-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JbG+ZgRoc0wnCYbLK17Z669fAkcZ8JITWbYviZfxCFMcgW0zKuJyskXF/D4+ctzP UltVJdvN35mYOamAAbfb4Q== 0001047469-02-007012.txt : 20021216 0001047469-02-007012.hdr.sgml : 20021216 20021216101030 ACCESSION NUMBER: 0001047469-02-007012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021031 FILED AS OF DATE: 20021216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARBOR ENTECH CORP CENTRAL INDEX KEY: 0000710782 STANDARD INDUSTRIAL CLASSIFICATION: LUMBER & WOOD PRODUCTS (NO FURNITURE) [2400] IRS NUMBER: 222335094 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-30432 FILM NUMBER: 02857973 BUSINESS ADDRESS: STREET 1: RD 1 STREET 2: BOX 1076 CITY: LITTLE MARSH STATE: PA ZIP: 16931 BUSINESS PHONE: 5703763217 MAIL ADDRESS: STREET 1: RD 1 BOX 1076 CITY: LITTLE MARSH STATE: PA ZIP: 16931 FORMER COMPANY: FORMER CONFORMED NAME: ARBOR ENERGY CORP DATE OF NAME CHANGE: 19840618 10QSB 1 a2096338z10qsb.txt FORM 10-QSB 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, 2002 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) Route 349, 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 January 31, 2002 - ----- -------------------------------- Common Stock, par value $.001 per share 7,050,540 Transitional Small Business Format (check one): Yes No X --- ARBOR ENTECH CORPORATION BALANCE SHEET OCTOBER 31, 2002 (Unaudited) ASSETS Current Assets: Cash and Cash Equivalents $299,445 Accounts Receivable 119,208 Inventories 176,572 Prepaid Expenses 64,934 -------- Total Current Assets 660,159 Property, Plant and Equipment (Net of Accumulated Depreciation of $91,593) 48,465 -------- $708,624 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable and Accrued Liabilities $ 33,120 -------- Total Current Liabilities 33,120 -------- 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 2,262,637 Retained Earnings (Deficit) (532,863) Notes Receivable - Related Parties (1,061,320) --------- Total Stockholders' Equity 675,504 -------- $708,624 ========
The accompanying notes are an integral part of the financial statements. ARBOR ENTECH CORPORATION STATEMENT OF OPERATIONS (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED OCTOBER 31, OCTOBER 31, ------------------------ ------------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Net Sales $ 121,980 $ 461,929 $ 369,457 $ 593,978 ---------- ---------- ---------- ---------- Costs and Expenses: Cost of Sales 73,188 230,733 221,674 297,613 Selling, General and Administrative Expenses 134,544 174,574 241,826 331,625 ---------- ---------- ---------- ---------- 207,732 405,307 463,500 629,238 ---------- ---------- ---------- ---------- Operating Income (Loss) (85,752) 56,622 (94,043) (35,260) ---------- ---------- ---------- ---------- Other Income (Expense): Interest Income 405 1,124 852 4,447 Other -- 4,882 -- 4,882 ---------- ---------- ---------- ---------- Total Other Income 405 6,006 852 9,329 ---------- ---------- ---------- ---------- Income (Loss) before Provision for Income Taxes (85,347) 62,628 (93,191) (25,931) Provision for Income Taxes -- 4,600 -- 4,600 ---------- ---------- ---------- ---------- Net Income (Loss) $ (85,347) $ 58,028 $ (93,191) $ (30,531) ========== ========== ========== ========== Earnings Per Common Share - Basic $ (.01) $ .01 $ (.01) $ (.00) ========== ========== ========== ========== Weighted Average Shares Outstanding 7,050,540 7,050,540 7,050,540 7,050,540 ========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements. ARBOR ENTECH CORPORATION STATEMENT OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED OCTOBER 31, ------------------------ 2002 2001 --------- --------- Cash Flows from Operating Activities: Net (Loss) $(93,191) $(30,531) -------- -------- Adjustments to Reconcile Net (Loss) to Net Cash Provided (Used) by Operating Activities: Depreciation 7,462 6,786 Changes in Operating Assets and Liabilities: (Increase) Decrease in Accounts Receivable 188,599 (151,348) (Increase) Decrease in Inventories (32,333) (64,241) (Increase) Decrease in Prepaid Expenses (24,325) 10,883 (Decrease) in Accounts Payable (24,314) (31,011) (Decrease) in Taxes Payable (1,479) (47,323) -------- -------- Total Adjustments 113,610 (276,254) -------- -------- Net Cash Provided (Used) by Operating Activities 20,419 (306,785) -------- -------- Cash Flows from Investing Activities: -- -- -------- -------- Cash Flows from Financing Activities: Capital Contributed 34,268 48,205 Loans to Related Parties - Net (7,268) (48,205) Repayment of Loans to Related Parties -- 21,000 -------- -------- Net Cash Provided by Financing Activities 27,000 21,000 -------- -------- Increase (Decrease) in Cash and Cash Equivalents 47,419 (285,785) Cash and Cash Equivalents - Beginning of Period 252,026 625,438 -------- -------- Cash and Cash Equivalents - End of Period $299,445 $339,653 ======== ======== Supplemental Cash Flow Information: Cash Paid for Interest $ -- $ -- ======== ======== Cash Paid for Income Taxes $ 50,200 $ 42,305 ======== ========
The accompanying notes are an integral part of the financial statements. ARBOR ENTECH CORPORATION NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2002 (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: Raw Materials $150,086 Finished Goods 26,486 -------- $176,572 ========
NOTE 3 - Property, Plant and Equipment Property, plant and equipment consists of the following: Land $22,058 Building and Improvements 61,114 Machinery and Equipment 4,300 Computers 12,804 Automobiles and Trucks 39,782 ------- 140,058 Less: Accumulated Depreciation 91,593 ------- $48,465 =======
The land and building are collateralized by a mortgage held by the Company's Secretary/Treasurer (see Note 6). NOTE 4 - Notes Receivable - Related Parties Notes receivable from related parties consists of amounts due from two affiliated companies. These loans are classified as a reduction of 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, which was reduced to 7% per annum in October 2001. ARBOR ENTECH CORPORATION NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2002 (Unaudited) NOTE 4 - Notes Receivable - Related Parties (Continued) ---------------------------------- The notes consist of the following: Receivable from: Rushmore Financial Services, Inc. (a) $784,024 ATTAIN Technology, Inc. (F/K/A Double H Management Corp.) (b) 195,072 ---------- 979,096 Accrued Interest 82,224 ---------- $1,061,320 ==========
