Securities and Exchange Commission
Washington, D. C. 20549
_______________
Form 10-SB
______________
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
GALAXY SPECIALTIES, INC.
(Name of registrant in its charter)
NEVADA 81-0438093
(State of incorporation) (I. R. S. Employer Identification No.)
369 East 900 South, Suite 149
Salt Lake City, Utah 84111
(801) 323-2395
(Address and telephone number of principal executive offices and principal
place of business)
________________
Securities registered pursuant to Section 12(b) of the Act:
None
________________
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
Title of each class
<PAGE>
Table of Contents
PART I
Item 1: Description of Business............................................3
Item 2: Management's Discussion and Analysis or Plan of Operation..........6
Item 3: Description of Property............................................6
Item 4: Security Ownership of Certain Beneficial Owners and Management.....6
Item 5: Directors, Executive Officers, Promoters and Control Persons.......7
Item 6: Executive Compensation.............................................7
Item 7: Certain Relationships and Related Transactions.....................8
Item 8: Description of Securities..........................................8
PART II
Item 1: Market Price for Common Equity and Related Stockholder Matters.....8
Item 2: Legal Proceedings..................................................8
Item 3: Changes in and Disagreements with Accountants......................9
Item 4: Recent Sales of Unregistered Securities............................9
Item 5: Indemnification of Directors and Officers..........................9
PART F/S
Index to Financial Statements..............................................9
PART III
Item 1: Index to and Description of Exhibits...............................10
2
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FORWARD LOOKING STATEMENTS
In this registration statement references to "Galaxy," "we," "us," and
"our" refer to Galaxy Specialties, Inc.
This Form 10-SB contains certain forward-looking statements. For this
purpose any statements contained in this Form 10-SB that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Galaxy's control. These factors include but are not limited to economic
conditions generally and in the industries in which Galaxy may participate;
competition within Galaxy's chosen industry, including competition from much
larger competitors; technological advances and failure by Galaxy to
successfully develop business relationships.
ITEM 1: DESCRIPTION OF BUSINESS
Business Development
On May 22, 1999, Galaxy Specialties, Inc. was incorporated in the state
of Nevada. Galaxy merged with Hystar Aerospace Marketing Corporation of
Montana ("Hystar") on June 5, 2000. Hystar merged with Galaxy solely to
change its domicile from Montana to Nevada. Hystar was incorporated in the
state of Montana on March 7, 1986 and was a wholly owned subsidiary of
Nautilus Entertainment, Inc., a Nevada corporation. Hystar was formed to
lease, sell and market the Hystar airship and the Burkett Mill, a waste
milling device. However, the venture was found to be cost prohibitive and
Hystar ceased such activities in 1986. Hystar did not engage in any further
commercial operations.
We do not have active business operations and remain a subsidiary of
Nautilus Entertainment, Inc., now called VIP Worldnet, Inc. We are a
development stage company and have suffered losses since our inception. Our
independent auditors have expressed doubt that we can continue as a going
concern unless we obtain financing. We have voluntarily filed this
registration statement to become a reporting company.
Our Plan
Our business plan is to seek, investigate, and, if warranted, acquire an
interest in a business opportunity. Our acquisition of a business opportunity
may be made by merger, exchange of stock, or otherwise. We have very limited
sources of capital, and we probably will only be able to take advantage of one
business opportunity. At the present time we have not identified any business
opportunity that we plan to pursue, nor have we reached any agreement or
definitive understanding with any person concerning an acquisition.
Our search for a business opportunity will not be limited to any
particular geographical area or industry. Our management has unrestricted
discretion in seeking and participating in a business opportunity, subject to
the availability of such opportunities, economic conditions and other factors.
Our management believes that companies who desire a public market to enhance
liquidity for current shareholders, or plan to acquire additional assets
through issuance of securities rather than for cash will be potential merger
or acquisition candidates.
The selection of a business opportunity in which to participate is
complex and extremely risky and will be made by management in the exercise of
its business judgement. There is no assurance that we will be able to
identify and acquire any business opportunity which will ultimately prove to
be beneficial to us and our shareholders.
