<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT 0F 1934
For the period ended: OCTOBER 31, 1999
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 Number 0-30432
ARBOR ENTECH CORPORATION
------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2335094
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
RD 1, BOX 1076, LITTLE MARSH, PA 16931
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (570) 376-2217
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
|X| Yes |_| No
Indicate the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
CLASS OUTSTANDING AT OCTOBER 31, 1999
----- -------------------------------
Common Stock, par value $.001 per share 7,050,540
Transitional Small Business Format (check one): Yes |X| No |_|
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ARBOR ENTECH CORPORATION
BALANCE SHEET
OCTOBER 31, 1999
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 80,361
Accounts Receivable 351,800
Inventories 25,292
Other Current Assets 2,399
----------
Total Current Assets 459,852
Property, Plant and Equipment (Net of Accumulated
Depreciation of $51,739) 38,506
----------
$ 498,358
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 311,778
----------
Total Current Liabilities 311,778
----------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, $.001 Par Value; Authorized
10,000,000 Shares; Issued and Outstanding
7,050,540 Shares 7,050
Additional Paid-In Capital 1,985,199
Retained Earnings (Deficit) (280,119)
Loans Receivable - Related Parties (1,525,550)
----------
Total Stockholders' Equity 186,580
----------
$ 498,358
==========
The accompanying notes are an integral part of the financial statements.
2
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ARBOR ENTECH CORPORATION
STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
OCTOBER 31, OCTOBER 31,
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 398,017 $ 217,824 $ 551,608 $ 378,180
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of Sales 206,061 108,754 281,320 187,330
Selling, General
and Administrative Expenses 154,470 98,068 217,044 150,603
----------- ----------- ----------- -----------
360,531 206,822 498,364 337,933
----------- ----------- ----------- -----------
Operating Income 37,486 11,002 53,244 40,247
----------- ----------- ----------- -----------
Other Income (Expense):
Net Loss on Trading Securities (10,697) -- (121,880) --
Interest Income 228 10,710 3,588 10,710
Other 7,444 -- 7,444 --
Interest Expense (2,947) (17,325) (7,659) (21,338)
----------- ----------- ----------- -----------
Total Other Income (Expense) (5,972) (6,615) (118,507) (10,628)
----------- ----------- ----------- -----------
Income before Provision
for Income Taxes 31,514 4,387 (65,263) 29,619
Provision for Income Taxes 1,500 13,500 1,500 26,200
----------- ----------- ----------- -----------
Net Income (Loss) $ 30,014 $ (9,113) $ (66,763) $ 3,419
=========== =========== =========== ===========
Earnings Per Common Share - Basic $ .00 $ (.00) $ (.01) $ .00
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 7,050,540 7,050,540 7,050,540 7,050,540
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
ARBOR ENTECH CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------------
OCTOBER 31,
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ (66,763) $ 3,419
------------- -------------
Adjustments to Reconcile Net Income
To Net Cash Provided by Operating
Activities:
Depreciation 3,800 2,275
Loss on Sale of Trading Securities 121,880 --
Changes in Operating Assets and Liabilities
(Increase) in Accounts Receivable (325,009) (142,705)
(Increase) Decrease in Inventories 44,886 (4,829)
(Increase) Decrease in Other Current Assets 528 (2,667)
(Decrease) in Accounts Payable
and Accrued Expenses (9,022) (30,435)
Purchases of Trading Securities (204,859,253) --
Proceeds from Sale of Trading Securities 204,737,373 --
------------- -------------
Total Adjustments (284,817) (178,361)
------------- -------------
Net Cash (Used) by Operating Activities (351,580) (174,942)
------------- -------------
Cash Flows from Financing Activities:
Capital Contributed 70,983 65,154
Loans to Related Parties (541,280) (75,865)
Proceeds of Loans to Related Parties 230,093 36,000
Payments of Loans from Related Party (222,321) --
Proceeds of Loans from Related Party 7,228 8,026
Payments of Brokerage Loans Payable -- --
------------- -------------
Net Cash Provided by (Used) In Financing Activities (455,297) 33,315
------------- -------------
(Decrease) in Cash and Cash Equivalents (806,877) (141,627)
Cash and Cash Equivalents - Beginning of Period 887,238 161,884
------------- -------------
Cash and Cash Equivalents - End of Period $ 80,361 $ 20,257
============= =============
Supplemental Cash Flow Information:
Cash Paid for Interest $ 7,659 $ --
============= =============
Cash Paid for Income Taxes $ 12,500 $ --
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
(Unaudited)
NOTE 1 - UNAUDITED INTERIM FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations and cash flows
presented.
