U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
SHALLBETTER INDUSTRIES, INC.
(Name of Small Business Issuer in its charter)
Minnesota 41-1961936
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
11900 Wayzata Blvd., Suite 100, Hopkins, MN 55305
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (612) 541-1155
Securities to be registered under Section 12(b) of the Act:
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.01
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I
1. Description of Business 3
2. Management's Discussion and Analysis or Plan of 7
Operations
3. Description of Properties 8
4. Security Ownership of Certain Beneficial Owners and 8
Management
5. Directors, Executive Officers, Promoters and Control 9
Persons
6. Executive Compensation 10
7. Certain Relationships and Related Transactions 10
8. Description of Securities 10
Part II
1. Market Price of and Dividends on the Registrant's 11
Common Equity and Related Stockholder Matters
2. Legal Proceedings 11
3. Changes in and Disagreements with Accountants 11
4. Recent Sales of Unregistered Securities 11
5. Indemnification of Directors and Officers 11
Part F/S Financial Statements 15
Part III
1. Index to Exhibits 15
2. Description of Exhibits 15
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
Shallbetter Industries, Inc. (the "Company") was formed as a
Minnesota corporation on September 18, 1968, for the purpose of
designing, manufacturing, and marketing low and medium voltage
electrical power distribution equipment. In February of 1969,
the Company completed an Intrastate Minnesota public offering and
sold 100,000 shares of its common stock to the public at $2.50
per share.
Through the 1970's, the Company expanded its operations, so that
it was offering nationally pre-engineered electrical products
through catalogs to wholesale electrical supply houses. Annual
sales for the company were historically in the $1.0 to $2.0
million range. In early 1982, due to recession and financial
losses at the Company, the Company's bank withdrew the Company's
line of credit. Consequently, the Company filed for chapter 11
protection from its creditors in April 1982. The bankruptcy
action converted to chapter 7 and the Company's assets were
liquidated in June of 1982. The Company then ceased operations
and been inactive since.
On December 9, 1999, the sole remaining officer and director of
the Company resigned his positions following the appointment of
Craig Laughlin to the Board of Directors. Mr. Laughlin has
undertaken to prepare the Company to seek a new business venture
in which to participate.
At a special meeting of stockholders held on December 29, 1999,
the following actions were taken:
* Elected Craig Laughlin the sole director of the Issuer.
* Appointed an independent auditor
* Adopted Amended and Restated Articles of Incorporation
* Adopted new Corporate By-Laws
General
The Company is seeking a favorable business opportunity to
acquire. The Company has not entered into any agreement, nor
does it have any commitment or understanding to enter into or
become engaged in a transaction as of the date of this filing.
The Company continues to investigate, review, and evaluate
business opportunities as they become available and will seek to
acquire or become engaged in business opportunities at such time
as specific opportunities warrant. The Company cannot now
predict what type of business it may enter into or acquire. It
is emphasized that the business objectives discussed herein are
extremely general and are not intended to be restrictive on the
discretion of the Company's management.
It is anticipated that business opportunities will be identified
for the Company through its officers and directors and through
professional advisors including securities broker-dealers and
through members of the financial community. To a large extent, a
decision to participate in a specific business opportunity may be
made upon management's analysis regarding the quality of the
other firm's management and personnel, the asset base of such
firm or enterprise, the anticipated acceptability of new products
or marketing concepts, the merit of the firm's business plan, and
numerous other factors which are difficult, if not impossible, to
analyze through the application of any objective criteria.
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There are no plans or arrangements proposed or under
consideration for the issuance or sale of additional securities
by the Company prior to the identification of an acquisition
candidate. Consequently, management anticipates that it may be
able to participate in only one potential business venture, due
primarily to the Company's limited capital. This lack of
diversification should be considered a substantial risk, because
it will not permit the Company to offset potential losses from
one venture against gains from another.
Selection of a Business
The Company anticipates that businesses for possible acquisition
will be referred by various sources, including its officers and
directors, professional advisors, securities broker-dealers,
venture capitalists, members of the financial community, and
others who may present unsolicited proposals. The Company will
not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its
officers and directors and their affiliates, as well as indirect
associations between them and other business and professional
people. By relying on "word of mouth", the Company may be
limited in the number of potential acquisitions it can identify.
While it is not presently anticipated that the Company will
engage unaffiliated professional firms specializing in business
acquisitions or reorganizations, such firms may be retained if
management deems it in the best interest of the Company.
Compensation to a finder or business acquisition firm may take
various forms, including one-time cash payments, payments based
on a percentage of revenues or product sales volume, payments
involving issuance of securities (including those of the
Company), or any combination of these or other compensation
arrangements. Consequently, the Company is currently unable to
predict the cost of utilizing such services.
The Company will not restrict its search to any particular
business, industry, or geographical location, and management
reserves the right to evaluate and enter into any type of
business in any location. The Company may participate in a newly
organized business venture or a more established company entering
a new phase of growth or in need of additional capital to
overcome existing financial problems. Participation in a new
business venture entails greater risks since in many instances
management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will
likely not be established, and the profitability of the venture
will be unproved and cannot be predicted accurately. If the
Company participates in a more established firm with existing
financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to
eliminate or reverse the circumstances leading to such financial
problems.
In seeking a business venture, the decision of management will
not be controlled by an attempt to take advantage of any
anticipated or perceived appeal of a specific industry,
management group, product, or industry, but will be based on the
business objective of seeking long-term capital appreciation in
the real value of the Company.
The analysis of new businesses will be undertaken by or under the
supervision of the officers and directors. In analyzing
prospective businesses, management will consider, to the extent
applicable, the available technical, financial, and managerial
resources; working capital and other prospects for the future;
the nature of present and expected competition; the quality and
experience of management services which may be available and the
depth of that management; the potential for further research,
development, or exploration; the potential for growth and
expansion; the potential for profit; the perceived public
recognition or acceptance of products, services, or trade or
service marks; name identification; and other relevant factors.
