UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-KSB

XAnnual report under section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended September 30, 2003

___Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____ to ____.

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

|1090 West Georgia Street, #1305

Vancouver, British Columbia, Canada | V6E 3V7   
|-------------------------------------------------------------------- | ----------
|(Address of Principal Executive Office)                              | (Zip Code)



Securities to be registered under Section 12(b) of the Act:

Title of each class

N/A

Securities to be registered under Section 12(g) of the Act:

Common Stock, $0 .01 par value

(Title of Class)



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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

Check if  no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in
this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [  ]

State issuer's revenues for its most recent fiscal year:   $ 0.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was sold, or the average bid and asked
price of such common equity, as of a specified date within the past 60 days.  (See definition of affiliate in
Rule 12b-2 of the Exchange Act.)

The aggregate market value of voting common equity held by non-affiliates as of September 30, 2003
was approximately $-0-.

Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the
issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis
of reasonable assumptions, if the assumptions are stated.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or
15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [  ]Yes [
] No



(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest
practicable date: As of January 8, 2004, the Company had 20,004,600 shares outstanding.

**DOCUMENTS INCORPORATED BY REFERENCE**

****If the following documents are incorporated by reference, briefly describe them and identify the part of
the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual
report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed documents should be
clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended
December 24, 1990).

Transitional Small Business Disclosure Format (Check one): Yes ____; No _X__

---

PART I

ITEM 1.        DESCRIPTION OF BUSINESS.****

General

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 has not conducted any
business operations or maintained any assets since 1982.

On December 9, 1999, the sole remaining officer and director of the Company resigned his
positions after appointing Craig Laughlin as President and sole director.  Under Mr. Laughlin's
guidance, the Company was restructured, its financial statements were updated and the Company
obtained a new independent auditor.  In 2000, the Securities and Exchange Commission accepted
for Company's Form 10-SB, General Form for Registration of Securities of Small Business
Issuers under Section 12(b) or (g) of the Securities Exchange Act of 1934.  The Company
undertook steps to actively seek a new business venture in which to participate.

On July 19, 2002, there was a change of control of the Company.  The change of control occurred
as a result of closing under a Stock Purchase Agreement (the "Agreement"), dated June 21, 2002,
between the Company, the Don and Bonnie Saunders Family Trust ("Saunders") and Mr. Laughlin.
Under the terms of the Agreement, as modified by two separate Addendums, Saunders, on its
own behalf and as agent for certain nominees, acquired 912,500 shares of the issued and
outstanding common stock of the Company from Mr. Laughlin for a purchase price of $223,000.

At the time of closing under the Agreement, the Company had a total of 1,207,885 shares of
common stock issued and outstanding.  Thus, the shares purchased by Saunders on its own behalf
and as agent for certain nominees, constituted approximately 75.55% of the Company's issued
and outstanding common stock.  In conjunction with closing under the Agreement, Mr. Laughlin
resigned as an officer and director of the Company and the Company appointed Mr. Thomas K.
Russell as the Company's President and Sole Director.

On September 24, 2003, the Company consummated a share exchange with the former stockholders of Logistics Resources Limited, a British Virgin Islands corporation  ("Logistics"), and
the share exchange resulted in a change of control of the Company.  Prior to the share exchange,
Donald G. Saunders and Bonnie Saunders controlled the Company and beneficially owned
approximately 61.47% of the outstanding voting shares.  Pursuant to the share exchange, the
former stockholders of Logistics were issued a total of 16,376,345 shares of the Company's
authorized but unissued common stock, representing approximately  82% of the post-closing
common shares of the Company.  In addition, Mr. Russell resigned as the President and sole
director, effective upon the close of business on September 24, 2003, and he was replaced by a
five-member board of directors consisting of Anthony C.Y. Chow, Chow Chung Pang, Terry W.
Wong, Martina Lynch and J.L. Shaw.  As a result of the Exchange, the Company acquired all of
the issued and outstanding stock of  Logistics, and Logistics became a subsidiary of the Company.

The Company's acquisition of Logistics has steered its business towards the development of
mineral resource properties and interests in Outer Mongolia.Logistics is a development stage
natural resources company which owns 3 mineral exploration licenses in the Gobi Altai central
Mongolian region covering an area of approximately 75,000 hectares.   In addition, the Company
is in the process of acquiring an additional five mineral exploration licenses which are located
within the Oyu Tolgoi (turquoise Hill) South Gobi area of Mongolia. The licenses are valid for
three (3) years and renewable for additional four (4) years subject to payment of annual licensing
fees determined by the government of Mongolia.

The area in which the mineral licenses are located includes a large gold/copper porphyry system.
The Company is currently seeking financing for the purpose of exploration and development of
these properties.The Company hopes to develop into an established and profitable Asian-based
resource company.

ITEM 2.         DESCRIPTION OF PROPERTY.

The Company currently has no investments in real estate, real estate mortgages, or real
estate securities.  The Company maintains a mailing address at 1090 West Georgia Street, #1305,
Vancouver, British Columbia, Canada V6E 3V7. The Company pays no rent for the use of this
mailing address.

ITEM 3.        LEGAL PROCEEDINGS.

The Company is not a party to any pending legal proceedings, and no such proceedings
are known to be contemplated.  No director, officer or affiliate of the Company, and no owner of
record or beneficial owner of more than five percent (5%) of the securities of the Company, or
any associate of any such director, officer or security holder is a party adverse to the Company or
has a material interest adverse to the Company in reference to pending litigation.

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

No matters were submitted to a vote of the security holders of the Company during the
fourth quarter of the fiscal year which ended September 30, 2003.

