<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
Of the Securities Exchange Act of 1934
For Quarter Ended September 30, 2000
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Commission File Number 0001082562
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SOFTWALL EQUIPMENT CORPORATION
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(Exact name of registrant as specified in its charter)
UTAH 87-06254752
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11602 Colchester Drive
SANDY, UTAH 84092
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(Address of principal executive offices)
Registrant's telephone number
including area code (801) 572-4724
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Former Address, if changed since last report
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 such shorter period that the
registrant was required to file such reports)
Yes X No
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and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
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14,142,000
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(Number of shares of common
stock the registrant had
outstand ing as of August 17, 2000)
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<PAGE>
PART 1
ITEM 1 - FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared
by the Company, pursuant to the rules and regulations of the Securities and
Exchange Commission.
In the opinion of the Company, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial
position of the Company as of September 30, 2000 and the results of its
operations and changes in its financial position from December 31, 1999
through September 30, 2000 have been made. The results of its operations
for such interim period is not necessarily indicative of the results to be
expected for the entire year.
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Softwall Equipment Corporation
(a Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
September December
30, 2000 31, 1999
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<S> <C> <C>
Current Assets
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Cash $ 12,374 $ 3,222
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Total Current Assets 12,374 3,222
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Property, Plant and Equipment - (net) (Note 3) 10,993 11,979
--------------------------------------------- ------------ ------------
Other Assets
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Patent (Note 4) 26,511 8,511
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Total Assets $ 49,878 $ 23,712
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
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Accounts Payable $ 20,971 $ 7,541
Interest Payable 1,648 197
Taxes Payable - 100
Note Payable 62,179 6,329
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Total Current Liabilities 84,798 14,167
Stockholders' Equity
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Common Stock, authorized 50,000,000
shares of $.001 par value, issued and
outstanding 14,142,000 respectively 14,142 14,135
Additional Paid In Capital 29,325 29,325
Deficit Accumulated During the
Development Stage (78,387) (33,915)
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Total Stockholders' Equity (34,920) 9,545
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Total Liabilities and Stockholders' Equity $ 49,878 $ 23,712
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
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Softwall Equipment Corporation
(a Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
For the
Period From
October 1998
For the Three For the Nine (Inception)
Months Ended Months Ended to
September September September September September
30, 2000 30, 1999 30, 2000 30, 1999 30, 2000
<S> <C> <C> <C> <C> <C>
----------- ----------- ----------- ----------- -----------
Revenues: $ - $ - $ - $ - $ -
Expenses:
General and administrative 1,727 2,700 26,226 4,731 56,968
Depreciation expense 2,412 765 3,323 1,849 6,099
Research & Development 4,428 - 13,522 - 13,522
Interest expense 957 - 1,451 - 1,648
----------- ----------- ----------- ----------- -----------
Total Expenses 9,524 3,465 44,522 6,580 78,237
----------- ----------- ----------- ----------- -----------
Other Gains and (Losses):
Gain on Sale of Equipment - - 50 - 50
Net (Loss) before taxes (9,524) (3,465) (44,472) (6,580) (78,187)
Taxes - - - - 200
----------- ----------- ----------- ----------- -----------
Net (Loss) $ (9,524) $ (3,465) $ (44,472) $ (6,580) $ (78,387)
=========== =========== =========== =========== ===========
Net (Loss) Per Shaer $ - $ - $ - $ -
=========== =========== =========== ===========
Weighted average shares
outstanding 14,142,000 7,459,250 14,137,757 5,266,852
=========== =========== =========== ===========
</TABLE>
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<PAGE>
<PAGE> Softwall Equipment Corporation
(a Development Stage Company)
Statement of Cash Flows
<TABLE>
<CAPTION>
For the
Period From
October
5, 1998
For the Nine (inception)
Months Ended to
September September
30, 2000 30, 1999 30, 1999
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows from Operating
Activities
Net (Loss) $ (44,472) $ (6,580) $ (78,387)
Adjustments to reconcile net income
to net cash provided by operating
activities;
Add depreciation expense 3,914 1,849 6,690
Stock for Services/Expenses 7 - 5,017
(Increase) Decrease in Accounts
Payable 14,781 (100) 22,619
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Net cash flows provided
(used) by operating activities (25,770) (4,831) (44,061)
Cash Flows from Investing
Activities:
Purchased of Fixed Assets (3,078) (2,285) (4,833)
Patent Costs (18,000) (16,799) (18,000)
Sale of Equipment 200 - (8,311)
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Net cash flows provided
(used) by investing activities (20,878) (19,084) (31,144)
Cash Flows from Financing
Activities:
Cash from Stock Sales 55,850 22,657 25,450
Cash from Notes - 2,500 60,879
Loss on Sale of Equipment (50) - (50)
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Net cash flows provided
(used) by financing activities 55,800 25,157 87,579
Net increase (decrease) in cash 9,152 1,242 12,374
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Cash, beginning of period 3,222 150 -
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Cash, end of period $ 12,374 $ 1,392 $ 12,374
========== ========== ==========
Supplementary Cash Flow Information:
Cash Paid for:
Interest $ - $ - $ -
Taxes $ 100 $ 100 $ 200
Stock issued for Assets $ - $ - $ 13,000
</TABLE>
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<PAGE>
Softwall Equipment Corporation
(a Development Stage Company)
Notes to the Financial Statements
September 30, 2000
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Softwall Equipment Corporation (the "Company") was incorporated
under the laws of the State of Utah on October 5, 1998 for the
purpose of manufacturing mining equipment. The Company has yet to
begin operations and generate revenue.
