U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended February 28, 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: 0-32237
GALAXY INVESTMENTS, INC.
_________________________
(Name of small business issuer in its charter)
Colorado 98-0347827
_______________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 604-750 West Pender Street
Vancouver, B.C. Canada V6C 2T7
_______________________________________ ________________
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (604) 689-0188
Indicate by checkmark whether the registrant (1) has 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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:
Outstanding at February 28, 2002
_________________________________
9,028,000
$.001 par value common stock
GALAXY INVESTSMENTS, INC.
FORM 10-QSB
TABLE OF CONTENTS
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements............................................... 3
ITEM 2. Management Discussion and Analysis of Financial Condition
and Results of Operations..........................................11
PART II--OTHER INFORMATION
ITEM 1. Legal Proceedings..................................................12
ITEM 2. Changes in Securities and Use of Proceeds..........................12
ITEM 3. Defaults Upon Senior Securities....................................12
ITEM 4. Submission of Matters to a Vote of Security Holders................12
ITEM 5. Other Information..................................................12
ITEM 6. Exhibits and Reports on Form 8-K...................................12
2
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
BALANCE SHEETS
February 28, 2002 and November 30, 2001
---------------------------------------
ASSETS
------
February 28, November 30,
2002 2001
------------ ------------
Current Assets
Cash $ 4 $ 620
-------- --------
Total current assets $ 4 $ 620
======== ========
LIABILITIES
___________
Current Liabilities
Accounts payable - related parties $ 6,154 $ 4,654
Accounts payable 2,733 2,787
-------- --------
Total current liabilities 8,887 7,441
-------- --------
STOCKHOLDERS' EQUITY
____________________
Preferred stock
25,000,000 shares authorized at $0.001
par value, none outstanding - -
Common stock
100,000,000 shares authorized, at $0.001
par value, 9,028,000 shares issued and
outstanding 9,028 9,028
Capital in excess of par value 6,474 6,474
Deficit accumulated during the
exploration stage ( 24,385) ( 22,323)
--------- ---------
Total stockholders' deficiency ( 8,883) ( 6,821)
--------- ---------
$ 4 $ 620
========= ========
SEE ACCOMPANYING NOTES
3
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
for the three months ended February 28, 2002 and 2001
and for the period December 17, 1999 (Date of Inception) to February 28, 2002
_____________________________________________________________________________
December 17,
1999 to
February 28, February 28, February 28
2002 2001 2002
____________ ____________ ___________
Revenues $ - $ - $ -
Expenses 2,062 2,025 24,385
------------ ------------ ----------
Net loss 2,062 2,025 24,385
============ ============ ==========
Net loss per common share
Basic $ - $ -
============ ============
Average outstanding shares
Basic 9,028,000 9,002,000
============ ============
SEE ACCOMPANYING NOTES
4
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the period December 17, 1999 (Date of Inception) to February 28, 2002
_____________________________________________________________________________
Capital in
Common Stock Excess of Accumulated
____________
Shares Amount Par value Deficit
______ ______ _________ ___________
Balance, December 17, 1999
(Date of Inception) - $ - $ - $ -
Issuance of common stock for
cash at $0.001
February, March and June 2000 9,000,000 9,000 - -
Issuance of common stock in
respect of resource property
acquisition 2,000 2 - -
Operating loss for the period
December 17, 1999 to
November 30, 2000 - - - ( 11,613)
--------- ------- ------ ------------
Balance, November 30, 2000 9,002,000 9,002 - ( 11,613)
Issuance of common stock to
settle debt at $0.25 26,000 26 6,474 -
Operating loss for the year
ended November 30, 2001 - - - ( 10,710)
--------- ------- ------ ------------
Balance, November 30, 2001 9,028,000 $ 9,028 $6,474 $( 22,323)
Operating loss for the three
months ended February 28,2002 - - - ( 2,062)
--------- ------- ------ ------------
Balance, February 28, 2002 9,028,000 $ 9,028 $6,474 $( 24,385)
========= ======= ====== ============
SEE ACCOMPANYING NOTES
5
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
for the three months ended February 28, 2002 and 2001
and for the period December 17, 1999 (Date of Inception) to February 28, 2002
_____________________________________________________________________________
December 17,
1999 to
Three months ended February 28, February 28
2002 2001 2002
____________ ____________ ___________
Cash flows from operating activities
Net loss
$ ( 2,062) $ ( 2,025) $ ( 24,385)
Adjustment to reconcile net loss
to net cash provided by operating
activities
Change in accounts payable 1,446 1,985 8,887
Issuance of common capital stock
for expenses - - 2
Issuance of common capital stock
to settle debt - - 6,500
---------- --------- ----------
Net cash used in operations ( 616) ( 40) ( 8,996)
---------- --------- ----------
Cash flows from investing activity - - -
---------- --------- ----------
Cash flows from financing activity
Proceeds from issuance of stock - - 9,000
---------- --------- ----------
Net increase (decrease) in cash ( 616) ( 40) 4
Cash at beginning of period 620 2,904 -
---------- --------- ----------
Cash at end of period $ 4 $ 2,864 $ 4
========== ========= ==========
Non cash flows from operating activities
Issuance of 2,000 common shares for
mineral claims expense - - $ 2
Issuance of 26,000 common shares to
settle debt at $0.25 - - 6,500
--------- --------- ----------
$ - $ - $ 6,502
---------- --------- ---------
SEE ACCOMPANYING NOTES
6
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2002
Note 1 Interim Financial Statements
____________________________
The accompanying balance sheets of Galaxy Investments, Inc. at February
28, 2002 and November 30, 2001 and the related statements of operations
and cash flows for the three and six months ended February 28, 2002 and
2001 and the period December 17, 1999 (Date of Inception) to February
28, 2002 have been prepared by the Company's management in conformity
with accounting principles generally accepted in the United States of
America. 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.