---

PART II

****ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

In July 2001, the Company's common stock was included in the NASD's Bulletin Board
system under the symbol "SBNS."  Although quotations for the Company's common stock
appear on the OTC Bulletin Board, there is no established trading market for the common stock.
Since July 2001, transactions in the common stock can only be described as sporadic.  Consequently, the Company is of the opinion that any published prices cannot be attributed to a liquid
and active trading market and, therefore, are not indicative of any meaningful market value.

As a result of failure to comply timely with its reporting obligations, the Company has
been delisted from the OTC Bulletin Board, and is currently trading on the pink sheets under the
symbol "SBNSE."

The following table sets forth for the respective periods indicated the prices of the
Company's Common Stock in the over-the-counter market, as reported and summarized by the
OTC Bulletin Board.  Such prices are based on inter-dealer bid and asked prices, without
markup, markdown, commissions, or adjustments and may not represent actual transactions.

|Calendar Quarter Ended | High ($) | Low ($)
|---------------------- | -------- | -------
|March 31, 2003         | 0.85     | 0.10   
|June 30, 2003          | 0.75     | 0.10   
|September 30, 2003     | 2.00     | 0.10   
|December 31, 2003      | 1.85     | 0.12   

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 September 30, 2003, there were approximately 290 holders of record of the Company's
common stock.

ITEM 6.        	MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION

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 10KSB 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.

Liquidity and Capital Resources

As of September 30, 2003, the Company remains in the development stage.  For the fiscal year
ended September 30, 2003, the Company's balance sheet reflects current asset and total assets of
$55, and total current liabilities of $449,490.  The Company has a commitment from J.L. Shaw,
who is an officer, director and shareholder of the Company, to loan approximately $200,000 to
the Company.  Other than this arrangement, no specific commitments to provide additional funds
have been  made by management, stockholders or any third party, and the Company has no
current plans, proposals, arrangements or understandings with respect to the sale or issuance of
additional securities.  The Company is currently seeking financing and is engaged in discussions
with several resource-based investment banks to obtain funding, but all of these negotiations are
in the preliminary stages and there can be no assurance that the Company will be able to obtain
the required funding.  In addition, the Company may continue to rely in the future, as it has in the
past, on loans or additional capital contributions from shareholders in order to pay expenses, at
least until a more permanent source of funding can be obtained.However, there is no legal
obligation for either management or significant stockholders to provide additional future funding.

Notwithstanding the foregoing, to the extent that additional funds are required, the Company
does not anticipate that such funds would come in the form of a public offering of its securities.
Rather, it would likely be in the form of a bank loan or line of credit, loans or advancements from
current shareholders without the issuance of additional shares or other securities, or a private
placement of restricted securities.

Plan of Operations

For the fiscal year ending September 30, 2004, the Company intends to engage in resource
exploration on the properties covered by its licenses, as discusses in Item 1 above.  The Company
anticipates incurring a loss for the fiscal year as a result of expenses associated with its
acquisition of Logistics and expenses associated with compliance with the reporting requirements
of the Securities Exchange Act of 1934.  In addition, the Company does not currently have
sufficient assets or capital resources to pay its ongoing expenses or to begin the exploration
process.  As discussed in the section entitled "Liquidity and Capital Resources" above, the
Company is currently seeking financing to cover its ongoing expenses and the costs of
exploration, andthe intent of management and significant stockholders is to provide sufficient
working capital necessary to support and preserve the integrity of the corporate entity.  However,
there is no legal obligation for either management or significant stockholders to provide
additional future funding.

Need for Additional Financing

The Company will require additional capital in order to meet its cash needs for the next year,
including the costs of compliance with the continuing reporting requirements of the Securities
Exchange Act of 1934, as amended, and the costs and expenses of carrying out the Company's
plans to engage in the exploration of the properties covered by its licenses.

The Company is currently fully dependent upon either future sales of securities and/or advances
or loans from significant stockholders or corporate officers to provide sufficient working capital
to preserve the integrity of the corporate entity.Except for the commitment from Mr. Shaw to
provide up to $200,000 to the Company described in "Liquidity and Capital Resources" above,
no specific commitments to provide additional funds have been made by management,
stockholders or third parties, and the Company has no current plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional securities.  Accordingly, there
can be no assurance that any additional funds will be available to the Company to allow it to
cover its expenses,or, that such funding, if available, will be obtained on terms favorable to or
affordable by the Company.

The Company may also seek to compensate providers of services by issuances of stock in lieu of
cash.  For information as to the Company's policy in regard to payment for consulting services,
see "Certain Relationships and Transactions."

ITEM 7.        FINANCIAL STATEMENTS.

See the following pages.

---

SHALLBETTER INDUSTRIES, INC.

SEPTEMBER 30, 2003

I N D E X

|                                                               
|---------------------------------------------------------------
|INDEPENDENT AUDITORS' REPORT                                   
|                                                               
|CONSOLIDATED BALANCE SHEETS                                    
|                                                               
|CONSOLIDATED  STATEMENTS OF OPERATIONS                         
|                                                               
|************CONSOLIDATED  STATEMENT OF STOCKHOLDERS' DEFICIENCY
|CONSOLIDATED STATEMENT OF OPERATIONS                           
|CONSOLIDATED STATEMENTS OF CASH FLOWS                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     

---

**Index**

Independent Auditors' Report

Consolidated Balance Sheets

Consolidated Statements of Stockholders' Deficiency

Consolidated Statements of Operations

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

---

**MOORE STEPHENS ELLIS FOSTER LTD.**CHARTERED ACCOUNTANTS1650 West 1st AvenueVancouver, BC  Canada   V6J 1G1Telephone:  (604) 734-1112  Facsimile: (604) 714-5916Website:  www.ellisfoster.com

