UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2005 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Commission file number: 000-31355 SUNCREST GLOBAL ENERGY CORP. (Name of small business issuer in its charter) Nevada 81-0438093 (State of incorporation) (I.R.S. Employer Identification No.) #584, 3353 South Main, Salt Lake City, Utah 84115 (Address of principal executive offices) (Zip code) Issuer's telephone number: (702) 946-6760 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock Check whether the issuer (1) 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 [ ] Check if disclosure of delinquent filers in response to item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] State issuer's revenue for its most recent fiscal year: None The aggregate market value for the voting stock held by non-affiliates cannot be determined due to the fact the registrant's common stock does not have an active trading market. As of September 6, 2005, the registrant had 39,050,000 shares of common stock outstanding. Documents incorporated by reference: None Transitional Small Business Disclosure Format: Yes [ ] No [X] TABLE OF CONTENTS PART I Item 1. Description of Business............................................3 Item 2. Description of Property............................................6 Item 3. Legal Proceedings..................................................6 Item 4. Submission of Matters to a Vote of Security Holders................6 PART II Item 5. Market for Common Equity and Related Stockholder Matters...........6 Item 6. Management's Discussion and Analysis or Plan of Operation..........6 Item 7. Financial Statements...............................................7 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............................20 Item 8A. Controls and Procedures...........................................20 Item 8B. Other Information.................................................20 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.................20 Item 10. Executive Compensation............................................21 Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...................................21 Item 12. Certain Relationships and Related Transactions....................22 Item 13. Exhibits..........................................................22 Item 14. Principal Accountant Fees and Services............................22 Signatures..................................................................23 In this annual report references to "Suncrest Global," "we," "us," and "our" refer to Suncrest Global Energy Corp. and its subsidiary. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as "may," "will," "expect," "believe," "anticipate," "estimate," "project," or "continue" or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. 2 PART I ITEM 1. DESCRIPTION OF BUSINESS Historical Development Suncrest Global Energy Corp. was incorporated in the state of Nevada on May 22, 1999 as Galaxy Specialties, Inc. On June 9, 2003 Galaxy Specialties, Inc. amended its articles of incorporation and changed the company name to Suncrest Global Energy Corp. On June 10, 2003 Suncrest Global Energy Corp. entered into an share exchange agreement whereby Suncrest Global acquired Coyote Oil Company, Inc. ("Coyote Oil") as a wholly-owned subsidiary. However, for accounting purposes the acquisition was treated as a reverse acquisition and Coyote Oil is the accounting survivor and Suncrest Global is the legal survivor. Coyote Oil is a Nevada corporation formed on July 6, 1996 that owns a proprietary process known as a mini oil refinery. (See "Our Business" and "Item 6. Management's Discussion and Analysis or Plan of Operation," below, for further details). Our Business Our business plan is to develop a manufacturing and marketing plan to sell a turnkey mini oil refinery or waste oil refinery to prospective customers. We have entered into an agreement to sell our mini oil refinery prototype, land and assets related to the property located in Green River, Utah. However, the agreement provides for a closing date of June 2006 and we cannot assure you that the sale will be consummated. Therefore, we intend to continue to focus our efforts on the development of the mini oil refinery proprietary process and operations. If the sale is closed, then management believes that we will rely on the proceeds from the sale of our mini refinery to fund operations and continue the development of a marketing plan to sell our proprietary process for mini oil refineries to customers. If the agreement does not close, then we anticipate that we will raise funds to continue development of the mini oil refinery proprietary process. Management has identified a market segment where we believe our mini refinery would be beneficial because a full size refinery is not cost effective due to limited feed stock and limited output volume. However, we have been unable to fund the restoration of our mini refinery and further development of the proprietary process as of the date of this filing and have been forced to delay our business plans. Mini Refinery Our mini oil refinery proprietary process relies on a scaled down, low cost refining and recycling process