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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT 0F 1934
For the period ended: July 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 Number 0-30432
ARBOR ENTECH CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 22-2335094
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
Route 349, RD 1, Box 1076, Little Marsh, PA 16931
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (570) 376-2217
--------------
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(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 July 31, 2000
----- ----------------------------
Common Stock, par value $.001 per share 7,050,540
Transitional Small Business Format (check one): Yes / / No /X/
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ARBOR ENTECH CORPORATION
BALANCE SHEET
JULY 31, 2000
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 388,216
Accounts Receivable 31,287
Inventories 97,152
Other Current Assets 8,800
-----------
Total Current Assets 525,455
Property, Plant and Equipment (Net of Accumulated
Depreciation of $59,842) 58,625
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$ 584,080
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 66,758
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Total Current Liabilities 66,758
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Commitments and Contingencies
Stockholders' Equity:
Common Stock, $.001 Par Value; Authorized
10,000,000 Shares; Issued and Outstanding
7,050,540 Shares 7,050
Additional Paid-In Capital 2,053,316
Retained Earnings (Deficit) (392,467)
Notes Receivable - Related Parties (1,150,577)
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Total Stockholders' Equity 517,322
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$ 584,080
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The accompanying notes are an integral part of the financial statements.
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ARBOR ENTECH CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
July 31,
----------------------------
2000 1999
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<S> <C> <C>
Net Sales $ 92,654 $ 153,591
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Costs and Expenses:
Cost of Sales 46,816 75,259
Selling, General and Administrative Expenses 94,814 62,574
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141,630 137,833
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Operating Income (Loss) (48,976) 15,758
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Other Income (Expense):
Net Loss on Trading Securities -- (111,183)
Interest Income 2,889 3,360
Other -- --
Interest Expense -- (4,712)
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Total Other Income (Expense) 2,889 (112,535)
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Net Loss $ (46,087) $ (96,777)
=========== ===========
Earnings Per Common Share - Basic $ (.01) $ (.01)
=========== ===========
Weighted Average Shares Outstanding 7,050,540 7,050,540
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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ARBOR ENTECH CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
July 31
--------------------------------
2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (46,087) $ (96,777)
Adjustments to Reconcile Net Loss to Net Cash
(Used) in Operating Activities:
Depreciation 2,855 1,900
Loss on Sale of Trading Securities -- 111,183
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 3,234 (27,528)
(Increase) in Inventories (33,794) (52,695)
Purchases of Trading Securities -- (163,764,119)
Proceeds from Sale of Trading Securities -- 163,652,936
(Increase) Decrease in Other Current Assets (8,800) 502
(Decrease) in Accounts Payable and Accrued Liabilities (7,316) (38,113)
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Total Adjustments (43,821) (115,934)
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Net Cash (Used) in Operating Activities (89,908) (212,711)
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Cash Flows from Investing Activities:
Capital Expenditures (17,950) --
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Net Cash (Used) in Investing Activities (17,950) --
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Cash Flows from Financing Activities:
Loans to Related Parties (22,560) (384,356)
Capital Contributed 22,560 39,756
Proceeds of Loans from Related Party -- 4,302
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Net Cash (Used) In Financing Activities -- (340,298)
(Decrease) in Cash and Cash Equivalents (107,858) (553,009)
Cash and Cash Equivalents - Beginning of Period 496,074 887,238
Cash and Cash Equivalents - End of Period $ 388,216 $ 334,229
============= =============
Supplemental Cash Flow Information:
Cash Paid for Interest $ -- $ --
============= =============
Cash Paid for Income Taxes $ 29,985 $ 12,500
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(Unaudited)
NOTE 1 - Unaudited Interim Financial Statement
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
Inventories consist of the following:
Raw Materials $ 65,092
Finished Goods 32,060
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$ 97,152
============
NOTE 3 - Property, Plant and Equipment
Property, plant and equipment consists of the following:
Land $ 3,000
Building and Improvements 61,114
Machinery and Equipment 4,300
Computers 10,273
Automobiles and Trucks 39,780
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118,467
Less: Accumulated Depreciation 59,842
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$ 58,625
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The land and building are collateralized by a mortgage held by the
Company's Secretary/Treasurer (see Note 5).