INDEPENDENT AUDITORS' REPORT

**To the Board of Directors and Stockholders****SHALLBETTER INDUSTRIES, INC.**(A development stage enterprise)

We have audited the consolidated balance sheets of Shallbetter Industries, Inc. ****("the Company") (a
development stage enterprise) as at September 30, 2003 and March 31, 2003, the related consolidated
statements of stockholders' deficiency from November 16, 2001 (inception) to September 30, 2003 and
the consolidated statements of operations and cash flows for the six-month period ended September 30,
2003, for the period from April 1, 2002 (commencement) to March 31, 2003 and for the cumulative
period from April 1, 2002 (commencement) to September 30, 2003.  These consolidated financial
statements are the responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform an audit to obtain reasonable assurance
whether the consolidated 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, these consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as at September 30, 2003 and March 31, 2003 and the
results of its operations and cash flows for the six-month period ended September 30, 2003, for the period
from April 1, 2002 (commencement) to September 30, 2003 and for the cumulative period from April
1, 2002 (commencement) to September 30, 2003 in conformity with generally accepted accounting
principles in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will
continue as a going concern.  As discussed in Note 1 to the consolidated financial statements, the
Company has not generated any revenue from operations that raise substantial doubt about its ability to
continue as a going concern.  Management's plans in regard to these matters are also described in Note
1.  The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

|Vancouver, Canada

December 22, 2003 | *"MOORE STEPHENS ELLIS FOSTER LTD."*

Chartered Accountants
|------------------------------------ | -----------------------------------------------------------



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|**SHALLBETTER INDUSTRIES, INC.**                                               |         |              |         |          
|------------------------------------------------------------------------------ | ------- | ------------ | ------- | ---------
|(A development stage enterprise)                                               |         |              |         |          
|Consolidated Balance Sheets                                                    |         |              |         |          
|**(Expressed in U.S. Dollars)**                                                |         |              |         |          
|                                                                               |         | September 30 |         | March 31 
|                                                                               |         |              | 2003    |          
|                                                                               |         |              |         |          
|**ASSETS**                                                                     |         |              |         |          
|                                                                               |         |              |         |          
|********Current assets                                                         |         |              |         |          
|Cash and cash equivalents                                                      | $       | 55           | $       | 52       
|                                                                               |         |              |         |          
|**Mineral exploration licenses**                                               |         | -            |         | -        
|                                                                               |         |              |         |          
|**Total assets**                                                               |         | ******** $   | 55      | $        
|                                                                               |         |              |         |          
|**LIABILITIES**                                                                |         |              |         |          
|                                                                               |         |              |         |          
|Current liabilities                                                            |         |              |         |          
|Accounts payable and accrued liabilities                                       | $       | 12,409       | $       | -        
|Due to related parties                                                         |         | 437,081      |         | 175,385  
|                                                                               |         |              |         |          
|**Total current liabilities**                                                  |         | 449,490      |         | 175,385  
|                                                                               |         |              |         |          
|**Commitments (Note 3)**                                                       |         |              |         |          
|                                                                               |         |              |         |          
|STOCKHOLDERS' (DEFICIENCY)                                                     |         |              |         |          
|                                                                               |         |              |         |          
|Share capital                                                                  |         |              |         |          
|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                    | 200,000 |              | 163,763
|issued and outstanding: 20,000,000 shares                                      |         |              |         |          
|(March 31, 2003 - 16,376,345)                                                  |         |              |         |          
|                                                                               |         |              |         |          
|Additional paid in capital                                                     |         | (140,575)    |         | (110,687)
|                                                                               |         |              |         |          
|**Deficit accumulated during the development stage**                           |         | (508,860)    |         | (228,409)
|                                                                               |         |              |         |          
|**Total stockholders' (deficiency)**                                           |         | (449,435)    |         | (175,333)
|                                                                               |         |              |         |          
|**********Total liabilities and stockholders' (deficiency)**                   | $       | 55           | $       | 52       
|**The accompanying notes are an integral part of these financial statements.** |         |             

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|**SHALLBETTER INDUSTRIES, INC.**                                           |              |   |         |             |           |             |           |              |          
|-------------------------------------------------------------------------- | ------------ | - | ------- | ----------- | --------- | ----------- | --------- | ------------ | ---------
|(A development stage enterprise)                                           |              |   |         |             |           |             |           |              |          
|Consolidated Statements of Stockholders' (Deficiency)                      |              |   |         |             |           |             |           |             
|For the period from November 16, 2001 (inception) to September 30, 2003    |              |   |         |             |           |            
|**(Expressed in US Dollars)**                                              |              |   |         |             |           |             |           |              |          
|                                                                           |              |   |         |             |           |             | Deficit   |              |          
|                                                                           |              |   |         |             |           | accumulated |           | Total       
|                                                                           |              |   |         | Additional  |           | during      |           | Stock-      
|                                                                           | Common stock |   | paid-in | development |           | holders'   
|                                                                           | Shares       |   | Amount  |             | capital   | stage       |           | (deficiency)
|                                                                           |              |   |         |             |           |             |           |              |          
|********Initial capitalization as a result of reverse                      |              |   |         |             |           |             |           |              |          
|acquisition (Note 1)                                                       | 16,376,345   | $ | 163,763 | $           | (113,763) | $           | -         | $            | 50,000   
|                                                                           |              |   |         |             |           |             |           |              |          
|Imputed interest on amount due to related parties                          | -            |   | -       |             | 3,076     |             | -         |              | 3,076    
|                                                                           |              |   |         |             |           |             |           |              |          
|Comprehensive income (loss)                                                |              |   |         |             |           |             |           |              |          
|Net (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 the acquisition of Shallbetter                  | 3,623,655    |   | 36,237  |             | (36,237)  |             | -         |              | -        
|                                                                           |              |   |         |             |           |             |           |              |          
|Imputed interest on amount due to related parties                          | -            |   | -       |             | 6,349     |             | -         |              | 6,349    
|                                                                           |              |   |         |             |           |             |           |              |          
|Comprehensive income (loss)                                                |              |   |         |             |           |             |           |              |          
|Net (loss) for the period                                                  | -            |   | -       |             | -         |             | (280,451) |              | (280,451)
|                                                                           |              |   |         |             |           |             |           |              |          
|Balance, September 30, 2003                                                | 20,000,000   | $ | 200,000 | $           | (140,575) | $           | (508,860) | $            | (449,435)
|                                                                           |              |   |         |             |           |             |           |              |          
|The accompanying notes are an integral part of these financial statements. |              |   |         |             |           |            

