<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File No. 0-27177
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
-------------------------------------------
(Name of Small Business Issuer in its Charter)
UTAH 87-0427597
---- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
923 West 500 North
Lindon, Utah 84042
------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 785-6520
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant 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 No X
--- --- --- ---
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
September 30, 1999
14,644,018
----------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1999 1998
(Unaudited)
<S> <C< <C>
CURRENT ASSETS
Inventory $ 160,000 $ 160,000
Total Current Assets 160,000 160,000
EQUIPMENT, NET 67,856 95,034
TOTAL ASSETS $ 227,856 $ 255,034
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 40,563 $ 40,563
Notes payable - related parties 1,424 -
Total Current Liabilities 41,987 40,563
STOCKHOLDERS' EQUITY
Common stock, $0.00025 par value,
200,000,000 shares authorized;
14,644,018 and 10,644,018 shares
issued and outstanding, respectively 3,663 2,663
Additional paid-in capital 4,264,723 3,805,723
Stock subscription receivable (283,297) -
Deficit accumulated during the
development stage (3,799,220) (3,593,915)
Total Stockholders' Equity 185,869 214,471
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 227,856 $ 255,034
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the For the June 18,
Three Months Ended Nine Months Ended 1984 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C>
SALES $ - $ - $ - $ - $ 599,609
COST OF
PRODUCT SOLD - - - - 676,198
GROSS MARGIN - - - - (76,589)
OPERATING EXPENSES
General and
administrative 92,225 1,819 122,014 47,270 1,770,722
Legal and
professional 29,503 1,322 30,703 6,824 830,275
Research and
development 25,410 90 25,410 2,552 536,098
Depreciation 9,059 8,000 27,178 23,999 355,312
Total Expenses (156,197) (11,231) (205,305) (80,645) 3,492,407
Net Loss
From Operations (156,197) (11,231) (205,305) (80,645) (3,568,996)
OTHER INCOME (EXPENSE)
Interest expense - - - - (84,919)
Interest income - 5 - 105 93,427
Loss on disposal
of assets - - - - (241,238)
Miscellaneous - - - - 2,506
Total Other
Income (Expense) - 5 - 105 (230,224)
NET LOSS $ (156,197) $ (11,226) $(205,305) $(80,540) $(3,799,220)
BASIC LOSS
PER SHARE $ (0.02) $ (0.00) $ (0.02) $ (0.02)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
<TABLE>
<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>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance, June 18, 1984 - $ - $ - $ -
Stock issued for cash at
$0.0143 per share - - - 2,000
Balance,
December 31, 1984 - - - 2,000
Stock issued for cash
at $0.05 per share - - - 20,000
Stock issuance costs - - - (4,450)
Purchase of treasury
stock (403,976) (5,950) - (5,950)
Sale of treasury stock at
$2.11 per share 196,658 2,896 - 413,969
Stock issued to officers for
services at $0.005
per share - - - 2,193
Net loss for the year ended
December 31, 1985 - - - (146,384)
Balance,
December 31, 1985 (207,318) $ (3,054) $ - $ 281,378
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1985 978,773 $ 245 $ 430,571 $ (146,384)
Purchase of treasury stock - - - -
Sale of treasury stock at
$29.65 per share - - 1,838,032 -
Net loss for the year ended
December 31, 1986 - - - (542,930)
Balance,
December 31, 1986 978,773 245 2,268,603 (689,314)
Net loss for the
year ended
December 31, 1987 - - - (509,693)
Balance,
December 31, 1987 978,773 245 2,268,603 (1,199,007)
Stock issued for services
at $0.60 per share 25,000 6 14,994 -
Net loss for the year
ended December 31, 1988 - - (501,513) -
Balance,
December 31, 1988 1,003,773 $ 251 $ 2,283,597 $ (1,700,520)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1985 (207,318) $ (3,054) $ - $ 281,378
Purchase of
treasury stock (13,997) (13,500) - (13,500)
Sale of treasury
stock at
$29.65 per share 62,000 768 (732,300) 1,106,500
Net loss for the
year ended
December 31, 1986 - - - (542,930)
Balance,
December 31, 1986 (159,315) (15,786) (732,300) 831,448
Net loss for the
year ended
December 31, 1987 - - - (509,693)