which processes crude oil or can be used to recycle waste oils. The mini refinery performs the oil refining process on a small scale, using a small catalyst cracker. A catalyst cracker is the mechanism used to break down hydrogen-carbon atoms in feed stock, like crude oil and recycled waste oil, and convert the feed stock into higher value products, such as gasoline and diesel fuel. We intend to market a turnkey mini refinery or waste oil refinery to prospective customers. The mini refinery uses a small, efficient modular plan and can be built, dismantled and shipped anywhere in the world. The cost of a facility similar to our mini refinery prototype is estimated at approximately $1 million. This mini refinery, when using waste oil as feed stock, could produce in excess of 3,000 barrels of product per day. It can be designed to use a personal computer based control system and may include a 2,000 volt power transformer substation, along with a management building, control room, tank farm, bag-house and quench system. Our proprietary process and mini refinery differ from major refineries in a number of ways. Some of the unique features of the proprietary process and mini refinery are: .. Feed stock volume: The mini refinery can be designed to process between 500 and 5,000 barrels of feed stock per day. This allows units to be installed in areas which do not justify construction of a larger refinery. 3 .. Portability: The mini refinery plant can be manufactured on steel skids, allowing the site to be built on one location, with the capability of being dismantled and moved to another location. This feature ensures the continued usefulness and value of the equipment in the event of feed stock exhaustion or unavailability. .. Type of Feed Stock: The mini refinery is designed to use various feed stocks, which may also be combined, including: conventional crude oil, automotive and industrial waste oils, oils extracted from petroleum based waste products, and/or oils produced from the processing of used tires and plastic products. Our proprietary process is also tolerant of silica, making slop oil a feed stock source. Typically, a larger refinery cannot use these types of waste oils because they will contaminate and shut down the catalytic cracker unit. These feedstock capabilities can provide new opportunities for recycling of waste. .. Catalyst: A catalyst is a substance which aids a chemical reaction without entering the reaction itself. Catalyst costs are substantially reduced due to the ability of our proprietary process to use expended catalyst sold by larger refineries. The efficiency of expended catalyst is slightly below optimum levels, but is compensated for by a substantial discount in cost. New catalyst can cost $2,000 per ton compared to expended catalyst resold by larger refineries which can be purchased for $100 per ton. Concerns about catalyst poisoning of our system are reduced because down time is usually one day for a mini refinery compared to 8 to 10 days with large cracking units. .. Minimal Emissions: Emissions of nitrogen oxide, sulphur oxide, carbon monoxide, and particulates usually are well within United States government guidelines. Nitrogen oxide and sulphur oxide are produced mainly as furnace emissions. These emissions are reduced once the plant processes are in full operation due to process integration. Carbon monoxide is processed through a regenerator which is run at a temperature calculated to convert the carbon monoxide to carbon dioxide. Minimal waste water or waste products are produced by the process. .. Manpower Requirements: The direct operation of the plant requires three operators during the day, two operators for swing shift and two operators at night. In addition, one individual must staff the laboratory and a welder and electrician/instrument specialist and a mechanic are required to service the pumps and equipment. .. Low Energy Consumption: Our proprietary process, once started, allows the facility to operate on limited energy consumption, thus lowering the cost of production. .. Small Footprint: The mini refinery requires only 3 to 7 acres for operation. .. End Products: Approximately 75% to 90% of the product produced at a mini refinery will be gasoline and diesel fuel. Due to the catalytic cracker process, the gasoline produced is a high octane product, increasing marketability and price of the overall gasoline output when blended with other distillation process products. Other products, which comprise approximately 10% to 15% of the total output, include liquid petroleum gas which can be further separated into butane, propane and fuel gas. Bottom oil and heavy fuel oil from the distillation process can be further processed through the catalytic cracker to allow the further breakdown of these heavy oils into their lighter fractions. The above percentages can vary with the mixture of feed stock types and process implementation. Market We intend to develop a marketing plan to sell mini refineries in the United States and internationally. There are domestic and international markets appropriate for this type of refinery because scaled down operations of a mini 4 refinery allow locating plants in areas previously thought