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|**SHALLBETTER INDUSTRIES, INC.**                                               |                  |              |           |               
|------------------------------------------------------------------------------ | ---------------- | ------------ | --------- | --------------
|(A development stage enterprise)                                               |                  |              |           |               
|Consolidated Statements of Operations                                          |                  |              |           |               
|**(Expressed in U.S. Dollars)**                                                |                  |              |           |               
|                                                                               |                  |              |           |               
|                                                                               | Cumulative from  |              | Six-month | (commencement)
|                                                                               | April 1, 2002 to |              | Ended     |               
|                                                                               | September 30     | September 30 | March 31 
|                                                                               |                  | 2003         |           | 2003          
|                                                                               |                  |              |           |               
|**General and administrative expenses**                                        |                  |              |           |               
|Accounting and legal                                                           | $                | 23,114       | $         | 22,409        
|Office and miscellaneous                                                       |                  | 3,223        |           | 3,159         
|Consulting fee                                                                 |                  | 30,000       |           | 30,000        
|Foreign exchange loss (gain)                                                   |                  | 1,159        |           | 1,231         
|Interest (imputed - related parties)                                           |                  | 9,425        |           | 6,349         
|Management fees                                                                |                  | 237,974      |           | 100,000       
|Mineral claims licenses fee                                                    |                  | 25,610       |           | 25,610        
|Geological report                                                              |                  | 18,000       |           | 18,000        
|Rent                                                                           |                  | 63,661       |           | 25,000        
|Salaries and benefit                                                           |                  | 72,000       |           | 24,000        
|Travel                                                                         |                  | 24,693       |           | 24,693        
|                                                                               |                  |              |           |               
|**Operating (loss)**                                                           |                  | (508,860)    |           | (280,451)     
|                                                                               |                  |              |           |               
|                                                                               |                  |              |           |               
|Net (loss) for the period                                                      | $                | (508,860)    | $         | (280,451)     
|                                                                               |                  |              |           |               
|**(Loss) per share,**                                                          |                  |              |           |               
|- basic and diluted                                                            |                  |              | $         | (0.02)        
|                                                                               |                  |              |           |               
|                                                                               |                  |              |           |               
|**Weighted average number of**                                                 |                  |              |           |               
|**common shares outstanding**                                                  |                  |              |           |               
|- basic and diluted                                                            |                  |              |           | 16,455,986    
|                                                                               |                  |              |           |               
|**The accompanying notes are an integral part of these financial statements.** |                  |             

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|**SHALLBETTER INDUSTRIES, INC.**                                                           |                  |              |           |                |                       |          
|------------------------------------------------------------------------------------------ | ---------------- | ------------ | --------- | -------------- | --------------------- | ---------
|********(A development stage enterprise)                                                   |                  |              |           |                |                       |          
|Consolidated Statements of Cash Flows                                                      |                  |              |           |                |                       |          
|**(Expressed in U.S. Dollars)**                                                            |                  |              |           |                |                       |          
|                                                                                           |                  |              |           |                | ********April 1, 2002
|                                                                                           | Cumulative from  |              | Six-month | (commencement)
|                                                                                           | April 1, 2002 to |              | Ended     |                | to                   
|                                                                                           | September 30     | September 30 | March 31 
|                                                                                           |                  | 2003         |           | 2003           |                       | 2003     
|                                                                                           |                  |              |           |                |                       |          
|**Cash flows from (used in)**                                                              |                  |              |           |                |                       |          
|**operating activities**                                                                   |                  |              |           | ********       |                       |          
|Net (loss) for the period                                                                  | $                | (508,860)    | $         | (280,451)      | $                     | (228,409)
|Adjustment to reconcile net loss to                                                        |                  |              |           |                |                       |          
|net cash used in operating activities:                                                     |                  |              |           |                |                       |          
|- interest (imputed - related parties)                                                     |                  | 9,425        |           | 6,349          |                       | 3,076    
|Changes in non-cash working capital items:                                                 |                  |              |           |                |                       |          
|- accounts payable and accrued liabilities                                                 |                  | 12,409       |           | 12,409         |                       | -        
|                                                                                           |                  |              |           |                |                       |          
|                                                                                           |                  | (487,026)    |           | (261,693)      |                       | (225,333)
|                                                                                           |                  |              |           |                |                       |          
|**Cash flows provided by financing activities**                                            |                  | ****         |           |                |                       |          
|Proceeds from issuance of common stock                                                     |                  | 50,000       |           | -              |                       | 50,000   
|Advances from related parties                                                              |                  | 437,081      |           | 261,696        |                       | 175,385  
|                                                                                           |                  |              |           |                |                       |          
|                                                                                           |                  | 487,081      |           | 261,696        |                       | 225,385  
|                                                                                           |                  |              |           |                |                       |          
|**Increase in cash and cash equivalents**                                                  |                  | 55           |           | 3              |                       | 52       
|                                                                                           |                  |              |           |                |                       |          
|**Cash and cash equivalents,**                                                             |                  |              |           |                |                       |          
|beginning of period                                                                        |                  | -            |           | 52             |                       | -        
|                                                                                           |                  |              |           |                |                       |          
|**Cash and cash equivalents**,****                                                         | ****             |              |           |                |                       |          
|******************** end of period                                                         | **$**            | **55**       | **$**     | **55**         | **$**                 | **52**   
|****                                                                                       |                  | ********     | ****      |                |                       |          
|**************The accompanying notes are an integral part of these financial statements.** | ****             |             

