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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Amendment No. 3 to
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ARBOR ENTECH CORPORATION
------------------------
(Name of Small Business Issuer in its charter)
Delaware 22-2335094
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
Route 349, Little Marsh, Pennsylvania 16931
--------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (570) 376-2217
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
Securities to be registered under Section 12(g) of the Act:
Common
(Title of class)
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BUSINESS
Arbor EnTech Corporation ("Arbor") is a Delaware corporation which was
organized in 1980 under the name Arbor Energy Corporation. Our name change was
effected in 1984.
Arbor engages in the production and wholesale distribution of wood
products for home use, principally fireplace wood and garden stakes. The
fireplace wood, which is sold under the name "Arborlogs(R)", is shrink wrapped
in bundles of approximately 6 pieces each. Tomato stakes are delivered in bulk
to be sold individually.
Arbor's products are packaged in and distributed from Arbor's facility in
Little Marsh, Pennsylvania, and then delivered by various independent trucking
concerns to customer locations in the northeastern United States. Uncut logs and
cut firewood are purchased from various loggers and cut and split, if necessary,
and packaged and palletized. Garden stakes are purchased precut and are banded
with a UPC code for customer delivery.
In addition to its wood products business, Arbor traded securities for its
own account from August 1994 to September 1999. This activity has been totally
discontinued by Arbor, which has determined to concentrate on its wood business.
Customers
Substantially all of Arbor's products are sold to Home Depot Inc. for
resale at its retail outlets. Arbor has no written agreement with Home Depot
with respect to these sales. Arbor believes it has a good relationship with Home
Depot, but were sales to Home Depot to diminish or cease for any reason, Arbor's
business would not be viable unless it developed relationships with Home Depot's
competitors in this area, such as lawn and garden shops, hardware stores and
supermarkets.
Suppliers
Arbor obtains logs, cut firewood and garden stakes from many independent
loggers. Arbor believes that if it could no longer obtain its raw logs and
firewood from loggers it currently utilizes, there are many alternate sources of
supply, including commencing logging operations on its own forest land.
Competition
Arbor competes with many other wood product companies. Some of the major
competitors are Ultraflame and Ossipee. Arbor also competes with numerous small
suppliers, local tree companies and others who sell wood by the cord. Arbor
competes on the basis of price, consistency of product quality and prompt
delivery. Arbor also competes with paper firelog companies and with suppliers of
metal plant cages and stakes. Arbor has no information on its competitive
position within the industry, because of the lack of public availability of
relevant information.
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Intellectual Property
The trademark "Arborlogs(R)" has been registered with the U.S.
Trademark and Copyright Office. This trademark expires on March 13, 2004, but
Arbor expects to renew the trademark for an additional 10 year term. While there
can be no guarantee that some entity will not attempt to utilize the same name,
we believe we have taken adequate steps to protect this trademark.
Governmental Regulation
There are no government regulations which materially impact our packaging
and distribution operations, except for regulations promulgated by OSHA (the
U.S. Occupational Safety and Health Agency), pursuant to which we are required
to maintain a safe warehouse environment for our workers, and by state
departments of weights and measures with respect to the labeling of our
products.
Personnel
Arbor is a seasonal employer. The number of employees ranges from a high
of approximately 17 from September to January to 4 in the remaining months. One
is an officer, who is fulltime, one is a full-time foreman and from 2 to 15
full-time employees are in the wood preparation and packaging area. Sales and
marketing is undertaken by Arbor's Executive Vice President; a foreman oversees
production at the Pennsylvania facility. Arbor's president and treasurer serve
in a part-time capacity and do not devote a substantial amount of time to the
affairs of Arbor. There are no employment contracts with any employee and no
employee is unionized.
Legal Proceedings
Arbor is not currently involved in any outstanding legal proceedings. In
the ordinary course of business Arbor may become involved in proceedings
involving workers' compensation, trucking issues and disputes involving orders,
none of which is expected to have a material adverse effect on its business.
How to Contact Arbor
Arbor's principal executive offices are located Route 349, RD 1,
P.O. Box 1076, in Little Marsh, Pennsylvania, and its telephone number is
(570) 376-2217.
Arbor is required to file quarterly and
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annual reports with the Securities and Exchange Commission and to send an annual
report to its shareholders. In the event Arbor's obligation to file these
reports is suspended under the Securities Exchange Act of 1934, it is Arbor's
current intention to continue to file such reports; however, this determination
may be modified. The public may read and copy this Form 10-SB and any other
materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an Internet site that contrains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov.
MANAGEMENT'S DISCUSSION AND ANALYSIS
General
We are a wood products company which has been in business since 1980. Our
business has increased over the years. We are almost wholly dependent on sales
to Home Depot. Arbor also has traded securities for its own account.
Results of Operations
Fiscal year ended April 30, 1999 compared to the fiscal year ended April 30,
1998.
Net sales for the fiscal year ended April 30, 1999 were approximately
$1,048,000, an increase of 42% as compared to net sales of approximately
$737,000 for the fiscal year ended April 30, 1998. Net sales increased due to
additional sales to Home Depot. Net gains from trading securities were
approximately $255,000 for the fiscal year ended April 30, 1999, an increase of
190% as compared to net gains from trading securities of approximately $88,000
for the fiscal year ended April 30, 1998. Net gains increased due to more
profitable results from its securities trading activities.