to be uneconomical or unprofitable due to lack of sufficient raw material for profitable plant volume output or prohibitive transportation costs. Our mini refinery proprietary process may use feed stock such as waste oils, oils from pyrolytic processes, coal tar gas oils, oils from used tires, and plastics. The lower output volume of a mini refinery allows the refinery to draw its feed stock from a relatively small area. If the feed stock supplies are exhausted, the portability and small plant size allows the economical movement of the mini refinery to another location. A potential market for mini refineries in the United States is Indian reservations. Many of the 500 Indian reservations in the United States have crude oil or access to crude oil. The mini refinery could use the crude oil to create fuel products that could be used and sold on the reservation. Also, some of the mini refinery products could be used to generate power for the reservation or the power could be transferred into the power grid of the utility industry. The worldwide market for the mini refinery is primarily found in lesser developed countries that refine crude oil. A number of these countries have crude oil as a resource yet lack the refining capacity. We believe our mini refinery offers a means for these countries to generate their own fuels and power for a relatively low cost. Competition We compete against larger companies who sell mini oil refineries around the world. IOR Energy Pty. Ltd., REDD Engineering and Construction, Inc., REOTEK Company, Inc., and Chemex, Inc. are competitors that manufacture and sell mini refineries. Their mini refineries typically are built with modular components to allow for mobility and, depending on the specific model, may process from 1,000 to 1,000,000 barrels of product per day. These companies have established manufacturing and marketing programs and have greater financial resources than we have. We may be unable to compete with these established companies. Patents, Trademarks, and Licenses We do not own or license any patents or trademarks. We rely on a proprietary process for our mini refinery process. Government Regulation A mini refinery is subject to federal, state and local health and environmental laws and regulations governing the discharge of pollutants into the air and water, and the generation, treatment, storage, transportation and disposal of solid and hazardous waste and materials. Our mini refinery can be designed to comply with the strict United States environmental laws. Generally, the operation of a mini refinery in the United States would be subject to the: . Clean Air Act . Clean Water Act . Resource Conservation and Recovery Act (related to certain hazardous and nonhazardous wastes) . Comprehensive Environmental Response, Compensation and Liability Act (related to liability imposed on cleaning up environmental wastes) When the land and mini refinery were transferred to Coyote Oil in 1999 the Utah Department of Environmental Quality required a clean up of the site. We completed the tank cleaning in July 2003 and had another estimated $1,000 of clean up remaining. Employees We do not have any employees and management does not anticipate a need to engage any full-time employees until we launch a marketing plan for our mini refinery proprietary process. 5 Available information Suncrest Global does not maintain a public internet website; however, we are an electronic filer and our annual, quarterly and current reports may be accessed through the SEC's website at: http://www.sec.gov/. ITEM 2: DESCRIPTION OF PROPERTY We own approximately 40 acres of land and the mini oil refinery located on that land in Green River, Utah. ITEM 3. LEGAL PROCEEDINGS We are not a party to any legal proceedings or threatened proceedings as of the date of this filing. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS We did not submit a matter to a vote of our security holders during the fourth quarter of our 2005 fiscal year. PART II ITEM 5. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS On July 21, 2005, the National Association of Securities Dealers (the "NASD") cleared our common stock for an unpriced quotation on the OTC Bulletin Board under the symbol "SUGE." Supplemental information will be required to be filed with the NASD prior to the appearance of a priced quotation, a bid and/or offering price, on that system. As of September 6, 2005, we had approximately 98 stockholders of record who hold our common stock. We have not declared dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. Recent Sales of Unregistered Securities We have not issued any unregistered shares of common stock during the fourth quarter of our 2005 fiscal year. Issuer Purchases of Equity Securities None. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION We are a development stage company, have not recorded revenues in the past two fiscal years, and have suffered losses since our inception. Our auditors have expressed doubt that we can continue as a going concern if we do not obtain financing. As of June 30, 2005, we had total assets of $473,211 and total liabilities of $310,733. Total operating expenses were $9,910 for the year ended June 30, 2005. During the year ended June 30, 2004 we incurred total operating expenses of $67,821, with $46,269 related to engineering and consulting expenses for the clean up and restoration of our mini refinery prototype. Historically we have relied on loans from third parties to fund our operating expenses, resulting in notes payable of $188,697. Management anticipates that the sale of our mini refinery in 2006 will provide proceeds for the five years after the closing that we may use for further development of our proprietary process and marketing plan. For the short term 6 we likely will rely on loans or advances from other parties to fund our operations. We may repay these loans and advancements with cash, if available, or we may convert them into common stock. Additional capital may also be provided by private placements of our common stock. We expect that any private placement of stock will be issued pursuant to exemptions provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock. Off-balance Sheet Arrangements None. ITEM 7. FINANCIAL STATEMENTS 7 Suncrest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (a Development Stage Company) Financial Statements June 30, 2005 8 CONTENTS Independent Auditor's Report................................................3 Balance Sheets..............................................................4 Statements of Operations ...................................................5 Statements of Stockholders' Equity..........................................6 Statements of Cash Flows....................................................7 Notes to the Financial Statements ..........................................8 9 Chisholm, Bierwolf & 533 West 2600 South, Suite 250 Nilson, LLC Bountiful, Utah 84010 Office (801) 292-8756 Certified Public Accountants Fax (801) 292-8809 ______________________________________________________________________________ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Suncrest Global Energy Corp.: We have audited the accompanying balance sheets of Suncrest Global Energy Corp. (a development stage company) as of June 30, 2005 and 2004 and the related statements of operations, stockholders' equity and cash flows for the years ended June 30, 2005 and 2004 and from inception, July 9, 1996 through June 30, 2005. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 Suncrest Global Energy Corp. (a development stage company) as of June 30, 2005 and 2004 and the results of its operations and cash flows for the years ended June 30, 2005 and 2004 and from inception, July 9, 1996, through June 30, 2005 in conformity with generally accepted accounting principles in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations which 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Chisholm, Bierwolf & Nilson Chisholm, Bierwolf & Nilson Bountiful, Utah September 26, 2005 10 SUNCREST GLOBAL ENERGY CORP. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Balance Sheets ASSETS June 30, June 30, 2005 2004 ------------- ------------- Current Assets Cash $ 8,981 $ 9,390 Restricted Cash - - ------------- ------------- Total Current Assets 8,981 9,390 Property, Plant and Equipment, net 464,230 464,230 ------------- ------------- Total Assets $ 473,211 $ 473,620 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable $ 43,700 $ 44,099 Accrued Expenses 68,336 49,416 Advance Sale Deposit 10,000 - Notes Payable 188,697 188,697 ------------- ------------- Total Current Liabilities 310,733 282,212 ------------- ------------- Total Liabilities 310,733 282,212 ------------- ------------- STOCKHOLDERS' EQUITY Preferred Stock, Authorized 5,000,00 Shares, $.01 Par Value, Issued and Outstanding 0 Shares - - Common Stock, Authorized 70,000,000 Shares, $.001 par Value, Issue and Outstanding 39,050,000 Shares 39,050 39,050 Additional Paid-in Capital 461,380 461,380 Deficit Accumulated During the Development Stage (337,952) (309,022) ------------- ------------- Total Stockholders' Equity 162,478 191,408 ------------- ------------- Total Liabilities and Stockholders' Equity $ 473,211 $ 473,620 ============= ============= The accompanying notes are an integral part of these financial statements. 11 Suncest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Consolidated Statements of Operations From For the Years Ended Inception on June 30, July 9, 1996 --------------------------- to June 30, 2005 2004 2005 ------------- ------------- ------------- REVENUES $ - $ - $ - Cost of Sales - - - ------------- ------------- ------------- Gross Profit (Loss) - - - ------------- ------------- ------------- OPERATING EXPENSES Engineering & Consulting - 46,269 46,269 General & Administrative 9,910 21,552 222,647 ------------- ------------- ------------- Total Operating Expenses 9,910 67,821 268,916 ------------- ------------- ------------- Net Operating Income (Loss) (9,910) (67,821) (268,916) Other Income (Expense) Interest Expense (19,020) (18,645) (68,236) ------------- ------------- ------------- Total Other Income (Expense) (19,020) (18,645) (68,236) Income Tax Expense - (100) (800) ------------- ------------- ------------- Net Income (Loss) $ (28,930) $ (86,566) $ (337,952) ============= ============= ============= NET LOSS PER SHARE $ - $ - $ (0.02) ============= ============= ============= WEIGHTED AVERAGE SHARES OUTSTANDING 39,050,000 38,590,984 18,557,383 ============= ============= ============= The accompanying notes are an integral part of these financial statements. 12