Our activities are subject to several significant risks which arise
primarily as a result of the fact that we have
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no specific business and may acquire or participate in a business opportunity
based on the decision of management which will, in all probability, act
without consent, vote, or approval of our shareholders.
Investigation and Selection of Business Opportunities
A decision to participate in a specific business opportunity may be made
upon our management's analysis of the quality of the other company's
management and personnel, the anticipated acceptability of new products or
marketing concept, the merit of technological changes, the perceived benefit
that company will derive from becoming a publicly held entity, and numerous
other factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, we anticipate that
the historical operations of a specific business opportunity may not
necessarily be indicative of the potential for the future because of the
possible need to shift marketing approaches substantially, expand
significantly, change product emphasis, change or substantially augment
management, or make other changes. We will be dependent upon the owners of a
business opportunity to identify any such problems which may exist and to
implement, or be primarily responsible for the implementation of, required
changes.
Our management will analyze the business opportunities, however, none of
our management are professional business analysts (See "Directors and
Executive Officers," below). Our management might hire an outside consultant
to assist in the investigation and selection of business opportunities. Since
our management has no current plans to use any outside consultants or advisors
to assist in the investigation and selection of business opportunities, no
policies have been adopted regarding use of such consultants or advisors. We
have not established the criteria to be used in selecting such consultants or
advisors, the service to be provided, the term of service, or the total amount
of fees that may be paid. However, because of our limited resources, it is
likely that any such fee we agree to pay would be paid in stock and not in
cash.
In our analysis of a business opportunity we anticipate that we will
consider, among other things, the following factors:
(1) Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
(2) Our perception of how any particular business opportunity will be
received by the investment community and by our stockholders;
(3) Whether, following the business combination, the financial
condition of the business opportunity would be, or would have a significant
prospect in the foreseeable future of becoming sufficient to enable our
securities to qualify for listing on a exchange or on a national automated
securities quotation system, such as NASDAQ.
(4) Capital requirements and anticipated availability of required
funds, to be provided by us or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
(5) The extent to which the business opportunity can be advanced;
(6) Competitive position as compared to other companies of similar size
and experience within the industry segment as well as within the industry as a
whole;
(7) Strength and diversity of existing management, or management
prospect that are scheduled for recruitment;
(8) The cost of our participation as compared to the perceived tangible
and intangible values and potential; and
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(9) The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required items.
No one of the factors described above will be controlling in the
selection of a business opportunity. Management will attempt to analyze all
factors appropriate to each opportunity and make a determination based upon
reasonable investigative measures and available data. Potentially available
business opportunities may occur in many different industries and at various
stages of development. Thus, the task of comparative investigation and
analysis of such business opportunities will be extremely difficult and
complex. Potential investors must recognize that, because of our limited
capital available for investigation and management's limited experience in
business analysis, we may not discover or adequately evaluate adverse facts
about the opportunity to be acquired.
Form of Acquisition
We cannot predict the manner in which we may participate in a business
opportunity. Specific business opportunities will be reviewed as well as our
needs and desires and those of the promoters of the opportunity. The legal
structure or method deemed by management to be suitable will be selected based
upon our review and our relative negotiating strength. Such structure may
include, but is not limited to, leases, purchase and sale agreements,
licenses, joint ventures and other contractual arrangements. We may act
directly or indirectly through an interest in a partnership, corporation or
other form of organization. We may be required to merge, consolidate or
reorganize with other corporations or forms of business organization. In
addition, our present management and stockholders most likely will not have
control of a majority of our voting shares following a merger or
reorganization transaction. As part of such a transaction, our existing
directors may resign and new directors may be appointed without any vote by
our stockholders.
Competition
We expect to encounter substantial competition in our effort to locate
attractive opportunities. Business development companies, venture capital
partnerships and corporations, venture capital affiliates of large industrial
and financial companies, small investment companies, and wealthy individuals
will be our primary competition. Many of these entities will have
significantly greater experience, resources and managerial capabilities than
we do and will be in a better position than we are to obtain access to
attractive business opportunities. We also will experience competition from
other public "blind pool" companies, many of which may have more funds
available.
