**UNITED STATES**

**FORM 10-QSB**

X...Quarterly report under section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly
period ended March 31, 2004

....Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition
period from ____ to _____.

**SHALLBETTER INDUSTRIES, INC.**

|Minnesota                                      | 0-31297                  | 41-1961936                       
|---------------------------------------------- | ------------------------ | ---------------------------------
|(State or other jurisdiction of
incorporation) | (Commission File Number) | (IRS Employer Identification No.)

|1090 West Georgia Street, #1305Vancouver, British Columbia, Canada | V6E 3V7   
|------------------------------------------------------------------ | ----------
|(Address of Principal Executive Office)                            | (Zip Code)

Issuer's telephone number:  (604) 685-9316

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ..X..  No ....

Applicable only to corporate issuers

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest
practicable date.  At March 31, 2004, the following shares were outstanding: 20,00,000

Transitional Small Business Disclosure Format (Check one): Yes .....     No ..X..



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PART 1 - FINANCIAL INFORMATION

ITEM 1.         FINANCIAL STATEMENTS AND EXHIBITS

(a)        The unaudited financial statements of registrant for the three months ended March 31, 2004,
follow.  The financial statements reflect all adjustments, which, in the opinion of management, are
necessary to a fair statement of the results for the interim period presented.

SHALLBETTER INDUSTRIES, INC.

(A Development Stage Company)

FINANCIAL STATEMENTS

Quarter Ended March 31, 2004

|INDEX TO FINANCIAL STATEMENTS:                 
|-----------------------------------------------
|Consolidated Balance Sheets                    
|Consolidate Statements of Operations           
|Consolidated Statements of Stockholders' Equity
|Consolidated Statements of Cash Flows          
|Notes to Consolidated Financial Statements     



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|**SHALLBETTER INDUSTRIES, INC.**  
|----------------------------------
|**(an exploration stage company)**
|**CONSOLIDATED BALANCE SHEETS**   

|                                                       |   |                           |      |                  
|------------------------------------------------------ | - | ------------------------- | ---- | -----------------
|                                                       |   | ************March 31,**** | **** | **September 30,**
|**(Expressed in U.S. Dollars)**                        |   | **2004**                  |      | **2003**         
|                                                       |   | **(Unaudited)**           |      | **(Audited)**    
|ASSETS                                                 |   |                           |      |                  
|****************Current assets                         |   |                           |      |                  
|Cash and cash equivalents                              | $ | 55                        | $    | 55               
|                                                       |   |                           |      |                  
|                                                       | $ | 55                        | $    | 55               
|                                                       |   |                           |      |                  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)         |   |                           |      |                  
|Current liabilities                                    |   |                           |      |                  
|Accounts payable and other accrued liabilities         | $ | 18,951                    | $    | 12,409           
|Due to related parties                                 |   | 767,344                   |      | 437,081          
|Total current liabilities                              |   | 786,295                   |      | 449,490          
|                                                       |   |                           |      |                  
|Commitments and contingencies                          |   | -                         |      | -                
|                                                       |   |                           |      |                  
|Stockholders' Equity (Deficit)                         |   |                           |      |                  
|Preferred Stock: $0.01 par value                       |   |                           |      |                  
|Authorized: 5,000,000 shares                           |   |                           |      |                  
|Issued and outstanding: nil                            |   | -                         |      | -                
|Common Stock: $0.01 par value                          |   |                           |      |                  
|Authorized: 45,000,000 shares                          |   |                           |      |                  
|Issued and outstanding: 20,000,000 (2003 : 20,000,000) |   | 200,000                   |      | 200,000          
|Additional paid in capital                             |   | (124,517)                 |      | (140,575)        
|Deficit accumulated during the development stage       |   | (861,723)                 |      | (508,860)        
|Total Stockholders' Equity (Deficit)                   |   | (786,240)                 |      | (449,435)        
|                                                       |   |                           |      |                  
|                                                       | $ | 55                        | $    | 55               

