U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 2001, or

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
act of 1934 for the transition period from to

                          Commission File No. 000-31297

                          SHALLBETTER INDUSTRIES, INC.
           (Name of Small Business Issuer as specified in its charter)

               Minnesota                               41-1961936
    (State or Other Jurisdiction of                   (IRS Employer
     Incorporation or Organization)                Identification No.)

                11900 Wayzata Blvd., Suite 100, Hopkins, MN 55305
              (Address of Principal Executive Offices and Zip Code)

Issuer's Telephone Number:  (952) 541-1155

Securities registered under Section 12(b) of the Act:  None

Securities  registered  under Section 12(g) of the Act: Common Stock,  Par Value
$0.01.

Check whether the issuer (1) filed all reports  required to be filed by sections
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or such  shorter
period  that the issuer 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 there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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. [ X ]

The Registrant's revenues for its most recent fiscal year:  $0

The aggregate market value of voting stock held by non-affiliates:  $0

As of December 31, 2001,  the  Registrant had  outstanding  1,207,885  shares of
common stock, par value $0.01.

Documents incorporated by reference:  None.


<PAGE>


                                TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                                   Page

Part I

1.    Description of Business                                             3

2.    Description of Property                                             7

3.    Legal Proceedings                                                   7

4.    Submission of Matters to a Vote of Security Holders                 7

Part II

5.    Market for Common Equity and Related Stockholder Matters            7

6.    Management's Discussion and Analysis and Plan of Operation          8

7.    Financial Statements                                                9

8.    Changes in and Disagreements with Accountants                       9
      on Accounting and Financial Disclosure

Part III

9.    Directors, Executive Officers, Promoters and Control                9
      Persons; Compliance with Section 16(a) of the Exchange Act

10.   Executive Compensation                                              10

11.   Security Ownership of Certain Beneficial Owners and Management      10

12.   Certain Relationships and Related Transactions                      11

13.   Exhibits and Reports on Form 8-K                                    11

Signatures                                                                11


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FORWARD-LOOKING STATEMENT NOTICE

     When used in this report, the words "may," "will," "expect,"  "anticipate,"
"continue,"   "estimate,"  "project,"  "intend,"  and  similar  expressions  are
intended to identify  forward-looking  statements  within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 regarding events,  conditions,  and financial trends that may affect the
Company's future plans of operations,  business strategy, operating results, and
financial  position.  Persons  reviewing  this  report  are  cautioned  that any
forward-looking  statements  are not  guarantees of future  performance  and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors.  Such factors are discussed under the headings "Item 1.  Description of
Business,"  and "Item 6.  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations,"  and also include general economic factors
and conditions  that may directly or indirectly  impact the Company's  financial
condition or results of operations.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

History

     Shallbetter  Industries,  Inc.  (the  "Company")  was formed as a Minnesota
corporation on September 18, 1968, for the purpose of designing,  manufacturing,
and marketing low and medium voltage electrical power distribution equipment. In
February of 1969, the Company completed an Intrastate  Minnesota public offering
and sold 100,000 shares of its common stock to the public at $2.50 per share.

     Through the 1970's,  the Company  expanded its  operations,  so that it was
offering  nationally  pre-engineered  electrical  products  through  catalogs to
wholesale   electrical  supply  houses.   Annual  sales  for  the  company  were
historically  in the $1.0 to $2.0 million range. In early 1982, due to recession
and financial  losses at the Company,  the Company's bank withdrew the Company's
line of credit.  Consequently,  the Company filed for chapter 11 protection from
its creditors in April 1982.  The bankruptcy  action  converted to chapter 7 and
the Company's  assets were  liquidated in June of 1982.  The Company then ceased
operations and has been inactive since.

     On December 9, 1999, the sole remaining officer and director of the Company
resigned his positions  following the appointment of Craig Laughlin to the Board
of Directors.  Mr.  Laughlin has undertaken to prepare the Company to seek a new
business venture in which to participate.

Selection of a Business

     The Company  anticipates  that businesses for possible  acquisition will be
referred by various sources, including its officers and directors,  professional
advisors,  securities  broker-dealers,   venture  capitalists,  members  of  the
financial  community,  and others who may  present  unsolicited  proposals.  The
Company  will not  engage  in any  general  solicitation  or  advertising  for a
business  opportunity,  and will rely on personal  contacts of its  officers and
directors and their affiliates,  as well as indirect  associations  between them
and other business and professional  people. By relying on "word of mouth",  the
Company may be limited in the number of potential  acquisitions it can identify.
While it is not presently  anticipated that the Company will engage unaffiliated
professional  firms  specializing in business  acquisitions or  reorganizations,
such firms may be retained if  management  deems it in the best  interest of the
Company.

     Compensation  to a finder or  business  acquisition  firm may take  various
forms,  including  one-time  cash  payments,  payments  based on a percentage of
revenues or product  sales  volume,  payments  involving  issuance of securities

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(including  those  of the  Company),  or  any  combination  of  these  or  other
compensation  arrangements.  Consequently,  the Company is  currently  unable to
predict the cost of utilizing such services.

