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, 2000, 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.  000-26017

                  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:  (612) 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, 2000, the Registrant had outstanding 1,197,285
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       7
     Matters

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

7.   Financial Statements                                   8

8.   Changes in and Disagreements with Accountants          8
     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                                 9

11.  Security Ownership of Certain Beneficial Owners and    10
     Management

12.  Certain Relationships and Related Transactions         10

13.  Exhibits and Reports on Form 8-K                       10

Signatures                                                  11

                            2
<PAGE>

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 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 (including those of the
Company), or any combination of these or other

                            3
<PAGE>

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 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

                                4
<PAGE>

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,

                                5
<PAGE>

however, that as a negotiated element of a transaction completed
in reliance on section 368, the acquiring corporation issue
securities in such an amount that the shareholders of the
acquired corporation 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 of their stronger financial
resources and prior

                                6
<PAGE>

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

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

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 2000 fiscal year.

                             PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is presently no established trading market for the
Company's common stock.

     All shares of common stock outstanding may be sold without
restriction, except 1,000,000 shares, which are held by 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, 2000, there were approximately 279 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, 2000 and 1999.

                                7
<PAGE>

     General and administrative expenses for the years ended
December 31, 2000 and 1999 were $9,344 and $0, respectively.
This increase is attributable to administrative, legal,
professional, accounting and auditing costs associated with
reviving the Company from dormancy and registering its common
stock pursuant to Section 12(g) of the Securities Exchange Act of
1934.

     Interest income for the years ended December 31, 2000 and
1999 were $200 and $0, respectively.

     Due to the foregoing, the Company realized a net loss of
$9,144 for the year ended December 31, 2000, compared to no loss
or gain for the year ended December 31, 1999.  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, 2000, the Company had working capital of
$856 and a retained deficit of $28,873.  The working capital is
the result of the sale to Craig Laughlin of 1,000,000 shares of
the Company's common stock at $0.01 per share, or a total of
$10,000.  The shares were purchased through a promissory note
that was paid in full in June 2000.  Management believes the
Company has sufficient funds to meet its anticipated needs
through the first half of 2001, but may need to raise additional
capital for the remainder of 2001 by means of debt financing,
equity financing or a combination of financing options.  However,
there are no existing understandings, commitments or agreements
for such an infusion; nor can there be assurances to that effect.
Unless the Company can obtain additional financing, its ability
to continue as a going concern is doubtful.

Plan of Operation

     The Company's need for capital may change dramatically if it
acquires an interest in a business opportunity during the next 12
months.  The Company's current operating plan is to (i) handle
the administrative and reporting requirements of a public
company; and (ii) search for potential businesses, products,
technologies and companies for acquisition.  At present, the
Company has no understandings, commitments or agreements with
respect to the acquisition of any business, product, technology
or company and there can be no assurance that the Company will
identify any such business, product, technology or company
suitable for acquisition in the future.  Further, there can be no
assurance that the Company would be successful in consummating
any acquisition on favorable terms or that it will be able to
profitably manage the business, product, technology or company it
acquires.

ITEM 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

                                8
<PAGE>

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

Name                Age  Positions (1)                  Since

Craig Laughlin      50   President and Director         1999

     All executive officers are elected by the Board and hold
office until the next Annual Meeting of stockholders 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.  From May 1990 through July 2000, Mr. Laughlin served as a
member of the board of directors of Century Controls
International, Inc., a publicly held company engaged in the
business of designing, manufacturing, and marketing a line of
proprietary control devices used in the management of large
commercial and industrial steam boilers and of certain
manufacturing processes.

Other Shell Company Activities

     Mr. Laughlin has served since February 1999 as the sole
officer and director of Future Technologies, Inc., a publicly
held shell corporation seeking a business acquisition.  The
possibility exists that Mr. Laughlin could become an officer
and/or director of other shell companies in the future.  Certain
conflicts of interest are inherent in the participation of the
Company's sole officer and director as management in other shell
companies, which may be difficult, if not impossible, to resolve
in all cases in the best interests of the Company.  Failure by
management to conduct the Company's business in its best
interests may result in liability of management of the Company to
the stockholders.

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

                                9
<PAGE>

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, 2000, the
number and percentage of the outstanding shares of common stock
which, according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director
of the Company, (ii) each executive officer, (iii) all current
directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the
beneficial owner of more than 5% of the outstanding common stock.
Except as otherwise indicated, the persons named in the table
have sole voting and dispositive power with respect to all shares
beneficially owned, subject to community property laws where
applicable.

Name and Address                        Common      Percent of
                                        Shares       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.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Except for the sale and purchase of the Company's common
stock described under Part II, Item 4. Recent Sales of
Unregistered Securities," there are no proposed transactions and
no transactions during the past two years to which the Company
was a party and in which any officer, director, or principal
stockholder, or their affiliates or associates, was also a party.