Employees
We currently have no employees. Our management expects to confer with
consultants, attorneys and accountants as necessary. We do not anticipate a
need to engage any full-time employees so long as we are seeking and
evaluating business opportunities. We will determine the need for employees
based upon the specific business opportunity.
Reports to Security Holders
Galaxy has voluntarily elected to file this Form 10-SB registration
statement in order to become a reporting company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Following the effective date of
this registration statement, we will be required to comply with the reporting
requirements of the Exchange Act. We will file annual, quarterly and other
reports with the Securities and Exchange Commission ("SEC"). We also will be
subject to the proxy solicitation requirements of the Exchange Act and,
accordingly, will furnish an annual report with audited financial statements
to our stockholders.
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Available Information
Copies of this registration statement may be inspected, without charge,
at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0300. Copies of this material
also should be available through the Internet by using the SEC's EDGAR
Archive, which is located at http://www.sec.gov.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
We have no assets and have experienced losses from inception. For the
fiscal year ended June 30, 2000, we had no cash on hand and total current
liabilities of $28,000. The $28,000 note payable is owed to a related party
for accounting and legal fees paid on our behalf incurred during the year
ended 2000. We have no commitments for capital expenditures for the next
twelve months.
As of the date of this Form 10-SB, we have yet to generate positive cash
flow. Since inception, we have primarily financed our operations through the
sale of our common stock and we believe that our current cash needs can be met
by loans from our directors, officers and shareholders for at least the next
twelve months. However, if we obtain a business opportunity, it may be
necessary to raise additional capital. This may be accomplished by selling
our common stock.
Our management intends to actively seek business opportunities during the
next twelve months.
ITEM 3: DESCRIPTION OF PROPERTIES
We do not currently own or lease any property. We utilize office space
in the office of one of our shareholders at no cost. Until we pursue a viable
business opportunity and recognize income, we will not seek independent office
space.
ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of our
outstanding common stock of each person or group known by us to own
beneficially more than 5% of our outstanding common stock and ownership of our
management. Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power with respect to
securities. Except as indicated by footnote, the persons named in the table
below have sole voting power and investment power with respect to all shares
of common stock shown as beneficially owned by them. The percentage of
beneficial ownership is based on 17,000,000 shares of common stock outstanding
as of August 1, 2000.
CERTAIN BENEFICIAL OWNERS
Common Stock Beneficially Owned
-------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
------------------------------- --------------------- -------------------
VIP Worldnet, Inc. 15,036,621 88.5%
154 E. Ford Avenue
Salt Lake City, Utah 84115
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* VIP Worldnet, Inc. holds 15,000,000 shares and its directors and
officers beneficially own the following shares of our common stock: Joanne
Clinger, President, 28,597 and Wayne Reichman, Secretary, 8,024.
MANAGEMENT
Common Stock Beneficially Owned
-------------------------------
Name and Address of Number of Shares
Beneficial Owners Common Stock Percentage of Class
-------------------------------- ------------------ -------------------
Jeanne Ball 200 **
968 Bloomsburg Cove
Murray, Utah 84123
April Marino 400 **
402 East Maxwell Lane
Salt Lake City, Utah 84115
** Less than 1%
ITEM 5: DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers and directors and their respective ages, positions
and term of office are set forth below. Biographical information for each of
those persons is also presented below. Our bylaws require at least one
director and allow for up to nine directors who serve for a term of one year
and our executive officers are chosen by our Board of Directors and serve at
its discretion. There are no existing family relationships between or among
any of our executive officers or directors.
Name Age Position Held Director or Officer Since
------------ ------ ---------------------- -----------------------
Jeanne Ball 42 President/ Director June 5, 2000
April Marino 26 Secretary/Treasurer/
Director June 5, 2000
Jeanne Ball For the past five years Ms. Ball has worked as an
independent contractor performing duties of a legal secretary for an attorney.
She is a director of Bennion Corporation and Wings & Things, Inc., both are
reporting companies.
April Marino Ms. Marino has been employed as a secretary for Mutual
Ventures Corporation since December 18, 1997. From January 1995 to October
1997 she was employed by Universal Business Insurance as a Customer Service
Representative. She is a director of Bennion Corporation, a reporting
company.
