UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 [ ] 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. 33-55254-12 XEBEC GALLEON, INC. (Exact name of Registrant as specified in its charter) NEVADA 87-0438447 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1800 EAST SAHARA, SUITE 107 LAS VEGAS, NEVADA 89104 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (702) 792-7479 Indicate by check mark whether the registrant (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 registrant 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 registrant's classes of common stock, as of the latest practicable date. Class Outstanding as of June 30, 1996 - - ------------------------------------ ------------------------------- $.001 PAR VALUE CLASS A COMMON STOCK 1,200,000 SHARES PART I - 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-Q 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 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 quarter ended June 30, 1996, are not necessarily indicative of the results that can be expected for the year ending December 31, 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Current assets at June 30, 1996 were $60,000 as compared to net current assets at June 30, 1995 of $0.00. The increase in current assets was due to an increase in cash of $60,000 from the sale of 200,000 shares of the Company's common stock at $.30 per share. The Company has not received any income nor incurred any expenses as of the quarter ended June 30, 1996, and has limited operational history. Since the acquisition of the cash, the Company has entered into the business of marketing and promoting Internet products and services for sponsoring companies. Management believes that it can attract sponsors and individuals to perform needed services for the company on a "contract basis" and therefore will not need any employees in the immediate future. The Company has not concluded any transactions, entered into any agreements, letters of intent, or any other arrangements with respect to any change in control or status of the Company. All risks inherent in new and inexperienced enterprises are inherent in the Company's business. The Company has not made a formal study of the economic potential of this venture. The Company will continue to expand through its proposed business operations and through acquisitions and will be extremely limited in its attempts to locate potential business situations for investigation. However, the Company's officers, directors and major shareholder believe that the present amount of capital contributed recently is sufficient to enable it to satisfy its reporting and other obligations as a public company for the foreseeable future. The Company plans to continue on a limited basis, the process of investigating possible merger and acquisition candidates, and believes that the Company's status as a publicly-held corporation will enhance its ability to locate such potential business ventures. Management anticipates that due to the limited amount of its resources, the Company may be restricted to participation in only one potential business venture. This lack of diversification should be considered a substantial risk because it will not permit the Company to offset potential losses from one venture against gains from another. XEBEC GALLEON, INC. (A Development Stage Company) BALANCE SHEETS 6/30/96 12/31/95 Unaudited Audited ----------- ----------- ASSETS CURRENT ASSETS Cash in bank $ 60,000 $ -0- ----------- ----------- TOTAL CURRENT ASSETS 60,000 -0- ----------- ----------- $ 60,000 $ -0- =========== =========== LIABILITIES & EQUITY CURRENT LIABILITIES Accounts payable $ -0- $ -0- ----------- ----------- TOTAL CURRENT LIABILITIES -0- -0- STOCKHOLDERS' EQUITY Common Stock $.001 par value: Authorized - 100,000,000 shares Issued and outstanding 1,200,000 shares (1,000,000 in 1995) 1,200 1,000 Additional paid-in capital 60,800 1,000 Deficit accumulated during the development stage (2,000) (2,000) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 60,000 0 ----------- ----------- $ 60,000 $ 0 =========== =========== XEBEC GALLEON, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS 4/28/86 For the three months For the six months (Date of ended June 30, ended June 30 inception) to 1996 1995 1996 1995 6/30/96 Unaudited Unaudited Unaudited Unaudited Unaudited ------------ ------------ ------------- ------------ ------------ Net sales $ -0- $ -0- $ -0- $ -0- $ -0- Cost of sales -0- -0- -0- -0- -0- ------------ ------------ ------------- ------------ ------------ GROSS PROFIT (LOSS) -0- -0- -0- -0- -0- General and administrative expenses -0- -0- -0- -0- 2,000 ------------ ------------ ------------- ------------ ------------ NET INCOME (LOSS) $ -0- $ -0- $ -0- $ -0- $ (2,000) ============ ============= ============= ============ ============ Net income (loss) per weighted average common shares $ .00 $ .00 $ .00 $ .00 ============ ============= ============= ============ Weighted average number of common shares used