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The decision to participate in a specific business may be based
on management's analysis of the quality of the other firm's
management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological
changes, and other factors which are difficult, if not
impossible, to analyze through any objective criteria. It is
anticipated that the results of operations of a specific firm may
not necessarily be indicative of the potential for the future
because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change
or substantially augment management, and other factors.
The Company will analyze all available factors and make a
determination based on a composite of available facts, without
reliance on any single factor. The period within which the
Company may participate in a business cannot be predicted and
will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for
the Company to complete its investigation and analysis of
prospective businesses, the time required to prepare appropriate
documents and agreements providing for the Company's
participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, or other reorganization with another corporation
or entity; joint venture; license; purchase and sale of assets;
or purchase and sale of stock, the exact nature of which cannot
now be predicted. Notwithstanding the above, the Company does
not intend to participate in a business through the purchase of
minority stock positions. On the consummation of a transaction,
it is likely that the present management and shareholders of the
Company will not be in control of the Company. In addition, a
majority or all of the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by
new directors without a vote of the Company's shareholders.
In connection with the Company's acquisition of a business, the
present shareholders of the Company, including officers and
directors, may, as a negotiated element of the acquisition, sell
a portion or all of the Company's Common Stock held by them at a
significant premium over their original investment in the
Company. As a result of such sales, affiliates of the entity
participating in the business reorganization with the Company
would acquire a higher percentage of equity ownership in the
Company. Management does not intend to actively negotiate for or
otherwise require the purchase of all or any portion of its stock
as a condition to or in connection with any proposed merger or
acquisition. Although the Company's present shareholders did not
acquire their shares of Common Stock with a view towards any
subsequent sale in connection with a business reorganization, it
is not unusual for affiliates of the entity participating in the
reorganization to negotiate to purchase shares held by the
present shareholders in order to reduce the amount of shares held
by persons no longer affiliated with the Company and thereby
reduce the potential adverse impact on the public market in the
Company's common stock that could result from substantial sales
of such shares after the business reorganization. Public
investors will not receive any portion of the premium that may be
paid in the foregoing circumstances. Furthermore, the Company's
shareholders may not be afforded an opportunity to approve or
consent to any particular stock buy-out transaction.
In the event sales of shares by present shareholders of the
Company, including officers and directors, is a negotiated
element of a future acquisition, a conflict of interest may arise
because directors will be negotiating for the acquisition on
behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited
for acquisition by the Company, but affiliates of the business
opportunity impose a condition that management sell their shares
at a price which is unacceptable
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to them, management may not sacrifice their financial interest
for the Company to complete the transaction. Where the business
opportunity is not well suited, but the price offered management
for their shares is high, Management will be tempted to effect
the acquisition to realize a substantial gain on their shares in
the Company. Management has not adopted any policy for resolving
the foregoing potential conflicts, should they arise, and does
not intend to obtain an independent appraisal to determine
whether any price that may be offered for their shares is fair.
Stockholders must rely, instead, on the obligation of management
to fulfill its fiduciary duty under state law to act in the best
interests of the Company and its stockholders.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance on exemptions from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Although the terms
of such registration rights and the number of securities, if any,
which may be registered cannot be predicted, it may be expected
that registration of securities by the Company in these
circumstances would entail substantial expense to the Company.
The issuance of substantial additional securities and their
potential sale into any trading market which may develop in the
Company's securities may have a depressive effect on such market.
While the actual terms of a transaction to which the Company may
be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to
structure the acquisition as a so-called "tax-free" event under
sections 351 or 368(a) of the Internal Revenue Code of 1986, (the
"Code"). In order to obtain tax-free treatment under section 351
of the Code, it would be necessary for the owners of the acquired
business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would
retain less than 20% of the issued and outstanding shares of the
surviving entity. Section 368(a)(1) of the Code provides for tax-
free treatment of certain business reorganizations between
corporate entities where one corporation is merged with or
acquires the securities or assets of another corporation.
Generally, the Company will be the acquiring corporation in such
a business reorganization, and the tax-free status of the
transaction will not depend on the issuance of any specific
amount of the Company's voting securities. It is not uncommon,
however, that as a negotiated element of a transaction completed
in reliance on section 368, the acquiring corporation issue
securities in such an amount that the shareholders of the
acquired corporation will hold 50% or more of the voting stock of
the surviving entity. Consequently, there is a substantial
possibility that the shareholders of the Company immediately
prior to the transaction would retain less than 50% of the issued
and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be
anticipated that stockholders immediately prior to the
transaction will experience a significant reduction in their
percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the
acquiring entity in the foregoing circumstances, generally
accepted accounting principles will ordinarily require that such
transaction be accounted for as if the Company had been acquired
by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the
other company.
The manner in which the Company participates in a business will
depend on the nature of the business, the respective needs and
desires of the Company and other parties, the management of the
business, and the relative negotiating strength of the Company
and such other management.
The Company will participate in a business only after the
negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted,
generally such agreements will require specific representations
and warranties by all of the parties thereto, will specify
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certain events of default, will detail the terms of closing and
the conditions which must be satisfied by each of the parties
prior to such closing, will outline the manner of bearing costs
if the transaction is not closed, will set forth remedies on
default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business
will be dependent on the nature of the business and the interest
acquired. The Company is unable to predict whether the Company
will be in control of the business or whether present management
will be in control of the Company following the acquisition. It
may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to
which the Company may be subject until it has acquired an
interest in a business. The use of assets and/or conduct of
businesses which the Company may acquire could subject it to
environmental, public health and safety, land use, trade, or
other governmental regulations and state or local taxation. In
selecting a business in which to acquire an interest, management
will endeavor to ascertain, to the extent of the limited
resources of the Company, the effects of such government
regulation on the prospective business of the Company. In
certain circumstances, however, such as the acquisition of an
interest in a new or start-up business activity, it may not be
possible to predict with any degree of accuracy the impact of
government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will
make the acquisition of an interest in such business a higher
risk.
Competition
The Company will be involved in intense competition with other
business entities, many of which will have a competitive edge
over the Company by virtue of their stronger financial resources
and prior experience in business. There is no assurance that the
Company will be successful in obtaining suitable investments.