Suncrest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) Deficit Accumulated Preferred Stock Common Stock Additional During the --------------------- ------------------------ Paid-in Development Shares Amount Shares Amount Capital Stage ---------- ---------- ------------- ---------- ------------- ------------- Balance at Inception on July 9, 1996 - $ - - $ - $ - $ - July, 1996 stock issued cash at $.001 per share - - 6,800,000 6,800 - - Net loss for the year ended December 31, 1996 - - - - - - ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 1996 - - 6,800,000 6,800 - - Net loss for the year ended December 31, 1997 - - - - - (35,986) ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 1997 - - 6,800,000 6,800 - (35,986) Net loss for the year ended December 31, 1998 - - - - - (9,624) ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 1998 - - 6,800,000 6,800 - (45,610) March 1999 - Assets contributed by shareholder - - - - 498,430 - Net loss for the year ended December 31, 1999 - - - - - (14,754) ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 1999 - - 6,800,000 6,800 498,430 (60,364) May 2000 - Stock issued for notes payable at $.001 per share - - 13,200,000 13,200 - - Net loss for the year ended December 31, 2000 - - - - - (94,683) ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 2000 - - 20,000,000 20,000 498,430 (155,047) Net loss for the year ended December 31, 2001 - - - - - (24,949) ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 2001 - - 20,000,000 20,000 498,430 (179,996) Net income (loss) for the year ended December 31, 2002 - - - - - (32,644) ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 2002 - - 2,000,000 20,000 498,430 (212,640) ---------- ---------- ------------- ---------- ------------- ------------- The accompanying notes are an integral part of these financial statements. 13
Suncrest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) Deficit Accumulated Preferred Stock Common Stock Additional During the --------------------- ------------------------ Paid-in Development Shares Amount Shares Amount Capital Stage ---------- ---------- ------------- ---------- ------------- ------------- Balance at December 31, 2002 - - 2,000,000 20,000 498,430 (212,640) June 2003 - Reverse acquisition adjustment - - 18,050,000 18,050 (46,050) - Net income (loss) for the six months ended June 30, 2003 - - - - - (9,816) ---------- ---------- ------------- ---------- ------------- ------------- Balance at June 30, 2003 - - 38,050,000 38,050 452,380 (222,456) December 2003 - Shares issued for services at $0.01 per share - - 1,000,000 1,000 9,000 - Net income (loss) for the year ended June 30, 2004 - - - - - (86,566) ---------- ---------- ------------- ---------- ------------- ------------- Balance at June 30, 2004 - - 39,050,000 39,050 461,380 (309,022) Net income (loss) for the year ended June 30, 2005 - - - - - (28,930) ---------- ---------- ------------- ---------- ------------- ------------- Balance at June 30, 2005 - $ - 39,050,000 $ 39,050 $ 461,380 $ (337,952) ========== ========== ============= ========== ============= ============= The accompanying notes are an integral part of these financial statements. 14
SUNCREST GLOBAL ENERGY CORP. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Consolidated Statements of Cash Flows From For the Years Ended Inception on June 30, July 9, 1996 --------------------------- Through 2005 2004 June 30, 2005 ------------- ------------- ------------- Cash Flows from Operating Activities: Net Income (Loss) $ (28,930) $ (86,566) $ (337,952) Adjustments to Reconcile net Loss to Net Cash Provided by Operations: Stock Issued for Services - 10,000 10,000 Change in Operating Assets and Liabilities: (Increase) Decrease in: Accounts Receivable - - - Inventory - - - Increase (Decrease) in: Accounts Payable & Accrued Expenses 18,521 18,731 84,035 ------------- ------------- ------------- Net Cash Provided (Used) by Operating Activities (10,409) (57,835) (243,917) ------------- ------------- ------------- Cash Flows from Investing Activities: Advance Sale Deposit 10,000 - 10,000 ------------- ------------- ------------- Net Cash Provided (Used) by Investing Activities 10,000 - 10,000 ------------- ------------- ------------- Cash Flows from Financing Activities: Proceeds from Issuance of Common Stock - - 6,800 Proceeds from Notes Payable - 27,000 281,098 Principal Payments on Notes Payable - - (45,000) ------------- ------------- ------------- Net Cash Provided (Used) by Financing Activities - 27,000 242,898 ------------- ------------- ------------- Increase (Decrease) in Cash (409) (30,835) 8,981 Cash and Cash Equivalents at Beginning of Period 9,390 40,225 - ------------- ------------- ------------- Cash and Cash Equivalents at End of Period $ 8,981 $ 9,390 $ 8,981 ============= ============= ============= Supplemental Cash Flow Information: Cash Paid For: Interest $ - $ - $ - Income Taxes $ - $ - $ 800 Non-Cash Investing and Financing Activities: Assets Contributed by Shareholder $ - $ - $ 498,430 Stock Issued for Notes Payable $ - $ - $ 13,200 Stock Issued for Services $ - $ 10,000 $ 10,000 The accompanying notes are an integral part of these financial statements. 15
