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 June 30, 2000
Commission File Number 0001082562
SOFTWALL EQUIPMENT CORPORATION
(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
(Address of principal executive offices)
Registrant's telephone number
including area code (801) 572-4724
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
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
14,142,000
(Number of shares of common
stock the registrant had
outstanding as of August 18, 2000)
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 June 30, 2000 and the results of its operations and changes
in its financial position from December 31, 1999 through June 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.
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Balance Sheets
ASSETS
June 30, December 31,
2000 1999
Curent Assets
Cash 9488 3222
Total Current Assets 9488 3222
Property Plant and Equipment-(net)
(Note 3) 22818 11979
Other Assets
Patent (Note 4)
Total Assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable 41527 7541
Interest Payable 691 197
Taxes Payable - 100
Note Payable 12179 6329
Current Liabilities 691 7,541
Stockholders' Equity -
Common Stock, authorized
50,000,000 12,179
shares of $.001 par value, 100
isssued and
outstanding 14,142,000 and 54,397 1550987
respectively 6,329
Additional Paid in Capital
Deficit Accumulated During
the 14,167
Development Stage
Total Stockholders' Equity
Total Liabilities and
Stockholders' Equity
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Statements of Operations
For the Period
For the Three For the Six From October
Months Ended Months Ended 1998 (inception)
June 30, June 30, to June 30
2000 1999 2000 1999 2000
Revenues:
$ $ - $ $
Expenses: - $ - -
-
General and administrative
Depreciation expense
Interest expense
2,031 1,084
Total Expenses 7,02 2,022 21,186 - 51,928
4,278
867 1,502 691
Other Gains and (Losses) 764 494
Gain on Sale of Equipment - 3,115 56,897
Net (Loss) Before Taxes 454
Taxes 2,88923,182
8,247
Net Income (Loss) - 50
Net (Loss) Per Share - $ (3,115)$ (56,847)
50 50 200
Weighted average $ (2,889) - $ (57,047)
shares $ (8,197) $ (23,132)
outstanding - $ (3,115)
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Statement of Cash Flows
For the Six For thePeriod From
Months Ended October 5, 1998
June 30, (inception) to
2000 1999 June 30, 2000
Cash Flows from Operating
Activities
Net (Loss)
Adjustments to
reconcile net income
to net cash
provided by $ (57,047)
operating
activities: $(3,115)
Add depreciation expense
Stock for Services/Expenses
Gain on Sale of Equipment
(Increase)Decrease
in Accounts
Net (used) by
operating activities
Cash Flows from $(23,132)
Investing
Activities:
Purchase of Fixed Assets
Purchase of Patent
Sale of Equipment
Net cash flows provided
(used) by
Investing activities
Cash Flows from
Financing
Activities:
Cash from stock sales
Cash from Notes
cash flows provided 1,502
financing activities - -
increase (decrease)
in cash (8,361)
Cash, beginning of period
Cash, end of period (50) (22,557)
Supplementary Cash Flow Information:
Cash Paid for:
Interest $ - $ - $ -
Taxes $ 100 $ -
$ 100
Stock issued for Assets $ - $ -
$ 13,000
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Notes to the Financial Statements
June 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.
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Notes to the Financial Statements
June 30, 2000
NOTE 1 - Summary of Significant Accounting Policies (continued)
Deferred tax assets and the valuation account at June 30, 2000 is as
follows:
Deferred tax asset:
NOL carryforward $ 6,000
Valuation allowance $ (6,000)
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:
June 30, December 31,
2000 1999
Generator - SW2 $ 525 $ -
Additional Parts - SW2 11,816 -
Computer 1,755 1,755
Vehicle 13,000 13,000
Total property, plant and
equipment 27,096 14,755
Less: accumulated
depreciation (4,278) (2,776)
Net Property, Plant and
Equipment $ 22,818 $ 11,979
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 June 30, 2000. During the period ending
June 30,2000, the Company acquired a water-tank trailer. During the same
period, the trailer was sold with a gain of $50.
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.
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Notes to the Financial Statements
June 30, 2000
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 Chairma n 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 and $5,100 during the
period ended June 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 June 30, 2000 is
$12,870.
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 11,429
Total Notes Payable - Related Party
$ 11,429
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.
On May 8, 2000, the Company issued 7,000 shares of common stock at par
value for services rendered in production of the SW2 Prototype.
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
compensation s 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 Peterson has been working on
behalf of the Company since inception without pay but has now started billing
on an hourly rate for any time consulting for the further development of the
prototypes belonging to the Company. The Company has not signed any
agreement or long tem contract for Mr. Peterson's compensation arrangement and
will only be paid when funds are available. In the future, the compensation
could come in the form of stock, as the board of directors and Mr. Peterson
agree.
IMC Agrico has donnated funds to BYU for the continuing development of the
technology and Peterson has contributed (currently billable) his professional
time to that as well.
Listed in order of priority, future capital funding will come from debt
financing and additional equity funding 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. The Company maintains minimal corporate activity and
has expended funds for general and administrative expenses as needed.
The Company reported a net loss of $(8,197) as compared to a loss for the
three months of 1999 of $(2,889). The Company had no revenue for any time
period and expects no income in the near future.
Plan of Operations. Business plans call for a demonstration of commercially
viable prototypes in both the Softwall and SACUM Business areas.
Softwall
A continuation of prototyping and shop and field-testing is planned at Brigham
Young University's College of Technology in partnership with IMC Agrico.
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 has
improved the RBS enclosure and forepoling of the FSC is complete. During
the second quarter of 2000, the company acquired ancillary equipment such as
pumps, motors, generators, and tanks to facilitate routine demonstration of
the SW2 prototype. This will permit us to demonstrate its operation for
customers and clients at various mining locations. By agreement, the SW2
prototype will be operated, tested, and demonstrated by IMC Agrico during the
six months of the winter in Florida. The other six months of the summer, the
prototype will be tested in Utah by the Company. After field testing, the
SW2 prototype will be sandblasted and painted for the International Mine
Expo 2000 trade show in Las Vegas scheduled for October 2000. Plans are to
show a video of the machine in a successful field test. The SW2 prototype
will be publicized in two trade journals in the next couple of months.
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. The scale
model will be on display at the Mine Expo 2000 along with technical
information and publications to illustrate the productive and labor saving
components of operating cost savings over conventional underground conveyors.
The SACUM Conveyor will also be featured in an upcoming trade journal.
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 Reoirts Form 8K None
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned authorized officer.
Dated August 18,2000
Softwall Equipment Corporation
/s/ Randall Peterson