Employees
The Company is a development stage company and currently has no
employees. The sole executive officer, who is not compensated
for his time contributed to the Company, will devote only such
time to the affairs of the Company as he deems appropriate, which
is estimated to be approximately 20 hours per month. Management
of the Company expects to use consultants, attorneys, and
accountants as necessary, and does not anticipate a need to
engage any full-time employees so long as it is seeking and
evaluating businesses. The need for employees and their
availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business
industry.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Results of Operations
The Company had no revenue for the six-month periods ended June
30, 2000 and 1999, and for the years ended December 31, 1999,
1998 and 1997.
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General and administrative expenses for the six months ended June
30, 2000, were $2,323, and the Company had no such expenses
during the corresponding period in 1999 or for the years ended
December 31, 1999, 1998 and 1997. General and administrative
expenses during the six-month period ended June 30, 2000,
consisted of fees and related expenses associated with reviving
the Company. The Company realized a net loss of $2,323 for the
first six months of 2000, and no net income or loss for the
corresponding period in 1999 or for the years ended December 31,
1999, 1998 and 1997.
The Company does not expect to generate any meaningful revenue or
incur operating expenses unless and until it acquires an interest
in an operating company.
Liquidity and Capital Resources
At June 30, 2000, the Company had working capital of $6,849 and a
retained deficit of $22,052. The working capital is the result
of the sale to Craig Laughlin of 1,000,000 shares of the
Company's common stock at $0.01 per share, or a total of$10,000.
The shares were purchased through a promissory note that was paid
in full in June 2000. Management believes the Company has
sufficient funds to meet its anticipated needs through the first
half of 2001.
The Company's need for capital may change dramatically if it
acquires an interest in a business opportunity during the next 12
months. The Company's current operating plan is to (i) handle
the administrative and reporting requirements of a public
company; and (ii) search for potential businesses, products,
technologies and companies for acquisition. At present, the
Company has no understandings, commitments or agreements with
respect to the acquisition of any business, product, technology
or company and there can be no assurance that the Company will
identify any such business, product, technology or company
suitable for acquisition in the future. Further, there can be no
assurance that the Company would be successful in consummating
any acquisition on favorable terms or that it will be able to
profitably manage the business, product, technology or company it
acquires.
ITEM 3. DESCRIPTION OF PROPERTIES
The Company uses offices at 11900 Wayzata Blvd., Suite 100,
Hopkins, MN 55305, provided by its sole officer and director at
no charge.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of July 31, 2000, the number
and percentage of the outstanding shares of common stock which,
according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director
of the Company, (ii) each executive officer, (iii) all current
directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the
beneficial owner of more than 5% of the outstanding common stock.
Except as otherwise indicated, the persons named in the table
have sole voting and dispositive power with respect to all shares
beneficially owned, subject to community property laws where
applicable.
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Common Percent
Shares of
Class(2)
Name and Address
Craig Laughlin (1) 1,000,000 83.5
11900 Wayzata Blvd., Suite 100
Hopkins, MN 55305
(1) Craig Laughlin is the sole executive officer and director of
the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Directors and Officers
The following table sets forth the names, ages, and positions
with the Company for the sole director and officer of the
Company.
Name Age Positions (1) Since
Craig Laughlin 50 President and Director 1999
All executive officers are elected by the Board and hold office
until the next Annual Meeting of stockholders and until their
successors are elected and qualify.
The following is information on the business experience of each
director and officer.
Craig Laughlin is the founder and President of SRC Funding, Inc.,
which structures venture capital financing for early stage
companies. Mr. Laughlin has been a consultant in the areas of
mergers, acquisitions, and early stage financing since 1986.
From May 1990 through July 2000, Mr. Laughlin served as a member
of the board of directors of Century Controls International,
Inc., a publicly held company engaged in the business of
designing, manufacturing, and marketing a line of proprietary
control devices used in the management of large commercial and
industrial steam boilers and of certain manufacturing processes.
Other Shell Company Activities
Mr. Laughlin is currently a director of Future Technologies,
Inc., a publicly held shell corporation seeking a business
acquisition. The possibility exists that Mr. Laughlin could
become an officer and/or director of other shell companies in the
future. Certain conflicts of interest are inherent in the
participation of the Company's sole officer and director as
management in other shell companies, which may be difficult, if
not impossible, to resolve in all cases in the best interests of
the Company. Failure by management to conduct the Company's
business in its best interests may result in liability of
management of the Company to the stockholders.
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ITEM 6. EXECUTIVE COMPENSATION
The Company has no agreement or understanding, express or
implied, with any officer, director, or principal stockholder, or
their affiliates or associates, regarding employment with the
Company or compensation for services. The Company has no plan,
agreement, or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates
or associates, regarding the issuance to such persons of any
shares of the Company's authorized and unissued common stock.
There is no understanding between the Company and any of its
present stockholders regarding the sale of a portion or all of
the common stock currently held by them in connection with any
future participation by the Company in a business. There are no
other plans, understandings, or arrangements whereby any of the
Company's officers, directors, or principal stockholders, or any
of their affiliates or associates, would receive funds, stock, or
other assets in connection with the Company's participation in a
business. No advances have been made or contemplated by the
Company to any of its officers, directors, or principal
stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan
or agreement in the future that would provide for cash or stock
based compensation for services rendered to the Company.