The Company is in the development stage according to Financial
Accounting Standards Board Statement No. 7
b. Accounting Method
The Company recognizes income and expense on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings (loss) per share of common stock is
based on the weighted average number of shares outstanding at the date
of the financial statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less to be cash equivalents.
e. Provision for Income Taxes
The Company adopted Statement of Financial Standards No. 109
"Accounting for Income Taxes" for the current fiscal year.
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" requires an asset and liability approach for
financial accounting and reporting for income tax purposes. This
statement recognizes (a) the amount of taxes payable or refundable for
the current year and (b) deferred tax liabilities and assets for
future tax consequences of events that have been recognized in the
financial statements or tax returns.
Deferred income taxes result from temporary differences in the
recognition of accounting transactions for tax and financial reporting
purposes. There were no temporary differences for the current year
accordingly, no deferred tax liabilities have been recognized.
No provision for income taxes has been recorded due to net
operating loss carryforward totaling approximately $30,000 that will
be offset against future taxable income. The NOL carryforward begins
to expire in the year 2014. No tax benefit has been reported in the
financial statements.
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<PAGE>
Softwall Equipment Corporation
(a Development Stage Company)
Notes to the Financial Statements
September 30, 2000
NOTE 1 - Summary of Significant Accounting Policies (continued)
Deferred tax assets and the valuation account at December 31, 1999 is
as follows:
Deferred tax asset:
NOL carryforward $ 6,000
Valuation allowance $ (6,000)
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Total $ -
f. 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
time of the financial statements and revenues and expenses during the
reporting period. In these financial statements, assets involve
reliance on management's estimates.
NOTE 2 - Development Stage Company
The Company is a development stage company as defined in Financial
Standards Board Statement No. 7. It is concentrating substantially
all of its efforts in raising capital and developing its business
operations in order to generate significant revenues.
NOTE 3 - Property, Plant and Equipment
Property, plant and equipment are stated at cost. Major renewals
and betterments are capitalized while expenditures for maintenance and
repairs are charged to operations as incurred.
Property, Plant and Equipment consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
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<S> <C> <C>
Generator - SW2 $ 525 $ -
Computer 1,755 1,755
Trailer 2,403 -
Vehicle 13,000 13,000
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Total property, plant and equipment 17,683 14,755
Less: accumulated depreciation (6,690) (2,776)
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Net Property, Plant and Equipment $ 10,993 $ 11,979
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</TABLE>
Depreciation - The cost of the equipment will be depreciated
using the straight-line method. The depreciation periods are
prescribed based on the type of property. The vehicle and computer
will be depreciated over the property's estimated useful life of 5
years. Depreciation expense is $764 for the three months ended
September 30, 2000.
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<PAGE>
Softwall Equipment Corporation
(a Development Stage Company)
Notes to the Financial Statements
September 30, 2000
NOTE 4 - Patent
The Company has capitalized all legal costs to file for the SACUM
(Surface Assisted Continuous Underground Mining Conveyor) patent. The
SACUM patent will be amortized over 15 years, commencing in the year
it becomes operational.
NOTE 5 - Related Party Transactions
The Company's President, and Chairman of the board, Randall
Peterson, contributed a vehicle at his cost of $13,000 and $200 cash
to the Company for 8,125,000 shares of the Company's common stock.
The Company's Vice President, and Director, Roger Brockbank, sold
his 1/2 interest in a patent to the Company for $14,700. The
Company's President, and Chairman of the board, Randall Peterson,
contributed 1/2 interest in a patent at his cost of $5,010 to the
Company for 5,010,000 shares of common stock.