Operation results for the quarter ended February 28, 2002 are not
necessarily indicative of the results that can be expected for the year
ending November 30, 2002.
Note 2 Summary Of Significant Accounting Policies
__________________________________________
Accounting Methods
__________________
The Company recognises income and expenses based on the accrual method
of accounting.
Dividend Policy
_______________
The Company has not yet adopted a policy regarding payment of
dividends.
Income Taxes
____________
On February 28, 2002 the Company had a net operating loss carry forward
of $24,385. The resulting tax benefit of approximately $7,316 from the
loss carry forward has been fully offset by a valuation reserve because
the use of the future tax benefit is doubtful since the Company has no
operations. The net operating loss will expire in 2023.
Basic and Diluted Net Income (Loss) Per Share
_____________________________________________
Basic net income (loss) per share amounts are computed based on the
weighted average number of shares actually outstanding. Diluted net
income (loss) per share amounts are computed using the weighted average
number of common shares and common equivalent shares outstanding as if
shares had been issued on the exercise of the preferred share rights
unless the exercise becomes antidilutive and then only the basic per
share amounts are shown in the report.
7
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2002 - Page 2
Note 2 Summary of Significant Accounting Policies - (cont'd)
Capitalization of Mineral Claim Costs
_____________________________________
Cost of acquisition, exploration, carrying and retaining unproven
properties are expensed as incurred. Costs incurred in proving and
developing a property ready for production are capitalized and
amortized over the life of the mineral deposit or over a shorter period
if the property is shown to have an impairment in value. Expenditures
for mining equipment are capitalized and depreciated over their useful
life.
Environmental Requirements
__________________________
At the report date, environmental requirements related to the mineral
claims acquired (Note 3) are unknown and therefore any estimate of any
future cost cannot be made.
Financial Instruments
_____________________
The carrying amounts of financial instruments, including cash, mineral
claims, and accounts payable are considered by management to be their
estimated fair values.
Estimates and Assumptions
_________________________
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of the
assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results
could vary from the estimates that were assumed in preparing these
financial statements.
Comprehensive Income
____________________
The Company adopted Statement of Financial Accounting Standards No.
130. The adoption of this standard had no impact on the total
stockholder's equity.
Recent Accounting Pronouncements
________________________________
The Company does not expect that the adoption of other recent
accounting pronouncements will have a material impact on its financial
statements.
Note 3 Option to Purchase Mineral Claims
_________________________________
On July 15, 2000 the Company acquired an option to purchase mineral
claims known as "Treadwell #1" Tenure #390518 located in the Kamloops
Mining Division on Cannell Creek, British Columbia. The claims have an
expiration date of October 19, 2002.
The claims have not been proven to have a commercially minable ore
reserve and therefore all costs for exploration and retaining the
properties have been expensed.
8
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2002 - Page 3
_________________
Note 3 Option to Purchase Mineral Claims - (cont'd)
_________________________________
The terms of the purchase to vest 100% in the claims includes total
payments of $40,000, the issuance of 100,000 shares of the Company and
by completing work commitments totalling $500,000 on the claims on the
dates in the following outline. The property is subject to a royalty of
one percent of the net smelter returns with a right to acquire the
rights to the royalty after start of commercial production.
Purchase price;
$2,500 cash and 2,000 common shares as initial payment
$7,500 cash and 8,000 free trading common shares by July 31, 2002
$10,000 cash and 40,000 free trading common shares by July 31, 2003
$20,000 cash and 50,000 free trading common shares by July 31, 2004
work commitments;
$25,000 in work by July 31, 2002
$150,000 in work by July 31, 2003
$150,000 in work by July 31, 2004
$175,000 in work by July 21, 2005
Note 4 Significant Transactions with Related Parties
_____________________________________________
Officers and directors have acquired 34% of the outstanding common
stock and has accounts payable due to them of $6,154.
