development
stage company) as of December 31, 2002 and the results of their operations and
their cash flows for the years ended December 31, 2002 and 2001 and from
inception on June 18, 1984 through December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.

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




HJ & Associates, LLC
Salt Lake City, Utah
April 7, 2003
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
                   Consolidated Balance Sheet
<CAPTION>

                              ASSETS

                                                      December 31,
                                                         2002
<S>                                                 <C>
CURRENT ASSETS

  Cash                                               $       338
  Deposits                                                 1,850
  Inventory                                                3,635
                                                      ----------
     Total Current Assets                                  5,823
                                                      ----------
EQUIPMENT, NET (Note 2)                                   44,043
                                                      ----------
CAPITALIZED LOAN COSTS, NET                                8,177
                                                      ----------
     TOTAL ASSETS                                     $   58,043
                                                      ==========
               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable (Note 7)                           $   47,116
  Stock subscription payable                              12,000
  Notes payable (Note 3)                                  87,973
  Notes payable - related (Note 4)                        15,410
  Accrued expenses                                         2,580
                                                      ----------
     Total Current Liabilities                           165,079
                                                      ----------
COMMITMENTS AND CONTINGENCIES (Note 5)

STOCKHOLDERS' EQUITY (DEFICIT)

  Common stock, $0.00025 par value, 200,000,000
   shares authorized; 15,950,424 shares issued
   and outstanding                                       3,988
  Additional paid-in capital                         5,126,506
  Deficit accumulated during the development stage  (5,237,530)
                                                    ----------
      Total Stockholders' Equity (Deficit)            (107,036)
                                                    ----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)                                     $   58,043
                                                    ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                4
<PAGE>
<TABLE>
            GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
              Consolidated Statements of Operations

<CAPTION>
                                                                    From
                                                                 Inception on
                                                                June 18, 1984
                                          For the Years Ended     Through
                                             December 31,        December 31,
                                          2002         2001         2002
<S>                                   <C>          <C>        <C>
SALES                                     $       -  $       -  $     599,609

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

General and administrative                  123,501     56,193      2,838,424
Legal and professional                       13,772     46,193        898,676
Research and development                      2,757     91,795        637,808
Depreciation                                  4,403     22,560        427,571
Loss on impairment of inventory              85,708          -         85,708
                                          ---------  ---------  -------------
   Total Expenses                           230,141    216,741      4,888,187
                                          ---------  ---------  -------------
Net Loss From Operations                   (230,141)  (216,741)    (4,964,776)

OTHER INCOME (EXPENSE)

Interest expense                            (41,025)    (1,148)      (128,004)
Interest income                                   -        555         93,982
Loss on disposal of assets                        -          -       (241,238)
Miscellaneous                                     -          -          2,506
                                         ----------  ---------  -------------
   Total Other Income (Expense)             (41,025)      (593)      (272,754)
                                         ----------  ---------  -------------
NET LOSS                                 $ (271,166) $(217,334) $  (5,237,530)
                                         ==========  =========  =============
LOSS PER SHARE                           $    (0.02) $   (0.01)
                                         ==========  =========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING                              15,488,472  14,879,048
                                         ==========  ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                5
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
     Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>

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

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

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

Stock issuance costs                      -          -      (4,450)         -

Purchase of treasury stock                -          -           -          -

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

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

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

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

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

Stock issuance costs                      -          -           -     (4,450)

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

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

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

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

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

Purchase of treasury stock                -          -           -          -

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cancellation of shares                   (5)         -           -          -

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

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

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

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

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

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

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

Cancellation of shares                    -          -           -          -

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conversion of debt to equity              -          -       3,500          -

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

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

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

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

Conversion of debt to equity              -          -           -      3,500

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

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

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

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

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


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

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

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

Receipt of stock subscription             -          -           -          -

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

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

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

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

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

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

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

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

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

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

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

Contribution of capital by
shareholder                               -          -      29,243          -

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

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

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

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

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

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

Contribution of capital by
shareholder                               -          -           -     29,243