Cost of sales were approximately $518,000 for fiscal 1999, an increase of
approximately $163,000, or 46% over fiscal 1998 cost of sales of approximately
$355,000. This increase is primarily attributable to Arbor's growth in sales.
Selling, general and administrative expenses were approximately $755,000
for fiscal 1999, an increase of approximately $317,000, or 72% over fiscal 1998
selling, general and administrative expenses of approximately $438,000. This
increase was due to an increase in compensation paid to two officers in the
amount of $200,000, an increase in traders' compensation in
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the amount of $155,000 and other general expenses of $7,000, offset by a
reduction in Pennsylvania corporation tax of $45,000 pursuant to a prior year's
audit adjustment. These changes were incurred in connection with Arbor's growth
in sales and trading income.
Interest income for fiscal 1999 was approximately $500, a decrease of
approximately $1,300, or 72% over fiscal 1998 interest income of approximately
$1,800.
The income tax provision increased from approximately $18,000 for the
fiscal year ended April 30, 1998 to approximately $49,000 for the fiscal year
ended April 30, 1999. This increase of 172% was primarily attributable to
greater taxable income and a lesser amount of net operating loss utilization
compared to fiscal 1998.
Arbor's net loss increased from approximately $19,000 for the fiscal
year ended April 30, 1998 to approximately $34,000 for the fiscal year ended
April 30, 1999. This was an increase of approximately $15,000, or 79%.
Fiscal year ended April 30, 1998 compared to fiscal year ended April 30, 1997.
Net sales for the fiscal year ended April 30, 1998 were approximately
$737,000, a decrease of 4% as compared to net sales of approximately $764,000
for the fiscal year ended April 30, 1997. Net gains from trading securities were
approximately $88,000 for the fiscal year ended April 30, 1998, a decrease of
74% as compared to net gains from trading securities of approximately $338,000
for the fiscal year ended April 30, 1997. Net gains decreased because of less
profitable trading.
Cost of sales were approximately $355,000 for fiscal 1998, a decrease of
approximately $9,000, or 2% under fiscal 1997 cost of sales of approximately
$364,000. This decrease is primarily attributable to Arbor's reduction in sales
from fiscal 1997 to fiscal 1998.
Selling, general and administrative expenses were approximately $438,000
for fiscal 1998, an increase of approximately $90,000, or 26% over fiscal 1997
selling, general and administrative expenses of approximately $348,000. This
increase was due to additional salaries and other expenses, including a prior
year's Pennsylvania state tax audit adjustment.
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Interest income for fiscal 1998 and 1997 was approximately $2,000 each
year.
The income tax provision decreased from approximately $36,000 for the
fiscal year ended April 30, 1997 to approximately $18,000 for the fiscal year
ended April 30, 1998. This decrease of 50% was primarily attributable to a
higher level of utilization of net operating loss carryforwards, offsetting
higher taxable income.
Arbor's net income decreased from approximately $356,000 for the fiscal
year ended April 30, 1997, to a net loss of approximately $19,000 for the fiscal
year ended April 30, 1998. This was a decrease of approximately $375,000, or
105% due primarily to a significant decrease in gains from Arbor's securities
trading activities.
Quarter Ended July 31, 1999 Compared to Quarter Ended July 31, 1998
Net sales for the quarter ended July 31, 1999 were approximately $154,000,
a decrease of 4% as compared to net sales of approximately $160,000 for the
quarter ended July 31, 1998. Arbor does not consider this to be a significant
change. Net losses from trading securities were approximately $111,000 for the
quarter ended July 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 $75,000 for the quarter ended July 31,
1999, a decrease of approximately $4,000, or 5% from the quarter ended July 31,
1998. Arbor does not consider this to be a signficant change, however, it is
consistent with Arbor's decrease in sales, as discussed above.
Selling, general and administrative expenses were approximately $63,000
for the quarter ended July 31, 1999, an increase of approximately $10,000, or
19% over expenses for the quarter ended July 31, 1998 of approximately $53,000.
This increase was due to additional salaries and other expenses.
Interest income for the quarter ended July 31, 1999 was approximately
$3,000, an increase of approximately $3,000, over interest income of
approximately zero for the quarter ended July 31, 1998.
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There was no income tax provision for the quarter ended July 31, 1999
because Arbor had a net loss. The provision for income taxes was approximately
$13,000 for the quarter ended July 31, 1998.
Arbor's net income decreased from approximately $13,000 for the quarter
ended July 31, 1998 to a net loss of approximately $97,000 for the quarter ended
July 31, 1999. This was a net decrease of approximately $110,000, or 846%. The
decrease was primarily due to stock trading losses.
The results of operations for the quarter ended July 31, 1999 are not
necessarily indicative of the results for any future interim or fiscal year
period.
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 July 31, 1999 we had working capital of approximately $231,000.
As at July 31, 1999, we had cash and cash equivalents of approximately
$334,000, which represented approximately 16% of total assets. Arbor believes it
has adequate working capital and will generate net revenues adequate to fund its
operations for at least the next 12 months.
Net cash provided by operating activities decreased by approximately
$2,734,000 from fiscal 1998 to fiscal 1999. This decrease was primarily
attributable to the liquidation during fiscal 1998 of securities owned carried
at the end of fiscal 1997. The liquidation of these securities in fiscal 1998
resulted in an increase in proceeds. At the end of fiscal 1998, however, Arbor
had no securities owned and therefore there were no such proceeds from the sale
of securities in fiscal 1999.