Suncrest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Notes to the Consolidated Financial Statements June 30, 2005 NOTE 1 - Summary of Significant Accounting Policies a. Organization Suncrest Global Energy Corp. (the Company), (formerly Galaxy Specialties, Inc.), a Nevada Corporation, was incorporated on May 22, 2000. The Company is currently in the development stage as defined in Financial Accounting Standards Board No. 7. It has been concentrating all of it efforts on restoring its mini oil refinery located in Green River, UT which was acquired in the acquisition of Coyote Oil Company, Inc. See below for the details of the acquisition. On June 5, 2000, the Company merged with Hystar Aerospace Marketing Corporation of Montana, Inc. (Hystar). Hystar's business plan was to lease, sell and market certain technology. The technology proved to be prohibitive and further activity ceased. Hystar never commenced operations. On June 10, 2003, Galaxy Specialties, Inc. (Galaxy) entered into a share exchange agreement with Coyote Oil Company, Inc. (Coyote), a private Nevada corporation. Pursuant to the agreement, Galaxy exchanged 20,000,000 shares of common stock for all of the outstanding common stock of Coyote and changed its name to Suncrest Global Energy Corp. The management of Galaxy resigned and was replaced by the management of Coyote. The acquisition has been recorded as a reverse acquisition whereby Coyote is the accounting survivor and the Company is the legal survivor, therefore, the historical financial statements presented are those of Coyote. b. Accounting Method The Company recognizes income and expense on the accrual basis of accounting. c. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. d. Property, Plant and Equipment Property, Plant and Equipment consists of the following at June 30, 2005 and 2004: 2005 2004 -------------- ------------- Property and Plant $ 464,230 $ 464,230 Accumulated Depreciation - - -------------- ------------- Total Property, Plant and Equipment $ 464,230 $ 464,230 ============== ============= 16 Suncrest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Notes to the Consolidated Financial Statements June 30, 2005 NOTE 1 - Summary of Significant Accounting Policies (Continued) d. Property, Plant and Equipment (Continued) The Provision for depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Since the assets have not been placed in service as of June 30, 2005, no depreciation expense has been recognized for the year ended June 30, 2005 and 2004 and from inception on July 9, 1996 thru June 30, 2005. In accordance with Financial Accounting Standards Board Statement No. 144, the Company records impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount. As of June 30, 2005, no impairments have been recognized. e. Provision for income Taxes No provision for income taxes has been recorded due to net operating loss carryforwards totaling approximately $337,952 that will be offset against future taxable income. These NOL carryforwards begin to expire in the year 2016. Deferred tax assets and valuation account is as follows at June 30, 2005 and 2004: Deferred tax asset: 2005 2004 ------------- ------------- NOL carryforward $ 94,660 $ 86,566 Valuation allowance (94,660) (86,566) ------------- ------------- Total $ - $ - ============= ============= f. 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. Fully dilutive earnings per share has not been presented because it equals primary earnings per share. For the Year For the Year From Inception Ended Ended on July 9, 1996 June 30, June 30, thru June 30, 2005 2004 2005 ------------- ------------- --------------- Income (loss) Numerator $ (28,930) $ (86,566) $ (337,952) Shares (Denominator) 39,050,000 38,590,984 18,557,383 ------------- ------------- --------------- Per Share Amount $ (0.00) $ (0.00) $ (0.02) ============= ============= =============== 17 Suncrest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Notes to the Consolidated Financial Statements June 30, 2005 NOTE 1 - Summary of Significant Accounting Policies (Continued) g. Preferred Stock Each share of preferred stock is convertible into 10 shares of common stock. h. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and expenses during the reporting period. In these financial statements, assets, liabilities and expenses involve extensive reliance on management's estimates. Actual results could differ from those estimates. i. Financial Instruments The recorded amounts for financial instruments, including cash equivalents, receivables, investments, accounts payable and accrued expenses, and long-term debt approximate their market values as of June 30, 2005. The Company has no investments in derivative financial instruments. NOTE 2 - Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company is in the development stage and has no operations 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. Management anticipates that funds received from the sale of the refinery as discussed in Note 4 will