Balance,
December 31, 1987 (159,315) (15,786) (732,300) 321,755
Stock issued for services
at $0.60 per share - - - 15,000
Net loss for the year
ended December 31, 1988 - - - (501,513)
Balance,
December 31, 1988 (159,315) $(15,786) $ (732,300) $ (164,758)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1988 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 forward 1,061,918 $ 266 $2,317,513 $(2,007,132)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1988 (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 forward - $ - $ - $ 310,647
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance forward 1,061,918 $ 266 $ 2,317,513 $(2,007,132)
Net loss for the
year ended
December 31, 1990 - - - (123,676)
Balance,
December 31, 1990 1,061,918 266 2,317,513 (2,130,808)
Stock issued for
services at $0.12
per share 20,400 5 2,395 -
Net loss for the year
ended December 31, 1991 - - - (207,142)
Balance,
December 31, 1991 1,082,318 271 2,319,908 (2,337,950)
Net loss for the
year ended
December 31, 1992 - - - -
Balance,
December 31, 1992 1,082,318 271 2,319,908 (2,337,950)
Net loss for the
year ended
December 31, 1993 - - - -
Balance,
December 31, 1993 1,082,318 $ 271 $ 2,319,908 $(2,337,950)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance forward $ - $ - $ - $ 310,647
Net loss for the
year ended
December 31, 1990 - - - (123,676)
Balance,
December 31, 1990 - - - 186,971
Stock issued for
services at $0.12
per share - - - 2,400
Net loss for the year
ended December 31, 1991 - - - (207,142)
Balance,
December 31, 1991 - - - (17,771)
Net loss for the
year ended
December 31, 1992 - - - -
Balance,
December 31, 1992 - - - (17,771)
Net loss for the
year ended
December 31, 1993 - - - -
Balance,
December 31, 1993 - $ - $ - $ (17,771)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1993 1,082,318 $ 271 $ 2,319,908 $ (2,337,950)
Net loss for the
year ended
December 31, 1994 - - - (10,964)
Balance,
December 31, 1994 1,082,318 271 2,319,908 (2,348,914)
Stock issued for
Commodity Recovery
Corporation valued
at predecessor cost
of $0.00 500,000 125 (125) -
Stock issued for Energy
Research Corporation
valued at predecessor cost
of $0.00 4,200,000 1,050 (1,050) -
Conversion of debt
to equity - - 3,500 -
Net loss for the
year ended
December 31, 1995 - - - (89,740)
Balance,
December 31, 1995 5,782,318 $1,446 $ 2,322,233 $(2,438,654)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<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 predecessor cost
of $0.00 - - - -
Stock issued for Energy
Research Corporation
valued at predecessor cost
of $0.00 - - - -
Conversion of debt
to equity - - - 3,500
Net loss for the
year ended
December 31, 1995 - - - (89,740)
Balance,
December 31, 1995 - $ - $ - $ (114,975)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1995 5,782,318 $ 1,446 $ 2,322,233 $(2,438,654)
Stock issued for cash
cash at $0.60 per share 150,000 38 89,962 -
Stock issued for
services valued at $1.00
per share 288,000 73 287,927 -
Stock subscription
receivable at
$0.50 per share 40,000 10 19,990 -
Net loss for the
year ended
December 31, 1996 - - - (400,501)
Balance,
December 31, 1996 6,260,318 1,567 2,720,112 (2,839,155)
Stock issued for cash
at $0.50 per share 1,163,700 291 575,773 -
Stock issued for services
at $0.50 per share 250,000 63 124,937 -
Receipt of stock
subscription - - - -
Net loss for the
year ended
December 31, 1997 - - - (290,549)
Balance,
December 31, 1997 7,674,018 $1,921 $ 3,420,822 $(3,129,704)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Treasury Stock Subscription Total
Shares Amount Receivable Equity
<S> <C> <C> <C> <C>
Balance,
December 31, 1995 - $ - $ - $ (114,975)
Stock issued for cash
cash at $0.60 per share - - - 90,000
Stock issued for
services valued at $1.00
per share - - - 288,000
Stock subscription
receivable at
$0.50 per share - - (20,000) -
Net loss for the
year ended
December 31, 1996 - - - (400,501)
Balance,
December 31, 1996 - - (20,000) (137,476)
Stock issued for cash
at $0.50 per share - - - 576,064
Stock issued for services
at $0.50 per share - - - 125,000
Receipt of stock
subscription - - 20,000 20,000
Net loss for the
year ended