Results of operations for interim periods are not necessarily
indicative of the results of operations for a full year.
NOTE 2 - INVENTORIES
<TABLE>
<S> <C>
Inventories consist of the following:
Raw Materials $ 6,323
Finished Goods 18,969
-------
$25,292
=======
</TABLE>
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<S> <C>
Land $ 3,000
Building and Improvements 61,114
Machinery and Equipment 4,300
Delivery Equipment 21,831
-------
90,245
Less: Accumulated Depreciation 51,739
-------
$38,506
=======
</TABLE>
The land and building are collateralized by a mortgage held by the
Company's Secretary/Treasurer (see Note 5).
5
<PAGE>
ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
(Unaudited)
NOTE 4 - LOANS RECEIVABLE - RELATED PARTIES
Loans receivable from related parties consists of amounts due from
officers and affiliated companies. These loans have no specific repayment terms
and are classified as a deduction from stockholders' equity. Although the loans
bear interest at 8% per annum such interest is not recorded as income for
financial statement purposes but as additional contributed capital.
<TABLE>
<CAPTION>
These loans consist of the following:
Receivable from:
<S> <C>
Mark Shefts (a) $ 79,817
Harvey Houtkin (b) 79,723
Rushmore Financial Services, Inc. (c) 893,959
Double H Management Corp. (d) 345,518
Solar Products, Sun-Tank, Inc. (e) 126,533
----------
1,525,550
Less: Current Portion 442,073
----------
$1,083,477
==========
</TABLE>
The current portion of loans receivable represent amounts that were repaid
in November 1999. Messrs. Houtkin and Shefts and Solar Products, Sun-Tank,
Inc. repaid their loans in full.
(a) Mr. Shefts owns 48.15% of the issued and outstanding common
stock of the Company and is Secretary/Treasurer and a Director
of Arbor.
(b) Mr. Houtkin owns 48.15% of the issued and outstanding common
stock of the Company and is President and a Director of Arbor.
(c) A corporation wholly owned by Mr. Shefts and Mr. Houtkin.
(d) A wholly owned subsidiary of Rushmore Financial Services, Inc.
(e) A corporation of which Mr. Shefts, Mr. Houtkin, and their
affiliates collectively own approximately 90%.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
LINE OF CREDIT
The Company has a revolving credit facility with its
Secretary/Treasurer, secured by a mortgage of the Company's real property
located in Tioga County, Pennsylvania. This revolving line of credit provides
for the extension of credit in the aggregate principal amount of $100,000 with
interest at 11% per annum. Principal and interest are payable on demand. There
was no balance due at October 31, 1999 on this credit facility.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The statements contained in this report which are not historical fact are
"forward-looking statements" that involve various important assumptions, risks,
uncertainties and other factors which could cause the Company's actual results
for 1999 and beyond to differ materially from those expressed in such
forward-looking statements. These important factors include, without limitation,
competitive factors and pricing pressures, changes in legal and regulatory
requirements, technological change or difficulties, product development risks,
commercialization and trade difficulties and general economic conditions, as
well as other risks previously disclosed in the Company's securities filings and
press releases.
QUARTER ENDED OCTOBER 31, 1999 COMPARED TO QUARTER ENDED OCTOBER 31, 1998
Net sales for the quarter ended October 31, 1999 were approximately
$398,000, an increase of 83% as compared to net sales of approximately $218,000
for the quarter ended October 31, 1998. Net sales increased due to the fact that
Arbor is selling its products to more Home Depot stores. Net losses from trading
securities were approximately $11,000 for the quarter ended October 31, 1999.
There was no trading activity in the comparable quarter of 1998. Arbor has
discontinued its trading activities and does not intend to resume them.
Cost of sales were approximately $206,000 for the quarter ended October
31, 1999, an increase of approximately $97,000, or 89% from the quarter ended
October 31, 1998. This growth in cost of sales is consistent with Arbor's
increase in sales, as discussed above.
Selling, general and administrative expenses were approximately
$155,000 for quarter ended October 31, 1999, an increase of approximately
$57,000, or 58% over the quarter ended October 31, 1998 of approximately
$98,000. This increase was due to additional salaries and office expenses.
Interest income for the quarter ended October 31, 1999 was
approximately $200, a decrease of approximately $10,500, or 98% less than
interest income of approximately $10,700 for the quarter ended October 31, 1998.
The provision for income taxes decreased for the quarter ended October
31, 1999, from approximately $14,000 for the quarter ended October 31, 1998 to
$1,000, a decrease of approximately 93%.
Arbor's net income increased from a net loss of approximately $9,000
for the quarter ended
7
<PAGE>
October 31, 1998 to net income of approximately $30,000 for the quarter ended
October 31, 1999. This was a net increase of approximately $39,000, or 433%.