|See accompanying condensed notes
|--------------------------------
|                                



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|**SHALLBETTER INDUSTRIES, INC.******             
|-------------------------------------------------
|******(an exploration stage company)******       
|******CONSOLIDATED STATEMENTS OF OPERATIONS******
|******(Unaudited)******                          
|******(Expressed in U.S. Dollars)**              
|                                                 
|General and administrative
expenses              
|Accounting and legal                             
|Office and miscellaneous                         
|Consulting fees                                  
|Foreign exchange loss (gain)                     
|Interest (imputed - related parties)             
|Management fees                                  
|Mineral claims license fees                      
|Geological reports                               
|Rent                                             
|Salaries and benefits                            
|Travel                                           
|                                                 
|Net loss for the period                          
|Basic and diluted net loss per share             
|Weighted average shares
outstanding              





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**SHALLBETTER INDUSTRIES, INC.****(an exploration stage company)****CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY****FOR THE PERIOD FROM DATE OF INCEPTION (NOVEMBER 16, 2001) TO MARCH 31, 2004**************Deficit
******Accumulated**
******Stock**
**Additional**
**during the**
******Common**
**Amount At**
**Paid In**
**Development**
******(Expressed in U.S. Dollars)**
**Shares**
**Par Value**
**Capital**
**Stage**
**Total****** ****Initial capitalization as a result of reverse
acquisition
16,376,345
$ 163,763
$   (113,763)
$                 -
$       50,000Imputed interest on amount due to related parties
-
-
3,076
-
3,076Net loss for the period



(228,409)
(228,409)Balance, March 31, 2003
16,376,345
$ 163,763
$   (110,687)
$   (228,409)
$   (175,333)Recapitalization to effect acquisition of
Shallbetter
3,623,655
36,237
(36,237)
-
-Imputed interest on amount due to related parties
-
-
6,349
-
6,349Net loss for the period
-
-
-
(280,451)
(280,451)Balance, September 30, 2003
20,000,000
$ 200,000
$   (140,575)
$   (508,860)
$   (449,435)Imputed interest on amount due to related parties
-
-
16,058
-
16,058Net loss for the period
-
-
-
(352,863)
(352,863)Balance, March 31, 2004
20,000,000
$ 200,000
$   (124,517)
$   (861,723)
$   (786,240)See accompanying condensed notes



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|**SHALLBETTER INDUSTRIES, INC.**
|--------------------------------

|**(an exploration stage company)**       
|-----------------------------------------
|**CONSOLIDATED STATEMENTS OF CASH FLOWS**
|**(Unaudited)**                          

| |  |                             |  |  |  | 
| |  | --------------------------- |  |  |  | 
| |  | ************Cumulative from |  |  |  | 

| |  | ****************inception (April 1, |  | **********Six Months Ended**
| |  | ----------------------------------- |  | ----------------------------

|                                                         |   | **2002) through**  |      | **********March 31,** | **** | **March 31,**
|-------------------------------------------------------- | - | ------------------ | ---- | --------------------- | ---- | -------------
|**(Expressed in U.S. Dollars)**                          |   | **March 31, 2004** | **** | ******2004**          | **** | **2003**     
|Cash flows from operating activities                     |   |                    |      |                       |      |              
|********Net loss                                         | $ | (861,723)          | $    | (352,863)             | $    | (114,205)    
|Adjustments to reconcile net loss to net cash            |   |                    |      |                       |      |              
|used in operating activities :                           |   |                    |      |                       |      |              
|Interest (imputed - related parties)                     |   | 25,483             |      | 16,058                |      | 1,538        
|Changes in assets and liabilities :                      |   |                    |      |                       |      |              
|Accounts payable and accrued liabilities                 |   | 18,951             |      | 6,542                 |      | -            
|Net cash used in operating activities                    |   | (817,289)          |      | (330,263)             |      | (112,667)    
|                                                         |   |                    |      |                       |      |              
|Cash flows from financing activities                     |   |                    |      |                       |      |              
|********Proceeds from issuance of common stock           |   | 50,000             |      | ********-             |      | -            
|Advances from related parties                            |   | 767,344            |      | ********330,263       |      | 112,719      
|Net cash provided by financing activities                |   | 817,344            |      | ********330,263       |      | 112,719      
|                                                         |   |                    |      |                       |      |              
|********Increase (decrease) in cash and cash equivalents |   | 55                 |      | -                     |      | 52           
|Cash and cash equivalents - beginning of period          |   | -                  |      | 55                    |      | -            
|Cash and cash equivalents - end of period                | $ | 55                 | $    | 55                    | $    | 52           

