SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-QSB
-------------------------
Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act
Of 1934
For The Quarterly Period Ended October 31, 2006
Commission File Number: 000-30432
ARBOR ENTECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2335094
(State of jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
PO Box 656
Tuxedo Park, NY 10987
(Address of principal executive offices)
(201) 782-9237
(Registrant's telephone number)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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.
Yes |X| No |_|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes |X| No |_|
As of October 31, 2006, the registrant had a total of 7,050,540 shares of Common
Stock outstanding.
ARBOR ENTECH CORPORATION
Form 10-QSB Quarterly Report
Table Of Contents
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheet as of October 31, 2006 3
Condensed Statements of Operations for the three Months Ended October 31, 2006 4
and October 31, 2005
Condensed Statements of Cash Flows for the three Months Ended October 31, 2006 5
and October 31, 2005
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7
Item 3. Controls and Procedures 9
PART II. OTHER INFORMATION 10
PART I. FINANCIAL INFORMATION
ARBOR ENTECH CORPORATION
CONDENSED BALANCE SHEET
OCTOBER 31, 2006
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 449,219
Prepaid Expenses 711
-----------
Total Current Assets 449,930
-----------
Total Assets $ 449,930
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 4,129
-----------
Total Current Liabilities 4,129
-----------
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 2,365,441
Retained Earnings (Deficit) (1,926,690)
-----------
Total Stockholders' Equity 445,801
-----------
$ 449,930
The accompanying notes are an integral part of the financial statements.
3
ARBOR ENTECH CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
-------------------------- --------------------------
October 31, October 31,
-------------------------- --------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net Sales $ -- $ -- $ -- $ --
----------- ----------- ----------- -----------
Costs and Expenses:
Selling, General and Administrative Expenses 4,460 10,719 7,594 15,441
----------- ----------- ----------- -----------
4,460 10,719 7,594 15,441
----------- ----------- ----------- -----------
Loss from Operations (4,460) (10,719) (7,794) (15,441)
----------- ----------- ----------- -----------
Other Income:
Interest 456 491 922 793
Other -- -- -- 15
----------- ----------- ----------- -----------
456 491 922 808
----------- ----------- ----------- -----------
Net Loss $ (4,004) $ (10,228) $ (6,672) $ (14,633)
=========== =========== =========== ===========
Loss Per Common Share - Basic $ (.00) $ (.00) $ (.00) $ (.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.
4
ARBOR ENTECH CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
----------------------
October 31,
----------------------
2006 2005
--------- ---------
Cash Flows from Operating Activities:
Net Loss $ (6,672) $ (14,633)
--------- ---------
Adjustments to Reconcile Net Loss to Net Cash
(Used) in Operating Activities:
Depreciation -- --
Decrease in Deferred Tax Assets -- 81,762
Decrease in Deferred Tax Liabilities -- (81,762)
Changes in Operating Assets and Liabilities:
Decrease in Miscellaneous Receivable -- 826
Decrease in Prepaid Expenses -- 1,531
(Decrease) in Accounts Payable and Accrued Liabilities (6,956) (1,887)
--------- ---------
Total Adjustments (6,956) 470
--------- ---------
Net Cash (Used) in Operating Activities (13,628) (14,163)
--------- ---------
Cash Flows from Investing Activities:
Proceeds from Receivable from Sale of Real Property -- 213,589
--------- ---------
Net Cash Provided by Investing Activities -- 213,589
--------- ---------
Cash Flows from Financing Activities: -- --
--------- ---------
Increase (Decrease) in Cash and Cash Equivalents (13,628) 199,426
Cash and Cash Equivalents - Beginning of Period 462,847 285,071
--------- ---------
Cash and Cash Equivalents - End of Period $ 449,219 $ 484,497
========= =========
Supplemental Cash Flow Information:
Cash Paid for Interest $ -- $ --
========= =========
Cash Paid for Income Taxes $ -- $ --
========= =========
The accompanying notes are an integral part of the financial statements.
5
ARBOR ENTECH CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - Unaudited Interim Financial Statements
In the opinion of the Company's management, the accompanying unaudited
condensed financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the information set
forth therein. These financial statements are condensed and therefore do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements.
Results of operations for interim periods are not necessarily indicative
of the results of operations for a full year.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
The information contained in this Form 10-QSB and documents incorporated herein
by reference are intended to update the information contained in the Company's
Form 10-KSB for its fiscal year ended April 30, 2006 which includes our audited
financial statements for the year ended April 30, 2006 and such information
presumes that readers have access to, and will have read, the "Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
other information contained in such Form 10-KSB and other Company filings with
the Securities and Exchange Commission ("SEC").
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties, and actual results
could be significantly different than those discussed in this Form 10-QSB.
Certain statements contained in Management's Discussion and Analysis,
particularly in "Liquidity and Capital Resources," and elsewhere in this Form
10-QSB are forward-looking statements. These statements may discuss, among other
things, expected growth, future revenues and future performance. Although we
believe the expectations expressed in such forward-looking statements are based
on reasonable assumptions within the bounds of our knowledge of our business, a
number of factors could cause actual results to differ materially from those
expressed in any forward-looking statements, whether oral or written, made by us
or on our behalf. The forward-looking statements are subject to risks and
uncertainties including, without limitation, the following: (a) the lack of any
current business operations, (b) the possible failure to obtain a suitable
business acquisition candidate, and (c) the specific risks of any new business
or acquisition. The foregoing should not be construed as an exhaustive list of
all factors that could cause actual results to differ materially from those
expressed in forward-looking statements made by us. All forward-looking
statements included in this document are made as of the date hereof, based on
information available to the Company on the date thereof, and the Company
assumes no obligation to update any forward-looking statements.