Morning Star Investments, a shareholder in the Company, loaned
the Company $6,329 during the period ended December 31, 1999, $5,100
during the period ended June 30, 2000, and $50,000 during the period
ended September 30, 2000. The remaining balance was provided by Sue
and Shawn Fletcher in the amount of $750. The Company has not made
any payments toward the loan. The note is interest bearing at 7% per
annum and is payable on demand. The principal and accrued interest
balance at September 30, 2000 is $63,827.
NOTE 6 - Note Payable Related Party
Notes payable - related party are as follows:
Note payable to Morning Star Investments,
a shareholder of the Company, accruing
interest at a rate of 7% per year, payable on
demand, unsecured 61,429
Total Notes Payable - Related Party $ 61,429
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NOTE 7 - Common Stock Transactions
During 1999, the Company sold 1,000,000 shares of common stock in a
private placement at $.03 per share ($30,000).
During 1999, the stockholders of the Company approved a 5 for 1
forward split of its common stock. The financial statements have been
restated to reflect the forward split.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES. The Company does not pay rent, has no
ongoing compensations costs, or any other long term or ongoing business
overhead commitments.
In its initial offering the company issued a limited amount of stock
to cover some start-up and business expenses. Randall D. Peterson has been
working on behalf of the company since its inception without pay and has
contributed his professional time on its behalf as it has been available.
Peterson has done this with the expectation that at some point in the
future the Company will have the funds to pay him for his professional time
at rates reasonable for a person with his education and experience in
either stock or cash or a combination of the two. Peterson has been
careful to not incur company expenses when there have not ben sufficient
funds to cover them. He has done this by operating the company business
from his consulting office in his home. Again he expects that eventually
the company will be in a position where it can pay him a reasonable fee for
the use of his office.
IMC Phosphates has donated funds to BYU for the continuing development
of the technology and Peterson has contributed his professional time to
that as well.
Listed in order of priority, future capital funding will come from
government grants, debt financing, and additional offerings. Peterson
intends to combine his consulting practice as part of the company when the
company is in a financial position to pay him a salary.
Once the technology is fully tested and demonstrated to the mining
industry and as opportunities allow, the Company may enter into a long term
joint venture with an existing manufacturing company already established in
the mining industry or with an existing mining company or that it may
acquire mineral properties or leases of its own to operate at a profit.
RESULTS OF OPERATION. During the third quarter 2000, the Company
raised $50,000 through a loan from a private party which provided enough
funds for only minimal operations and pay old outstanding payables. During
the quarter, the Company expended approximately $18,000 for legal fees,
patent applications fees, and acquisition costs to secure the patent on the
SACUM (Surface Assisted Continuous Underground Mining Conveyor). Other
than the patent costs, the Company maintained minimal corporate activity
and expended funds in general and administrative expenses, mostly
professional fees, consulting fees, and office expense.
The Company reported a net loss of $(44,472) as compared to a loss for
the nine months of 1999 of $(6,580). The Company had no revenue for any
time period and expects no income in the near future.
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<PAGE>
PLAN OF OPERATIONS. Business plans call for a demonstration of
commercially viable prototypes in both the Softwall and SACUM Business
areas. Application for government grant funding is in process for both
mining systems.
SOFTWALL
A continuation of prototyping and shop and field-testing is planned at
Brigham Young University's College of Technology in partnership with IMC
Phosphates. Initial shop testing has proven the SW2's ability to walk
across the shop floor. Initial field-testing has also proven the FSC
sluicing displacement concept, which is discussed in the original patent
application. Further testing, adjustment, improvement of hydraulic valve
and water valve configurations are being studied and incorporated into the
SW2 prototype preparatory to a second field test. Additional steel
fabrication is also underway to improve the RBS enclosure and forepoling of
the FSC. During the third quarter of 2000, the company plans to acquire
ancillary equipment such as pumps, motors, generators, tanks, winches, jib
lifts etc. to facilitate routine demonstration of the SW2 prototype. This
will permit us to demonstrate its operation for customers and clients at
various mining locations. After field testing, the SW2 prototype was
sandblasted and painted for the International Mine Expo 2000 trade show in
Las Vegas that occurred in October 2000.
SACUM CONVEYOR
The first section of the SACUM Conveyor system has been built at BYU and a
bench scale model has been built to demonstrate its application. In
October at Mine Expo 2000, the bench model was displayed along with
technical information and publications to illustrate the productive and
labor saving components of operating cost savings over conventional
underground conveyors.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. None
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SIGNATURES
Pursuant to 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 authorized officer.
Dated November 10, 2000 Softwall Equipment Corporation
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