On acquisition of a business, it is possible that current
management will resign and be replaced by persons associated with
the business acquired, particularly if the Company participates
in a business by effecting a stock exchange, merger, or
consolidation as discussed under "Item 1. Business." In the
event that any member of current management remains after
effecting a business acquisition, that member's time commitment
and compensation will likely be adjusted based on the nature and
location of such business and the services required, which cannot
now be foreseen.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for the sale and purchase of the Company's common stock
described under Part II, Item 4. Recent Sales of Unregistered
Securities," there are no proposed transactions and no
transactions during the past two years to which the Company was a
party and in which any officer, director, or principal
stockholder, or their affiliates or associates, was also a party.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue 45,000,000 shares of common
stock, par value $0.01 per share, of which 1,197,285 shares are
issued and outstanding. Holders of common stock are entitled to
one vote per share on each matter submitted to a vote at any
meeting of stockholders. Shares of common stock do not carry
cumulative voting rights and, therefore, holders of a majority of
the outstanding shares of common stock will be able to elect the
entire board of directors, and, if they do so, minority
stockholders would not be able to elect any members to the board
of directors. The Company's board of directors has authority,
without action by the Company's stockholders, to issue all or any
portion of the authorized but unissued shares of common stock,
which would reduce the percentage ownership in the Company of its
stockholders and which may dilute the book value of the common
stock. Stockholders of the Company have no pre-emptive rights to
acquire additional shares of common stock. The common stock is
not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company,
the shares of common stock are entitled to share equally in
corporate assets after satisfaction of all liabilities. Holders
of common stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds
legally available for the payment of dividends. The Company has
not paid dividends on its common stock and does not anticipate
that it will pay dividends in the foreseeable future.
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The Company is authorized to issue 5,000,000 shares of preferred
stock, par value $0.01, none of which are issued and outstanding.
The Company currently has no plans to issue any preferred stock.
The Company's board of directors has authority, without action by
the stockholders, to issue all or any portion of the unissued
preferred stock in one or more series and to determine the voting
rights, preferences as to dividends and liquidation, conversion
rights and other rights of such series. The preferred stock, if
and when issued, may carry rights superior to those of the common
stock.
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
There is presently no established trading market for the
Company's common stock.
All shares of common stock outstanding may be sold without
restriction, except 1,000,000 shares, which are held by the sole
officer and director of the Company. After December 2000, shares
held by the sole officer and director may be sold subject to
complying with all of the terms and conditions of Rule 144.
Since its inception, no dividends have been paid on the Company's
common stock. The Company intends to retain any earnings for use
in its business activities, so it is not expected that any
dividends on the common stock will be declared and paid in the
foreseeable future.
At July 31, 2000, there were approximately 279 holders of record
of the Company's common stock.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings, and to the best of its knowledge, no such
proceedings by or against the Company have been threatened.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company did not engage an independent accountant from 1982
until December 1999, when it engaged S. W. Hatfield as its
independent accountant. There have been no disagreements with
the accountant for the Company since December 1999.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On December 29, 1999, the Company sold 1,000,000 shares of common
stock to Craig Laughlin, the sole officer and director of the
Company, for $10,000. No underwriter or broker was involved in
the offering, and no commissions were paid on the sale of the
shares. The shares were offered and sold in reliance on the
exemption set forth in Section 4(2) of the Securities Act of
1933.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's articles of incorporation provide the following:
A director of this corporation shall not be personally
liable to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director; except
for: (i) liability based on a breach of the duty of loyalty
to the corporation or the shareholders; (ii) liability for
acts or
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omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (iii) liability
based on the payment of an improper dividend or an improper
repurchase of the corporation's stock under Minnesota
Statutes, Section 302A.559, or on violations of federal or
state securities laws; (iv) liability for any transaction
from which the director derived an improper personal
benefit; or (v) liability for any act or omission prior to
the date this Article VI becomes effective. If Minnesota
statutes, Chapter 302A, hereafter is amended to authorize
the further elimination or limitation of the liability of
the directors, then the liability of a director of the
corporation, in addition to the limitation on personal
liability provided herein, shall be limited to the fullest
extent permitted by the amended Chapter 302A. Any repeal of
this provision as a matter of law or any modification of
this Article by the shareholders of the corporation shall be
prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the
corporation existing at the time of such repeal or
modification.
The Company's by-laws provide that the officers and directors
shall have rights to indemnification provided by Minnesota
statute. Section 302A.521 of the Minnesota Statutes provided as
follows:
Subdivision 1. Definitions. (a) For purposes of this
section, the terms defined in this subdivision have the
meanings given them.
(b) "Corporation" includes a domestic or foreign
corporation that was the predecessor of the corporation
referred to in this section in a merger or other transaction
in which the predecessor's existence ceased upon
consummation of the transaction.
(c) "Official capacity" means (1) with respect to a
director, the position of director in a corporation, (2)
with respect to a person other than a director, the
elective or appointive office or position held by an
officer, member of a committee of the board, or the
employment relationship undertaken by an employee of the
corporation, and (3) with respect to a director, officer, or
employee of the corporation who, while a director, officer,
or employee of the corporation, is or was serving at the
request of the corporation or whose duties in that position
involve or involved service as a director, officer, partner,
trustee, employee, or agent of another organization or
employee benefit plan, the position of that person as a
director, officer, partner, trustee, employee, or agent, as
the case may be, of the other organization or employee
benefit plan.
(d) "Proceeding" means a threatened, pending, or
completed civil, criminal, administrative, arbitration, or
investigative proceeding, including a proceeding by or in
the right of the corporation.
(e) "Special legal counsel" means counsel who has not
represented the corporation or a related organization, or a
director, officer, member of a committee of the board, or
employee, whose indemnification is in issue.
Subdivision 2. Indemnification mandatory; standard.
(a) Subject to the provisions of subdivision 4, a
corporation shall indemnify a person made or threatened to
be made a party to a proceeding by reason of the former or
present official capacity of the person against judgments,
penalties, fines, including, without limitation, excise
taxes assessed against the person with respect to an
employee benefit plan, settlements, and reasonable expenses,
including attorneys'
12
<PAGE>
fees and disbursements, incurred by the person in connection
with the proceeding, if, with respect to the acts or
omissions of the person complained of in the proceeding, the
person:
(1) Has not been indemnified by another organization
or employee benefit plan for the same judgments, penalties,
fines, including, without limitation, excise taxes assessed
against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorneys'
fees and disbursements, incurred by the person in connection
with the proceeding with respect to the same acts or
omissions;
(2) Acted in good faith;
(3) Received no improper personal benefit and section
302A.255, if applicable, has been satisfied;
(4) In the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and
(5) In the case of acts or omissions occurring in the
official capacity described in subdivision 1, paragraph (c),
clause (1) or (2), reasonably believed that the conduct was
in the best interests of the corporation, or in the case of
acts or omissions occurring in the official capacity
described in subdivision 1, paragraph (c), clause (3),
reasonably believed that the conduct was not opposed to the
best interests of the corporation. If the person's acts or
omissions complained of in the proceeding relate to conduct
as a director, officer, trustee, employee, or agent of an
employee benefit plan, the conduct is not considered to be
opposed to the best interests of the corporation if the
person reasonably believed that the conduct was in the best
interests of the participants or beneficiaries of the
employee benefit plan.