These forward-looking statements often can be identified by the use of
predictive, future-tense or forward-looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "plans," "may," or similar terms.
General
We were a wood products company that had been in business since 1980. Our
business fluctuated over the years. We were almost wholly dependent on sales to
The Home Depot, Inc. As discussed below in "Discontinued Operations," on
September 2, 2003, we discontinued our wood products business.
At present, we our seeking other business opportunities, but there can be
no assurance that such opportunities will be identified, engaged in, or result
in any profits.
Results of Operations
Since we discontinued our wood products business, there were no sales from
continuing operations during the years ended April 30, 2006 and 2005 and the
quarter ended and six months ended October 31, 2006.
Selling, general and administrative expenses were $4,460 for the quarter
ended October 31, 2006, as compared to $10,719 for the comparable period of the
prior year. Selling, general and administration expenses were $7,594 for the six
months ended October 31, 2006, as compared to $15,441 for the comparable period
of the prior year.
For the quarter ended October 31, 2006, we had a net loss of $4,004 as
compared to a net loss of $10,228 for the comparable period of the prior year.
For the six months ended October 31, 2006, we had a net loss of $6,672 as
compared to $14,633 for the comparable period of the prior year.
7
Discontinued Operations
On September 2, 2003, we informed Home Depot that we would no longer do
business with that company due to increased difficulties in transacting business
with Home Depot on a profitable basis. We stated to Home Deport that these
difficulties included Home Depot's prohibition against price increases despite
increases in our costs of production, a diminution in the Home Depot territories
we were allowed to sell product to, and Home Depot's demands regarding returns
of ordered products that we were unwilling to accede to for economic reasons. As
a result, on September 2, 2003, we discontinued our wood products business. The
sale of our real estate resulted in a gain of approximately $186,000 for the
year ended April 30, 2005.
Liquidity and capital resources
In the prior periods discussed above, our working capital requirements
were met primarily from sales generated by our discontinued wood products
business. At October 31, 2006, we had working capital of $445,801.
As at October 31, 2006, we had cash and cash equivalents of $449,219,
which represented substantially all of our total assets. We believe we have
adequate working capital to search for business opportunities for at least the
next 12 months.
On July 20, 2005, we closed on the sale of our real property located in
Little Marsh, Pennsylvania and realized net proceeds of approximately $214,000.
This amount was reported as a receivable at April 30, 2005 because we entered
into the contract of sale on April 15, 2005. The payment of this receivable in
the first quarter of fiscal 2006 resulted in cash provided by investing
activities of approximately $214,000 for the six months ended October 31, 2005.
Net cash was used in operating activities for the six months ended October
31, 2006 and October 31, 2005 of 13,628 and $14,163, respectively.
Since terminating our wood products business in September 2002, the
Company has been unable to find a suitable business opportunity or merger
candidate considering the limited cash resources available to the Company and
that the Company's Common Stock has a limited and sporadic trading market.
Nevertheless, Management is continuing to explore various business opportunities
that may be available to it. As of the filing date of this Form 10-QSB, there
are no known trends or any known demands, commitments, events or uncertainties
that will result in or that are reasonably likely to result in the Company's
liquidity increasing or decreasing in any material way. Further, at the present
time, the Company has no commitments for capital expenditures and does not
anticipate same until it establishes a business or acquires an operating
business, of which there can be no assurances given.
Off-Balance Sheet Transactions
We do not have any transactions, agreements or other contractual
arrangements that constitute off-balance sheet arrangements.
Application Of Critical Accounting Policies
Our financial statements and accompanying notes are prepared in accordance
with accounting principles generally accepted in the United States of America.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. Critical accounting policies for use of
estimates, accounting for stock-based compensation and environmental remediation
costs.
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
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.
8
ITEM 3. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-15(e). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. The Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective at the reasonable
assurance level at the end of our most recent quarter. There have been no
changes in the Company's disclosure controls and procedures or in other factors
that could affect the disclosure controls subsequent to the date the Company
completed its evaluation. Therefore, no corrective actions were taken.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
As of the filing date of this Form 10-QSB, we are not a party to any pending
legal proceedings.
ITEM 2. CHANGES IN SECURITIES.
(a) In the three months ended October 31, 2006, there were no sales of
unregistered securities.
(b) Rule 463 of the Securities Act is not applicable to the Company.
(c) In the three months ended October 31, 2006 there were no repurchases by
the Company of its Common Stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
ITEM 5. OTHER INFORMATION:
None.
9
ITEM 6. EXHIBITS:
Except for the exhibits listed below as filed herewith or unless
Otherwise noted, all other required exhibits have been previously
filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, on Form 10-SB, as
amended (file no. 000-51160).
3.a. Our Articles of Incorporation (1)
3.b. Our By-Laws (2)
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 from the Company's Chief Executive Officer (3)
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 from the Company's Chief Financial Officer (3)
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 from the Company's Chief Executive Officer (3)
32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 from the Company's Chief Financial Officer (3)
_______________________________
(1) Previously filed as an exhibit to the Company's Registration
Statement on Form 10-SB (SEC File No. 0-30432) filed on or
about July 30, 1999, and incorporated herein by this
reference.
(2) Previously filed as an exhibit to Amendment No. 1 to the
Company's Registration Statement on Form 10-SB (SEC File No.
01-15207) filed on or about August 2, 1999, and incorporated
herein by this reference.
(3) Filed herewith.
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ARBOR ENTECH CORPORATION
Date: November 30 2006 By: /s/ Harvey Houtkin
------------------------------------
Harvey Houtkin,
Chairman of the Board,
Chief Executive Officer
Date: November 30, 2006 By: /s/ Mark Shefts
------------------------------------
Mark Shefts,
Chief Financial Officer
11