     The  Company  will not  restrict  its  search to any  particular  business,
industry,  or  geographical  location,  and  management  reserves  the  right to
evaluate  and enter into any type of business in any  location.  The Company may
participate in a newly organized business venture or a more established  company
entering  a new phase of growth or in need of  additional  capital  to  overcome
existing  financial  problems.  Participation  in a new business venture entails
greater risks since in many instances management of such a venture will not have
proved its ability,  the eventual  market of such venture's  product or services
will likely not be  established,  and the  profitability  of the venture will be
unproved and cannot be predicted  accurately.  If the Company  participates in a
more established firm with existing financial  problems,  it may be subjected to
risk  because  the  financial  resources  of the  Company may not be adequate to
eliminate or reverse the circumstances leading to such financial problems.

     In seeking a business  venture,  the  decision  of  management  will not be
controlled by an attempt to capitalize on any anticipated or perceived appeal of
a specific industry,  management group, product, or industry,  but will be based
on the business objective of seeking long-term capital  appreciation in the real
value of the Company.

     The  analysis  of  new  businesses  will  be  undertaken  by or  under  the
supervision of the officers and directors.  In analyzing prospective businesses,
management will consider,  to the extent  applicable,  the available  technical,
financial, and managerial resources; working capital and other prospects for the
future;  the  nature of  present  and  expected  competition;  the  quality  and
experience of management  services  which may be available and the depth of that
management; the potential for further research, development, or exploration; the
potential for growth and  expansion;  the  potential  for profit;  the perceived
public  recognition  or  acceptance of products,  services,  or trade or service
marks; name identification; and other relevant factors.

     The  decision  to  participate  in a  specific  business  may be  based  on
management's  analysis  of  the  quality  of the  other  firm's  management  and
personnel, the anticipated  acceptability of new products or marketing concepts,
the merit of technological  changes,  and other factors which are difficult,  if
not  impossible,  to analyze through any objective  criteria.  It is anticipated
that the  results  of  operations  of a  specific  firm may not  necessarily  be
indicative  of the  potential  for the  future  because  of the  requirement  to
substantially shift marketing approaches,  expand significantly,  change product
emphasis, change or substantially augment management, and other factors.

     The Company will  analyze all  available  factors and make a  determination
based on a composite of available facts,  without reliance on any single factor.
The period  within  which the Company may  participate  in a business  cannot be
predicted  and will  depend  on  circumstances  beyond  the  Company's  control,
including the  availability of businesses,  the time required for the Company to
complete its  investigation  and analysis of  prospective  businesses,  the time
required to prepare  appropriate  documents  and  agreements  providing  for the
Company's participation, and other circumstances.

Acquisition of a Business

     In  implementing  a structure for a particular  business  acquisition,  the
Company may become a party to a merger,  consolidation,  or other reorganization
with another corporation or entity; joint venture; license; purchase and sale of
assets;  or purchase and sale of stock,  the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a  business  through  the  purchase  of  minority  stock  positions.  On  the

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consummation  of a  transaction,  it is likely that the present  management  and
shareholders of the Company will not be in control of the Company.  In addition,
a majority or all of the  Company's  directors  may, as part of the terms of the
acquisition transaction,  resign and be replaced by new directors without a vote
of the Company's shareholders.

     In connection  with the Company's  acquisition  of a business,  the present
shareholders  of the  Company,  including  officers  and  directors,  may,  as a
negotiated  element of the  acquisition,  sell a portion or all of the Company's
common  stock  held  by  them  at a  significant  premium  over  their  original
investment  in the  Company.  It is not  unusual  for  affiliates  of the entity
participating in the  reorganization to negotiate to purchase shares held by the
present  shareholders  in order to reduce the number of "restricted  securities"
held by persons no longer  affiliated  with the Company  and thereby  reduce the
potential adverse impact on the public market in the Company's common stock that
could result from  substantial  sales of such shares after the  restrictions  no
longer apply. As a result of such sales,  affiliates of the entity participating
in  the  business  reorganization  with  the  Company  would  acquire  a  higher
percentage of equity ownership in the Company. Public investors will not receive
any  portion of the  premium  that may be paid in the  foregoing  circumstances.
Furthermore,  the Company's  shareholders  may not be afforded an opportunity to
approve or consent to any particular stock buy-out transaction.

     In the event  sales of  shares  by  present  shareholders  of the  Company,
including  officers  and  directors,   is  a  negotiated  element  of  a  future
acquisition,  a  conflict  of  interest  may  arise  because  directors  will be
negotiating  for the  acquisition on behalf of the Company and for sale of their
shares for their own respective  accounts.  Where a business opportunity is well
suited  for  acquisition  by  the  Company,   but  affiliates  of  the  business
opportunity  impose a condition  that  management  sell their  shares at a price
which is  unacceptable  to them,  management may not sacrifice  their  financial
interest  for the  Company  to  complete  the  transaction.  Where the  business
opportunity  is not well  suited,  but the price  offered  management  for their
shares is high,  management will be tempted to effect the acquisition to realize
a substantial  gain on their shares in the Company.  Management  has not adopted
any policy for resolving the foregoing potential  conflicts,  should they arise,
and does not intend to obtain an independent  appraisal to determine whether any
price  that may be offered  for their  shares is fair.  Stockholders  must rely,
instead,  on the  obligation of  management to fulfill its fiduciary  duty under
state law to act in the best interests of the Company and its stockholders.

