<PAGE>
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: October 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.
<TABLE>
<CAPTION>
Class Outstanding at October 31, 2000
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<S> <C> <C>
Common Stock, par value $.001 per share 7,050,540
</TABLE>
Transitional Small Business Format (check one): Yes No X
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<PAGE>
ARBOR ENTECH CORPORATION
BALANCE SHEET
OCTOBER 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
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<S> <C>
Current Assets:
Cash and Cash Equivalents $ 243,311
Accounts Receivable 261,040
Inventories 60,809
Other Current Assets 8,800
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Total Current Assets 573,960
Property, Plant and Equipment (Net of Accumulated
Depreciation of $63,697) 54,770
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$ 628,730
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 84,672
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Total Current Liabilities 84,672
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Commitments and Contingencies
Stockholders' Equity:
Common Stock, $.001 Par Value; Authorized
10,000,000 Shares; Issued and Outstanding
7,050,540 Shares 7,050
Additional Paid-In Capital 2,076,308
Retained Earnings (Deficit) (365,731)
Notes Receivable - Related Parties (1,173,569)
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Total Stockholders' Equity 544,058
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$ 628,730
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
ARBOR ENTECH CORPORATION
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STATEMENT OF OPERATIONS
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(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
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October 31, October 31,
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2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 355,297 $ 398,017 $ 447,951 $ 551,608
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of Sales 185,472 206,061 232,288 281,320
Selling, General and Administrative Expenses 138,083 154,470 232,897 217,044
----------- ----------- ----------- -----------
323,555 360,531 465,185 498,364
----------- ----------- ----------- -----------
Operating Income (Loss) 31,742 37,486 (17,234) 53,244
----------- ----------- ----------- -----------
Other Income (Expense):
Net Loss on Trading Securities -- (10,697) -- (121,880)
Interest Income 2,019 228 4,908 3,588
Other -- 7,444 -- 7,444
Interest Expense -- (2,947) -- (7,659)
----------- ----------- ----------- -----------
Total Other Income (Expense) 2,019 (5,972) 4,908 (118,507)
----------- ----------- ----------- -----------
Income (Loss) before Provision for Income Taxes 33,761 31,514 (12,326) (65,263)
Provision for Income Taxes 7,025 1,500 7,025 1,500
----------- ----------- ----------- -----------
Net Income (Loss) $ 26,736 $ 30,014 $ (19,351) $ (66,763)
=========== =========== =========== ===========
Earnings Per Common Share - Basic $ .00 $ .00 $ (.00) $ (.01)
=========== =========== =========== ===========
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.
<PAGE>
ARBOR ENTECH CORPORATION
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STATEMENT OF CASH FLOWS
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(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
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OCTOBER 31,
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2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities:
Net (Loss) $ (19,351) $ (66,763)
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Adjustments to Reconcile Net (Loss) to
Net Cash (Used) by Operating
Activities:
Depreciation 6,710 3,800
Loss on Sale of Trading Securities -- 121,880
Changes in Operating Assets and Liabilities
(Increase) in Accounts Receivable (226,519) (325,009)
Decrease in Inventories 2,549 44,886
(Increase) Decrease in Other Current Assets (8,800) 528
Increase (Decrease) in Accounts Payable and Accrued Expenses 10,598 (9,022)
Purchases of Trading Securities -- (204,859,253)
Proceeds from Sale of Trading Securities -- 204,737,373
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Total Adjustments (215,462) (284,817)
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Net Cash (Used) by Operating Activities (234,813) (351,580)
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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:
Capital Contributed 45,552 70,983
Loans to Related Parties (45,552) (541,280)
Proceeds of Loans to Related Parties -- 230,093
Payments of Loans from Related Party -- (222,321)
Proceeds of Loans from Related Party -- 7,228
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Net Cash Provided by (Used) In Financing Activities -- (455,297)
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(Decrease) in Cash and Cash Equivalents (252,763) (806,877)
Cash and Cash Equivalents - Beginning of Period 496,074 887,238
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Cash and Cash Equivalents - End of Period $ 243,311 $ 80,361
============= =============
Supplemental Cash Flow Information:
Cash Paid for Interest $ -- $ 7,659
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Cash Paid for Income Taxes $ 29,985 $ 12,500
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
ARBOR ENTECH CORPORATION
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NOTES TO FINANCIAL STATEMENTS
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OCTOBER 31, 2000
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(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
Inventories consist of the following:
<TABLE>
<S> <C>
Raw Materials $20,270
Finished Goods 40,539
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$60,809
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</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
Computers 10,273
Automobiles and Trucks 39,780
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118,467
Less: Accumulated Depreciation 63,697
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$ 54,770
========
</TABLE>
The land and building are collateralized by a mortgage held by the
Company's Secretary/Treasurer (see Note 5).
<PAGE>
ARBOR ENTECH CORPORATION
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NOTES TO FINANCIAL STATEMENTS
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OCTOBER 31, 2000
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(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.