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ARBOR ENTECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(Unaudited)
NOTE 4 - Notes Receivable - Related Parties
Notes receivable from related parties consists of amounts due
from affiliated companies. These loans originally had no specific repayment
terms and are classified as a deduction from stockholders' equity. Although the
loans bear interest such interest is not recorded as income for financial
statement purposes but as additional contributed capital. In November 1999 the
remaining two loans were memorialized into 10 year promissory notes bearing
interest at 10% per annum.
The notes consist of the following:
Receivable from:
Rushmore Financial Services, Inc. (a) $ 871,138
Double H Management Corp. (b) 216,747
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1,087,885
Accrued Interest 62,692
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$ 1,150,577
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(a) A corporation wholly owned by Mr. Shefts and Mr. Houtkin.
(b) A wholly owned subsidiary of Rushmore Financial Services, Inc.
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 July 31, 2000, on this credit facility.
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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 2000 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.
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 but has discontinued such activity.
Results of operations
Quarter ended July 31, 2000, compared to the quarter ended July 31,
1999.
Net sales for the quarter ended July 31, 2000, were approximately
$93,000, a decrease of 40% as compared to net sales of approximately $154,000
for the quarter ended July 31, 1999. Net sales decreased due to less sales to
Home Depot. Net losses from trading securities were approximately $111,000 for
the quarter ended July 31, 1999. Arbor had no trading activities during the
quarter ended July 31, 2000 and has discontinued its trading activities and does
not intend to resume them.
Cost of sales were approximately $47,000 for the quarter ended July 31,
2000, a decrease of approximately $28,000 or 37% over the comparable 1999 period
cost of sales of approximately $75,000. This decrease is primarily attributable
to Arbor's decline in sales.
Selling, general and administrative expenses were approximately $95,000
for the quarter ended July 31, 2000, an increase of approximately $32,000 or 51%
over the quarter ended July 31, 1999, selling, general and administrative
expenses of approximately $63,000. This increase was due primarily to an
increase in salaries and related
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payroll tax expenses of approximately $21,000, and an overall increase in other
general expenses of $11,000.
Interest income for the quarters ended July 31, 2000 and 1999 was
approximately $3,000. Interest expense was approximately $5,000 for the quarter
ended July 31, 1999, compared with $0 for the quarter ended July 31, 2000. This
decrease of $5,000 was due to the repayment by Arbor of its interest bearing
loans.
Arbor's net loss decreased from approximately $97,000 for the quarter
ended July 31, 1999 to approximately $46,000 for the quarter ended July 31,
2000. This was a decrease of approximately $51,000, or 53%.
The results of operations for the three months ended July 31, 2000, 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. At July 31, 2000, we
had working capital of approximately $458,000.
As at July 31, 2000, we had cash and cash equivalents of approximately
$388,000, which represented approximately 66% 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 decreased by approximately
$123,000 from the quarter ended July 31, 1999, to the quarter ended July 31,
2000. This decrease was partially due to the change in the purchase and sale
of trading securities from the quarter ended July 31, 1999, to the quarter
ended July 31, 2000. During the quarter ended July 31, 1999, Arbor had net
purchases over sales proceeds of approximately $111,000 compared to $0 in the
quarter ended July 31, 2000.
Net cash used in investing activities was approximately $18,000 during
the quarter ended July 31, 2000, which represented capital expenditures made by
Arbor.
Net cash used in financing activities was approximately $340,000 in the
quarter ended July 31, 1999, compared to $0 in the quarter ended July 31, 2000.
This change was primarily attributable to additional net loans made by Arbor to
related parties during the quarter ended July 31, 1999.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) None
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
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President
By: /s/ Mark Shefts
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Mark Shefts
Chief Financial Officer
Dated: September 14, 2000
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