Note 5 Going Concern
_____________________
Continuation of the Company as a going concern is dependent upon
obtaining additional working capital to service its debt and for its
planned activity and the management of the Company has developed a
strategy, which it believes will accomplish this objective through
additional equity funding, and long term financing, which will enable
the Company to operate for the coming year.
9
GALAXY INVESTMENTS, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2002 - Page 4
_________________
Note 6 Commitment
__________
On February 21, 2002, the Company executed a Letter of Intent Agreement
to acquire a Nevada based start-up bio-technology company called
Elasticated Adhesive Technologies, Inc. ("EAT") which is focused on the
development of proprietary Trans Dermal Drug Delivery Systems.
The parties to the Agreement plan to execute a Definitive Share
Exchange Agreement, whereby the Company is to acquire 100% of the
issued and outstanding capital stock of EAT, in exchange for the
issuance of 10,000,000 restricted common shares and up to 10,000
preferred common shares of the Company. The Company will also
undertake a private placement of equity totalling $2,550,000 in
conjunction with the acquisition. The closing of the Definitive Share
Exchange Agreement is contingent upon the completion of this private
placement.
10
ITEM 2. Management Discussion and Analysis of Financial Condition
and Results of Operations.
This Form 10-QSB may contain trend information and forward-looking statements
that involve risks and uncertainties. The actual results of operations of the
Company could differ materially from the Company's historical result of
operations and those discussed in such forward-looking statements as a result
OF certain factors set forth in this section and elsewhere in this Form 10-QSB,
including information incorporated by reference.
The Company is in the business of acquiring and exploring mineral properties and
does not have a source of revenue at this time.
RESULTS OF OPERATION.
Revenues
As of the three month period ended February 28, 2002, the Company generated $0
in revenues as compared to $0 for the three month period ended February 28,
2001.
Operating Expenses
For the three month period ended February 28, 2002, the Company had total
operating expenses of $2,062 and $2,025 total operating expenses for the same
quarter ended February 28, 2001. The increase in total operating expenses was
due to an increase in general and administrative costs.
The Company has an accumulated deficit from December 17, 1999 (date of
inception) to February 28 2002 of ($24,385).
Operating Loss
As of the three month period ended February 28, 2002, the Company incurred a net
loss of $2,062 as compared to $2,025 for the same period from the previous year.
Additionally, as February 28, 2002, the Company had accounts payable due to
related parties of $6,154 and current liabilities exceeded its current assets by
$8,887.
The Company does not expect any significant changes in the number of its
employees within the next 12 months.
Income Taxes
On February 28, 2002 the Company had a net operating loss carry forward of
$24,385. The tax benefit of approximately $7,316 from the loss carry forward
has been fully offset by a valuation reserve because the use of the future tax
benefit is doubtful since the Company has no operations. The net operating loss
will expire in 2023.
11
Liquidity and Financial Resources
Period from December 17, 1999, to February 28 2002.
From December 17, 1999, the date of incorporation, to February 28, 2002, the
Company raised $9,028 through the issuance of 9,028,000 common shares, as
follows: from February 2000 to June 2000, the Company issued 9,000,000 shares
of its $.001 par value common stock, at a price of $.001 per share, by virtue
of Section 4(2) of the Securities Act of 1933, as amended.
On October 11, 2000, the Company issued 2,000 shares of its $.001 par value
common stock as payment for mineral claims for a total value of $2 representing
$.001 per share.
On July 10, 2001, Galaxy issued 26,000 shares of its $.001 par value common
stock to related parties valued at $.25 per share for a total value of $6,500 to
reduce an accounts payable due to those related parties. This value was
allocated $26.00 to common stock and $6,474 to capital in excess of par value.
For the next 12 months, management of the Company plans to satisfy its cash
requirements by raising additional funds by way of private placements and/or a
public offering, to satisfy working capital needs.
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings.
The Company has no current or pending material legal proceedings to
which the Company is or is likely to be a party or of which any of its
property is or is likely to be the subject of.
ITEM 2. Changes in Securities and Use of Proceeds.
There have been no changes in securities during this reporting period.
ITEM 3. Defaults Upon Senior Securities.
The Company has incurred no defaults upon senior securities during this
reporting period.
ITEM 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during
this reporting period.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(b) Form 8-K
Form 8-K previously filed on April 1, 2002.
12
SIGNATURES
In accordance with 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 hereunto duly authorized.
Galaxy Investments, Inc.
(Registrant)
/s/Gregory C. Burnett
__________________________________
Gregory C. Burnett
Director/President
Date: April 12, 2002
13