(b) The termination of a proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent does not, of itself, establish
that the person did not meet the criteria set forth in this
subdivision.
Subdivision 3. Advances. Subject to the provisions of
subdivision 4, if a person is made or threatened to be made
a party to a proceeding, the person is entitled, upon
written request to the corporation, to payment or
reimbursement by the corporation of reasonable expenses,
including attorneys' fees and disbursements, incurred by the
person in advance of the final disposition of the
proceeding, (a) upon receipt by the corporation of a written
affirmation by the person of a good faith belief that the
criteria for indemnification set forth in subdivision 2 have
been satisfied and a written undertaking by the person to
repay all amounts so paid or reimbursed by the corporation,
if it is ultimately determined that the criteria for
indemnification have not been satisfied, and (b) after a
determination that the facts then known to those making the
determination would not preclude indemnification under this
section. The written undertaking required by clause (a) is
an unlimited general obligation of the person making it, but
need not be secured and shall be accepted without reference
to financial ability to make the repayment.
Subdivision. 4. Prohibition or limit on
indemnification or advances. The articles or bylaws either
may prohibit indemnification or advances of expenses
otherwise required by this section or may impose conditions
on indemnification or advances of expenses in addition to
the conditions contained in subdivisions 2 and 3 including,
without limitation, monetary limits on
13
<PAGE>
indemnification or advances of expenses, if the prohibition
or conditions apply equally to all persons or to all persons
within a given class. A prohibition or limit on
indemnification or advances may not apply to or affect the
right of a person to indemnification or advances of expenses
with respect to any acts or omissions of the person
occurring prior to the effective date of a provision in the
articles or the date of adoption of a provision in the
bylaws establishing the prohibition or limit on
indemnification or advances.
Subdivision 5. Reimbursement to witnesses. This
section does not require, or limit the ability of, a
corporation to reimburse expenses, including attorneys' fees
and disbursements, incurred by a person in connection with
an appearance as a witness in a proceeding at a time when
the person has not been made or threatened to be made a
party to a proceeding.
Subdivision 6. Determination of eligibility. (a) All
determinations whether indemnification of a person is
required because the criteria set forth in subdivision 2
have been satisfied and whether a person is entitled to
payment or reimbursement of expenses in advance of the final
disposition of a proceeding as provided in subdivision 3
shall be made:
(1) By the board by a majority of a quorum, if the
directors who are at the time parties to the proceeding are
not counted for determining either a majority or the
presence of a quorum;
(2) If a quorum under clause (1) cannot be obtained,
by a majority of a committee of the board, consisting solely
of two or more directors not at the time parties to the
proceeding, duly designated to act in the matter by a
majority of the full board including directors who are
parties;
(3) If a determination is not made under clause (1) or
(2), by special legal counsel, selected either by a majority
of the board or a committee by vote pursuant to clause (1)
or (2) or, if the requisite quorum of the full board cannot
be obtained and the committee cannot be established, by a
majority of the full board including directors who are
parties;
(4) If a determination is not made under clauses (1)
to (3), by the shareholders, but the shares held by parties
to the proceeding must not be counted in determining the
presence of a quorum and are not considered to be present
and entitled to vote on the determination; or
(5) If an adverse determination is made under clauses
(1) to (4) or under paragraph (b), or if no determination is
made under clauses (1) to (4) or under paragraph (b) within
60 days after (i) the later to occur of the termination of a
proceeding or a written request for indemnification to the
corporation or (ii) a written request for an advance of
expenses, as the case may be, by a court in this state,
which may be the same court in which the proceeding
involving the person's liability took place, upon
application of the person and any notice the court requires.
The person seeking indemnification or payment or
reimbursement of expenses pursuant to this clause has the
burden of establishing that the person is entitled to
indemnification or payment or reimbursement of expenses.
(6) With respect to a person who is not, and was not
at the time of the acts or omissions complained of in the
proceedings, a director, officer, or person possessing,
directly or indirectly, the power to direct or cause the
direction of the management or policies of the corporation,
the determination whether indemnification of this person is
required because the
14
<PAGE>
criteria set forth in subdivision 2 have been satisfied and
whether this person is entitled to payment or reimbursement
of expenses in advance of the final disposition of a
proceeding as provided in subdivision 3 may be made by an
annually appointed committee of the board, having at least
one member who is a director. The committee shall report at
least annually to the board concerning its actions.
Subdivision 7. Insurance. A corporation may purchase
and maintain insurance on behalf of a person in that
person's official capacity against any liability asserted
against and incurred by the person in or arising from that
capacity, whether or not the corporation would have been
required to indemnify the person against the liability under
the provisions of this section.
Subdivision 8. Disclosure. A corporation that
indemnifies or advances expenses to a person in accordance
with this section in connection with a proceeding by or on
behalf of the corporation shall report to the shareholders
in writing the amount of the indemnification or advance and
to whom and on whose behalf it was paid not later than the
next meeting of shareholders.
PART F/S
FINANCIAL STATEMENTS
The financial statements of the Company appear at the end of
this registration statement beginning with the Index to Financial
Statements on page 17.
PART III
ITEM 1. INDEX TO EXHIBITS
ITEM 2. DESCRIPTION OF EXHIBITS
Copies of the following documents are included as exhibits
to this report.
Exhibit Form 1-A Title of Document
No. Ref. No.