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

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

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

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

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

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

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

Receipt of stock subscription             -          -           -          -

Expense of stock subscription             -          -           -          -

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Net loss for the year ended
December 31, 2002                         -          -           -   (271,166)
                                -----------  ---------  ----------  ---------
Balance forward                           -  $       -  $        -  $(107,036)
                               ------------  ---------  ----------  ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                15
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
              Consolidated Statements of Cash Flows
<CAPTION>
                                                                    From
                                                                 Inception on
                                                                June 18, 1984
                                          For the Years Ended     Through
                                             December 31,        December 31,
                                          2002         2001         2002
<S>                                   <C>          <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                              $ (271,166)  $  (217,334) $ (5,237,530)
 Adjustment to reconcile net loss to net
  cash used by operating activities:
  Depreciation                              4,403        22,560       427,571
  Amortization of interest and debt issue
   costs                                   40,125             -        40,125
  Common stock issued for services         28,223        37,700     1,465,323
  Loss on disposal of property                  -             -       241,238
  Loss on impairment of inventory          85,708             -        85,708
  Contributed services                      8,750             -         8,750
  Stock subscription expensed                   -             -       388,002
 Changes in operating assets and liabilities:
  (Increase) decrease in inventory         (3,635)       91,135       (89,343)
  (Increase) decrease in deposits          (1,850)            -        (1,850)
  Increase (decrease) in accounts payable  (2,138)        3,179         6,551
  Increase (decrease) in accrued
  liabilities                                 900           841        62,251
                                         --------      --------    ----------
   Net Cash Used by Operating
   Activities                            (110,680)      (61,919)   (2,603,204)
                                         --------      --------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES

 Capital expenditures                     (24,340)            -      (742,531)
 Purchase of treasury stock                     -             -       (19,450)
 Stock subscription                             -             -      (732,300)
                                         --------      --------    ----------
   Net Cash Used from Investing
   Activities                             (24,340)            -    (1,494,281)
                                         --------      --------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from note payable                80,000             -        80,000
 Proceeds from note payable - related       7,000           122       554,785
 Repayments of note payable - related           -             -      (443,761)
 Sale of treasury stock                         -             -     1,911,183
 Stock subscription                        18,000             -       750,000
 Common stock issued for cash              30,000        17,000     1,245,316
                                         --------     ---------    ----------
  Net Cash Provided by Financing
   Activities                            $135,000     $  17,122    $4,097,823
                                         --------     ---------    ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statement.
                                16
<PAGE>
<TABLE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
        Consolidated Statements of Cash Flows (Continued)
<CAPTION>
                                                                    From
                                                                 Inception on
                                                                June 18, 1984
                                          For the Years Ended     Through
                                             December 31,        December 31,
                                          2002         2001         2002
<S>                                   <C>          <C>        <C>
INCREASE (DECREASE) IN CASH          $        (20)   $ (44,797)   $       338

CASH AT BEGINNING OF PERIOD                   358       45,155              -
                                     ------------    ---------    -----------
CASH AT END OF PERIOD                $        338    $     358    $       338
                                     ============    =========    ===========

          SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION

CASH PAID DURING THE YEAR FOR

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

SCHEDULE OF NON-CASH FINANCING ACTIVITIES

 Common stock issued for services    $     28,223    $  37,700    $1,465,323
 Common stock issued for debt        $          -    $       -    $   61,997
 Common stock issued for loan costs  $     12,000    $       -    $   12,000
 Common stock issued for loan costs  $     28,329    $       -    $   28,329
 Common stock issued for equipment   $     24,106    $       -    $   24,106
 Contributed services                $      8,750    $       -    $    8,750
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                17
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2002 and 2001


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

       a.  Accounting Methods

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

       b.  Equipment

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

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

       When assets are retired or otherwise disposed of, or become fully
       depreciated, the cost of the assets and the related accumulated
       depreciation are removed from the accounts with any gain or loss on
       disposition reflected in the statement of operations.
                                18
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001

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, 2002 and 2001:
                                                    2002           2001

       Deferred tax assets:
          NOL Carryover                        $ 1,484,165   $ 1,085,770
          Depreciation                               8,480             -

       Deferred tax liabilities:                         -             -

       Valuation allowance                      (1,492,645)   (1,085,770)
                                               -----------   -----------
       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, 2002 and 2001 due to the following:

                                                    2002           2001

       Book loss                                $ (106,500)   $(84,760)
       Depreciation                                 (4,050)      3,970
       Stock for services/options expense            9,300      14,700
       Other                                             -       1,700
       Valuation allowance                         101,250      64,390
                                                ----------    --------
                                                $        -    $      -

       At December 31, 2002, the Company had net operating loss
       carryforwards of approximately $3,805,550 that may be offset against
       future taxable income from the year 2002 through 2022.  No tax
       benefit has been reported in the December 31, 2002 consolidated
       financial statements since the potential tax benefit is offset by a
       valuation allowance of the same amount.
                                19
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

       c.  Income Taxes (Continued)