ITEM 6: EXECUTIVE COMPENSATION
Our named executive officers have not received any cash compensation,
bonuses, stock appreciation rights, long term compensation, stock awards or
long-term incentive rights from us during the past three fiscal years. We
have not entered into employment contracts with our executive officers and
their compensation, if any, will be
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determined at the discretion of our Board of Directors.
Compensation of Directors
We do not have any standard arrangement for compensation of our directors
for any services provided as director, including services for committee
participation or for special assignments.
ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have not engaged in any transactions in excess of $60,000 during the
past two years involving our executive officers, directors, 5% stockholders or
immediate family members of such persons.
Parent Company
VIP Worldnet, Inc. is our parent company and beneficially owns 15,036,621
shares of our common stock. Such shares represent 88.5 % of our issued and
outstanding shares.
ITEM 8: DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 20,000,000 shares of common stock, par value
$.001, of which 17,000,000 are outstanding as of August 1, 2000. All shares
of common stock have equal rights and privileges with respect to voting,
liquidation and dividend rights. Each share of common stock entitles the
holder thereof (i) to one non-cumulative vote for each share held of record on
all matters submitted to a vote of the stockholders, (ii) to participate
equally and to receive any and all such dividends as may be declared by the
Board of Directors out of funds legally available; and (iii) to participate
pro rata in any distribution of assets available for distribution upon
liquidation of the Company. Our stockholders have no preemptive rights to
acquire additional shares of common stock or any other securities.
PART II
ITEM 1: MARKET PRICE FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
We do not have an established public trading market. We have
approximately 86 stockholders of record and 1,363,379 common shares are free
trading and the balance, 15,636,621, are restricted shares as that term is
defined in Rule 144. We do not have any outstanding options or warrants to
purchase our common shares. We have not declared dividends on our common
stock and do not anticipate paying dividends on our common stock in the
foreseeable future.
ITEM 2: LEGAL PROCEEDINGS
We are not a party to any proceedings or threatened proceedings as of the
date of this filing.
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ITEM 3: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no change in, or disagreements with, our principal
independent accountant during our last two fiscal years.
ITEM 4: RECENT SALES OF UNREGISTERED SECURITIES
We have not sold any securities without registration within the past
three years.
ITEM 5: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Nevada Revised Statutes Section 78.7502 and 78.751 our
Articles of Incorporation and bylaws provide for the indemnification of
present and former directors and officers and each person who serves at our
request as our officer or director. We will indemnify such individuals
against all costs, expenses and liabilities incurred in a threatened, pending
or completed action, suit or proceeding brought because such individual is our
director or officer. We will not indemnify an individual adjudged liable due
to his negligence or willful misconduct toward us. This right of
indemnification shall not be exclusive of other rights the individual is
entitled to as a matter of law or otherwise.
Our bylaws provide that individuals may receive advances for expenses if
the individual provides a written undertaking that he will repay the advance
if he is judged be a court of competent jurisdiction that he is not entitled
to indemnification.
PART F/S
INDEX TO FINANCIAL STATEMENTS
Galaxy Specialties, Inc. Financial Statements for June 30, 2000 and 1999.
Auditors report F-1
Balance sheet F-2
Statement of operations F-3
Statement of stockholder's equity F-4
Statement of cash flows F-5
Notes F-6
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GALAXY SPECIALTIES, INC.
FINANCIAL STATEMENTS
JUNE 30, 2000 and 1999
<PAGE> 10
<Letterhead of:
SMITH & COMPANY
A Professional Corporation of
Certified Public Accountants>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Galaxy Specialties, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Galaxy Specialties, Inc. (a
development stage company) as of June 30, 2000 and 1999, and the related
statements of operations, changes in stockholders' equity (deficit), and cash
flows for the years ended June 30, 2000 and 1999, and for the period of March
7, 1986 (date of inception) to June 30, 2000. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the 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 financial statements referred to above present fairly, in
all material respects, the financial position of Galaxy Specialties, Inc. (a
development stage company) as of June 30, 2000 and 1999, and the results of
its operations, changes in stockholders' equity (deficit), and its cash flows
for the years ended June 30, 2000 and 1999, and for the period of March 7,
1986 (date of inception) to June 30, 2000, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial
statements, the Company has at June 30, 2000 a retained deficit of $45,000.