Net cash used by financing activities was approximately $2,827,000 in
fiscal 1998 compared to net cash provided by financing activities of
approximately $570,000 in fiscal 1999, or a net increase of $3,397,000. This
increase was primarily attributable to a payment of brokerage loans payable of
approximately $1,881,000 in fiscal 1998, and a net increase in loan proceeds
from related party transactions of approximately $1,479,000.
Net cash used in operating activities increased by approximately $94,000
from the quarter ended July 31, 1998 to the quarter ended July 31, 1999. This
increase was primarily attributable to the net loss incurred by Arbor during the
quarter ended July 31, 1999.
Net cash provided by financing activities was approximately $40,000 in the
quarter ended July 31, 1998 compared to net cash used by financing activities of
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approximately $340,000 in the quarter ended July 31, 1999. This decrease of
approximately $380,000 was primarily attributable to loans made to related
parties during the quarter ended July 31, 1999.
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.
DESCRIPTION OF PROPERTY
Arbor owns a lumber mill facility located on 102 acres of property in
Little Marsh, Pennsylvania. The mill consists of an enclosed structure of 17,000
square feet where its executive offices and production and distribution
facilities are located, with a 7,000 outdoor overhang for airing of inventory.
Approximately 12 acres of the property is devoted to Arbor's work area and the
remaining 90 acres are forest land. The real property was mortgaged to Mark
Shefts, Secretary/Treasurer and a director of Arbor, to secure a credit line Mr.
Shefts extended to Arbor in the amount of $100,000.
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to Arbor, as of the date
of this registration statement, relating to the beneficial ownership of shares
of common stock of Arbor: by each person who is known by Arbor to be the
beneficial owner of more than five percent of the outstanding shares of common
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stock; each director or person who has agreed to become a director; and all
executive officers and directors as a group.
Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is 160 Summit Avenue, Montvale, New Jersey 07645.
A person is deemed to be the beneficial owner of securities that can be
acquired by him or her within 60 days from the date of this registration
statement upon the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that options,
warrants or convertible securities that are held by him or her, but not those
held by any other person, and which are exercisable within 60 days of the date
of this registration statement have been exercised and converted.
Name and Address of Number of Shares Percentage of Shares
Beneficial Owner Beneficially Owned Beneficially Owned
---------------- ------------------ ------------------
Harvey Houtkin((1)(2) 3,554,000 50.4%
Wanda Shefts(1)(2) 159,100 2.3%
Mark Shefts(1)(2) 3,554,000 50.4%
All directors and executive
officers as a group (3 persons) 6,949,900 98.6%
(1) The address of such person is c/o All-Tech Direct, Inc., 160 Summit
Avenue, Montvale, NJ 07645.
(2) Such person may be deemed to be the owner of 159,100 of such shares by
virtue of his/her being a control person of Solar Products, Sun-Tank, Inc.
In the case of these 159,100 shares the beneficial owner has shared voting
and investment power. With respect to all other shares, the record owner
has sole investment and voting power over the shares.
A significant number of shares are authorized but unissued. Arbor may in
the future issue all or a portion of these shares to management or promoters of
Arbor or their affiliates or associates. Arbor has no present plans to issue any
of these shares.
MANAGEMENT
Executive Officers and Directors Age Positions
- -------------------------------- --- ---------
Harvey Houtkin 51 Chairman of the Board, Chief
Executive Officer, President
Wanda Shefts 41 Executive Vice President, Director
Mark Shefts 42 Secretary/Treasurer, Director
Sherry Houtkin 49 Director
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Harvey I. Houtkin founded Arbor EnTech Corporation in October 1980 and has
been our Chairman of the Board, Chief Executive Officer and President since
inception. From April 1993 through the present Mr. Houtkin has been Chairman of
the Board, Chief Executive Officer and Secretary of All-Tech Direct, Inc.
("All-Tech"), an NASD registered securities broker/dealer specializing in direct
accesss electronic trading. From September 1996 to January 1997 he also served
as president of All-Tech but not as Secretary. Mr. Houtkin is an associate
member of the American Stock Exchange. He held a seat on the New York Stock
Exchange from 1984 to 1988 and co-owns Domestic Securities, Inc. a broker/dealer
which operated a floor brokerage business on that Exchange during the time the
seat was owned. Mr. Houtkin graduated from Baruch College of the City University
of New York in 1970 with a Bachelor of Science Degree and in 1973 with a Masters
Degree in Business Administration. He is the author of The SOES Bandits'
Guide-Day Trading in the 21st Century and Secrets of the SOES Bandit.
Wanda Shefts was the Vice President and a director of Arbor 1982 through
April 1987 and from February 1993 through the present. She has an Associates
Degree from Kingsborough Community College.