     It is  anticipated  that any securities  issued in any such  reorganization
would be issued in reliance on exemptions  from  registration  under  applicable
federal  and  state  securities  laws.  In  some  circumstances,  however,  as a
negotiated  element of the  transaction,  the Company may agree to register such
securities  either at the time the  transaction  is  consummated,  under certain
conditions,  or at  specified  times  thereafter.  Although  the  terms  of such
registration  rights  and  the  number  of  securities,  if  any,  which  may be
registered  cannot  be  predicted,  it  may be  expected  that  registration  of
securities  by the  Company  in these  circumstances  would  entail  substantial
expense to the Company.  The issuance of substantial  additional  securities and
their  potential  sale into any trading market that may develop in the Company's
securities may have a depressive effect on such market.

     While the actual terms of a transaction to which the Company may be a party
cannot  be  predicted,  it may be  expected  that the  parties  to the  business
transaction  will find it desirable to structure the  acquisition as a so-called
"tax-free"  event under  sections 351 or 368(a) of the Internal  Revenue Code of
1986, (the "Code").  In order to obtain tax-free  treatment under section 351 of
the Code, it would be necessary  for the owners of the acquired  business to own
80% or more of the voting  stock of the  surviving  entity.  In such event,  the
shareholders  of the  Company  would  retain  less  than 20% of the  issued  and
outstanding  shares  of the  surviving  entity.  Section  368(a)(1)  of the Code
provides for  tax-free  treatment of certain  business  reorganizations  between
corporate  entities  where  one  corporation  is  merged  with or  acquires  the
securities or assets of another corporation.  Generally, the Company will be the
acquiring corporation in such a business reorganization, and the tax-free status
of the transaction will not depend on the issuance of any specific amount of the
Company's voting securities.  It is not uncommon,  however, that as a negotiated
element of a  transaction  completed in reliance on section  368, the  acquiring
corporation  issue  securities  in such an amount that the  shareholders  of the

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acquired  corporation  hold 50% or more of the  voting  stock  of the  surviving
entity.  Consequently,  there is a substantial possibility that the shareholders
of the Company  immediately  prior to the transaction would retain less than 50%
of the  issued  and  outstanding  shares  of the  surviving  entity.  Therefore,
regardless of the form of the business  acquisition,  it may be anticipated that
stockholders  immediately prior to the transaction will experience a significant
reduction in their percentage of ownership in the Company.

     Notwithstanding  the fact that the  Company is  technically  the  acquiring
entity in the foregoing circumstances,  generally accepted accounting principles
ordinarily  require that such a  transaction  be accounted for as if the Company
had been acquired by the other entity owning the business and,  therefore,  will
not permit a write-up in the carrying value of the assets of the other company.

     The manner in which the Company  participates  in a business will depend on
the nature of the business,  the respective needs and desires of the Company and
other  parties,  the  management of the business,  and the relative  negotiating
strength of the Company and such other management.

     The Company will  participate in a business only after the  negotiation and
execution  of  appropriate  written  agreements.  Although  the  terms  of  such
agreements cannot be predicted,  generally such agreements will require specific
representations  and  warranties  by all of the parties  thereto,  will  specify
certain  events of default,  will detail the terms of closing and the conditions
which must be  satisfied  by each of the  parties  prior to such  closing,  will
outline the manner of bearing costs if the  transaction is not closed,  will set
forth remedies on default, and will include miscellaneous other terms.

Operation of Business After Acquisition

     The  Company's  operation  following  its  acquisition  of  a  business  is
dependent on the nature of the business and the interest acquired. The Company's
present  management may or may not have experience in the nature of the acquired
business and is unable to predict  whether the Company will be in control of the
acquired  business or whether the  acquired  business  will be in control of the
Company. It may be additionally expected that the acquired business will present
and be subject to various risks like  governmental  regulation,  competition and
other risks that cannot be predicted at the present time.

Governmental Regulation

     It is impossible to predict the government regulation, if any, to which the
Company may be subject until it has acquired an interest in a business.  The use
of assets  and/or  conduct of  businesses  that the Company  may  acquire  could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest,  management  will  endeavor to  ascertain,  to the
extent of the limited  resources of the Company,  the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however,  such as the  acquisition of an interest in a new or start-up  business
activity,  it may not be  possible to predict  with any degree of  accuracy  the
impact of  government  regulation.  The  inability  to  ascertain  the effect of
government   regulation  on  a  prospective  business  activity  will  make  the
acquisition of an interest in such business a higher risk.

Competition

     The Company  will be involved in intense  competition  with other  business
entities,  many of which will have a competitive edge over the Company by virtue

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of their stronger financial resources and prior experience in business. There is
no  assurance  that  the  Company  will  be  successful  in  obtaining  suitable
investments.

Employees

     The Company is a development  stage company and currently has no employees.
Executive  officers  will devote only such time to the affairs of the Company as
they deem appropriate, which is estimated to be approximately 20 hours per month
per person. Management of the Company expects to use consultants, attorneys, and
accountants as necessary, and does not anticipate a need to engage any full-time
employees  so long as it is  seeking  and  evaluating  businesses.  The need for
employees and their availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business industry.