The Company has suffered losses from operations and has a substantial need for
working capital. This raises substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are
described in Note 2 to the financial statements. The accompanying financial
statements do not include any adjustments that may result from the outcome of
this uncertainty.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
July 25, 2000
10 West 100 South, Suite 700* Salt Lake City, Utah 84101-1554
Telephone: (801) 575-8297 * Facsimile: (801) 575-8306
F-1
<PAGE> 11
GALAXY SPECIALTIES, INC.
(A Development Stage Company)
BALANCE SHEETS
June 30,
2000 1999
------------- -------------
ASSETS
CURRENT ASSETS
Cash in bank $ 0 $ 0
------------- -------------
$ 0 $ 0
============= =============
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable - related party (Note 4) $ 28,000 $ 0
------------- -------------
TOTAL CURRENT LIABILITIES 28,000 0
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock $.001 par value:
Authorized - 20,000,000 shares
Issued and outstanding 17,000,000 shares 17,000 17,000
Deficit accumulated during the development stage (45,000) (17,000)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (28,000) 0
------------- -------------
$ 0 $ 0
============= =============
See Notes to Financial Statements
F-2
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GALAXY SPECIALTIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
3/7/86
Year ended (Date of
June 30, inception) to
2000 1999 6/30/2000
------------ ------------- -------------
Net sales $ 0 $ 0 $ 0
Cost of sales 0 0 0
------------ ------------- -------------
GROSS PROFIT 0 0 0
General & administrative expenses 28,000 0 45,000
------------ ------------- -------------
NET LOSS $ (28,000) $ 0 $ (45,000)
============ ============= =============
Net income (loss) per weighted
average share $ (.002) $ (.000)
============ =============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 17,000,000 17,000,000
============ =============
See Notes to Financial Statements
F-3
<PAGE> 13
GALAXY SPECIALTIES, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Deficit
Accumulated
Common Stock During
Par Value $0.001 Development
Shares Amount Stage
------------ ------------- -------------
Balances at 3/7/86 (Date of inception) 0 $ 0 $ 0
Issuance of common stock (restricted)
at $.001 per share at 4/24/86 17,000,000 17,000 0
Net loss for period (3,400)
------------ ------------- -------------
Balances at 6/30/86 17,000,000 17,000 (3,400)
Net loss for year (3,400)
------------ ------------- -------------
Balances at 6/30/87 17,000,000 17,000 (6,800)
Net loss for year (3,400)
------------ ------------- -------------
Balances at 6/30/88 17,000,000 17,000 (10,200)
Net loss for year (3,400)
------------ ------------- -------------
Balances at 6/30/89 17,000,000 17,000 (13,600)
Net loss for year (3,400)
------------ ------------- -------------
Balances at 6/30/90 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/91 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/92 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/93 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/94 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/95 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/96 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/97 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/98 17,000,000 17,000 (17,000)
Net income for year 0
------------ ------------- -------------
Balances at 6/30/99 17,000,000 17,000 (17,000)
Net loss for year (28,000)
------------ ------------- -------------
Balances at 6/30/00 17,000,000 $ 17,000 $ (45,000)
============ ============= =============
See Notes to Financial Statements
F-4
<PAGE> 14
GALAXY SPECIALTIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
3/7/86
Year ended (Date of
June 30, inception) to
2000 1999 6/30/2000
------------ ------------- -------------
OPERATING ACTIVITIES
Net income (loss) $ (28,000) $ 0 $ (45,000)
Adjustments to reconcile net income
(loss) to cash used by operating
activities:
Amortization 0 0 17,000
Accounts payable - related party 28,000 0 28,000
------------ ------------- -------------
NET CASH USED BY
OPERATING ACTIVITIES 0 0 0
INVESTING ACTIVITIES
Organization costs 0 0 (17,000)
------------ ------------- -------------
NET CASH REQUIRED BY
INVESTING ACTIVITIES 0 0 (17,000)
FINANCING ACTIVITIES
Proceeds from sale of common stock 0 0 17,000
------------ ------------- -------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 0 17,000
------------ ------------- -------------
INCREASE IN CASH
AND CASH EQUIVALENTS 0 0 0
Cash and cash equivalents at
beginning of period 0 0 0
------------ ------------- -------------
CASH & CASH EQUIVALENTS
AT END OF PERIOD $ 0 $ 0 $ 0
============ ============= =============
See Notes to Financial Statements.