December 31, 1997 - - - (290,549)
Balance,
December 31, 1997 - $ - $ - $ 293,039
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<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)
Common stock issued for
services valued at
$0.115 per share
(unaudited) 1,000,000 250 114,750 -
Common stock issued for
services to be rendered
valued at $0.115 pr share
(unaudited) 2,000,000 500 229,500 -
Common stock issued for
debt and subscription
valued at $0.115
per share (unaudited) 1,000,000 250 114,750 -
Net loss for the
nine months ended
September 30, 1999
(unaudited) - - - (205,305)
Balance,
September 30, 1999
(unaudited) 14,644,018 $3,663 $ 4,264,723 $(3,799,220)
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<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
Common stock issued for
services valued at
$0.115 per share
(unaudited) - - - 115,000
Common stock issued for
services to be rendered
valued at $0.115 pr share
(unaudited) - - (230,000) -
Common stock issued for
debt and subscription
valued at $0.115
per share (unaudited) - - (53,297) 61,703
Net loss for the
nine months ended
September 30, 1999
(unaudited) - - - (205,305)
Balance,
September 30, 1999
(unaudited) - $ - $(283,297) $ 185,869
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the For the June 18,
Three Months Ended Nine Months Ended 1984 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C>
CASH FLOWS
FROM OPERATING
ACTIVITIES
Net loss $ (156,197) $ (11,226) $ (205,305) $(80,540) $(3,799,220)
Adjustment
to reconcile net
loss to net
cash used by
operating activities:
Depreciation 9,059 8,000 27,178 23,999 355,312
Stock issued
for services 115,000 - 115,000 - 884,400
Loss on disposal
of property - - - - 241,238
Changes in operating
assets and
liabilities:
(Increase) in
inventory - - - - (160,000)
Increase (decrease)
in accrued
liabilities - - - - 59,670
Net Cash (Used)
by Operating
Activities (32,138) (3,226) (63,127) (56,541)(2,418,600)
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures - - - (13,546) (718,191)
Purchase of treasury
stock - - - - (19,450)
Stock subscription - - - - (732,300)
Net Cash (Used)
from Investing
Activities - - (13,546)(1,469,941)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note
payable - related 32,138 510 63,127 510 540,503
Repayments of
note payable - related - - - (9,300) (443,761)
Sale of treasury stock - - - - 1,911,183
Cancellation of
stock subscription - - - - 732,300
Common stock
issued for cash - - - - 1,148,316
Net Cash (Used)
Provided by
Financing Activities $32,138 $ 510 $ 63,127 $(8,790)$3,888,541
</TABLE>
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
For the For the June 18,
Three Months Ended Nine Months Ended 1984 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS $ - $ (2,716) $ - $ (78,877) $ -
CASH AND
CASH EQUIVALENTS
AT BEGINNING OF PERIOD - 4,338 - 80,499 -
CASH AND CASH
EQUIVALENTS END
OF PERIOD $ - $ 1,622 $ - $ 1,622 $ -
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR
Interest $ - $ - $ - $ - $ 84,919
Income taxes $ - $ - $ - $ - $ -
SCHEDULE OF NON-CASH FINANCING ACTIVITIES
Common stock
issued
for services $ 115,000 $ - $115,000 $ - $884,400
[/TABLE]
<PAGE>
GALTECH SEMICONDUCTOR MATERIALS CORPORATION
AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared
by the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at September 30,
1999 and 1998 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's December 31, 1998 audited consolidated financial statements. The
results of operations for the periods ended September 30, 1999 and 1998 are
not necessarily indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course
of business. However, the Company has little cash and without realization of
additional adequate financing, it would be unlikely for the Company to pursue
and realize its objective of operating profitably. The Company plans to raise
additional capital through equity financing. In the interim, management has
committed to covering the operating expenses of the Company.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
- --------------------------------------------------------------------
Plan of Operation.