|See accompanying condensed notes
|--------------------------------



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1.         Basis of Presentation

The accompanying unaudited interim consolidated balance sheets, statements of operations and cash
flows reflected all adjustments, consisting of normal recurring adjustments and other adjustments, that
are, in the opinion of management, necessary for a fair presentation of the financial position of the
Company, at March 31, 2004, and the results of operations and cash flows for the interim periods ended
March 31, 2004 and 2003. The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instruction for Form 10-QSB pursuant to the rules and regulations of
Securities and Exchange Commission and, therefore, do not include all information and notes normally
provided in audited financial statements and should be read in conjunction with the Company's
consolidated financial statements for the year ended September 30, 2003 included in the annual report
previously filed on Form10-KSB. The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.

**2.        Related Party Transactions**

(a)        The amounts due to related parties are payable to directors and principal shareholders. These
amounts are unsecured, interest free and no stated terms of repayment. The Company recorded imputed
interest of $16,058 at an interest rate of 5.35% per annum on the amounts due to related parties for the
six-month period ended March 31, 2004.

(b)        The Company incurred the following expenses to its directors and principal shareholders:

Three months ended

Six-month endedMarch 31,



March 31,

March 31,2004

2003

2004

2003Management fees

$   58,000

$      34,494

$   105,000

$      68,987Consulting fees

15,000

-

15,000

-$   73,000

$      34,494

$   120,000

$      68,987



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******ITEM 2.        
 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

**SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS**

Certain statements in this report, including statements in the following discussion, which are not statements
of historical fact, are what are known as "forward-looking statements," which are basically statements about
the future.  For that reason, these statements involve risk and uncertainty since no one can accurately predict
the future.  Words such as "plans," "intends," "will," "hopes," "seeks," "anticipates," "expects," and the like,
often identify such forward-looking statements, but are not the only indication that a statement is a forward-looking statement.  Such forward-looking statements include statements concerning our plans and objectives
with respect to the present and future operations of the Company, and statements which express or imply that
such present and future operations will or may produce revenues, income or profits.  Numerous factors and
future events could cause the Company to change such plans and objectives, or fail to successfully implement
such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues,
income or profits.  Therefore, the  reader is advised that the following discussion should be considered in
light of the discussion of risks and other factors contained in this report on Form 10QSB and in the
Company's other filings with the Securities and Exchange Commission.  No statements contained in the
following discussion should be construed as a guarantee or assurance of future performance or future results.

Introduction

The information presented here should be read in conjunction with Shallbetter Industries, Inc.'s financial
statements and other information included in this Form 10-QSB. When used in this Form 10-QSB, the words
"expects", "anticipates", "estimates" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to risks and uncertainties, including those set forth below under
"Risks and Uncertainties", that could cause actual results to differ materially from those projected. These
forward-looking statements speak only as of the date hereof. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with regard thereto or any change in
events, conditions or circumstances on which any statement is based.

Plan of Operations

Shallbetter Industries Inc. ("the Company") is an exploration stage company engaged in the acquisition and
exploration of mineral properties in Outer Mongolia. The Company is a reporting issuer trading on the
OTCBB under the symbol SBNS.