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

       d.  Cash Equivalents

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

       e.  Basic Loss Per Share

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

                                           For the Year Ended
                                            December 31, 2001
                                 Loss             Shares       Per Share
                              (Numerator)      (Denominator)     Amount
                               $(217,334)        15,090,018   $    (0.01)
                               =========         ==========   ==========

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

       f. Principles of Consolidation

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

        g. Use of Estimates

       The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make estimates
       and assumptions that affect the reported amounts of assets and
       liabilities and disclosure of contingent assets and liabilities at
       the date of the financial statements and the reported amounts of
       revenues and expenses during the reporting period.  Actual results
       could differ from those estimates.
                                20
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

       h.  Inventory

       The inventory of raw materials for crystal growing is stated at the
       lower of cost or market and is accounted for on a first-in-first-out
       basis.  During the year ended December 31, 2002, the Company recorded
       an impairment loss of $85,708 relating to inventory which they no
       longer intend to use.

       i.  Stock Options

       As permitted by SFAS No. 123, 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.

       j.  Revenue Recognition

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

       k. Newly Issued Accounting Pronouncements

       The Company adopted the provisions of FASB Statement No.145,
       "Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB
       Statement No. 13, and Technical Corrections," FASB Statement No. 146,
       "Accounting for Costs Associated with Exit or Disposal Activities,"
       FIN 44, "Accounting for Certain Transactions Involving Stock
       Compensation (an interpretation of APB Opinion No. 25)," and FASB
       Statement No. 147, "Acquisitions of Certain Financial Institutions
       an amendment of FASB Statements No. 72 and 144 and FASB
       Interpretation No. 9." The effect of these adopted provisions on the
       Company's financial statements was not significant.

       In December 2002, the FASB issued Statement No. 148, "Accounting for
       Stock-Based Compensation   Transition and Disclosure   an amendment
       of FASB Statement No. 123" (SFAS 148).  SFAS 148 is effective for
       fiscal years beginning after December 15, 2003.  The Company is
       currently reviewing SFAS 148.
                                21
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001

NOTE 2 - EQUIPMENT

                                                     December 31,
                                                         2002

       Equipment consists of the following:

       Research equipment                           $   224,310
       Furniture                                          3,205
       Leasehold improvements                             2,118
       Less: accumulated depreciation                  (185,590)
                                                    -----------
       Net Equipment                                $    44,043
                                                    ===========

       Amounts charged to depreciation expense were $4,403 and $22,560 for
       the years ended December 31, 2002 and 2001, respectively.

NOTE 3 -  NOTES PAYABLE

   On March 15, 2002 , the Company entered into a debt agreement with Varity
   Global, Inc., whereby the Company would receive $80,000 in cash in
   exchange for a $90,000 Promissory Note payable on March 15, 2003.  As
   further consideration for the financing, the Company also issued 100,000
   shares of common stock valued at $12,000 and 400,000 options to purchase
   common shares at $0.15 per share.  The options have a Black-Scholes value
   of $28,329.  The Note is also collateralized by 900,000 shares of common
   stock which are to be issued upon default by the Company.

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

   The 100,000 shares of common stock and the 400,000 options have been
   treated as capitalized loan costs, which will be amortized over the life
   of the note, or one year.  During the year ended December 31, 2002,
   $32,153 has been recognized as amortization expense related to the loan
   costs.

NOTE 4 - RELATED PARTY TRANSACTIONS

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

                                22

<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001


NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)

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

       In 2000 and 2001, the current officers made advances to the Company
       of $8,289 and $122, respectively which bear interest at 10%, are
       unsecured and due on demand.

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

NOTE 5 - STOCK TRANSACTIONS

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

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

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

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

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

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

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

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

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

       In 1998, the Company issued 2,970,000 shares of common stock for
       services valued at $0.12 per share.
                                23
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001


NOTE 5 - STOCK TRANSACTIONS (Continued)

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

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

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

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

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

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

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

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

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

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

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

NOTE 6 -  STOCK OPTIONS

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

       During July 2002, the Company granted options to purchase 120,000
       shares of common stock.  The options have an exercise price of $0.25
       per share, vest immediately and have a one-year term.
                                24
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001


NOTE 6 -  STOCK OPTIONS (Continued)

       A summary of the status of the Company's outstanding stock options as
       of December 31, 2002 and 2001 and changes during the periods then
       ended is presented below:

                                         2002                  2001
                                             Weighted              Weighted
                                             Average               Average
                                             Exercise              Exercise
                                   Shares     Price      Shares     Price