Mark D. Shefts was the Secretary/Treasurer and a director of Arbor from
1982 through April 1987 and from February 1993 through the present. He has been
a principal of All-Tech since early 1988 and has been its President, Chief
Operating Officer, Chief Financial Officer, Treasurer and a Director since such
time. From September 1996 to January 1997 he was the Secretary of All- Tech and
during such period he did not hold the office of President. He is a member of
the Chicago Stock Exchange and co-owns Domestic Securities, Inc. a broker/dealer
which operated a floor brokerage business on the New York Stock Exchange from
1984 to 1988. Mr. Shefts is licensed as a Commodity Pool Operator and a
Commodity Trading Advisor by the National Futures Association. He is also a
Certified Financial Services Auditor of the National Association of Financial
Services Auditors, a Certified Fraud Examiner of the Association of Certified
Fraud Examiners, and an arbitrator for the American Arbitration Association and
NASD Regulation, Inc. Mr. Shefts graduated in 1979 from Brooklyn College of the
City of New York with a Bachelor of Science Degree in Accounting.
Sherry Houtkin has been a director of Arbor since February 1994. She has
studied at Rockland Community College and Ramapo College.
Mark Shefts and Wanda Shefts are husband and wife. Harvey Houtkin and
Wanda Shefts are brother and sister. Harvey Houtkin and Sherry Houtkin are
husband and wife.
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Executive Compensation
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Principal Position Year Salary Bonus Other Annual Compensation
- --------------------------- ---- ------ ----- -------------------------
<S> <C> <C> <C> <C>
Harvey Houtkin: CEO & Pres. 1999 -- $100,000 --
1998 -- -- --
1997 -- -- --
Wanda Shefts 1999 $ 79,500 31,000 $ 24,000
1998 72,250 25,000 24,000
1997 73,550 -- 24,000
Mark Shefts 1999 -- 100,000 --
1998 -- -- --
1997 -- -- --
</TABLE>
Employment Agreements
Arbor has no employment agreements with any of its employees, including
Wanda Shefts, its Executive Vice President.
Stock Option Plans
Arbor has no stock option or bonus plans for its employees.
Limitations on Liability and Indemnification Matters
As authorized by the Delaware General Corporation Law, Arbor's By-Laws
provide that Arbor will indemnify any person who was or is a party or is
threatened to be made a party to any action or proceeding by reason of such
person's being an officer, director, employee or agent of Arbor if that person
acted in good faith in in a manner that person reasonably believed to be in or
not opposed to the best interest of Arbor. Section 145 of the Delaware General
Corporation Law permits indemnification of any person who was or is a party or
is threatened to be made a party to any threatenened, pending or completed
action suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person was an officer, director,
employee or agent of the corporation if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reaonable cause to believe that the person's conduct was not
unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to Arbor's
directors,
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officers and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
RELATED PARTY TRANSACTIONS
During the fiscal year ended April 30, 1999, and the quarter ended July
31, 1999, Arbor acted as lender under a series of revolving loans bearing
interest at 8% a year to two affiliated companies and to Messrs. Houtkin and
Shefts, officers, directors and shareholders of Arbor. The loans had no specific
repayment terms and have been classified as long-term in nature. These loans
were made by oral agreements upon request of these related parties. The loans to
Messrs. Houtkin and Shefts were paid off on November 18, 1999; $130,000 of the
loan to one of the affiliated companies, Double H Management Corp. ("Double H")
and $26,000 of the loan to the other affiliated company, Rushmore Financial
Services, Inc. ("Rushmore") was paid on such date. Double H is wholly owned by
Rushmore. The principal amount of the loan to Double H after the payment on
November 18 was $216,747 and the the principal amount of the loan to Rushmore
was $871,138.00. Rushmore is owned 50% by Harvey Houtkin and 50% by Mark Shefts,
officers, directors and principal shareholders of Arbor.
At the end of the fiscal year ended April 30, 1999, and the quarter ended
July 31, 1999 Arbor owed Solar Products, Sun-Tank Inc. ("Solar") $215,083 and
$219,395, respectively, pursuant to an oral revolving loan bearing interest at
8% per annum. On September 28, 1999, Arbor repaid Solar $215,083. On September
30, 1999, the remaining balance of the loan was repaid in full.
On September 30, 1999, Arbor loaned Solar $125,597 pursuant to an oral
loan bearing interest at 8% per annum. This loan was repaid in full on
November 18, 1999 by Solar. Harvey Houtkin and Mark Shefts are officers,
directors and principal shareholders of Solar as well as Arbor.
Prior to being paid off or down on November 18, 1999, the amounts owed to
Arbor were as follows:
Mark Shefts(1) $ 80,101
Harvey Houtkin(1) 80,006
Double H Management Corp.(2) 346,747
Solar Products, Sun-Tank inc.(3) 126,983
Rushmore Financial
Services, Inc. (4) 897,138
----------
$1,530,975
==========
(1) Such person owns 48.15% of the issued and outstanding Common Stock of
Arbor and is an officer and director.
(2) Such corporation is wholly owned by Rushmore Financial Services, Inc.
(3) Such corporation is beneficially owned 45.6% by Harvey Houtkin and 44.7%
by Mark Shefts.
(4) Such corporation is owned 50% by Mr. Houtkin and 50% by Mr. Shefts.
The remaining balances of $871,138 owed by Rushmore and $216,747 owed by
Solar have been memorialized in 10 year promissory notes bearing interest at 10%
a year.
DESCRIPTION OF SECURITIES
Arbor has authority to issue 10,000,000 shares of stock, $.001 par value.
Each share has one vote. No dividends are required to be paid on this stock and
Arbor has never paid any dividends. The shares do not have preemptive rights.