1 (2) Restated Articles of Incorporation
2 (2) By-Laws
3 (6) Subscription Agreement dated December 29, 1999
4 (6) Promissory Note and Security Agreement
dated December 29, 1999
5 (15) Financial Data Schedules
15
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned thereunto duly
authorized.
SHALLBETTER INDUSTRIES, INC.
Date: August 7, 2000 By: /s/ Craig Laughlin, President
In accordance with the Exchange Act, this registration statement
has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: August 7, 2000 /s/ Craig Laughlin, Director
16
<PAGE>
SHALLBETTER INDUSTRIES, INC.
CONTENTS
Page
Annual Financial Statements
Report of Independent Certified Public Accountants 18
Balance Sheets as of December 31, 1999, 1998 and 1997 19
Statements of Operations and Comprehensive Income
for the years ended December 31, 1999, 1998 and 1997 20
Statement of Changes in Shareholders' Equity
for the years ended December 31, 1999, 1998 and 1997 21
Statements of Cash Flows
for the years ended December 31, 1999, 1998 and 1997 22
Notes to Financial Statements 23
Interim Financial Statements
Accountant's Review Report 25
Balance Sheets
as of June 30, 2000 and 1999 26
Statements of Operations and Comprehensive Income for
the six and three months ended June 30, 2000 and 1999 27
Statements of Cash Flows for
the six and three months ended June 30, 2000 and 1999 28
Notes to Financial Statements 29
17
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Shallbetter Industries, Inc.
We have audited the accompanying balance sheets of Shallbetter
Industries, Inc. (a Minnesota corporation) as of December 31,
1999, 1998 and 1997 and the related statements of operations and
comprehensive income, changes in shareholders' equity and cash
flows for the each of the three years then ended, respectively.
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 generally accepted
auditing standards. 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 Shallbetter Industries, Inc. as of December 31, 1999, 1998 and
1997, and the results of its operations and its cash flows for
the each of the three years then ended, respectively, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note A to the financial statements, the Company has no viable
operations or significant assets and is dependent upon
significant shareholders to provide sufficient working capital to
maintain the integrity of the corporate entity. These
circumstances create substantial doubt about the Company's
ability to continue as a going concern and are discussed in Note
A. The financial statements do not contain any adjustments that
might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
February 2, 2000
18
<PAGE>
SHALLBETTER INDUSTRIES, INC.
BALANCE SHEETS
December 31, 1999, 1998 and 1997
1999 1998 1997
ASSETS
Current Assets
Cash on hand and in bank $ - $ - $ -
Total Assets $ - $ - $ -
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities $ - $ - $ -
Commitments and Contingencies
Shareholders' Equity
Preferred stock - $0.01 par value.
5,000,000 shares authorized;
none issued and outstanding - - -
Common stock - $0.01 par value.
45,000,000 shares authorized.
1,220,000, 220,000 and 220,000
shares issued and outstanding 12,200 2,200 2,200
Additional paid-in capital 17,529 17,529 17,529
Accumulated deficit (19,729) (19,729) (19,729)
10,000 - -
Stock subscription receivable (10,000) - -
Total shareholders' equity - - -
Total Liabilities and Shareholders'
Equity $ - $ - $ -
The accompanying notes are an integral part of these financial
statements
19
<PAGE>
SHALLBETTER INDUSTRIES, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
Revenues $ - $ - $ -
Expenses
General and administrative expenses - - -
Income before Income Taxes - - -
Provision for Income Taxes - - -
Net Income - - -
Other Comprehensive Income - - -
Comprehensive Income $ - $ - $ -
Net income per weighted-average
share of common stock
outstanding, calculated on
Net Income - basic and fully diluted nil nil nil
Weighted-average number of shares
of common stock outstanding 225,479 220,000 220,000
The accompanying notes are an integral part of these financial
statements
20
<PAGE>
SHALLBETTER INDUSTRIES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 1999, 1998 and 1997
Additional Stock
Common Stock paid-in Accumulated subscription
Shares Amount capital deficit receivable Total
Balances at
January 1, 1997 220,000 $ 2,200 $17,529 $(19,729) $ - $ -
Net income for
the year - - - - - -
Balances at
December 31,1997 220,000 2,200 17,529 (19,729) - -
Net income for
the year - - - - - -
Balances at
December 31, 1998 220,000 2,200 17,529 (19,729) - -
Sale of common stock
on stock subscription
agreement 1,000,000 10,000 - - (10,000) -
Net income for
the year - - - - - -
Balances at
December 31,1999 1,220,000 $12,200 $17,529 $(19,729) $(10,000) $ -
The accompanying notes are an integral part of these financial
statements
21
<PAGE>
SHALLBETTER INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
Cash Flows from Operating Activities
Net income for the year $ - $ - $ -
Adjustments to reconcile net loss to
net cash provided by operating activities - - -
Net cash used in operating activities - - -
Cash Flows from Investing Activities - - -
Cash Flows from Financing Activities - - -
Increase in Cash - - -
Cash at beginning of period - - -
Cash at end of period $ - $ - $ -
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period $ - $ - $ -
Income taxes paid for the period $ - $ - $ -
The accompanying notes are an integral part of these financial
statements
22
<PAGE>
SHALLBETTER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - Organization and Description of Business
Shallbetter Industries, Inc. (Company) was initially incorporated
on September 8, 1968 under the laws of the State of Minnesota.
From inception through 1982, the Company was involved in the
design, production and sale of custom electric power distribution
equipment; including switchgears, panelboards, busducts, high and
low voltage main entrance cabinets and substations. The Company
also designed and marketed electrical apparatus to the mobile
home industry.
On December 30, 1999, at a Special Meeting of the Shareholders,
the following items were approved: 1) Restated Articles of
Incorporation were filed with the State of Minnesota to increase
the authorized number of common shares which may be issued from
250,000 at $0.10 par value to 45,000,000 shares at $0.01 par
value and to authorize the issuance of up to 5,000,000 shares of
$0.01 par value preferred stock and 2) to change the Company's
year-end from August 31 to December 31. The effects of these
changes are reflected in the accompanying financial statements as
of the first day of the first period presented.