provide adequate funding for operations during the coming year. NOTE 3 - Notes Payable Notes Payable is detailed as follows at June 30, 2005 and 2004: 2005 2004 ----------- ----------- Notes payable to an individual, bears interest at 10%, unsecured, payable upon demand $ 47,000 $ 47,000 Notes payable to a company, matures December, 2003, bears interest at 10%, principal due at maturity, secured by oil refinery, convertible into common stock at a rate established by the Board 141,697 141,697 ----------- ----------- Total Notes Payable $ 188,697 $ 188,697 =========== =========== 18 Suncrest Global Energy Corp. (Formerly Galaxy Specialties, Inc.) (A Development Stage Company) Notes to the Consolidated Financial Statements June 30, 2005 NOTE 4 - Subsequent Events On June 3, 2005, the Company entered into an agreement to sell the land and refinery in Green River to an unrelated corporation for a price of $500,000. The Company has received deposits in the amount of $50,000 ($10,000 as of June 30, 2005 and $40,000 subsequent to June 30, 2005). The Company anticipates closing the transaction in early 2006. NOTE 5 - Recent Pronouncements In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an amendment of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43, Chapter 4 Inventory Pricing. SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material ( spoilage). SFAS No. 149 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 will not have an impact on the Company's financial statements. In December 2004, the FASB issued SFAS No. 152, Amendment of FASB Statement No. 66, Accounting for Sales of Real Estate, which references the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position. This Statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for incidental operations and costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. SFAS No. 152 is effective for financial statements for fiscal years beginning after June 15, 2005. The adoption of SFAS no. 152 will not have an impact on the Company's financial statements. In December 2004, the FASB issued SFAS No. 153, Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions, which is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. SFAS No. 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. This adoption of SFAS No. 153 will not have any impact on the Company's financial statements. In December 2004, the FASBN issued SFAS No. 123 (revised), Accounting for Stock-Based Compensation, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This adoption of SFAS No. 123 (revised) did not have any impact on the Company's financial statements. 19 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE In our Current Report on Form 8-K, filed February 13, 2004, we reported that our independent auditors, Chisholm & Associates, Certified Public Accountants, resigned as our independent auditors and that we engaged Chisholm, Bierwolf & Nilson, LLC as our independent auditors. ITEM 8A. CONTROLS AND PROCEDURES Our President, who acts in the capacity of principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, he concluded that our disclosure controls and procedures were effective. Our President also determined that there were no changes made in our internal controls over financial reporting during the fourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. ITEM 8B. OTHER INFORMATION None. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Directors and Executive Officers Our executive officers and directors and their respective ages, positions, term of office and biographical information are set forth below. Our bylaws require two directors to serve for a term of one year or until they are replaced by a qualified director. 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 Since - ----- ---- ------------- -------------- John W. Peters 53 President and Director June 9, 2003 April L. Marino 31 Secretary/Treasurer and Director June 5, 2000 John W. Peters Mr. Peters has been involved with Coyote Oil since its inception in 1996 and has served as President of that company since June 15, 2001. Since July 1999 Mr. Peters has been the manager of Development Specialties, Inc. a property development and management company. He is a director of Bingham Canyon Corporation, Earth Products and Technologies, Inc., Skinovation Pharmaceutical Incorporated and Cancer Capital Corp., reporting companies. Mr. Peters studied business administration at Long Beach Community College and California Polytechnic State University in San Louis Obispo, California April L. Marino Ms. Marino is employed as a administrative assistant by First Equity Holdings Corp. She has been an employee of that company since December 1997. She is a director of Pinecrest Services, Inc. and Libra Alliance Corporation, reporting companies. Audit Committee Financial Expert Because we have minimal operations we do not have an audit committee serving at this time and, accordingly, we do not have an audit committee financial expert serving on an audit committee. 