F-5
<PAGE> 15
GALAXY SPECIALTIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
a. Organization & Consolidation Policy
Galaxy Specialties, Inc. (the Company), a Nevada corporation, was incorporated
on May 22, 2000. On June 5, 2000, the Company merged with Hystar Aerospace
Marketing Corporation of Montana Inc. (Hystar). The Company is the surviving
corporation.
Hystar Aerospace Marketing Corporation of Montana was incorporated March 7,
1986 to lease, sell, and market airships and the Burkett Mill, a waste milling
device, which rights were acquired from VIP Worldnet, Inc., initially the only
shareholder. The technology to further develop the airship and the mill by
the parent company proved to be prohibitive, and shortly after the acquisition
of the marketing rights further activity ceased. Hystar has been inactive
since that date.
The merger was recorded under the pooling of interests method of accounting.
Each share of the Company remained outstanding as one fully paid and
non-assessable share of capital stock of the surviving corporation.
The accompanying financial statements present the financial condition and
results of operations of Hystar from its inception through the merger date and
of the surviving entity, the Company, as of the merger date.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual basis of accounting.
c. Earnings (Loss) Per Share
The computation of earnings (loss) per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents.
e. Provision for Income Taxes
The Company records the income tax effect of transactions in the same year
that the transactions enter into the determination of income, regardless of
when the transactions are recognized for tax purposes. Tax credits are
recorded in the year realized. Since the Company has not yet realized income
as of the date of this report, no provision for income taxes has been made.
In February, 1992, the Financial Accounting Standards Board adopted Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes, which
supersedes substantially all existing authoritative literature for accounting
for income taxes and requires deferred tax balances to be adjusted to reflect
the tax rates in effect when those amounts are expected to become payable or
refundable. The Statement was applied in the Company's financial statements
for the fiscal year commencing July 1, 1992.
No provision for income taxes have been recorded due to net operating loss
carryforwards totaling approximately $45,000 that will be offset against
future taxable income. These NOL carryforwards begin to expire in the year
2001. No tax benefit has been reported in the financial statements because
the Company believes there is a 50% or greater chance the carryforwards will
expire unused.
F-6
<PAGE> 16
GALAXY SPECIALTIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2000 and 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)
f. 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 statement and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
g. Dividend Policy
The Company has not yet adopted any policy regarding payment of dividends.
h. Organization Costs
The Company amortized its organization costs over a five year period.
NOTE 2: GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has no assets and has
had recurring operating losses for the past several years and is dependent
upon financing to continue operations. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty. It is management's plan to find an operating company to merge
with, thus creating necessary operating revenue.
NOTE 3: CAPITALIZATION
In 1986, the Company issued 17,000,000 shares of common stock for the
marketing rights to a waste milling device. The value of this issuance was
$17,000.
NOTE 4: RELATED PARTY TRANSACTIONS
During the year ended June 30, 2000, the Company incurred $28,000 of
professional fees payable to Mutual Ventures Corp. An officer of the Company
is also an employee of Mutual Ventures Corp.
NOTE 5: DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined in Financial Accounting
Standards Board Statement No. 7. It is concentrating substantially all of its
efforts in raising capital and searching for a business operation with which
to merge, or assets to acquire, in order to generate significant operations.
F-7
<PAGE> 17
PART III
ITEM 1: INDEX TO AND DESCRIPTION OF EXHIBITS
Exhibit
Number Description Location
------- ------------- ------------
3.1 Articles of Incorporation, dated May 22, 2000 See attached
3.2 Articles of Merger filed June 5, 2000 See attached
3.3 Bylaws of Galaxy See attached
27 Financial Data Schedule See attached
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, who is duly authorized.
8/16/00
Date_________________________ Galaxy Specialties, Inc.
/s/ Jeanne Ball
By: _______________________________
Jeanne Ball, President and Director