ITEM 2.  DESCRIPTION OF PROPERTY

     We have no corporate  office  space under lease at this time.  We currently
operate out of space provided by Craig  Laughlin,  our  president,  director and
principal stockholder, at 11900 Wayzata Blvd., Suite 100, Hopkins, MN 55305. The
costs associated with the use of the telephone and mailing address are deemed by
us to be  immaterial,  as the  telephone  and  mailing  address  are used almost
entirely by our officer for other business  purposes.  Mr.  Laughlin is under no
legal obligation to provide rent free office space to the Company, and we do not
pay rent to Mr. Laughlin.

ITEM 3.  LEGAL PROCEEDINGS

     The Company is not a party to any legal proceedings, and to the best of its
knowledge, no such proceedings by or against the Company have been threatened.

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

     No matter was submitted to a shareholder vote for the fourth the quarter of
the 2001 fiscal year.

                                     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.

     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 Bid ($)               Low Bid ($)

September 30, 2001                    $0.55                       $0.25
December 31, 2001                     $0.75                       $0.25

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     All shares of common stock  outstanding  may be sold  without  restriction,
except 1,000,000 shares, which are held by Craig Laughlin,  the sole officer and
director  of the  Company.  The  shares  held  by Mr.  Laughlin  are  restricted
securities   within  the  meaning  of  Rule  144  and  cannot  be  sold  without
registration  under the Securities  Act of 1933 or in a transaction  exempt from
registration.

     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 December 31, 2001,  there were
approximately 290 holders of record of the Company's common stock.

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

Results of Operations

     The Company  generated no revenue for the years ended December 31, 2001 and
2000.

     General and  administrative  expenses for the years ended December 31, 2001
and 2000 were $7,376 and $9,344, respectively.  This decrease is attributable to
lower costs of  administrative,  legal,  professional,  accounting  and auditing
expenses  associated  with  filing  the  Company's  periodic  reports  under the
Securities  Exchange Act of 1934 in 2001,  compared with the expenses associated
with  reviving  the Company  from  dormancy  and  registering  its common  stock
pursuant to Section  12(g) of the  Securities  Exchange  Act of 1934 in calendar
year 2000.

     Interest  income for the years ended December 31, 2001 and 2000 were $0 and
$200, respectively.

     Due to the  foregoing,  the  Company  realized a net loss of $7,376 for the
year ended  December  31,  2001,  compared  to a net loss of $9,144 for the year
ended  December 31, 2000. The Company does not expect to generate any meaningful
revenue or incur operating  expenses unless and until it acquires an interest in
an operating company.

Liquidity and Capital Resources

     At December 31, 2001, the Company had a working  capital  deficit of $6,520
and an accumulated  deficit of $36,249.  The working capital deficit is a result
of the  administrative  expenses  incurred  by the  Company  over  the  past two
calendar years in the amount of $16,720 that have been offset by interest income
of $200 and an equity investment of $10,000 made by Craig Laughlin.

     The Company does not have sufficient cash to meet its operational needs for
the next twelve  months.  Management  will attempt to raise  additional  capital
through  loans from  related  parties,  debt  financing,  equity  financing or a
combination of financing options.  Although  management has expressed its intent
to provide  necessary  working  capital to preserve  the  Company,  there are no
written agreements for such an infusion of capital and there be no assurances to
that effect. Unless the Company can obtain additional financing,  its ability to
continue as a going concern is doubtful.

     The Company's  need for capital may change  dramatically  if it acquires an
interest  in a business  opportunity  during the next 12 months.  The  Company's
current  operating  plan  is to (i)  handle  the  administrative  and  reporting
requirements  of a public  company;  and (ii) search for  potential  businesses,
products,  technologies and companies for acquisition.  At present,  the Company
has no understandings, commitments or agreements with respect to the acquisition

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of any  business,  product,  technology or company and there can be no assurance
that the Company will identify any such business, product, technology or company
suitable for acquisition in the future.  Further, there can be no assurance that
the Company would be successful in  consummating  any  acquisition  on favorable
terms  or that it will be able  to  profitably  manage  the  business,  product,
technology or company it acquires.

ITEM 7.  FINANCIAL STATEMENTS

     The financial  statements  of the Company  appear at the end of this report
beginning with the Index to Financial Statements on page F-1.

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

      None.

                                    PART III

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

Directors and Officers

     The following  table sets forth the names,  ages,  and  positions  with the
Company for the sole director and officer of the Company.

Name                      Age   Positions (1)                         Since

Craig Laughlin            51    President and Director                1999

     All  executive  officers are elected by the Board and hold office until the
next Annual Meeting of stockholders  or until their  successors are duly elected
and qualified.

     The following is  information  on the business  experience of each director
and officer.

