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 March 31, 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
14,135,000
(Number of shares of common
stock the registrant had
outstanding as of May 10, 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 March 31, 2000 and the results of its operations and changes
in its financial position from December 31, 1999 through March 31, 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.
To the Board of Directors and Stockholders of
Softwall Equipment Corporation
Salt Lake City, Utah
We have reviewed the accompanying balance sheet of Softwall Equipment
Corporation as of March 31, 2000 and the related income and cash flow
statements for the three month period then ended. These financial
statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 1999, and the related
statements of income, stockholders' equity, and cash flows for the year then
ended; and in our report dated April 5, 2000, we expressed an unqualified
opinion on those financial statements.
The accompanying statements of operations and cash flows for the period ended
March 31, 1999 were not audited or reviewed by us and, accordingly, we do not
express an opinion on them.
Crouch, Bierwolf & Chisholm
May 19, 2000
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Balance Sheets
ASSETS
March 31, December 31,
Current Assets
Cash
2000 1999
Accounts receivable
Total Current Assets
(Reviewed) (Audited)
Property Plant and Equipment-(net)
(Note 3)
Other Assets
Patent (Note 4) $124
Total Assets 3,222
13,525
- 13,649
3,222 11,766
11,979 8,511
8,511 33,926
23,712
Accounts Payable
Interest Payable
Taxes Payable
Note Payable
$ 28,200
Total Current Liabilities $
237 7,541
Stockholders' Equity -
197
Common Stock, authorized
50,000,000
10,879
shares of $.001 par value, 100
issued and
outstanding 14,135,000 respectively 39,316
Additional Paid in Capital
6,329
Deficit Accumulated During
the
Development Stage 14,167
Total Stockholders' Equity
Total Liabilities and
Stockholders' Equity
14,135
29,325
14,135
(5,390)
29,325
$
33,926
(33,915)
9,545
$
23,712
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Statements of Operations
For the Three For the Period From
Months Ended October 5, 1998
March 31, (inception) to
March 31, 2000
(Unaudited) $
2000 1999 -
Revenues:
Reviewed) $-
(Unaudited) $-
Expenses:
General and administrativeDepreciation expense 45,099
Interest expense
Total Expenses 14,157 9
Net (Loss) 738 217
3,514
Net (Loss) Per Share 40 -
Weighted average
shares 14,935 226
outstanding $ (14,935)
$ $ (226)
- $ 237
-
14,135,000 1,675,000
$ (48,850)
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Statement of Cash Flows
For the Three For the Period From
Months Ended October 5, 1998
March 31, (inception) to
March
31, 2000
Cash
Flows from Operating 1999
Activities
(Unaudited)
2000
(Unaudited)
Net (Loss)
Adjustments to
reconcile net income
(Reviewed)
to net cash provided
by operating $ (48,850)
activities:
Add depreciation expense
$(226)
Stock for Services/Expenses
(Increase)Decrease
in Accounts
Receivable
Inc (Dec) in
Accounts Payable
Net cash flows provided
(used) by
operating activities 3,514
217
Cash
Flows from Investing
5,010
Activities: $(14,935)
-
Purchase of Fixed Assets
(13,525)
Purchase of Patent
-
Net cash flows provided
(used) by 28,437
Investing activities
-
Cash
Flows from Financing
Activities:
(25,414)
Cash from stock sales (9)
Cash from Notes
Net cash flows provided
(used) by
financing activities
Net
increase (decrease)
in cash (2,280)
-
Cash, beginning of period (8,511)
738
-
Cash, end of period
-
(10,791)
-
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
March 31, 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
March 31, 2000
NOTE 1 - Summary of Significant Accounting Policies (continued)
Deferred tax assets and the valuation account at March 31, 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:
March 31, December 31,
2000 1999
Generator - SW2 $ 525 $ -
Computer 1,755 1,755
Vehicle 13,000 13,000
Total property, plant and equipment 15,280 14,755
Less: accumulated depreciation (3,514) (2,776)
Net Property, Plant and Equipment $ 11,766 $ 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 $738 for
the three months ended March 31, 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.
SOFTWALL EQUIPMENT CORPORATION
(a Development Stage Company)
Notes to the Financial Statements
March 31, 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 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. 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
March 31, 2000 is $6,526.
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 6,329
Total Notes Payable - Related Party
$ 6,329
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.
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 Agrico has donnated 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 1999, the Company raised $30,000 in a
private placement which provided enough funds for only minimal operations.
The Company expended approximately $23,000 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 $(14,935) as compared to a loss for
the three months of 1999 of $(226). 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.
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 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 is also
underway to improve the RBS enclosure and forepoling of the FSC. During the
second 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 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.
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. Video
animation is also in development process. All 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.
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
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 May 19, 2000