The business of mineral deposit exploration and extraction involves a high degree of risk. Few properties that
are explored are ultimately developed into production. At present, none of the Company's properties has a
known body of commercial ore. Other risks facing the Company include competition, reliance on third parties
and joint venture partners, environmental and insurance risks, political and environmental instability,
statutory and regulatory requirements, fluctuations in mineral prices and foreign currencies, share price
volatility, title risks, and uncertainty of additional financing.

The Company owns three mineral exploration licenses in the Gobi Altai central Mongolian region covering
an area of approximately 75,000 hectares. The present focus for us is fully committed to evaluate, explore
and develop the exploration concessions granted us, subject to review of a detailed exploration program.

During the period, the Company has initiated an early stage exploration program by sending a qualified team
of engineers and geologists from China to engage in assay works and soil sampling on the Outer Mongolian
Gobi Altai region concessions.  Soil samplings from various targeted anomalous zones were taken for
evaluation and analysis. A full independent evaluation report will be published by the Company as soon as
the results become available.

Funding during this period was raised through advance from significant shareholders.  These funds were used
to finance ongoing expenses incurred by the Company.

Results of Operations

The Company has had no operations during the six-month period ended March 31, 2004. The Company
received no revenue and incurred expenses of $352,863 stemming from general and administrative
expenditures as compared to $114,205 for the same period of last year. The increase of $238,658 was mainly
due to the management fees and consulting fees paid to the directors and consultants for their services.

The Company expects the trend of losses to continue at an increasing rate until we can achieve commercial
production on some of the mineral properties or sell some of mineral properties, of which there can be no
assurance.

Liquidity and Working Capital

As of March 31, 2004, the Company had total current assets of $55 and total liabilities of $786,295. The
Company has a working capital deficit of $786,240. Currently, the Company's operation was financed by
its significant shareholders.

The Company has no other capital resources other than the ability to use its common stock to achieve
additional capital. No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds will be available to the
Company to allow it to cover operation expenses.

Outlook

We are now seeking strategic joint venture partners that will bring the necessary resources and experience
to develop and further explore targeted regions of the concessions in Outer Mongolia.

We are also trying to obtain additional funding through the sale of our securities by private placement or
through several resource-based investment bank financings.

We will concentrate our efforts on drilling and regional exploration work on the mineral claims currently
held by us and will consider additional projects if and when opportunities arise.

**ITEM 3.        
CONTROLS AND PROCEDURES**

As of the end of the period covered by this report, we carried out an evaluation, under the supervision
and with the participation of our chief executive officer and chief financial officer, of the effectiveness of
the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure controls and procedures are
effective in timely alerting them to material information required to be included in our periodic SEC
reports.  It should be noted that design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

In addition, there has been no change in our internal control over financial reporting during the most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REPORT
REFLECT MANAGEMENT'S BEST JUDGMENT BASED UPON FACTORS CURRENTLY
KNOWN AND INVOLVE RISKS AND UNCERTAINTIES.  ACTUAL RESULTS MAY VARY
MATERIALLY.

PART II - OTHER INFORMATION

ITEM 1.        	LEGAL PROCEEDINGS

ITEM 2.        	CHANGES IN SECURITIES

ITEM 3.        	DEFAULTS UPON SENIOR SECURITIES

ITEM 4.        	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ITEM 6.        	EXHIBITS AND REPORTS ON FORM 8-K.

> (a)        The following exhibits are filed herewith:
> 
> 31.1        Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the
> Securities Exchange Act of 1934, as amended, as adopted pursuant to Section
> 302 of the Sarbanes-Oxley Act of 2002.
> 
> 
> 32.1        Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
> Section 906 of the Sarbanes-Oxley Act of 2002.
> 
> 
> (b)        No reports on Form 8-K were filed by the Company during the quarter ended
> March 31, 2004.



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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

**SHALLBETTER INDUSTRIES, INC.**

By:/S/ ANTHONY C.Y. CHOWAnthony C. Y. Chow, Chairman and CEO

By: /S/ TERRY W. WONGTerry W. Wong, Director and President

Date: May 14, 2004