UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File No. 000-31355
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GALAXY SPECIALITIES, INC.
(Exact name of Small Business Issuer as specified in its charter)
NEVADA 81-0438093
-------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3353 South Main Street, Suite 584
Salt Lake City, Utah 84115
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (801) 323-2395
------------------------------
Indicate by check mark whether the Issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of September 30, 2000
------------------------------------ -------------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 17,000,000 SHARES
1
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF REPRESENTATION
General
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and, therefore, do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' equity (deficit)
in conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included, and all such
adjustments are of a normal recurring nature. Operating results for the three
months ended September 30, 2000, are not necessarily indicative of the results
that can be expected for the year ending June 30, 2001.
2
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GALAXY SPECIALTIES, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
------------------ -----------------
ASSETS (Unaudited) (Audited)
------
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 0 $ 0
------------------ -----------------
$ 0 $ 0
================== =================
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable - related party (Note 4) $ 28,000 $ 28,000
------------------ -----------------
TOTAL CURRENT LIABILITIES 28,000 28,000
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) (45,000)
------------------ -----------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (28,000) (28,000)
------------------ -----------------
$ 0 $ 0
================== =================
</TABLE>
See Notes to Financial Statements.
3
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GALAXY SPECIALTIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
3/7/86
Three Months Ended (Date of
September 30, inception) to
2000 1999 9/30/00
----------------- ----------------- ------------------
<S> <C> <C> <C>
Net sales $ 0 $ 0 $ 0
Cost of sales 0 0 0
----------------- ----------------- ------------------
GROSS PROFIT 0 0 0
General & administrative expenses 0 0 45,000
----------------- ----------------- ------------------
NET LOSS $ 0 $ 0 $ (45,000)
================= ================= ==================
BASIC AND DILUTED (LOSS) PER COMMON SHARE
Net income (loss) per weighted average share $ (.000) $ (.000)
================= =================
Weighted average number of common shares used to compute
net income (loss) per weighted average share 17,000,000 17,000,000
================= =================
</TABLE>
See Notes to Financial Statements.
4
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GALAXY SPECIALTIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
3/7/86
Three Months Ended (Date of
September 30, inception) to
2000 1999 9/30/00
------------- -------------- -------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ 0 $ 0 $ (45,000)
Adjustments to reconcile net income (loss) to cash used by
operating activities:
Amortization 0 0 17,000
Accounts payable - related party 0 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
============= ============== =============
</TABLE>
See Notes to Financial Statements.
5
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GALAXY SPECIALTIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
a. Basis of Presentation
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") for interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted auditing
principles for complete financial statements. The unaudited financial
statements should, therefore, be read in conjunction with the financial
statements and notes thereto in the Report on Form 10-SB12G for the
year ended June 30, 2000. In the opinion of management, all adjustments
(consisting of normal and recurring adjustments) considered necessary
for a fair presentation, have been included. The results of operations
for the three month period ended September 30, 2000 are not necessarily
indicative of the results that may be expected for the entire fiscal
year.
b. 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.
c. Recognition of Revenue
The Company recognizes income and expense on the accrual basis of
accounting.
d. Net Loss Per Common Share
Basic and diluted loss per common share is computed by dividing net
loss available to common shareholders by the weighted average number of
common shares outstanding during the periods presented.
e. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
6
<PAGE>
GALAXY SPECIALTIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
September 30, 2000
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)
f. 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.
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 statement and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
h. Dividend Policy
The Company has not yet adopted any policy regarding payment of
dividends.
i. 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.
7
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GALAXY SPECIALTIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
September 30, 2000
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.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
In this report references to "Galaxy," "we," "us," and "our" refer to
Galaxy Specialities, Inc.
Forward Looking Statements
This Form 10-QSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10-QSB 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 market which Galaxy may participate; competition within
Galaxy's chosen market and failure by Galaxy to successfully develop business
relationships.
Plan of Operations
Since inception, we have had no revenues and have experienced losses. We
have financed our operations primarily through the sale of our common stock or
by loans from shareholders. As of September 30, 2000, we had no cash on hand and
total current liabilities of $28,000. The $28,000 accounts payable is for legal
and accounting fees which were paid on our behalf by Mutual Ventures
Corporation, a related party. We have no material commitments for the next
twelve months. We believe that our current cash needs for at least the next
twelve months can be met by loans from our directors, officers and shareholders.
Our management intends to actively pursue business opportunities during the
next twelve months. All risks inherent in new and inexperienced enterprises are
inherent in our business. We have not made a formal study of the economic
potential of any business. At the present, we have not identified any assets or
business opportunities for acquisition.
Based on current economic and regulatory conditions, management believes
that it is possible, if not probable, for a company like ours, without many
assets or liabilities, to negotiate a merger or acquisition with a viable
private company. The opportunity arises principally because of the high legal
and accounting fees and the length of time associated with the registration
process of "going public". However, should any of these conditions change, it is
very possible that there would be little or no economic value for anyone taking
over control of Galaxy.
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
business opportunity to be acquired. Also, we intend to concentrate our
acquisition efforts on properties or businesses that we believe to be
undervalued or that we believe may realize a substantial benefit from being
publicly owned. Investors should expect that any acquisition candidate may have
little or no operating history, or a history of losses or low profitability.
It is emphasized that our management may effect transactions having a
potentially adverse impact upon our shareholders pursuant to the authority and
discretion of our management to complete acquisitions without submitting any
proposal to the stockholders for their consideration.
Should a merger or acquisition prove unsuccessful, it is possible that we
may decide not to pursue further acquisition activities and management may
abandon its activities and our shares would become worthless.
9
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GALAXY SPECIALITIES, INC.
Dated: October 31, 2000 /s/ Jeanne Ball
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Jeanne Ball, President and Director
10