     Craig  Laughlin is the founder and  President of SRC Funding,  Inc.,  which
provides  consulting  services on corporate structure and finance to early stage
companies.  Mr.  Laughlin  has  been a  consultant  in the  areas  of  corporate
structure  and finance  since 1986.  Since  September  1994,  he has served as a
director of Gold Standard  Medical,  Inc., a company that holds  certain  patent
rights to a blood gas monitoring  device, but has suspended further research and
development  of  the  technology  pending  reorganization  of  the  company  and
obtaining  additional  capital.  From May 1990 through July 2000,  Mr.  Laughlin
served as a member of the board of directors of Century Controls  International,
Inc.,  a  publicly   held  company   engaged  in  the  business  of   designing,
manufacturing,  and marketing a line of proprietary  control devices used in the
management  of large  commercial  and  industrial  steam  boilers and of certain
manufacturing processes. Mr. Laughlin served from March 1999 to March 2001 as an
officer  and  director  of Future  Technologies,  Inc.,  a  publicly  held shell
corporation   seeking  a  business   acquisition.   In  February  2001,   Future
Technologies  issued  12,873,944  shares  of  restricted  common  stock  to  the
shareholders of SE Global Equities,  Inc., a Cayman Islands  corporation ("SEG")
and majority owned  subsidiary of Capital  Alliance  Group,  Inc., of Vancouver,
Canada  ("CAG"),  in exchange  for all of the capital  shares of SEG held by its
shareholders.  SEG operates an Internet financial center for exploring worldwide
investments  through an  established  global  alliance  network  of brokers  and
information providers.

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Other Shell Company Activities

     The  possibility  exists that Mr.  Laughlin  could become an officer and/or
director of other shell companies in the future.  Certain  conflicts of interest
are inherent in the  participation of the Company's sole officer and director as
management in other shell companies,  which may be difficult, if not impossible,
to  resolve  in all  cases in the best  interests  of the  Company.  Failure  by
management to conduct the Company's business in its best interests may result in
liability of management of the Company to the stockholders.

ITEM 10.  EXECUTIVE COMPENSATION

     The Company has no agreement or understanding, express or implied, with any
officer, director, or principal stockholder,  or their affiliates or associates,
regarding employment with the Company or compensation for services.  The Company
has no plan, agreement, or understanding,  express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
the  issuance  to such  persons of any shares of the  Company's  authorized  and
unissued common stock. There is no understanding  between the Company and any of
its present  stockholders  regarding  the sale of a portion or all of the common
stock currently held by them in connection with any future  participation by the
Company in a business. There are no other plans, understandings, or arrangements
whereby any of the Company's officers,  directors, or principal stockholders, or
any of their  affiliates or  associates,  would receive funds,  stock,  or other
assets in connection with the Company's participation in a business. No advances
have been made or contemplated by the Company to any of its officers, directors,
or principal stockholders, or any of their affiliates or associates. There is no
policy that prevents  management from adopting a plan or agreement in the future
that would provide for cash or stock based compensation for services rendered to
the Company.

     On acquisition of a business,  it is possible that current  management will
resign  and be  replaced  by  persons  associated  with the  business  acquired,
particularly  if the Company  participates  in a business  by  effecting a stock
exchange, merger, or consolidation as discussed under "Item 1. Business." In the
event that any member of current  management  remains after effecting a business
acquisition,  that  member's time  commitment  and  compensation  will likely be
adjusted  based on the nature and  location of such  business  and the  services
required, which cannot now be foreseen.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table sets forth as of December  31,  2001,  the number and
percentage  of the  outstanding  shares of common stock which,  according to the
information supplied to the Company,  were beneficially owned by (i) each person
who is currently a director of the Company,  (ii) each executive officer,  (iii)
all current directors and executive  officers of the Company as a group and (iv)
each person who, to the  knowledge of the Company,  is the  beneficial  owner of
more than 5% of the outstanding common stock. Except as otherwise indicated, the
persons named in the table have sole voting and  dispositive  power with respect
to all shares  beneficially  owned,  subject to  community  property  laws where
applicable.

Name and Address                                Common Shares     Percent of
                                                                   Class(2)
Craig Laughlin (1)
11900 Wayzata Blvd., Suite 100                    1,000,000          83.5
Hopkins,  MN 55305

(1)   Craig Laughlin is the sole executive officer and director of the Company.

                                       10
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On December 29, 1999, the Company sold 1,000,000  shares of common stock to
Craig Laughlin,  the sole officer and director of the Company, for $10,000 under
a stock subscription  agreement,  which was paid in full in 2000. No underwriter
or broker was involved in the offering, and no commissions were paid on the sale
of the shares. The shares were offered and sold in reliance on the exemption set
forth in Section 4(2) of the Securities Act of 1933.

     During the year ended December 31, 2001, Craig Laughlin  advanced $6,600 to
the Company to pay  administrative  expenses.  The advances do not bear interest
and are payable on demand.

     The Company uses offices at 11900 Wayzata  Blvd.,  Suite 100,  Hopkins,  MN
55305, provided by its sole officer and director at no charge.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

 Exhibit No.  SEC Ref. No.  Title of Document

     3.1           (3)      Restated Articles of Incorporation*

     3.2           (3)      By-Laws*


* These exhibits are are incorporated  herein by this reference to the Company's
Registration  Statement  on Form 10-SB filed with the  Securities  and  Exchange
Commission on August 9, 2000.

Form 8-K Filings

     No reports on Form 8-K were filed during the fourth  quarter ended December
31, 2001.

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.

Date: February 20, 2002                   By: /s/ Craig Laughlin, President

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


February 20, 2002                        /s/ Craig Laughlin, Director

                                       11
<PAGE>


                          SHALLBETTER INDUSTRIES, INC.