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

                                      Weighted
                            Number     Average  Weighted   Number    Weighted
                         Outstanding  Remaining  Average Exercisable  Average
              Range of   at Dec. 31, Contractual Exercise at Dec.31, Exercise
         Exercise Prices     2002       Life      Price     2002       Price

             $ 0.27       250,000       0.75      $ 0.27   250,000    $ 0.27
               0.25       120,000       0.79        0.25   120,000      0.25
               0.15       400,000       1.50        0.15   400,000      0.15

       The Company estimates the fair value of each stock option at the
       grant date by using the Black-Scholes option pricing model based on
       the following assumptions:

                                                       For the Period
                                                            Ended
                                                      December 31, 2002

       Risk free interest rate                          2.00% - 2.66%
       Expected life                                      1 - 2 years
       Expected volatility                                117% - 125%
       Dividend yield                                           0.00%
                                25
<PAGE>
           GALTECH SEMICONDUCTOR MATERIALS CORPORATION
                         AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2002 and 2001


NOTE 7 - COMMITMENTS AND CONTINGENCIES

       On December 18, 1992, a judgment was entered against the Company for
       $40,563 for non-payment of an account payable.  This amount has been
       included in the accounts payable for December 31, 2002.  The Company
       has written off other accounts payable which were incurred prior to
       1990.   The Company's legal counsel has represented that the statute of
       limitations for collection of the payables which were written off has
       expired. The Company does not intend to pay the liabilities which were
       written off, however there is no assurance that the creditors will not
       make claims against the Company.

       In April 1, 2002, the Company entered into a thirty-six month lease
       for its office space.  The Company pays $1,850 per month at the
       beginning of the month. Rent expense for the year ended December 31,
       2002 and 2001 was $20,800 and $5,000, 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.

NOTE 9 - SUBSEQUENT EVENTS

       Subsequent to December 31, 2002, the Company issued 4,999,000 shares
       of common stock for services valued at $0.055 - $0.08 per share and
       676,665 shares of common stock for cash valued at $0.03 - $0.10 per
       share.

       Subsequent to December 31, 2002, the Company defaulted on a note
       maturing on February 28, 2003. Per the terms of the note, upon
       default the Company was to issue 900,000 shares of common stock.
                                26
<PAGE>

     ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
---------------------

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

                            PART III

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

     Directors and Executive Officers.
     ---------------------------------

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


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

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

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

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

Richard J. Dean             Executive VP                 2/07/03

William Tunnell             Director                     2/07/03

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

     Worth P. Allred, Vice President, Research and Development, Director. Mr.
Allred is 76 years of age. He has over 40 years of experience in semiconductor
compound materials and is one of the world's leading experts in the field of
crystal growth. Mr. Allred received a Masters degree in Nuclear Physics from
Brigham Young University in 1953. He has spent the past five years conducting
research in cadmium telluride and cadmium zinc telluride crystal growth at
Galtech. Mr. Allred has published over 33 papers in the area of crystal
growth.

     Rulon Cluff, Secretary/ Treasurer and Director. Mr. Cluff is 74 years of
age.  Mr. Cluff has over 20 years experience in the semiconductor compound
materials field in management positions as president and director and in
marketing capacities. For the past eight months, Mr. Cluff has served as a
member of the transition team for Galtech. During the past five years, Mr.
Cluff has been active in civil aviation education and training and has also
served as an advisor to Galtech and more recently, as Secretary/Treasurer.

     Philroy Brown, Jr., Acting President, Vice President, Production &
Product Development & Sales, and Director.  Mr. Brown, age 54, has been the
Laboratory Manager of Electrical Engineering at Brigham Young University for
the past nine years.

     Richard J. Dean, Executive Vice President and Director.  Mr. Dean, 73
years old, retired from the practice of dentistry in 1976.  Since 1992, he has
been involved in the development of mining properties in Utah.

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

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

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

     Family Relationships.
     ---------------------

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

     Involvement in Certain Legal Proceedings.
     -----------------------------------------

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

     (1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy
or two years prior to that time;

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

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

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

     Board Meetings and Committees.
     ------------------------------

     The Board of Directors held a total of two meetings during the calendar
year ended December 31, 2002. The Compensation Committee, consisting of the
Board of Directors, is primarily responsible for reviewing compensation of
executive officers and overseeing the granting of stock options. Rulon Cluff
served as Chairman of the Audit Committee and convened two 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 2002 fiscal year.

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

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

     ITEM 10. Executive Compensation.
     --------------------------------

     There were no officers or directors of Galtech at December 31, 2002,
whose salary and bonus for all services in all capacities exceed $100,000 for
the calendar year then ended.