There are no provisions in the charter or by-laws of Arbor which would
delay, defer or prevent a change in the control over Arbor.
MARKET FOR ARBOR'S COMMON STOCK
This Form 10-SB is being filed by Arbor EnTech Corporation on a voluntary
basis in order for the stock of Arbor to be traded on The Nasdaq Stock Market,
Inc.'s Bulletin Board.
Arbor's Common Stock is currently considered to be "penny stock" and as
such is subject to a variety of requirements under the Securities Exchange Act
of 1934, as amended. Penny stocks are low-priced shares of small companies not
traded on an exchange or quoted on Nasdaq. Prices often are not available.
Investors in penny stocks often are unable to sell stock back to the
broker/dealer that sold them the stock. Thus, investment in a penny stock can be
very risky. Prior to effecting a transaction in a penny stock, a brokerage firm
must deliver a standardized risk disclosure statement to the customer which
describes the risks involved, the duties of the broker/dealer to the customer
and the rights and remedies available, the nature of bid and ask prices in the
penny stock market and a toll-free
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telephone number to provide information on disciplinary histories. Further, the
broker/dealer must disclose the bid and ask prices, the number of shares to
which the prices apply, and the amount and description of any compensation
received by the broker/dealer. Prior to the transaction the broker/dealer must
approve the person's account for transactions involving penny stocks by
obtaining from the person information concerning the person's financial
situation, investment experience and investment objectives and reasonably
determine, based on such information, that transactions in penny stocks are
suitable for that person and that the person has sufficient knowledge and
experience in financial matters that the person reasonably may be expected to be
capable of evaluating the risks of transactions in penny stocks. Finally, the
broker/dealer must receive from the customer a signed and dated written
acknowledgement of receipt of the disclosure document disclosing the basis on
which the broker/dealer made the suitability determination, and on which the
person agrees in writing to the specific transaction. Each customer must also
receive a monthly statement indicating the market value of the penny stocks
owned by the customer. These requirements, while offering a great deal of
customer protection, negatively affect liquidity in the penny stock market by
making the process both more selective and more time consuming.
PART II
MARKET PRICE; DIVIDENDS
Arbor's stock was traded on the OTC Bulletin Board. The range of high and
low bid prices for each quarter within the last two fiscal years and the
quarters ended June 30, 1999 and September 30, 1999 are as follows:
Date High Bid Low Bid
---- -------- -------
4/1/97-6/30/97 $0.75 $0.75
7/1/97-9/30/97 0.75 0.25
10/1/97-12/31/97 1.00 0.50
1/1/98-3/31/98 1.00 1.00
4/1/98-6/30/98 1.50 0.25
7/1/98-9/30/98 2.00 1.5625
10/1/98-12/30/98 2.00 2.00
1/1/99-3/31/99 2.00 2.00
4/1/99-6/30/99 2.00 2.00
7/1/99-8/31/99 -- --
The foregoing information has been provided by The Nasdaq Stock Market, Inc. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions. On September 1, 1999
Arbor's stock was delisted from the OTC Bulletin Board.
No actions have been or are contemplated to be taken to request or
encourage any additional broker/dealers to act as a market maker for Arbor's
stock or to engage third parties to obtain additional market makers.
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Arbor has one class of stock outstanding, its Common Stock. As at November
3, 1999, there were approximately 187 holders of record of the Common Stock of
Arbor.
LEGAL PROCEEDINGS
Arbor is not currently involved in any legal proceedings.
CHANGES IN OR DISAGREEMENTS WITH ACCOUNTANTS
Arbor has neither changed nor disagreed with its accountants in the past
two fiscal years.
RECENT SALES OF UNREGISTERED SECURITIES
Arbor has not sold any unregistered securities in the past three years.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The By-Laws of Arbor provide that Arbor shall indemnify any person who is
a party or is threatened to be made a party to any threatened, pending or
completed action, lawsuit or proceeding because that person is or was a
director, officer, employee or agent of Arbor. In addition, Section 145 of the
Delaware General Corporation Law permits such indemnification.
FINANCIAL STATEMENTS
PART III
INDEX TO EXHIBITS
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FINANCIAL STATEMENTS
ARBOR ENTECH CORPORATION
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Accountants F-2
Balance Sheet, April 30, 1999 and July 31, 1999 (Unaudited) F-3
Statement of Operations, Years Ended April 30, 1999 and
April 30, 1998 (Unaudited) and Three Months Ended
July 31, 1999 and 1998 (Unaudited) F-4
Statement of Stockholders' Equity, Years Ended April 30, 1999
and April 30, 1998 (Unaudited) and Three Months Ended
July 31, 1999 (Unaudited) F-5
Statement of Cash Flows, Years Ended April 30, 1999 and
April 30, 1998 (Unaudited) and Three Months Ended
July 31, 1999 and 1998 (Unaudited) F-6
Notes to Financial Statements F-7
F-1
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REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders
Arbor Entech Corporation
We have audited the accompanying balance sheet of Arbor Entech Corporation as
of April 30, 1999, and the related statements of operations, stockholders'
equity, and cash flows for the year 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 audit.
We conducted out audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provides 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 Arbor Entech Corporation as of
April 30, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
WOLINETZ, GOTTLIEB & LAFAZAN, P.C.