---

******SHALLBETTER INDUSTRIES, INC.****(A development stage enterprise)****Notes to Consolidated Financial Statements****September 30, 2003 and March 31, 2003****(Expressed in U.S. Dollars)**

**1.        Incorporation and Continuance of Operations**

These consolidated financial statements presented are those of Shallbetter Industries, Inc. ("Shallbetter")
and its wholly-owned subsidiary Logistics Resources Limited ("Logistics").  Collectively, they are
referred to herein as "the Company".

Logistics was incorporated on November 16, 2001 under the laws of the British Virgin Islands.
Logistics, a development stage enterprise, commenced operations on April 1, 2002 in the business of
acquiring, exploring and developing natural resources.

Shallbetter was incorporated on September 18, 1968 under the laws of the State of Minnesota, U.S.A.
 Shallbetter has not conducted any business operations since 1982.

On August 14, 2003, Shallbetter entered into a Share Exchange Agreement ("Agreement") with
Logistics, whereby Shallbetter issued 16,376,345 shares of its common stock in exchange for all of
the outstanding common stock of Logistics.  As part of the agreement, Shallbetter transferred its net
liabilities to its former president for nil consideration and became a non-operating shell company
without any assets or liabilities.  Immediately prior to the Agreement, Shallbetter had 3,623,655
shares of common stock issued and outstanding.  The acquisition was completed on September 24,
2003 and accounted for as recapitalization of Logistics because the shareholders of Logistics
controlled Shallbetter after the acquisition with the shareholders of Shallbetter continuing only as
passive investors.  Logistics was treated as the acquiring entity for accounting purposes and
Shallbetter was the surviving entity for legal purposes.  The combined company is considered to be a
continuation of the operations of Logistics. The issued and outstanding common stock of Logistics
prior to the completion of acquisition was restated to reflect the 16,376,345 common stock issued by
Shallbetter.  The Company has an office in Vancouver, Canada.

These consolidated financial statements have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which contemplates the realization of assets and
the satisfaction of liabilities and commitments in the normal course of business.  The Company has
not generated any revenue and requires additional funds to maintain its operations.  Management's
plans in this regard are to raise equity financing as required.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.
These consolidated financial statements do not include any adjustments that might result from this
uncertainty.

The Company has not generated any operating revenues to date.

2.        Significant Accounting Policies

The consolidated financial statements include accounts of the Company and its wholly-owned subsidiary
Logistics. All significant inter-company balances and transactions are eliminated.

The preparation of consolidated financial statements in conformity with generally accepted accounting
principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates and assumptions.

Cash equivalents comprise certain highly liquid instruments with a maturity of three months or less when
purchased.  As at September 30, 2003 and March 31, 2003, cash and cash equivalents consist of cash
only.

Exploration costs are charged to operations as incurred until such time that proven or probable reserves
are discovered.  From that time forward, the Company will capitalize all costs to the extent that future
cash flow from mineral reserves equals or exceeds the costs deferred.  The deferred costs will be
amortized using the unit-of-production method when a property reaches commercial production.  As at
September 30, 2003, the Company did not have proven or probable reserves.

Exploration activities conducted jointly with others are reflected at the Company's proportionate interest
in such activities.

Costs related to site restoration programs are accrued using the unit-of-production method and charged
to operation expenses.  Costs associated with environmental remediation obligations are accrued at the
most likely estimate when it is probable that such costs will be incurred and they can be reasonably
estimated.

Costs of initial acquisition of mineral rights and concessions are capitalized until the properties are
abandoned or the right expires.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable, in accordance with SFAS No. 144, *"Accounting for the
Impairment or Disposal of Long-Lived Assets"*.  An impairment loss would be recognized when the
carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from
the use of the asset and its eventual disposition.  The amount of the impairment loss to be recorded is
calculated by the excess of the asset's carrying value over its fair value.  Fair value is generally
determined using a discounted cash flow analysis.

 (f)        
Advertising Expenses

The Company expenses advertising costs as incurred.  There were no advertising expenses incurred by
the Company for the six-month period ended September 30, 2003 and the period from April 1, 2002
(commencement) to March 31, 2003.

Basic earning (loss) per share is computed using the weighted average number of shares outstanding
during the period.  The Company adopted SFAS No. 128, *"Earnings Per Share".*Diluted loss per share
is equal to the basic loss per share for the six-month period ended September 30, 2003 and for the period
from April 1, 2002 (commencement) to March 31, 2003 because there is no potential dilutive securities.