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

                        SUMMARY COMPENSATION TABLE

                                             Long Term Compensation
          Annual Compensation             Awards     Payouts
  (a)           (b)      (c)    (d)   (e)     (f)          (g)    (h)    (i)

Name and     Years or              Other                               All
principal    periods               Annual   Restricted Option/  LTIP   Other
position     Ended       $     $   Compen-  Stock      SAR's   Payouts Compen-
                      Salary Bonus sation   Awards$    #       $       sation
------------------------------------------------------------------------------

S. Kent Holt 12/31/00    0     0     0         0           0      0       0
Former       12/31/01    0     0     0         0           0      0       0
Acting       12/31/02    0     0     0         0           0      0       0
Pres., CEO
and Director

Worth P.     12/31/00    0     0     0         0           0      0       0
Allred       12/31/01    0     0     0         0           0      0       0
VP R & D     12/31/02    0     0     0         0           0      0       0
and Director

Rulon Cluff  12/31/00    0     0     0         0           0      0       0
Sec./Treas.  12/31/01    0     0     0         0           0      0       0
and Director 12/31/02    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, 2002, and none of our executive officers has exercised any
options during that period.

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

     None.

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

     None.

     Pension Table.
     --------------

     None; not applicable.

     Other Compensation.
     -------------------

     On February 7, 2003, which is subsequent to the period covered by this
Report, 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.

     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 April 8, 2003, by each person known by Galtech to be the
beneficial owner of more the five percent of the common stock, by each
director of Galtech, by the chief executive officer, and by all officers and
directors of Galtech as a group. Unless noted otherwise, each person named has
sole voting and investment power with respect to the shares indicated.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     Parents of the Issuer.
     ----------------------

     Galtech has no corporate parent.

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

     (a)  Exhibits.
     --------------

     None.

     (b)  Reports on Form 8-K.
     -------------------------

     None.

     ITEM 14.  Controls and Procedures.
     ----------------------------------

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

                           SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned
thereunto duly authorized.

                              GALTECH SEMICONDUCTOR MATERIALS CORPORATION


Date: 4-15-03                 By: /s/ Philroy Brown, Jr.
     --------                    ---------------------------------------------
                                  Philroy Brown, Jr.
                                  Acting President and Director

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


Date: 4-15-03                 By: /s/ Philroy Brown, Jr.
     --------                    ---------------------------------------------
                                  Philroy Brown, Jr.
                                  Acting President and Director

Date: 4-15-03                 By: /s/ Rulon Cluff
     --------                    ---------------------------------------------
                                  Rulon Cluff, Secretary/Treasurer and
                                  Director

Date: 4-15-03                 By: /s/ Worth P. Allred
     --------                    ---------------------------------------------
                                  Worth P. Allred, VP, Research and
                                  Development and Director

<PAGE>

                   CERTIFICATION PURSUANT TO
         SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Philroy Brown, Jr., Acting President of Galtech Semiconductor
Materials Corporation, (the "Registrant") certify that:

     1.   I have reviewed this Annual Report on Form 10-KSB of the Registrant;

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

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

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

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

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

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

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

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

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

     6.     The Registrant's other certifying officer and I have indicated in
this Annual Report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated:  April 15, 2003               Signature: /s/ Philroy Brown, Jr.
                                               ------------------------------
                                               Philroy Brown, Jr.
                                               Acting President
<PAGE>

                   CERTIFICATION PURSUANT TO
         SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Rulon Cluff, Secretary/Treasurer of Galtech Semiconductor Materials
Corporation (the "Registrant"), certify that:

     1.   I have reviewed this Annual Report on Form 10-KSB of the Registrant;

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

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

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

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

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

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

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

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

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

     6.   The Registrant's other certifying officer and I have indicated in
this Annual Report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated:  April 15, 2003               Signature: /s/ Rulon Cluff
                                               ------------------------------
                                               Rulon Cluff
                                               Secretary/Tresurer
<PAGE>

                    CERTIFICATION PURSUANT TO
                     18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO
          SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual report of Galtech Semiconductor Materials
Corporation (the "Company") on Form 10-KSB for the year ending December 31,
2002, as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), we, Philroy Brown, Jr., Acting President, and Rulon Cluff,
Secretary/Treasurer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

     (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

 /s/ Philroy Brown, Jr.
-----------------------
Philroy Brown, Jr.
Acting President
4/15/03

 /s/ Rulon Cluff
-----------------------
Rulon Cluff
Secretary/
Treasurer
4/15/03