     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   SEC Ref.   Title of Document
   No.       No.

   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, 2000.

                               10
<PAGE>


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, 2001            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, 2001                /s/ Craig Laughlin, Director


                               11
<PAGE>

                            PART F/S


                  SHALLBETTER INDUSTRIES, INC.

                              INDEX


                                                                      Page

Report of Independent Certified Public Accountants                     F-2

Financial Statements

 Balance Sheets as of December 31, 2000 and 1999                       F-3

 Statements of Operations and Comprehensive Income
  for the years ended December 31, 2000 and 1999                       F-4

 Statement of Changes in Shareholders' Equity
  for the years ended December 31, 2000 and 1999                       F-5

 Statements of Cash Flows
  for the years ended December 31, 2000 and 1999                       F-6

 Notes to Financial Statements                                         F-7

                               F-1
<PAGE>


                       S. W. HATFIELD, CPA
                  certified public accountants

   Member: American Institute of Certified Public Accountants
                      SEC Practice Section
                 Information Technology Section
          Texas Society of Certified Public Accountants


       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Shareholders
Shallbetter Industries, Inc.

We have audited the accompanying balance sheets of Shallbetter
Industries, Inc. (a Minnesota corporation) as of December 31,
2000 and 1999 and the related statements of operations and
comprehensive income, changes in shareholders' equity and cash
flows for the each of the two years then ended, respectively.
These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Shallbetter Industries, Inc. as of December 31, 2000 and 1999,
and the results of its operations and its cash flows for the each
of the three years then ended, respectively, in conformity with
generally accepted accounting principles.

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

                                    S. W. HATFIELD, CPA
Dallas, Texas
February 1, 2001



              Use our past to assist your future sm
(secure mailing address)    (overnight delivery/shipping address)
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, 2000 and 1999


                                               2000      1999
                             ASSETS
Current Assets
 Cash on hand and in bank                      $    856  $      -

Total Assets                                   $    856  $      -



              LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
 Accounts payable - trade                      $      -  $      -

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.
  1,197,285 shares issued and outstanding        11,973    11,973
  Additional paid-in capital                     17,756    17,756
 Accumulated deficit                            (28,873)  (19,729)
                                                    856    10,000
 Stock subscription receivable                        -   (10,000)

  Total shareholders' equity                        856         -

Total Liabilities and Shareholders' Equity     $    856  $      -


 The accompanying notes are an integral part of these financial
                           statements.

                               F-3
<PAGE>


                  SHALLBETTER INDUSTRIES, INC.
        STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
             Years ended December 31, 2000 and 1999


                                               2000       1999

Revenues                                   $         -  $         -

Expenses
 General and administrative expenses            (9,344)           -

Loss from operations                            (9,344)           -

Other income
 Interest income                                   200            -

Loss before Income Taxes                        (9,144)           -

Provision for Income Taxes                           -            -

Net Loss                                        (9,144)           -

Other Comprehensive Income                           -            -

Comprehensive Loss                         $    (9,144)   $       -

Net Loss per weighted-average
 share of common stock
 outstanding, calculated on
  Net Loss - basic and fully diluted       $     (0.01)        nil

Weighted-average number of shares
 of common stock outstanding                 1,197,285     202,764

 The accompanying notes are an integral part of these financial
                           statements.

                               F-4
<PAGE>


                  SHALLBETTER INDUSTRIES, INC.
          STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
             Years ended December 31, 2000 and 1999
<TABLE>
<CAPTION>


                                                   Additional                  Stock
                                Common Stock        paid-in  Accumulated    subscription
                              Shares     Amount     capital    deficit       receivable   Total
<S>                        <C>          <C>         <C>       <C>            <C>        <C>
Balances at
 January 1, 1999              197,285   $  1,973    $ 17,756  $ (19,729)     $      -   $       -

Sale of common stock
 on stock subscription
 agreement                  1,000,000     10,000           -          -       (10,000)          -

Net income for the year             -          -           -          -             -           -

Balances at
 December 31, 1999          1,197,285     11,973      17,756    (19,729)      (10,000)          -

Cash received on stock
 subscription receivable           -           -           -          -        10,000      10,000

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

Balances at
 December 31, 2000         1,197,285   $  11,973   $  17,756   $ (28,873)   $       -   $     856
</TABLE>

 The accompanying notes are an integral part of these financial
                           statements.