During 1982, the Company ceased all operations, liquidated all
assets and settled all outstanding liabilities through a Chapter
7 action in the U. S. Bankruptcy Court.. Subsequent to the
settlement and dismissal of the bankruptcy action , the Company
has not conducted any business operations or maintained any
assets. The current business purpose of the Company is to seek
out and obtain a merger, acquisition or outright sale transaction
whereby the Company's shareholders will benefit. The Company is
not currently engaged in any negotiations and continues to seek
an appropriate merger or acquisition candidate.
The Company is fully dependent upon funding under a Stock
Subscription Agreement with a member of its current management
and/or significant shareholders to provide sufficient working
capital to preserve the integrity of the corporate entity. It is
the intent of management and significant shareholders fulfill the
obligations under the Stock Subscription Agreement to provide the
necessary working capital necessary to support and preserve the
integrity of the corporate entity.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE B - Summary of Significant Accounting Policies
1.Cash and cash equivalents
The Company considers all cash on hand and in banks, including
accounts in book overdraft positions, certificates of deposit
and other highly-liquid investments with maturities of three
months or less, when purchased, to be cash and cash
equivalents.
23
<PAGE>
SHALLBETTER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE B - Summary of Significant Accounting Policies - Continued
2.Income taxes
With a 1999 effective change of control of the Company, all
net operating loss carryforwards incurred prior to that time
were negated in accordance with Section 382 of the Internal
Revenue Code.
At December 31, 1999, 1998 and 1997, the deferred tax asset
and deferred tax liability accounts, as recorded when
material, are entirely the result of temporary differences.
Temporary differences represent differences in the recognition
of assets and liabilities for tax and financial reporting
purposes, primarily accumulated depreciation and amortization.
Any deferred tax asset existing at these dates was fully
reserved due to the unpredictability of their ultimate
realization.
Earnings (Loss) per share
Basic earnings (loss) per share is computed by dividing the
net income (loss) by the weighted-average number of shares of
common stock and common stock equivalents (primarily
outstanding options and warrants). Common stock equivalents
represent the dilutive effect of the assumed exercise of the
outstanding stock options and warrants, using the treasury
stock method. The calculation of fully diluted earnings
(loss) per share assumes the dilutive effect of the exercise
of outstanding options and warrants at either the beginning of
the respective period presented or the date of issuance,
whichever is later. As of December 31, 1999, 1998 and 1997,
the Company has no warrants and/or options issued and
outstanding.
NOTE C - Common Stock Transactions
On December 30, 1999, the Company filed Amended and Restated
Articles of Incorporation with the State of Minnesota. The
effect of these Articles was to increase the authorized number of
common shares which may be issued from 250,000 at $0.10 par value
to 45,000,000 shares at $0.01 par value. Additionally, the
Restated Articles authorized the issuance of up to 5,000,000
shares of $0.01 par value preferred stock. The effect of these
changes is reflected in the accompanying financial statements as
of the first day of the first period presented.
On December 30, 1999, the Company entered into a $10,000 Stock
Subscription Agreement with an individual, who became the
Company's President and Sole Director on December 9, 1999, for
the acquisition of 1,000,000 shares of restricted, unregistered
$0.01 par value common stock. The Stock Subscription Agreement
is scheduled to be paid in the following installments: February
1, 2000 - $3,000; April 1, 2000 - $3,500; June 1, 2000 - $3,500.
The February 1, 2000 installment was received as scheduled.
24
<PAGE>
Accountant's Review Report
Board of Directors and Shareholders
Shallbetter Industries, Inc.
We have reviewed the accompanying balance sheets of Shallbetter
Industries, Inc. (a Minnesota corporation) as of June 30, 2000
and 1999 and the accompanying statements of operations and
comprehensive income for the six and three months ended June 30,
2000 and 1999 and statements of cash flows for the six months
ended June 30, 2000 and 1999. These financial statements are
prepared in accordance with the instructions for Form 10-QSB, as
issued by the U. S. Securities and Exchange Commission, and are
the sole 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 on 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 accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note A to the financial statements, the Company has no viable
operations or significant assets and is dependent upon
significant shareholders to provide sufficient working capital to
maintain the integrity of the corporate entity. These
circumstances create substantial doubt about the Company's
ability to continue as a going concern and are discussed in Note
A. The financial statements do not contain any adjustments that
might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
August 7, 2000
25
<PAGE>
Shallbetter Industries, Inc.
Balance Sheets
June 30, 2000 and 1999
(Unaudited)
June 30, June 30,
2000 1999
ASSETS
Current Assets
Cash on hand and in bank $ 6,849 $ -
Total Assets $ 6,849 $ -
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities $ - $ -
Commitments and Contingencies
Shareholders' Equity
Preferred stock - $0.01 par value.
5,000,000 shares authorized;
none issued and outstanding - -
Common stock - $0.01 par value.
45,000,000 shares authorized.
1,220,000 and 220,000
shares issued and outstanding 12,200 2,200
Additional paid-in capital 17,529 17,529
Accumulated deficit (22,052) (19,729)
7,677 -
Stock subscription receivable (828) -
Total shareholders' equity 6,849 -
Total Liabilities and Shareholders' Equity $ 6,849 $ -
The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
See Accountant's Review Report
The accompanying notes are an integral part of these financial
statements.
26
<PAGE>
Shallbetter Industries, Inc.
Statements of Operations and Comprehensive Income
Six and Three months ended June 30, 2000 and 1999
(Unaudited)
Six months Six months Three months Three months
ended ended ended ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Revenues $ - $ - $ - $ -
Expenses
General and administrative 2,323 - - -
Total expenses 2,323 - - -
Loss before Income Taxes (2,323) - - -
Provision for Income Taxes - - - -
Net Loss (2,323) - - -
Other comprehensive income - - - -
Comprehensive Income $(2,323) $ - $ - $ -
Loss per weighted-average share of
common stock outstanding,
computed on Net Loss - basic
and fully diluted nil nil nil nil
Weighted-average number
of shares of common
stock outstanding 1,220,000 220,000 1,220,000 220,000
The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
See Accountant's Review Report
The accompanying notes are an integral part of these financial
statements.