<TABLE>
<S> <C>
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 85,864
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$1,173,569
==========
</TABLE>
(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 October 31, 2000 on this credit facility.
<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 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.
RESULTS OF OPERATIONS
QUARTER ENDED OCTOBER 31, 2000 COMPARED TO THE QUARTER ENDED
OCTOBER 31, 1999.
Net sales for the quarter ended October 31, 2000 were approximately
$355,000, a decrease of 11% as compared to net sales of approximately $398,000
for the quarter ended October 31, 1999. Net sales decreased due to less sales to
Home Depot. Net losses from trading securities were approximately $11,000 for
the quarter ended October 31, 1999. Arbor had no trading activities during the
quarter ended October 31, 2000 and has discontinued its trading activities and
does not intend to resume them.
Cost of sales were approximately $185,000 for the quarter ended
October 31, 2000, a decrease of approximately $21,000 or 10% over the comparable
1999 period cost of sales of approximately $206,000. This decrease is primarily
attributable to Arbor's decline in sales.
Selling, general and administrative expenses were approximately
$138,000 for the quarter ended October 31, 2000, a decrease of approximately
$16,000 or 10% over selling, general and administrative expenses of
approximately $154,000 for the quarter ended October 31, 1999. This decrease was
due primarily to an increase in salaries and related payroll tax expenses of
approximately $10,000, offset by an overall decrease in other general expenses
of $26,000.
Interest income for the quarter ended October 31, 2000 was
approximately $2,000 compared to $0 for the quarter ended October 31, 1999. The
increase in interest income is primarily attributable to higher average money
market account balances in the current quarter. Interest expense was
approximately $3,000 for the quarter ended October 31, 1999 compared with $0 for
the quarter ended October 31, 2000. This decrease of $3,000 was due to the
repayment by Arbor of its interest bearing loans.
Arbor's net income decreased from approximately $30,000 for the
quarter ended October 31, 1999 to approximately $27,000 for the quarter ended
October 31, 2000. This was a decrease of approximately $3,000, or 10%.
<PAGE>
SIX MONTHS ENDED OCTOBER 31, 2000 COMPARED TO THE SIX MONTHS ENDED
OCTOBER 31, 1999.
Net sales for the six months ended October 31, 2000 were
approximately $448,000, a decrease of 19% as compared to net sales of
approximately $552,000 for the six months ended October 31, 1999. Net sales
decreased due to less sales to Home Depot. Net losses from trading securities
were approximately $122,000 for the six months ended October 31, 1999. Arbor had
no trading activities during the six months ended October 31, 2000 and has
discontinued its trading activities and does not intend to resume them.
Cost of sales were approximately $233,000 for the six months ended
October 31, 2000, a decrease of approximately $49,000 or 17% over the comparable
1999 period cost of sales of approximately $281,000. This decrease is primarily
attributable to Arbor's decline in sales.
Selling, general and administrative expenses were approximately
$233,000 for the six months ended October 31, 2000, an increase of approximately
$16,000 or 7% over selling, general and administrative expenses of approximately
$217,000 for the six months ended October 31, 1999. This increase was due
primarily to an increase in salaries and related payroll tax expenses of
approximately $30,000, offset by an overall decrease in other general expenses
of $14,000.
Interest income for the six months ended October 31, 2000 was
approximately $5,000 compared to interest income of $4,000 for the six months
ended October 31, 1999. Interest expense was approximately $8,000 for the six
months ended October 31, 1999 compared with $0 for the six months ended October
31, 2000. This decrease of $8,000 was due to the repayment by Arbor of its
interest bearing loans.
Arbor's net income decreased from approximately $67,000 for the six
months ended October 31, 1999 to approximately $19,000 for the six months ended
October 31, 2000. This was a decrease of approximately $48,000, or 72%.
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 October 31, 2000 we
had working capital of approximately $489,000.
As at October 31, 2000, we had cash and cash equivalents of
approximately $243,000, which represented 39% 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 used in operating activities decreased by approximately
$117,000 from the six months ended October 31, 1999 to the six months ended
October 31, 2000. This decrease was partially due to the change in the purchase
and sale of trading securities from the six months ended October 31, 1999 to the
six months ended October 31, 2000. During 1999, Arbor had net purchases over
sales proceeds of approximately $122,000, compared to $0 in 2000.
Net cash used in investing activities was approximately $18,000
during the six months ended October 31, 2000, which represented capital
expenditures made by Arbor.
<PAGE>
Net cash used in financing activities was approximately $455,000 in
1999, compared to $0 for the six months ended October 31, 2000. This change was
primarily attributable to additional net loans to related parties of
approximately $455,000 during the six months ended October 31, 1999.
<PAGE>
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
President
By: /s/ Mark Shefts
Mark Shefts
Chief Financial Officer
Dated: December 12, 2000