to compute net income (loss) 1,200,000 1,000,000 1,000,000 1,000,000 ============ ============ ============= ============ XEBEC GALLEON, INC. (A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Deficit Accumulated Common Stock Additional During Par Value $.001 Paid-in Development Shares Amount Capital Stage ---------- ---------- ----------- ----------- Balances at 4/28/86 (Date of inception) -0- $ -0- $ -0- $ -0- Issuance of common stock (restricted) at $.002 per share at 4/28/86 1,000,000 1,000 1,000 Net loss for period (1,950) --------- --------- ---------- ----------- Balances at 12/31/86 1,000,000 1,000 1,000 (1,950) Net loss for year (10) --------- --------- ---------- ----------- Balances at 12/31/87 1,000,000 1,000 1,000 (1,960) Net loss for year (10) --------- --------- ---------- ----------- Balances at 12/31/88 1,000,000 1,000 1,000 (1,970) Net loss for year (10) --------- --------- ---------- ----------- Balances at 12/31/89 1,000,000 1,000 1,000 (1,980) Net loss for year (10) --------- --------- ---------- ----------- Balances at 12/31/90 1,000,000 1,000 1,000 (1,990) Net loss for year (10) --------- --------- ---------- ----------- Balances at 12/31/91 1,000,000 1,000 1,000 (2,000) Net loss for year -0- --------- --------- ---------- ----------- Balances at 12/31/92 1,000,000 1,000 1,000 (2,000) Net loss for year -0- --------- --------- ---------- ----------- Balances at 12/31/93 1,000,000 1,000 1,000 (2,000) Net loss for year -0- --------- --------- ---------- ----------- Balances at 12/31/94 1,000,000 1,000 1,000 (2,000) Net loss for year -0- --------- --------- ---------- ----------- Balances at 12/31/95 1,000,000 1,000 1,000 (2,000) Stock sold 200,000 200 59,800 Net income for period -0- --------- --------- ---------- ----------- Balances at 6/30/96 1,200,000 $ 1,200 $ 60,800 $ (2,000) ========= ========= ========== =========== XEBEC GALLEON, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS 4/28/86 For the six months (Date of ended June 30, inception) to 1996 1995 6/30/96 Unaudited Unaudited Unaudited ------------- ------------- ------------- OPERATING ACTIVITIES Net income (loss) $ -0- $ -0- $ (2,000) Adjustments to reconcile net income (loss) to cash used by operating activities: Amortization -0- -0- 50 ------------- ------------- ------------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES -0- -0- (1,950) INVESTING ACTIVITIES Organization Costs -0- -0- (50) ------------- ------------- ------------- NET CASH USED BY INVESTING ACTIVITIES -0- -0- (50) FINANCING ACTIVITIES Proceeds from sale of common stock 60,000 -0- 62,000 ------------- ------------- ------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 60,000 -0- 62,000 ------------- ------------- ------------- INCREASE IN CASH AND CASH EQUIVALENTS 60,000 -0- 60,000 Cash and cash equivalents at beginning of year -0- -0- -0- ------------- ------------- ------------- CASH & CASH EQUIVALENTS AT END OF PERIOD $ 60,000 $ -0- $ 60,000 ============= ============= ============= XEBEC GALLEON, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 1996 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES Accounting Methods The Company recognizes income and expenses based on the accrual method of accounting. Dividend Policy: The Company has not yet adopted any policy regarding payment of dividends. 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 is required to be applied in the Company's financial statements for the fiscal year commencing January 1, 1993. The Company has elected to recognize the cumulative effect of the change in 1993. At December 31, 1995 a deferred tax asset has not been recorded due to the Company's lack of operations to provide income to use the net operating loss carryover of $2,000 which will expire December 31, 2006. NOTE 2: DEVELOPMENT STAGE COMPANY The Company was incorporated under the laws of the State of Utah on April 28, 1986, and changed its state of domicile to Nevada on December 30, 1993, and has been in the development stage since incorporation. NOTE 3: CAPITALIZATION On the date of incorporation, the Company sold 1,000,000 shares of its common stock to Capital General Corporation for $2,000 cash for an average consideration of $.002 per share. On May 29, 1996, the Company sold 200,000 shares of its common stock for $60,000 cash for an average consideration of $.30 per share. The Company's authorized stock includes 100,000,000 shares of common stock at $.001 par value. NOTE 4: RELATED PARTY TRANSACTIONS The Company neither owns or leases any real property. Office services are provided, without charge, by Capital General Corporation. Such costs are immaterial to the financial statements, and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. XEBEC GALLEON, INC. Dated: July 2, 1996 s\Krista Nielson ------------------------------------------------------ Krista Nielson, President, CEO and Director Dated: July 2, 1996 s\David R. Yeaman ------------------------------------------------------ David R. Yeaman, Secretary/Treasurer, CFO and Director