Rockville Centre, New York
June 24, 1999
F-2
<PAGE>
ARBOR ENTECH CORPORATION
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1999 1999
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 334,229 $ 887,238
Accounts Receivable 54,319 26,791
Inventories 122,873 70,178
Other Current Assets 2,425 2,927
----------- -----------
Total Current Assets 513,846 987,134
Property, Plant and Equipment (Net of Accumulated
Depreciation of $49,839 at July 31, 1999 and $47,939 at April 30, 1999) 40,406 42,306
----------- -----------
$ 554,252 $ 1,029,440
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 282,687 $ 320,800
----------- -----------
Total Current Liabilities 282,687 320,800
Loan Payable - Related Party 219,395 215,093
----------- -----------
Total Liabilities 502,082 535,893
----------- -----------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, $.001 Par Value; Authorized
10,000,000 Shares; Issued and Outstanding
7,050,540 Shares 7,050 7,050
Additional Paid-In Capital 1,953,972 1,914,216
Retained Earnings (Deficit) (310,133) (213,356)
Loans Receivable - Related Parties (1,598,719) (1,214,363)
----------- -----------
Total Stockholders' Equity 52,170 493,457
----------- -----------
$ 554,252 $ 1,029,440
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
ARBOR ENTECH CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
3 Months Ended Years Ended
--------------------------- ---------------------------
July 31 April 30,
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 153,591 $ 160,356 $ 1,048,397 $ 737,204
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of Sales 75,259 78,576 518,425 354,618
Selling, General and Administrative Expenses 62,574 52,535 754,583 438,287
----------- ----------- ----------- -----------
137,833 131,111 1,273,008 792,905
----------- ----------- ----------- -----------
Operating Income (Loss) 15,758 29,245 (224,611) (55,701)
----------- ----------- ----------- -----------
Other Income - Net:
Net Gain (Loss) on Trading Securities (111,183) -- 255,095 87,658
Interest Income 3,360 -- 534 1,840
Other -- -- 3,153 --
Interest Expense (4,712) (4,013) (18,981) (34,932)
----------- ----------- ----------- -----------
(112,535) (4,013) 239,801 54,566
----------- ----------- ----------- -----------
Income (Loss) before Provision for Income Taxes (96,777) 25,232 15,190 (1,135)
Provision for Income Taxes -- 12,700 49,000 17,669
----------- ----------- ----------- -----------
Net Income (Loss) $ (96,777) $ 12,532 $ (33,810) $ (18,804)
=========== =========== =========== ===========
Earnings Per Common Share - Basic $ (.01) $ .00 $ (.00) $ (.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.
F-4
<PAGE>
ARBOR ENTECH CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Loans
Common Stock Additional Retained Receivable--
---------------------- Paid-In Earnings Related
Shares Amount Capital (Deficit) Parties Total
--------- ---------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance - April 30, 1997
(Unaudited) 7,050,540 $ 7,050 $1,707,378 $ (160,742) $ (807,548) $ 746,138
Capital Contributed -- -- 84,821 -- -- 84,821
Loans to Related Parties -
Net -- -- -- -- (840,613) (840,613)
Net Loss -- -- -- (18,804) -- (18,804)
--------- ---------- ---------- ---------- ----------- ----------
Balance - April 30, 1998
(Unaudited) 7,050,540 7,050 1,792,199 (179,546) (1,648,161) (28,458)
Capital Contributed -- -- 122,017 -- -- 122,017
Repayments of Loans to
Related Parties - Net -- -- -- -- 433,798 433,798
Net Loss -- -- -- (33,810) -- (33,810)
--------- ---------- ---------- ---------- ----------- ----------
Balance - April 30, 1999 7,050,540 7,050 1,914,216 (213,356) (1,214,363) 493,547
Capital Contributed -- -- 39,756 -- -- 39,756
Loans to Related
Parties - Net -- -- -- -- (384,356) (384,356)
Net Loss -- -- -- (96,777) -- (96,777)
--------- ---------- ---------- ---------- ----------- ----------
Balance - July 31, 1999
(Unaudited) 7,050,540 $ 7,050 $1,953,972 $ (310,133) $(1,598,719) $ 52,170
========= ========== ========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
ARBOR ENTECH CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Years Ended
July 31 April 30,
------------------------------- -------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ (96,777) 12,532 $ (33,810) $ (18,804)
------------- ------------- ------------- -------------
Adjustments to Reconcile Net Income
To Net Cash Provided by Operating
Activities:
Depreciation 1,900 1,700 7,338 3,882
Gain (Loss) on Sale of Trading Securities 111,183 -- (255,095) (87,658)
Changes in Operating Assets and Liabilities
(Increase) in Accounts Receivable (27,528) (37,467) (4,873) (9,210)
(Increase) in Inventories (52,695) (32,323) (24,713) (6,000)
Purchases of Trading Securities (163,764,119) -- (214,682,789) (466,199,840)
Proceeds from Sale of Trading Securities 163,652,936 -- 214,937,884 469,156,416
(Increase) Decrease in Other Current Assets 502 (2,667) (2,927) 32
Increase (Decrease) in Accounts Payable
and Accrued Expenses (38,113) (60,664) 218,387 53,847
------------- ------------- ------------- -------------
Total Adjustments (115,934) (131,421) 193,212 2,911,469
------------- ------------- ------------- -------------
Net Cash Provided by (Used) in Operating Activities (212,711) (118,889) 159,402 2,892,665
------------- ------------- ------------- -------------
Cash Flows from Investing Activities:
Capital Expenditures -- -- (4,300) (21,831)
------------- ------------- ------------- -------------
Net Cash (Used) in Investing Activities -- -- (4,300) (21,831)
------------- ------------- ------------- -------------
Cash Flows from Financing Activities:
Loans to Related Parties (384,356) (32,591) (286,978) (1,980,384)
Proceeds of Loans to Related Parties -- 36,000 720,776 1,139,771
Capital Contributed 39,756 32,592 122,017 84,821
Loans from Related Party -- -- (1,615) (509,259)