The Company and its subsidiary maintains its accounting records in U.S. Dollars, the functional currency,
as follows:

At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use
of the exchange rate in effect at that date.  At the period end, monetary assets and liabilities are
remeasured by using the exchange rate in effect at that date.  The resulting foreign exchange gains and
losses are included in operations.

Fair value of financial instruments are made at a specific point in time, based on relevant information
about financial markets and specific financial instruments.  As these estimates are subjective in nature,
involving uncertainties and matters of significant judgement, they cannot be determined with precision.
Changes in assumptions can significantly affect estimated fair values.

The carrying value of cash and cash equivalents, accounts payable and accrued liabilities approximate
their fair value because of the short-term nature of these instruments. The Company is operating outside
of the United States of America, which may give rise to significant foreign currency risks from
fluctuations and the degree of volatility of foreign exchange rate between U.S. dollars and the currencies
of the countries in which it operates in.  Management is of the opinion that the Company is not exposed
to significant interest or credit risks arising from these financial instruments.

The Company has adopted Statement of Financial Accounting Standards (SFAS") No. 109, *"Accounting
for Income Taxes",*which requires the Company to recognize deferred tax liabilities and assets for the
expected future tax consequences of events that have been recognized in the Company's consolidated
financial statements or tax returns using the liability method.  Under this method, deferred tax liabilities
and assets are determined based on the temporary differences between the consolidated financial
statements and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.

The Company adopted SFAS No. 130, *"Reporting Comprehensive Income*", which requires inclusion of
foreign currency translation adjustments, reported separately in its Statement of Stockholders' Equity, in
other comprehensive income.   The Company had no other comprehensive income for the six-month
period ended September 30, 2003 and for the period from April 1, 2002 (commencement) to March 31,
2003.

The Company adopted the fair value method of accounting for stock-based compensation
recommended by of Statement of Financial Accounting Standards No. 123 (SFAS 123), "*Accounting
for Stock-based Compensation*".

The Company does not have a stock option plan nor granted any stock options since inception.

The Company adopted the Statement of Financial Accounting Standards No. 133 (SFAS 133),
*Accounting for Derivative Instruments and Hedging Activities,* which requires companies to recognize
all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair
value.  If certain conditions are met, a derivative may be specifically designated as a hedge, the objective
of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition
of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction.  For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of change.

The Company has not entered into derivative contracts either to hedge existing risks or for
speculative purposes.

The Company adopted the Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill*and Other Intangible Assets"*, which requires that goodwill and intangible assets with indefinite life are
not amortized but rather tested at least annually for impairment.  Intangible assets with a definite life are
required to be amortized over its useful life or its estimated useful life.

The Company does not have any goodwill, nor intangible assets with indefinite or definite life since
inception.

In June 2002, the FASB issued SFAS No. 146, *Accounting for Costs Associated with Exit or Disposal
Activities*, which addresses financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issued No. 94-3, *Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity*.  SFAS No. 146 generally requires
a liability for a cost associated with an exit or disposal activity to be recognized and measured initially
at its fair value in the period in which the liability is incurred.  The pronouncement is effective for exit
or disposal activities initiated after December 31, 2002.  The adoption of SFAS No.146 does not have
an impact on the Company's consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45), Guarantor's Accounting and
Disclosure Requirements for Guarantees, including Indirect Guarantees of indebtedness of Others - An
Interpretation of FASB Statements of No. 5, 57 and 107 and rescission of FASB Interpretation No. 34.
This interpretation clarifies the requirements for a guarantor's accounting for and disclosures of certain
guarantees issued and outstanding.  FIN 45 also clarifies the requirements related to the recognition of
a liability by a guarantor at the inception of a guarantee.  FIN 45 is effective for guarantees entered into
or modified after December 31, 2002.  The adoption of FIN 45 does not have impact on the Company's
consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), *Consolidation of Variable Interest
Entities - An Interpretation of Accounting Research Bulletin (ARB) No. 51*.  This interpretation clarifies
how to identify variable interest entities and how the Company should assess its interests in a variable
interest entity to decide whether to consolidate the entity.  FIN 46 applies to variable interest entities
created after January 31, 2003, in which the Company obtains an interest after that date.  Also, FIN 46
applies in the first fiscal quarter or interim period beginning after June 15, 2003, to variable interest
entities in which the Company holds a variable interest that it acquired before February 1, 2003. The
adoption of FIN 46 does not have an impact on the Company's consolidated financial statements.

In May 2003, the FASB issued SFAS No. 149, *Amendment of Statement 133 on Derivative Instruments
and Hedging Activities*. This Statement amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under SFAS No. 133. This Statement is effective for
contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 does not have an
impact on the Company's consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, *Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity*. This Statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in
some circumstances). This Statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 does not have an impact on the Company's consolidated
financial statements.

**3.        Mineral Exploration Licenses**

The Company was granted three (3) mineral exploration licences by the government of Mongolia.
The licenses which cover an area of approximately 75,000 hectares are located within the Gobi Altai
central Mongolian region. These mineral exploration licenses are valid for three (3) years and
renewable for additional four (4) years.  The Company is required to pay annual licensing fees at the
rate of $0.05 per hectare for the first year, $0.10 per hectare for each of the second and third year,
$1.00 per hectare for each of the fourth and fifth year and $1.50 per hectare for each of the sixth and
seventh year.  A royalty equal to 2.5% of the sales value of minerals produced and 7.5% for placer
gold mining is levied by the government of Mongolia.