                               F-5
<PAGE>


                  SHALLBETTER INDUSTRIES, INC.
                    STATEMENTS OF CASH FLOWS
             Years ended December 31, 2000 and 1999


                                                  2000        1999
Cash Flows from Operating Activities
 Net Loss for the year                            $(9,144)   $   -
 Adjustments to reconcile net loss to
  net cash provided by operating activities              -       -

 Net cash used in operating activities              (9,144)      -


Cash Flows from Investing Activities                     -       -


Cash Flows from Financing Activities
 Proceeds from sale of common stock                10,000        -

  Net cash provided by financing activities        10,000        -

Increase in Cash                                      856        -

Cash at beginning of period                             -        -

Cash at end of period                          $      856    $   -

Supplemental Disclosure of
 Interest and Income Taxes Paid
  Interest paid for the period                 $        -     $  -
  Income taxes paid for the period             $        -     $  -

 The accompanying notes are an integral part of these financial
                           statements.

                               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.

On December 30, 1999, at a Special Meeting of the Shareholders,
the following items were approved: 1) Restated Articles of
Incorporation were filed with the State of Minnesota to increase
the authorized number of common shares which may be issued from
250,000 at $0.10 par value to 45,000,000 shares at $0.01 par
value and to authorize the issuance of up to 5,000,000 shares of
$0.01 par value preferred stock and 2) to change the Company's
year-end from August 31 to December 31.  The effects of these
changes are reflected in the accompanying financial statements as
of the first day of the first period presented.

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

The Company is fully dependent upon funding from 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/or 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.

                               F-7
<PAGE>

                  SHALLBETTER INDUSTRIES, INC.

            NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE B - Summary of Significant Accounting Policies - Continued

2.Income taxes

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

At December 31, 2000 and 1999, the deferred tax asset and
deferred tax liability accounts, as recorded when material, are
entirely the result of temporary differences.  Temporary
differences represent differences in the recognition of assets
and liabilities for tax and financial reporting purposes,
primarily accumulated depreciation and amortization.  Any
deferred tax asset existing at these dates was fully reserved due
to the unpredictability of their ultimate realization.

3. Earnings (Loss) per share

Basic earnings (loss) per share is computed by dividing the net
income (loss) by the weighted-average number of shares of common
stock and common stock equivalents (primarily outstanding options
and warrants).  Common stock equivalents represent the dilutive
effect of the assumed exercise of the outstanding stock options
and warrants, using the treasury stock method.  The calculation
of fully diluted earnings (loss) per share assumes the dilutive
effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the
date of issuance, whichever is later.  As of December 31, 2000
and 1999, the Company has no warrants and/or options issued and
outstanding.

NOTE C - Common Stock Transactions

On December 30, 1999, the Company filed Amended and Restated
Articles of Incorporation with the State of Minnesota.  The
effect of these Articles was to increase the authorized number of
common shares which may be issued from 250,000 at $0.10 par value
to 45,000,000 shares at $0.01 par value.  Additionally, the
Restated Articles authorized the issuance of up to 5,000,000
shares of $0.01 par value preferred stock.  The effect of these
changes is reflected in the accompanying financial statements as
of the first day of the first period presented.

On December 30, 1999, the Company entered into a $10,000 Stock
Subscription Agreement with an individual, who became the
Company's President and Sole Director on December 9, 1999, for
the acquisition of 1,000,000 shares of restricted, unregistered
$0.01 par value common stock.  The Stock Subscription Agreement
was scheduled to be paid in the following installments: February
1, 2000 - $3,000; April 1, 2000 - $3,500; June 1, 2000 - $3,500.
As of December 31, 2000, all amounts due under the Stock
Subscription Agreement were received.

                               F-8
<PAGE>


                  SHALLBETTER INDUSTRIES, INC.

            NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE D - Selected Financial Data (Unaudited)

The following is a summary of the quarterly results of operations
for the years ended December 31, 2000 and 1999, respectively.
<TABLE>
<CAPTION>
                            Quarter ended  Quarter ended  Quarter ended Quarter ended   Year ended
                               March 31,    June 30,      September 30,   December 31,  December 31,
<S>                           <C>          <C>            <C>           <C>             <C>
Year ended December 31, 2000

 Revenues                     $         -  $         -    $          -  $         -     $        -
 Gross Profit                           -            -               -            -              -
 Net Loss                          (2,322)           -          (5,902)        (918)        (9,144)
 Basic and fully diluted
  earnings per share                  nil          nil             nil           nil    $    (0.01)
 Weighted-average
  number of shares
  issued and outstanding        1,197,285    1,197,285       1,197,285     1,197,285     1,197,285

Year ended December 31, 1999

 Revenues                     $         -  $         -     $         -  $          -    $        -
 Gross Profit                           -            -               -             -             -
 Net Loss                               -            -               -             -             -
 Basic and fully diluted
  earnings per share                  nil          nil             nil           nil           nil
 Weighted-average
  number of shares
  issued and outstanding          197,285      197,285         197,285       219,024       202,764
</TABLE>
                               F-9
<PAGE>