                                      INDEX


                                                                     Page

Report of Independent Certified Public Accountants                   F-2

Financial Statements

  Balance Sheets
   as of December 31, 2001 and 2000                                  F-3

  Statements of Operations and Comprehensive Income
   for the years ended December 31, 2001 and 2000                    F-4

  Statement of Changes in Shareholders' Equity
   for the years ended December 31, 2001 and 2000                    F-5

  Statements of Cash Flows
   for the years ended December 31, 2001 and 2000                    F-6

  Notes to Financial Statements                                      F-7


                                      F-1
<PAGE>


S. W. HATFIELD, CPA
      certified public accountants

      Member:     Texas Society of Certified Public Accountants
                  Press Club of Dallas

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
Shallbetter Industries, Inc.

We have audited the accompanying balance sheets of Shallbetter Industries,  Inc.
(a  Minnesota  corporation)  as of  December  31,  2001 and 2000 and the related
statements of operations  and  comprehensive  income,  changes in  shareholders'
equity  and cash  flows for each of the two years then  ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Shallbetter Industries, Inc. as
of December 31, 2001 and 2000,  and the results of operations and cash flows for
each of the two years then ended,  respectively,  in conformity  with accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note A to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon  significant  shareholders to provide  sufficient  working
capital to maintain the integrity of the corporate entity.  These  circumstances
create  substantial  doubt  about the  Company's  ability to continue as a going
concern and are discussed in Note A. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.


                                               S. W. HATFIELD, CPA
Dallas, Texas
January 18, 2002



                     Use our past to assist your future (sm)

P. O. Box 820395                             9002 Green Oaks Circle, 2nd Floor
Dallas, Texas  75382-0395                             Dallas, Texas 75243-7212
214-342-9635 (voice)                                        (fax) 214-342-9601
800-244-0639                                                    SWHCPA@aol.com

                                      F-2
<PAGE>


                         SHALLBETTER INDUSTRIES, INC.
                                Balance Sheets
                           December 31 2001 and 2000


                                                    December 31,    December 31,
                                                      2001              2000
                                                   -------------   -------------
                                    ASSETS
Current Assets
  Cash in bank                                      $       80      $     856
                                                     ---------       --------

Total Assets                                        $       80      $     856
                                                     =========       ========



                     LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
  Advances from Officer                             $    6,600      $       -
                                                     ---------       --------

Commitments and Contingencies

Shareholders' Equity
  Preferred stock - $0.01 par value.
   5,000,000 shares authorized;
   none issued and outstanding                               -              -
  Common stock - $0.01 par value.
   45,000,000 shares authorized.
   1,207,885 shares issued and outstanding              12,079         12,079
  Additional paid-in capital                            17,650         17,650
  Accumulated deficit                                  (36,249)       (28,873)
                                                     ---------       --------

   Total Shareholders' Equity                           (6,520)           856
                                                     ---------       --------

Total Liabilities and Shareholders' Equity          $       80      $     856
                                                     =========       ========

                                      F-3
<PAGE>


                         SHALLBETTER INDUSTRIES, INC.
               Statements of Operations and Comprehensive Income
                    Years ended December 31, 2001 and 2000

                                                    Year ended       Year ended
                                                   December 31,     December 31,
                                                       2001             2000
                                                   ------------     ------------
Revenues                                           $        -       $         -
                                                         -----            -----
Expenses
  General and administrative                             7,376            9,344
                                                         -----            -----
   Total expenses                                        7,376            9,344
                                                         -----            -----
Loss from operations                                    (7,376)          (9,344)

Other income
  Interest income                                            -              200
                                                         -----            -----
Loss before Income Taxes                                (7,376)          (9,144)

Provision for Income Taxes                                   -                -
                                                         -----            -----
Net Loss                                                (7,376)          (9,144)

Other comprehensive income                                   -                -
                                                         -----            -----
Comprehensive Income                                $   (7,376)     $    (9,144)
                                                         =====            =====
Loss per weighted-average share of
  common stock outstanding,
  computed on Net Loss - basic
  and fully diluted                                 $    (0.01)     $     (0.01)
                                                         =====            =====
Weighted-average number of shares
  of common stock outstanding                        1,207,885        1,207,885
                                                     =========        =========

                                      F-4
<PAGE>


                         SHALLBETTER INDUSTRIES, INC.
                 Statements of Changes in Shareholders' Equity
                    Years ended December 31, 2001 and 2000

<TABLE>
<S>                           <C>        <C>        <C>        <C>          <C>          <C>
                                                    Additional                 Stock
                                   Common Stock       paid-in  Accumulated  subscription
                                Shares      Amount    capital    deficit     receivable   Total
                              ---------- ---------- ---------- ------------ ------------ -------

Balances at
  January 1, 2000,
  as reported                  1,197,285 $   11,973 $  17,756  $   (19,729) $   (10,000) $     -

Correction of cumulative
  clerical errors found in
  Fiscal 2001 reconciliation
  of shareholders' listing        10,600        106      (106)           -            -        -
                              ---------- ---------- ---------- ------------ ------------ -------
Balances at
  January 1, 2000,
  as restated                  1,207,885     12,079    17,650      (19,729)     (10,000)       -

Collections on stock
  subscription receivable              -          -         -            -       10,000   10,000

Net loss for the year                  -                    -            -       (9,144)       -
                              ----------            ---------- ------------ ------------ -------
   (9,144)