27
<PAGE>
Shallbetter Industries, Inc.
Statements of Cash Flows
Six months ended June 30, 2000 and 1999
(Unaudited)
Six months Six months
ended ended
June 30, June 30,
2000 1999
Cash Flows from Operating Activities
Net Loss $(2,323) $ -
Adjustments to reconcile net income to
net cash provided by operating activities
Decrease in accounts payable - -
Net cash provided by (used in) operating
activities (2,323) -
Cash Flows from Investing Activities - -
Cash Flows from Financing Activities
Cash received common stock subscription 9,172 -
Advance from shareholder - -
Net cash provided by financing activities 9,172 -
Increase (Decrease) in Cash and
Cash Equivalents 6,849 -
Cash and cash equivalents at beginning
of period - -
Cash and cash equivalents at end of period $6,849 $ -
Supplemental Disclosures of Interest and Income Taxes Paid
Interest paid during the period $ - $ -
Income taxes paid (refunded) $ - $ -
The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
See Accountant's Review Report
The accompanying notes are an integral part of these financial
statements.
28
<PAGE>
Shallbetter Industries, Inc.
Notes to Financial Statements
NOTE A - Organization and Description of Business
Shallbetter Industries, Inc. (Company) was initially incorporated
on September 8, 1968 under the laws of the State of Minnesota.
From inception through 1982, the Company was involved in the
design, production and sale of custom electric power distribution
equipment; including switchgears, panelboards, busducts, high and
low voltage main entrance cabinets and substations. The Company
also designed and marketed electrical apparatus to the mobile
home industry.
On December 30, 1999, at a Special Meeting of the Shareholders,
the following items were approved: 1) Restated Articles of
Incorporation were filed with the State of Minnesota to increase
the authorized number of common shares which may be issued from
250,000 at $0.10 par value to 45,000,000 shares at $0.01 par
value and to authorize the issuance of up to 5,000,000 shares of
$0.01 par value preferred stock and 2) to change the Company's
year-end from August 31 to December 31. The effects of these
changes are reflected in the accompanying financial statements as
of the first day of the first period presented.
During 1982, the Company ceased all operations, liquidated all
assets and settled all outstanding liabilities through a Chapter
7 action in the U. S. Bankruptcy Court.. Subsequent to the
settlement and dismissal of the bankruptcy action , the Company
has not conducted any business operations or maintained any
assets. The current business purpose of the Company is to seek
out and obtain a merger, acquisition or outright sale transaction
whereby the Company's shareholders will benefit. The Company is
not currently engaged in any negotiations and continues to seek
an appropriate merger or acquisition candidate.
The Company is fully dependent upon funding under a Stock
Subscription Agreement with a member of its current management
and/or significant shareholders to provide sufficient working
capital to preserve the integrity of the corporate entity. It is
the intent of management and significant shareholders fulfill the
obligations under the Stock Subscription Agreement to provide the
necessary working capital necessary to support and preserve the
integrity of the corporate entity.
During interim periods, the Company follows the accounting
policies set forth in its annual audited financial statements
accompanying these interim financial statements and notes to the
financial statements. The information presented within these
interim financial statements may not include all disclosures
required by generally accepted accounting principles and the
users of financial information provided for interim periods
should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial
statements, prepared in accordance with the U. S. Securities and
Exchange Commission's instructions for Form 10-QSB, are unaudited
and contain all material adjustments, consisting only of normal
recurring adjustments necessary to present fairly the financial
condition, results of operations and cash flows of the Company
for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results
which ultimately will be reported for the full fiscal year ending
December 31, 2000.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
29
<PAGE>
Shallbetter Industries, Inc.
Notes to Financial Statements - Continued
NOTE B - Summary of Significant Accounting Policies
Cash and cash equivalents
The Company considers all cash on hand and in banks,
including accounts in book overdraft positions, certificates
of deposit and other highly-liquid investments with
maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Income taxes
With a 1999 effective change of control of the Company, all
net operating loss carryforwards incurred prior to that time
were negated in accordance with Section 382 of the Internal
Revenue Code.
At June 30, 2000 and 1999, the deferred tax asset and
deferred tax liability accounts, as recorded when material,
are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of
assets and liabilities for tax and financial reporting
purposes, primarily accumulated depreciation and
amortization. Any deferred tax asset existing at these dates
was fully reserved due to the unpredictability of their
ultimate realization.
3. Earnings (Loss) per share
Basic earnings (loss) per share is computed by dividing the
net income (loss) by the weighted-average number of shares of
common stock and common stock equivalents (primarily
outstanding options and warrants). Common stock equivalents
represent the dilutive effect of the assumed exercise of the
outstanding stock options and warrants, using the treasury
stock method. The calculation of fully diluted earnings
(loss) per share assumes the dilutive effect of the exercise
of outstanding options and warrants at either the beginning
of the respective period presented or the date of issuance,
whichever is later. As of June 30, 2000 and 1999, the
Company has no warrants and/or options issued and
outstanding.
NOTE C - Common Stock Transactions
On December 30, 1999, the Company filed Amended and Restated
Articles of Incorporation with the State of Minnesota. The
effect of these Articles was to increase the authorized number of
common shares which may be issued from 250,000 at $0.10 par value
to 45,000,000 shares at $0.01 par value. Additionally, the
Restated Articles authorized the issuance of up to 5,000,000
shares of $0.01 par value preferred stock. The effect of these
changes is reflected in the accompanying financial statements as
of the first day of the first period presented.
On December 30, 1999, the Company entered into a $10,000 Stock
Subscription Agreement with an individual, who became the
Company's President and Sole Director on December 9, 1999, for
the acquisition of 1,000,000 shares of restricted, unregistered
$0.01 par value common stock. The Stock Subscription Agreement
is scheduled to be paid in the following installments: February
1, 2000 - $3,000; April 1, 2000 - $3,500; June 1, 2000 - $3,500.
As of June 30, 1999, approximately $9,172 of the scheduled
amounts have been received.
30
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