Proceeds of Loans from Related Party 4,302 4,013 16,052 319,159
Payments of Brokerage Loans Payable -- -- -- (1,880,974)
------------- ------------- ------------- -------------
Net Cash Provided by (Used) In Financing Activities (340,298) 40,014 570,252 (2,826,866)
------------- ------------- ------------- -------------
Increase (Decrease) in Cash and Cash Equivalents (553,009) (78,875) 725,354 43,968
Cash and Cash Equivalents - Beginning of Period 887,238 161,884 161,884 117,916
------------- ------------- ------------- -------------
Cash and Cash Equivalents - End of Period $ 334,229 $ 83,009 $ 887,238 $ 161,884
============= ============= ============= =============
Supplemental Cash Flow Information:
Cash Paid for Interest $ -- $ -- $ 18,981 $ 21,620
============= ============= ============= =============
Cash Paid for Income Taxes $ 12,500 $ -- $ 17,200 $ 102,480
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Information as of July 31, 1999 and for the Three Months
Ended July 31, 1999 and 1998 is Unaudited)
NOTE 1 - Nature of Business
Arbor Entech Corporation (the "Company") is a Delaware corporation
that engages in the production and wholesale distribution of wood products for
home use, principally fireplace wood and garden stakes.
NOTE 2 - Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all highly liquid short-term investments with
a maturity of three months or less at time of purchase to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed
principally by the straight-line method over the estimated useful lives of the
related assets. Expenditures for maintenance and repairs are charged to expense
as incurred where are major betterments and renewals are capitalized.
Marketable Securities
The Company accounts for its investments in marketable securities in
accordance with Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
Management determines the appropriate classification of all
securities at the time of purchase and re-evaluates such designation as of each
balance sheet date. The Company classifies all of its debt and marketable equity
securities as trading securities. The Company's trading securities are
classified as current assets and are recorded at fair value. Unrealized holding
gains and losses are included in earnings.
Use of Estimates
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.
F-7
<PAGE>
ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Information as of July 31, 1999 and for the Three Months
Ended July 31, 1999 and 1998 is Unaudited)
NOTE 2 - Summary of Significant Accounting Policies (Continued)
Revenue Recognition
Sales are recorded as products are shipped.
Income Taxes
The Company utilizes the liability method of accounting for income
taxes. Under such method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates in effect at the balance sheet date. The resulting asset or
liability is adjusted to reflect enacted changes in tax law. Future tax benefits
attributable to temporary differences are recognized to the extent that
realization of such benefits is more likely than not.
Earnings Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"),
which replaced APB No. 15 to conform earning per share with international
standards as well as to simplify the complexity of the computation under APB No.
15. The previous primary earnings per share ("EPS") calculation is replaced with
a basic EPS calculation. The basic EPS differs from the primary EPS calculation
in that the basic EPS does not include any potentially dilutive securities.
Fully dilutive EPS is replaced with diluted EPS and should be disclosed
regardless of dilutive impact to basic EPS.
Fair Value of Financial Instruments
The fair value of the Company's financial instruments, which consist
primarily of cash and cash equivalents, accounts receivable, accounts payable,
accrued expenses, and long-term receivables and debt, approximate their carrying
amounts reported.
F-8
<PAGE>
ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Information as of July 31, 1999 and for the Three Months
Ended July 31, 1999 and 1998 is Unaudited)
NOTE 2 - Summary of Significant Accounting Policies (Continued)
Concentration of Credit Risk
The Company's financial instruments that are exposed to
concentration of credit risk consist of cash and cash equivalents. At times,
such amounts are in excess of the FDIC and SIPC insurance limits.
The Company's customer base is comprised primarily of one major
national retailer. The Company routinely assesses the financial strength of its
customers and records an allowance for doubtful accounts when it determines that
collection of a particular amount is unlikely.
Unaudited Interim Financial Statements
The interim financial data of the Company is unaudited. Certain
information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial statements for the interim periods presented have
been made. The results of operations for the three month period ended July 31,
1999 are not necessarily indicative of the results for the full year.
NOTE 3 - Inventories
July 31,
1999 April 30,
(Unaudited) 1999
----------- ----
Inventories consist of the following:
Raw Materials $ 49,149 $ 28,480
Finished Goods 73,724 41,698
-------- --------
$122,873 $ 70,178
======== ========
NOTE 4 - Property, Plant and Equipment
Property, plant and equipment consists of the following:
July 31,
1999 April 30, Estimated
(Unaudited) 1999 Useful Life
----------- ---- -----------
Land $ 3,000 $ 3,000 --
Building and Improvements 61,114 61,114 15-31 Years
Machinery and Equipment 4,300 4,300 5 Years
Delivery Equipment 21,831 21,831 5 Years
------- -------
90,245 90,245
Less: Accumulated Depreciation 49,839 47,939
------- -------
$40,406 $42,306
======= =======
The land and building are collateralized by a mortgage held by the Company's
Secretary/Treasurer (see Note 8).