20 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than five percent of a registered class of our equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Officers, directors and greater than ten-percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based upon our records and representations to us that no Forms 5 were required, we believe no filings were required to be filed during our 2005 fiscal year. Code of Ethics Due to the fact that we have only two officers and directors and minimal operations, we have not adopted a Code of Ethics for our principal executive and financial officers. Our Board will revisit this issue in the future to determine if adoption of a Code of Ethics is appropriate. In the meantime, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations. ITEM 10. 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. John W. Peters, who acted in a capacity similar to Chief Executive Officer during the past fiscal year, did not receive any compensation during fiscal year 2005. 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. In addition, we have not entered into employment contracts with our executive officers and their compensation, if any, will be determined at the discretion of our Board of Directors. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Securities Under Equity Compensation Plans We do not have any securities authorized for issuance under any equity compensation plans. Certain Beneficial Owners The following table lists the beneficial ownership by our management and each person or group known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the 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 39,050,000 shares of common stock outstanding as of September 6, 2005. CERTAIN BENEFICIAL OWNERS ------------------------ Name and address of Amount and nature Percentage beneficial owner Title of class of beneficial ownership of class - -------------------- ---------------- ----------------------- --------- VIP Worldnet, Inc. Common 15,036,621 (1) 38.5% 154 E. Ford Avenue Salt Lake City, Utah 84115 21 (1) 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, owns 28,597 shares and Wayne Reichman, Secretary, owns 8,024 shares. MANAGEMENT ---------- Name and Address of Amount and nature Percentage Beneficial Owner Title of class of beneficial ownership of class - ------------------------ -------------- ----------------------- ---------- John W. Peters Common 7,500,200 19.2% 2554 West 4985 South Taylorsville, UT 84118 April L. Marino Common 400 Less than 1% #584, 3353 S. Main Street, Salt Lake City, UT 84115 All directors and executive Common 7,500,600 19.2% officers as a group (2) Represents 7,500,000 common shares owned by Mr. Peters and 200 shares owned by his spouse. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS We have not entered into or proposed any transactions during the last two years in which a director, executive officer or more than 5% shareholder had a material direct or indirect interest. ITEM 13. EXHIBITS Exhibits 2.1 Agreement and Plan of Reorganization between Suncrest Global and Coyote Oil, dated June 10, 2003 (Incorporated by reference to exhibit 2.1 of Form 8-K, as amended, filed June 16, 2003) 3.1 Restated Articles of Incorporation (Incorporated by reference to exhibit 3.1 of Form 10-KSB, filed October 15, 2003) 3.2 Restated bylaws of Suncrest Global (Incorporated by reference to exhibit 3.2 of Form 10-KSB, filed October 15, 2003) 31.1 Principal Executive Officer Certification 31.2 Principal Financial Officer Certification 32.1 Section 1350 Certification ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Accountant Fees The following table presents the aggregate fees billed for each of the last two fiscal years by our principal accountants, Chisholm, Bierwolf and Nilson, LLC and Chisholm & Associates, in connection with the audit of our financial statements and other professional services rendered by those firms. 22 2005 2004 -------- -------- Audit fees $ 7,785 $ 7,260 Audit-related fees 0 0 Tax fees 0 0 All other fees $ 285 $ 0 Audit fees represent the professional services rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports, along with services normally provided by the accountant in connection with statutory and regulatory filings or engagements. Audit-related fees represent professional services rendered for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees. Tax fees represent professional services rendered by the principal accountant for tax compliance, tax advise, and tax planning. All other fees represent fees billed for products and services provided by the principal accountant, other than the services reported for the other categories. Audit Committee Pre-approval Policies We do not have an audit committee currently serving, and as a result, our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SUNCREST GLOBAL ENERGY CORP. /s/ John W. Peters Date: September 27, 2005 By: _______________________________________ John W. Peters, President In accordance with the Exchange Act this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ John W. Peters Date: September 27, 2005 By: __________________________________________ John W. Peters President, Principal Executive Officer, Principal Financial and Accounting Officer and Director /s/ April L. Marino Date: September 27, 2005 By: __________________________________________ April L. Marino, Secretary/Treasurer and Director 23