(a) A corporation wholly owned by Mr. Shefts and Mr. Houtkin. (b) A wholly owned subsidiary of Rushmore Financial Services, Inc. NOTE 5 - Related Party Transactions -------------------------- The Company incurred $27,000 and $21,000 in administrative fees to a Company owned by two of its significant stockholders for the six months ended October 31, 2002 and 2001 respectively. NOTE 6 - 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, 2002 on this credit facility. 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 2002 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. Results of operations --------------------- QUARTER ENDED OCTOBER 31, 2002 COMPARED TO THE QUARTER ENDED OCTOBER 31, 2001. Net sales for the quarter ended October 31, 2002 were approximately $122,000, a decrease of $340,000 or 74% as compared to net sales of approximately $462,000 for the quarter ended October 31, 2001. Net sales decreased primarily due to less orders from Home Depot. Cost of sales were approximately $73,000 for the quarter ended October 31, 2002, a decrease of approximately $158,000 or 68% over the comparable 2001 period cost of sales of approximately $231,000. Cost of sales as a percentage of net sales was approximately 60% for the quarter ended October 31, 2002 compared to approximately 50% for the quarter ended October 31, 2001. This increase is primarily attributable to an increase in product costs during the current quarter that was not passed on to Home Depot. Selling, general and administrative expenses were approximately $135,000 for the quarter ended October 31, 2002, a decrease of approximately $40,000 or 23% over selling, general and administrative expenses of approximately $175,000 for the quarter ended October 31, 2001. This decrease was due primarily to a decrease in salaries and related costs of approximately $30,000 along with reductions in other general expenses. Interest income for the quarter ended October 31, 2002 was approximately $400 compared to $1,100 for the quarter ended October 31, 2001. The decrease in interest income is primarily attributable to lower average money market account balances in the current quarter coupled with lower interest rates. Arbor's net loss was approximately $85,000 for the quarter ended October 31, 2002 compared to net income of approximately $58,000 for the quarter ended October 31, 2001. SIX MONTHS ENDED OCTOBER 31, 2002 COMPARED TO THE SIX MONTHS ENDED OCTOBER 31, 2001. Net sales for the six months ended October 31, 2002 were approximately $369,000, a decrease of $225,000 or 38% as compared to net sales of approximately $594,000 for the six months ended October 31, 2001. Net sales decreased primarily due to less orders from Home Depot. Cost of sales were approximately $222,000 for the six months ended October 31, 2002, a decrease of approximately $76,000 or 26% over the comparable 2001 period cost of sales of approximately $298,000. Cost of sales as a percentage of net sales was approximately 60% for the six months ended October 31, 2002 compared to approximately 50% for the six months ended October 31, 2001. This increase is primarily attributable to an increase in product costs during the period that was not passed on to Home Depot. Selling, general and administrative expenses were approximately $242,000 for the six months ended October 31, 2002, a decrease of approximately $90,000 or 27% over selling, general and administrative expenses of approximately $332,000 for the six months ended October 31, 2001. This decrease was due primarily to a decrease in salaries and related costs of approximately $72,000 along with reductions in other general expenses. Interest income for the six months ended October 31, 2002 was approximately $900 compared to interest income of $4,400 for the six months ended October 31, 2001. This decrease in interest income is primarily attributable to lower average money market account balances in the current period coupled with lower interest rates. Arbor's net loss increased from approximately $31,000 for the six months ended October 31, 2001 to approximately $93,000 for the six months ended October 31, 2002. This was an increase of approximately $62,000, or 200%. 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, 2002 we had working capital of approximately $627,000. As at October 31, 2002, we had cash and cash equivalents of approximately $299,000, which represented 42% 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 was approximately $20,000 for the six months ended October 31, 2002, as compared to net cash used in operating activities of approximately $307,000 for the six months ended October 31, 2001. This increase of approximately $327,000 is primarily attributable to the increase of net loss of approximately $62,000 offset by a net change in operating assets and liabilities of approximately $390,000. Net cash provided by financing activities increased by approximately $6,000, primarily attributable to net capital contributed in connection with related party loans. 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 16, 2002 Certification of Chief Executive Office and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-QSB of Arbor EnTech Corporation (the ""Company'') for the quarterly period ended October 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the ""Report''), Harvey Houtkin, as Chairman and Chief Executive Officer of the Company, and Mark Shefts, as Treasurer and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) I have reviewed this quarterly report on Form 10-QSB of the Company; (2) Based on my knowledge, this quarterly report fully complies with the requirements of Section 113(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (3) Based on my knowledge, the information included in this quarterly report fairly presents in all material respects the financial condition and results of operations of the Company as of, and for, the periods presented in this quarterly report. s/ Harvey Houtkin ------------------------------- Harvey Houtkin Chief Executive Officer December 16, 2002 s/ Mark Shefts ------------------------------- Mark Shefts Chief Financial Officer Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----