NOTE 5 - 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.
July 31, April 30,
1999 1999
---------- ----------
(Unaudited)
These loans consist of the following:
Receivable from:
Mark Shefts (a) $ 191,773 $ 188,013
Harvey Houtkin (b) 191,773 188,013
Rushmore Financial
Services, Inc. (c) 876,430 510,577
Double H Management
Corp. (d) 338,743 327,760
---------- ----------
$1,598,719 $1,214,363
========== ==========
(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.
NOTE 6 - Loan Payable - Related Party
Loan payable to a related party consists of amounts due to an
affiliated company. The loan has no specific repayment terms and bears interest
at 8% per annum.
F-9
<PAGE>
ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Information as of July 31, 1999 and For The Three Months
Ended July 31, 1999 and 1998 is Unaudited)
NOTE 7 - Income Taxes
Income tax provision consisted of the following:
Years Ended
April 30,
-----------------------
1999 1998
------- --------
(Unaudited)
Current
Federal $29,000 $ --
State 20,000 17,669
------- -------
49,000 17,669
------- -------
Deferred
Federal -- --
State -- --
------- -------
-- --
------- -------
$49,000 $17,669
======= =======
The following is a reconciliation of the US statutory income tax
rate and the effective tax rate on pretax income:
Years Ended
April 30,
--------------------
1999 1998
------- --------
(Unaudited)
US federal statutory rate 34% 34%
State taxes, net of federal tax
Benefit 9.6 13.9
Benefit of net operating loss
carryforward (17.1) (34%)
Other, net 9.2 7.2
------- -------
Effective tax rate $ 35.7 $ 21.1%
======= =======
The Company had no deferred tax assets or liabilities at April 30,
1999.
NOTE 8 - Commitments and Contingencies
Legal
The Company may be subject to legal proceedings and claims which may
arise in the ordinary course of its business. Currently, the Company is not a
party to any known legal proceedings.
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 April 30, 1999 and July 31, 1999 on this credit facility.
F-10
<PAGE>
ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Information as of July 31, 1999 and For The Three Months
Ended July 31, 1999 and 1998 is Unaudited)
NOTE 9 - Major Customers
Net sales to a major national retailer in 1999 and 1998 accounted
for approximately 98% and 97% of net sales, respectively.
As of April 30, 1999, 100% of accounts receivable are amounts due
from a major national retailer.
NOTE 10 - Year 2000 Considerations
The "Year 2000" problem relates to computer systems that have time
and date-sensitive programs that were designed to read years beginning with
"19", but may not properly recognize the year 2000. If a computer system or
software application used by the Company or a third party dealing with the
Company fails because of the inability of the system of application to properly
read the year 2000 the results could have a material adverse effect on the
Company.
The Company's review of its own operating systems has not revealed
any Year 2000 issues that cannot be remediated in a timely manner. However, the
Company is dependent on third party vendors. Failures and interruptions, if any,
resulting from the inability of certain computing systems of third party vendors
to recognize the Year 2000 could have a material adverse effect on the Company's
results of operations. There can be no assurance that the Year 2000 issue can be
resolved by any of such third parties prior to the upcoming change in the
century. Although the Company may incur substantial costs, as a result of such
third party service providers correcting Year 2000 issues, such costs are not
sufficiently certain to estimate at this time.
F-11
<PAGE>
INDEX TO EXHIBITS
Page
Exhibit 1 Charter and By-laws Previously Filed
Exhibit 10.1 Promissory Note - Rushmore Previously Filed
Financial Services, Inc.
Exhibit 10.2 Promissory Note - Double H Previously Filed
Management Corp.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARBOR ENTECH CORPORATION
Date: February 3, 2000
By; s/Harvey Houtkin
Harvey Houtkin, Chairman of the Board,
Chief Executive Officer, President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-30-1999 APR-30-1998
<PERIOD-END> APR-30-1999 APR-30-1998
<CASH> 887,238 0
<SECURITIES> 0 0
<RECEIVABLES> 26,791 0
<ALLOWANCES> 0 0
<INVENTORY> 70,178 0
<CURRENT-ASSETS> 987,134 0
<PP&E> 90,245 0
<DEPRECIATION> 47,939 0
<TOTAL-ASSETS> 1,029,440 0
<CURRENT-LIABILITIES> 320,800 0
<BONDS> 215,093 0
0 0
0 0
<COMMON> 7,050 0
<OTHER-SE> 486,497 0
<TOTAL-LIABILITY-AND-EQUITY> 1,029,440 0
<SALES> 1,048,397 737,204
<TOTAL-REVENUES> 1,307,179 826,702
<CGS> 518,425 265,009
<TOTAL-COSTS> 1,273,008 792,905
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 18,981 34,932
<INCOME-PRETAX> 15,190 (1,135)
<INCOME-TAX> 49,000 17,669
<INCOME-CONTINUING> (33,810) (18,804)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (33,810) (18,804)
<EPS-BASIC> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