Balances at
  December 31, 2000            1,207,885     12,079    17,650      (28,873)           -      856

Net loss for the year                  -                    -            -       (7,376)
                              ----------            ---------- ------------ ------------ -------
   (7,376)

Balances at
  December 31, 2001            1,207,885 $   12,079 $  17,650  $   (36,249) $         -  $(6,520)
                              ========== ========== ========== ============ ============ =======
</TABLE>





                                      F-5
<PAGE>


                         SHALLBETTER INDUSTRIES, INC.
                           Statements of Cash Flows
                    Years ended December 31, 2001 and 2000


                                                     Year ended     Year ended
                                                     December 31,   December 31,
                                                        2001            2000
                                                     ------------   ------------
Cash Flows from Operating Activities
  Net Loss                                            $ (7,376)      $ (9,144)
  Adjustments to reconcile net income to net cash
   provided by operating activities
     Depreciation                                            -              -
                                                     ------------   ------------

Net cash provided by (used in) operating activities     (7,376)        (9,144)
                                                     ------------   ------------

Cash Flows from Investing Activities                         -              -
                                                     ------------   ------------

Cash Flows from Financing Activities
  Advances from shareholder                              6,600              -
  Proceeds from sale of common stock                         -         10,000
                                                     ------------   ------------

Net cash provided by financing activities                6,600         10,000
                                                     ------------   ------------

Increase (Decrease) in Cash and Cash Equivalents          (776)           856

Cash and cash equivalents at beginning of period           856              -
                                                     ------------   ------------

Cash and cash equivalents at end of period            $     80        $   856
                                                     ============   ============


Supplemental Disclosures of Interest and Income
Taxes Paid
  Interest paid during the period                     $      -        $     -
                                                     ============   ============
  Income taxes paid (refunded)                        $      -        $     -
                                                     ============   ============

                                      F-6
<PAGE>


                         SHALLBETTER INDUSTRIES, INC.

                         Notes to Financial Statements


NOTE A - Organization and Description of Business

Shallbetter  Industries,  Inc. (Company) was initially incorporated on September
8, 1968 under the laws of the State of Minnesota.  From inception  through 1982,
the Company was involved in the design,  production and sale of custom  electric
power distribution equipment; including switchgears, panelboards, busducts, high
and low voltage  main  entrance  cabinets  and  substations.  The  Company  also
designed and marketed electrical apparatus to the mobile home industry.

During  1982,  the  Company  ceased all  operations,  liquidated  all assets and
settled  all  outstanding  liabilities  through  a Chapter 7 action in the U. S.
Bankruptcy  Court.  Subsequent to the settlement and dismissal of the bankruptcy
action , the Company has not conducted any business operations or maintained any
assets.  The current business purpose of the Company is to seek out and obtain a
merger,   acquisition  or  outright  sale  transaction   whereby  the  Company's
shareholders  will  benefit.  The  Company  is  not  currently  engaged  in  any
negotiations  and  continues  to  seek  an  appropriate  merger  or  acquisition
candidate.

The Company is fully dependent upon its current  management  and/or  significant
shareholders to provide  sufficient working capital to preserve the integrity of
the  corporate   entity.   It  is  the  intent  of  management  and  significant
shareholders to provide the necessary  working capital  necessary to support and
preserve the integrity of the corporate entity.

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


NOTE B - Summary of Significant Accounting Policies

1. Cash and cash equivalents

     The Company considers all cash on hand and in banks,  including accounts in
     book overdraft  positions,  certificates of deposit and other highly-liquid
     investments with maturities of three months or less, when purchased,  to be
     cash and cash equivalents.

2. Income taxes

     With a 1999 effective  change of control of the Company,  all net operating
     loss  carryforwards  incurred prior to that time were negated in accordance
     with Section 382 of the Internal Revenue Code.

     At December  31, 2001 and 2000,  the  deferred  tax asset and  deferred tax
     liability accounts,  as recorded when material,  are entirely the result of
     temporary  differences.  Temporary differences represent differences in the
     recognition  of assets  and  liabilities  for tax and  financial  reporting
     purposes, primarily accumulated depreciation and amortization. Any deferred
     tax  asset   existing  at  these  dates  was  fully  reserved  due  to  the
     unpredictability of ultimate realization.

                                      F-7
<PAGE>

                         SHALLBETTER INDUSTRIES, INC.

                   Notes to Financial Statements - Continued

NOTE B - Summary of Significant Accounting Policies - Continued

3. Earnings (Loss) per share

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) by the weighted-average  number of shares of common stock and common
     stock  equivalents  (primarily  outstanding  options and warrants).  Common
     stock equivalents  represent the dilutive effect of the assumed exercise of
     the  outstanding  stock  options and  warrants,  using the  treasury  stock
     method.  The calculation of fully diluted earnings (loss) per share assumes
     the dilutive effect of the exercise of outstanding  options and warrants at
     either the  beginning  of the  respective  period  presented or the date of
     issuance, whichever is later. As of December 31, 2001 and 2000, the Company
     has no warrants and/or options issued and outstanding.

NOTE C - Fair Value of Financial Instruments

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.