**4.        Income Taxes**

Logistics is not subject to income taxes, however, mining operations conducted in Mongolia is
subject to income taxes on its taxable income reported at a tax rate in accordance with the relevant
Mongolia income tax laws.  As at September 30, 2003, the Company has estimated tax loss
carryforward for tax purposes of $179,000.  This amount may be carried forward for three (3) years to
be applied against future Mongolia federal taxable income. The Company evaluates its valuation
allowance requirements on an annual basis based on projected future operations.  When
circumstances change and this causes a change in management's judgement about the realizability of
deferred tax assets, the impact of the change on the valuation allowance is generally reflected in
current income.

The tax effects of temporary differences that give rise to the Company's deferred tax asset (liability)
are as follows:

|                    | Six-month      | April 1, 2002 
|------------------- | -------------- | --------------
|                    | ended          | (commencement)
|                    | September 30   | to March 31   
|                    | 2003           | 2003          
|Loss carry forwards | $  27,000      | $  13,000     
|Valuation allowance | (27,000)       | (13,000)      
|                    | $            - | $    -        

**5.        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 $6,394 and $3,076 at an interest rate of 5.5% per annum on the amounts due
to related parties for the six-month period ended September 30, 2003 and period from April 1,
2002 (commencement) to March 31, 2003 respectively.



|                | Six-month    | April 1, 2002 
|--------------- | ------------ | --------------
|                | ended        | (commencement)
|                | September 30 | to March 31   
|                | 2003         | 2003          
|Management fees | $  100,000   | $  137,940    
|Consulting fees | 30,000       | -             
|                | $  130,000   | $  137,940    

ITEM 8.        	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 8A.        
CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer (or those persons
performing similar functions), after evaluating the effectiveness of the Company's disclosure controls
and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934, as amended) as of a date within 90 days of the filing of this quarterly report (the "Evaluation
Date"), have concluded that, as of the Evaluation Date, the Company's disclosure controls and
procedures were effective to ensure the timely collection, evaluation and disclosure of information
relating to the Company that would potentially be subject to disclosure under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.  There were no
significant changes in the Company's internal controls or in other factors that could significantly
affect the internal controls subsequent to the Evaluation Date.

---

PART  III

ITEM 9.        
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The directors and executive officers currently serving the Company are as follows:

|Name               | Age | Position Held and Tenure                       
|------------------ | --- | -----------------------------------------------
|Anthony C. Y. Chow | 37  | Director, Chairman and CEO since September 2003
|Chow Chung Pang    | 41  | Director since September 2003                  
|Terry W. Wong      | 42  | Director and President since September 2003    
|Martina Lynch      | 44  | Director and Secretary since September 2003    
|J. L. Shaw         | 51  | Director since September 2003                  

The directors named above will serve until the next annual meeting of the Company's
stockholders.  Thereafter, directors will be elected for one-year terms at the annual stockholders'
meeting.  Officers will hold their positions at the pleasure of the board of directors, absent any
employment agreement, of which none currently exists or is contemplated.  There is no arrangement
or understanding between any of the directors or officers of the Company and any other person
pursuant to which any director or officer was or is to be selected as a director or officer.

The directors and officers will devote their time to the Company's affairs on an "as needed"
basis, which, depending on the circumstances, could amount to as little as two hours per month, or
more than forty hours per month, but more than likely will fall within the range of five to ten hours
per month.

Biographical Information

**Anthony C. Y. Chow**.	Mr. Chow is Chairman of the Board and CEO of the Company.   He
is currently the President of Waistech International, Inc., and has been a Director of that company
since March, 2001.  He is also Chairman of Jadepear Investment, Ltd., and in that capacity has spent
the last several years conducting businesses in North America and China in the areas of trade,
technology transfer and natural resource businesses.   Mr. Chow has held several senior management
positions with both investment and manufacturing firms, the most recent being Vice President of
Waistech Electronics (HK), President of Polymer Plastic Manufacturing (China) and President of
Logistics Resources, Ltd (BVI).  Mr. Chow holds dual degrees in engineering and commerce.

**Chow Chung Pang**.	Mr. Chow is a Director of the Company.  He has been Vice President
of Waistech International, Inc., since March, 2001, where his responsibility is mainly focused on sales
and marketing of the company's services in China.  Mr. Chow has developed extensive business
contacts and relationships all over Asia during the past ten years in the areas of trade, electronics and
information technologies as President of Waistech Electronics (HK) and Vice President of Polymer
Plastic Manufacturing (China).  Mr. Chow has a degree in computer engineering and has developed
systems integration for various financial institutions in Asia.

**Terry W. Wong**.	Mr. Wong is President and a Director of the Company.  He is a
founder and one of the directors of Logistics Resources, Ltd.  He was a founder of Shenzhen Global
Net Ltd (Shenzhen, China) and has been a director of that company since 1998.  From 1996 to 1998
he was the founder of Royal Diamond Casino (Canada), one of the first casinos in Vancouver,
Canada.  From 1990 to 1997 he was Managing Director of Maple Fortune Holdings (Canada), a
commercial real estate development company.  From 1985 to 1989 he was Executive Director of Tak
Kee Stevedoring and Container Ltd (Hong Kong).  He holds both a bachelors degree in finance and a
masters degree in economics from Simon Fraser University.

**Martina Lynch**.	Ms. Lynch is Secretary  and a Director of the Company.  For the past
24 years she has worked on the administrative team of McCarthy Tetrault, LLP, a law firm in
Vancouver, Canada.

**J. L. Shaw**.	Mr. Shaw is a Director of the Company.  Mr. Shaw's background includes
investment banking, commodity trades, international finance, real estate and movie productions.  He
has also served on the board of directors of a number of companies internationally.  He comes from a
prominent entertainment and media family whose holdings include TVB, the largest television
network in Asia, and Shaw studio and theatres.  Mr. Shaw holds a degree in economics from
University of British Columbia, Canada.