- ------------------
During the next three months, the Company plans to perform test
production runs to test the process for production of cadmium telluride
semiconductor material that was developed by Worth Allred. The Company has a
fully instrumented, custom-designed control program that will allow it to
compare actual production data to its model and make appropriate adjustments
in the production process. The Company has sufficient equipment, supplies and
materials to continue this process for three months. Any funds required at
this stage are expected to be minimal.
In the following nine month period, management expects to transition
the engineering effort from the "proof-of-principle" effort of the preceding
three months, to a pilot production level. The Company will need to raise
substantial additional funding to purchase the necessary equipment and upgrade
its software. The Company will seek sufficient funds to allow it to continue
its research and development efforts for two years without the need for
additional capital. Management will attempt to raise up to $4 million in this
regard, with approximately $1,700,000 of these funds allocated to research and
development over the next two years.
Once the process has been refined and the Company is able to produce
cadmium telluride substrates of consistently high quality and size, it will
provide samples of its product to potential customers such as Texas
Instruments, Sandia and Santa Barbara Research for analysis. If its research
and development efforts are successful, and if it is able to raise sufficient
capital, the Company expects to be able to begin full-scale production in two
years.
The foregoing contains "forward-looking" statements and information,
all of which is modified by reference to the caption "Risk Factors," Part I,
Item 1 of its Registration Statement on Form 10-SB, which was filed with the
Securities and Exchange Commission on August 30, 1999, and which is
incorporated herein by reference. See Item 6 of this Report.
Results of Operations.
- ---------------------
The Company has not had any material operations since approximately
1990. In anticipation of renewed operations, it has conducted three test
crystal growths in the last two years.
Liquidity.
- ----------
The Company did not receive any revenues during the three monhs
ended September 30, 1999, or September 30, 1998, or the nine months then
ended. Net losses during these periods where as follows: (i) three months
ended September 30, 1999 - ($156,197); (ii) three months ended September 30,
1998 - ($11,226); (iii) nine months ended September 30, 1999 - ($205,305); and
(iv) nine months ended September 30, 1998 - ($80,540).
The Company is presently located in a facility leased by Patterned
Fiber Composites, Inc., which it uses rent-free. The Company has sufficient
equipment, supplies and materials to continue its process improvements and
engineering analysis for the next three months. Current operations may be
characterized as a "proof-of-principle" effort, during which the Company is
testing and refining its production processes. At the end of this three month
period, management expects that the Company will need to raise substantial
additional capital in order to allow it to proceed to the pilot production
level.
Year 2000
- ---------
The Company's computer system consists of personal computers built
by its Secretary/Treasurer, David R. Porter. These computers use the
Microsoft NT 4.0 operating system and the Company has confirmed that these
systems are Year 2000 compliant.
LabView, by National Instruments, is the software that will control
the furnaces used for the Company's semiconductor crystal growth; the Company
has also confirmed that this software is Year 2000 compliant. In addition,
the Company writes its own programs for other applications and these programs
have also been determined to properly recognize the change of year to the Year
2000.
The Company can give no assurance that third parties with whom it
intends to do business will ensure Year 2000 compliance in a timely manner or
that, if they do not, their computer systems will not have an adverse effect
on the Company. However, the Company does not believe that Year 2000
compliance issues of such third parties will result in a material adverse
effect on its financial condition or results of operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- ----------------------------
None; not applicable.
Item 2. Changes in Securities and Use of Proceeds.
- ---------------------------------------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
- ------------------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
- --------------------------------------------------------------
None; not applicable.
Item 5. Other Information.
- ----------------------------
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
- -------------------------------------------
(a) Exhibits.
Registration Statement on Form 10-SB, filed with
the Securities and Exchange Commission on August 30,
1999. *
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
None.
* This document, together with related exhibits,
has previously been filed with the Securities
and Exchange Commission and is incorporated
herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
GALTECH SEMICONDUCTOR MATERIALS
CORPORATION
Date: 12-9-1999 By: /s/ William F. Pratt
-------------- -------------------------------------
William F. Pratt
CEO, President and Director
Date: 12-9-1999 By: /s/ David R. Porter
-------------- -------------------------------------
David R. Porter
Secretary/Treasurer and Director
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