NOTE D - Advances from Officer

To support  operations  during  Calendar  2001,  the Company's  chief  executive
officer has advanced  approximately  $6,600 to the Company.  These  advances are
non-interest bearing and are repayable upon demand.

NOTE E - Income Taxes

The components of income tax (benefit)  expense for the years ended December 31,
2001 and 2000, respectively, are as follows:
                                                      December 31,  December 31,
                                                         2001          2000
                                                      ------------  ------------
   Federal:
     Current                                          $          -  $          -
     Deferred                                                    -             -
                                                      ------------  ------------
                                                                 -             -
                                                      ------------  ------------
   State:
     Current                                                     -             -
     Deferred                                                    -             -
                                                      ------------  ------------
                                                                 -             -
                                                      ------------  ------------
   Total                                              $          -  $          -
                                                      ============  ============

As of December 31, 2001,  the Company has a net operating loss  carryforward  of
approximately  $16,500  to offset  future  taxable  income.  Subject  to current
regulations,  this  carryforward  will  begin to expire in 2020.  The amount and
availability  of  the  net  operating  loss  carryforwards  may  be  subject  to
limitations set forth by the Internal  Revenue Code.  Factors such as the number
of shares ultimately issued within a three year look-back period;  whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate;  continuity of historical  business;  and subsequent income of
the  Company  all  enter  into  the  annual   computation  of  allowable  annual
utilization of the carryforwards.

                                      F-8
<PAGE>

                          SHALLBETTER INDUSTRIES, INC.

                   Notes to Financial Statements - Continued

NOTE E - Income Taxes - Continued

The Company's income tax expense for the years ended December 31, 2001 and 2000,
respectively, are as follows:
                                                      December 31,  December 31,
                                                         2001          2000
                                                      ------------  ------------

Statutory rate applied to loss before income taxes    $    (2,510)  $    (3,110)
Increase(decrease) in income taxes resulting from:
    State income taxes                                          -             -
    Other, including reserve for deferred tax asset         2,510         3,110
                                                      ------------  ------------

      Income tax expense                              $         -   $         -
                                                      ============  ============

Temporary  differences,  consisting primarily of statutory deferrals of expenses
for organizational costs and statutory  differences in the depreciable lives for
property and equipment, between the financial statement carrying amounts and tax
bases of assets and liabilities give rise to deferred tax assets and liabilities
as of December 31, 2001 and 2000, respectively:
                                                      December 31,  December 31,
                                                         2001          2000
                                                      ------------  ------------
Deferred tax assets
  Net operating loss carryforwards                    $     5,620   $     3,110
  Less valuation allowance                                 (5,620)       (3,110)
                                                      ------------  ------------

   Net Deferred Tax Asset                             $         -   $         -
                                                      ============  ============

During the years ended  December 31, 2001 and 2000, the reserve for the deferred
current tax asset increased by approximately $2,510 and $3,110, respectively.

NOTE F - Common Stock Transactions

During  the  first  quarter  of  2001,   the  Company   performed  an  extensive
reconciliation  of its shareholder list in conjunction with the appointment of a
new stock  transfer  agent.  As a result  of this  reconciliation  process,  the
Company noted various clerical errors in its issued and outstanding  shares. The
net effect of this reconciliation process was to add 10,600 shares to the issued
and  outstanding  shares of the Company as of the first day of the first  period
presented.

On December 30, 1999,  the Company  entered  into a $10,000  Stock  Subscription
Agreement  with an  individual,  who became  the  Company's  President  and Sole
Director  on  December  9, 1999,  for the  acquisition  of  1,000,000  shares of
restricted,  unregistered $0.01 par value common stock. As of December 31, 2000,
all amounts due under the Stock Subscription Agreement had been received.

                                      F-9
<PAGE>

                         SHALLBETTER INDUSTRIES, INC.

                   Notes to Financial Statements - Continued

NOTE G - Selected Financial Data (Unaudited)

The following is a summary of the quarterly results of operations for the years
ended December 31, 2001 and 2000, respectively.
<TABLE>
<S>                          <C>            <C>            <C>            <C>            <C>
                             Quarter ended  Quarter ended  Quarter ended  Quarter ended  Year ended
                               March 31        June 30      September 30   December 31   December 31
                             -------------  -------------  -------------  -------------  -----------
Year ended December 31, 2001

  Net revenues               $          -   $          -   $          -   $          -   $        -
  Gross profit                          -              -              -              -            -
  Net loss from operations         (1,521)          (920)        (4,004)          (931)      (7,376)
  Basic and fully diluted
   earnings per share                 nil            nil            nil            nil        (0.01)
  Weighted-average
   number of shares
   outstanding                  1,207,885      1,207,885      1,207,885      1,207,885    1,207,885

Year ended December 31, 2000

  Net revenues               $          -   $          -   $          -   $          -   $        -
  Gross profit                          -              -              -              -            -
  Net loss from operations         (2,322)             -         (5,902)          (920)      (9,144)
  Basic and fully diluted
   earnings per share                 nil            nil            nil            nil        (0.01)
  Weighted-average
   number of shares
   outstanding                  1,207,885      1,207,885      1,207,885      1,207,885    1,207,885
</TABLE>
The  Company   experiences   fluctuations  in  quarterly   operating   expenses,
principally  professional services, which are charged to expense as the services
are incurred.


                                      F-10