The increase was due to the increase in net sales discussed above.
The results of operations for the quarter ended October 31, 1999 are
not necessarily indicative of the results for any future interim or fiscal year
period.
SIX MONTHS ENDED OCTOBER 31, 1999 COMPARED TO SIX MONTHS ENDED OCTOBER 31, 1998
Net sales for the six months ended October 31, 1999 were approximately
$552,000, an increase of 46% as compared to net sales of approximately $378,000
for the six months ended October 31, 1998. This increase was a result of Arbor's
selling its products to more Home Depot stores. Net losses from trading
securities were approximately $122,000 for the six months ended October 31,
1999. There was no trading activity in the comparable six months of 1998. Arbor
has discontinued its trading activities and does not intend to resume them.
Cost of sales was approximately $281,000 for the six months ended
October 31, 1999, an increase of approximately $94,000, or 50% from the six
months ended October 31, 1998. This increase is consistent with Arbor's increase
in sales, as discussed above.
Selling, general and administrative expenses were approximately
$217,000 for the six months ended October 31, 1999, an increase of approximately
$66,000, or 44% over expenses for the six months ended October 31, 1998, of
approximately $151,000. This increase was due to additional salaries, office
expenses and other expenses.
Interest income for the six months ended October 31, 1999, was
approximately $4,000, a decrease of approximately $7,000 over interest income
of approximately $11,000 for the six months ended October 31, 1998.
The income tax provision for the six months ended October 31, 1999, was
$2,000, compared to approximately $26,000 for the six months ended October 31,
1998. The decrease was due to the fact that the earnings before taxes was
greater in the 1998 period than in the comparable 1999 period.
Arbor's net income decreased from approximately $3,000 for the six
months ended October 31, 1998 to a net loss of approximately $67,000 for the
six months ended October 31, 1999. This was a net decrease of approximately
$70,000, or 2300%. The decrease was primarily due to stock trading losses.
The results of operations for the six months ended October 31, 1999,
are not necessarily indicative of the results for any future interim or fiscal
year period.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In the periods discussed above, Arbor's working capital requirements
have been met primarily from sales of its wood products and gains from its
trading activities. At October 31, 1999 we had working capital of approximately
$590,000.
As at October 31, 1999, we had cash and cash equivalents of
approximately $80,000, which represented approximately 4% of total assets. Arbor
believes it has adequate working capital and that its operations will generate
cash adequate to fund its operations for at least the next 12 months.
Net cash used by operating activities increased by approximately
$177,000 from fiscal 1998 to fiscal 1999. This increase was primarily
attributable to a reduction in net income accompanied by an increase in accounts
receivable, offset by a decrease in inventory.
Net cash provided by financing activities was approximately $33,000 in
fiscal 1998 compared to net cash used by financing activities of approximately
$455,000 in fiscal 1999, or a net decrease of $488,000. This decrease was
primarily attributable to loans made by Arbor to related parties.
Arbor could borrow money and use the proceeds to make payments to its
management or promoters or their affiliates and associates but has no present
intention of doing so.
YEAR 2000 ISSUES
We have devised a plan and have substantially completed a review and
assessment of all hardware and software and believe that our hardware and
software are substantially year 2000 compliant so that the computer programs do
not cease functioning because of an inability to process on a date occurring
from and after January 1, 2000. Our review has not revealed any Year 2000 issues
that have not been remediated. Remediation costs were not material.
PART 11 - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) None
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ARBOR ENTECH CORPORATION
Registrant
By: /s/ HARVEY HOUTKIN
---------------------------
President
By: /s/ MARK SHEFTS
---------------------------
Mark Shefts
Chief Financial Officer
Dated: February 3, 2000
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 80,361
<SECURITIES> 0
<RECEIVABLES> 351,800
<ALLOWANCES> 0
<INVENTORY> 25,292
<CURRENT-ASSETS> 459,852
<PP&E> 90,245
<DEPRECIATION> 51,739
<TOTAL-ASSETS> 498,358
<CURRENT-LIABILITIES> 311,778
<BONDS> 0
0
0
<COMMON> 7,050
<OTHER-SE> 179,530
<TOTAL-LIABILITY-AND-EQUITY> 498,358
<SALES> 551,608
<TOTAL-REVENUES> 562,640
<CGS> 281,320
<TOTAL-COSTS> 498,364
<OTHER-EXPENSES> 121,880
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,659
<INCOME-PRETAX> (65,263)
<INCOME-TAX> 1,500
<INCOME-CONTINUING> (66,763)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66,763)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