Compliance With Section 16(a) of the Exchange Act.

The Company's directors  have not yet filed an Annual Statement of Changes in Beneficial
Ownership on Form 5.

ITEM 10.        EXECUTIVE COMPENSATION.

No officer or director received any remuneration from the Company during the fiscal year.
Until the Company acquires additional capital, it is not intended that any officer or director will
receive compensation from the Company other than reimbursement for out-of-pocket expenses
incurred on behalf of the Company.  See "Certain Relationships and Related Transactions."  The
Company has no stock option, retirement, pension, or profit-sharing programs for the benefit of
directors, officers or other employees, but the Board of Directors may recommend adoption of one or
more such programs in the future.

ITEM 11.
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth, as of the end of the Company's most recent fiscal year, the
number of shares of Common Stock owned of record and beneficially by executive officers, directors
and persons who hold 5.0% or more of the outstanding Common Stock of the Company.  Also
included are the shares held by all executive officers and directors as a group.

|Name and Address                                                                   | Number of Shares Owned
Beneficially | Percent of Class Owned
|---------------------------------------------------------------------------------- | ----------------------------------- | ----------------------
|Donald G. Saunders (2)2877 Paradise RoadLas Vegas, NV 89109                        | 2,227,499                           | 11.13%                
|Bonnie Saunders (2)2877 Paradise RoadLas Vegas, NV 89109                           | 2,227,499                           | 11.13%                
|Anthony C. Y. Chow (1)3111Springside PlaceRichmond, VancouverV7E 1X3, Canada       | 10,981,976                          | 54.89%                
|Anita Choy6732 Cartier St.Vancouver, BC

VSP 4S4, Canada                           | 2,322,166                           | 11.60%                
|Chow Chung Pang (1)Room 303A, 3F, Peter Building58-62 Queens Road CentralHong Kong | 0                                   | 0                     
|Terry Wong (1)1094 Hillside RoadW. Vancouver

V7S 1E9, Canada                      | 0                                   | 0                     
|Martina Lynch (1)1402-1415 W. Georgia St.Vancouver, BCV6C 3CA, Canada              | 0                                   | 0                     
|J. L. Shaw (1) (3)1402-1415 W. Georgia St.Vancouver, BCV6C 3CA, Canada             | 1,069,376                           | 5.34%                 
|All current officers and directors as a group (5
persons)                          | 12,051,352                          | 60.24%                

(1)        
The person listed is currently an officer and director of the Company.(2)        
Includes 1,227,500 shares owned by the Don and Bonnie Saunders Family Trust and 999,999 shares owned by
the Saunders Children's Trust, of which Donald G. Saunders and Bonnie Saunders may be deemed to be the
beneficial owners.(3)        
Includes 1,068,817 shares to be owned by Sea Dragon, Inc., of which Mr. Shaw may be deemed to be the
beneficial owner.

ITEM 12.        
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

No officer, director, promoter, affiliate or beneficial owner of the Company has, has had, or
proposes to have, any direct or indirect material interest in any asset proposed to be acquired by the
Company through security holdings, contracts, options, or otherwise.

The Company has adopted a policy under which any consulting or finder's fee that may be
paid to a third party for consulting services to assist management in evaluating a prospective business
opportunity would be paid in stock rather than in cash.  Any such issuance of stock would be made on
an ad hoc basis.  Accordingly, the Company is unable to predict whether, or in what amount,
such stock issuance might be made.

It is not currently anticipated that any salary, consulting fee, or finder's fee shall be paid to any
of the Company's directors or executive officers, or to any other affiliate of the Company except as
described under "Executive Compensation" above.

Although management has no current plans to cause the Company to do so, it is possible that
the Company may enter into an agreement with an acquisition candidate requiring the sale of all or a
portion of the Common Stock held by the Company's current stockholders to the acquisition
candidate or principals thereof, or to other individual or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future employment of
specified officers and payment of salaries to them.  It is more likely than not that any sale of securities
by the Company's current stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders.  Any payment to current stockholders in the
context of an acquisition involving the Company would be determined entirely by the largely
unforeseeable terms of a future agreement with an unidentified business entity.

ITEM 13.        
EXHIBITS AND REPORTS ON FORM 8-K.

(a)        
 The Exhibits listed below are filed as part of this Annual Report.

Exhibit No.                Document



3.1        
Restated Articles of Incorporation (incorporated by reference from Registration
Statement on Form 10-SB filed with the Securities and Exchange Commission on
August 9, 2000.

3.2        
Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed
with the Securities and Exchange Commission on August 9, 2000).

31.1
        
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange
Act of 1934, as amended.

31.2
        
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange
Act of 1934, as amended.

32.1
        Certification  pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.

32.2
        Certification  pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.

(b)
        Reports on Form 8-K

These exhibits are incorporated herein by reference to the Company's Current Reports
on Form 8-K filed with the U. S. Securities and Exchange Commission on December
18, 2003, December 19, 2003, and on Form 8-K/A filed with the U. S. Securities and
Exchange Commission on December 22, 2003.

---

**SIGNATURES**

In accordance with Section 13 or 15(d) 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

Date: January 13, 2004

In accordance with the Exchange Act, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

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

Date: January 13,  2004

By: /S/ CHOW CHUNG PANGChow Chung Pang, Director

Date: January 13,  2004

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

Date: January 13,  2004

By: /S/ MARTINA LYNCHMartina Lynch, Director and Secretary

Date: January 13,  2004

By: /S/ J.L. SHAWJ. L. Shaw, Director

Date: January 13, 2004****