**U.S.Securities and Exchange Commission**

**Washington,D.C. 20549**

 

**Form 10-KSB**

 

**ý****ANNUAL REPORT PURSUANTTO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

**Forthe Fiscal Year ended April 30, 2004**

 

**o****TRANSITION REPORT UNDERSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

**Forthe transition period from           to          **

 

**Commissionfile number 000 30432**

 

**ARBORENTECH CORPORATION**

(Name of Small Business Issuer in itscharter)

 

| **Delaware**                                                    |   | **22-2335094**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                            |   |                                 |
| **RD 1, Box 1076, Little Marsh, Pennsylvania**                  |   | **16931**                            |
| (Address of principal executive offices)                        |   | (Zip Code)                           |
|                                                            |   |                                 |
| Issuer’s telephone number **(570)  376-2217**              |

 

Securities registered under Section 12(b)of the Act:

 

| **Title of  each class  to be so registered** |   | **Name of  each exchange on which  each class is to be registered** |
|-----------------------------------------------|--------|---------------------------------------------------------------------|
| None                                          |   | NASD Bulletin Board                                                 |

 

Securities registered underSection 12(g) of the Act:

 
| **Common**       |
|------------------|
| (Title of class) |

 

Check whether the issuer (1) filed allreports required to be filed by Section 13 or 15(d) of the Exchange Actduring the past 12 months (or such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.    Yes ý  No o

 

Check if there is no disclosure of delinquentfilers in response to item 405 of Regulation SB not contained in this form, andno disclosure will be contained, to the best of registrant’s knowledge, indefinitive proxy or information statements incorporated by reference in PartIII of this Form 10-KSB or any amendment to this Form 10-KSB  ý

 

State issuer’s revenues for its most recentfiscal year: $0.

 

State the aggregate market value of thevoting and non-voting common equity held by non-affiliates computed byreference to the price at which the common equity was sold, or the average bidand asked price of such common equity, as of a specified date within the past60 days.  (See definition of affiliatein Rule 12b-2 of the Exchange Act.) Average Bid/Ask 08/11/04: $679,320.00

 

Note: If determining whether a person is anaffiliate will involve an unreasonable effort and expense, the issuer maycalculate the aggregate market value of the common equity held bynon-affiliates on the basis of reasonable assumptions, if the assumptions arestated.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGDURING THE PAST FIVE YEARS)

 

Check whether the issuer has filed alldocuments and reports required to be filed by Section 12, 13, or 15(d) ofthe Exchange Act after the distribution of securities under a plan confirmed bya court.

 
|   | Yes o |   | No ý |
|--------|------------|--------|----------------|

 

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

 

State the number of shares outstanding of each of the issuer’s classesof common equity, as of the latest practicable date: 7,050,540

 

DOCUMENTS INCORPORATED BY REFERENCE

 

If the following documents are incorporated by reference, brieflydescribe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,etc.) into which the document is incorporated: (1) any annual report tosecurity holders; (2) any proxy or information statement; and (3) anyprospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933(“Securities Act”).  The list ofdocuments should be clearly described for identification purposes (e.g., annualreport to security holders for fiscal year ended December 24, 1990).

 

Transitional Small Business Disclosure Format (check one):

 
|   | Yes o |   | No ý |
|--------|------------|--------|----------------|

 

 

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PART I

 

*The statements contained in this report thatare not historical fact are “forward-looking statements” that involve variousimportant assumptions, risks, uncertainties and other factors that could causethe Company’s actual results for 2004 and beyond to differ materially fromthose expressed in such forward-looking statements.  These important factors include, without limitation, competitivefactors and pricing pressures, changes in legal and regulatory requirements,technological change or difficulties, product development risks, commercializationand trade difficulties and general economic conditions, as well as other riskspreviously disclosed in the Company’s securities filings and press releases.*

 

**ITEM 1. DESCRIPTION OF BUSINESS**

 

Arbor EnTech Corporation (“Arbor”) is a Delaware corporation which wasorganized in 1980 under the name Arbor Energy Corporation.  Our name change was effected in 1984.

 

Arbor engaged in the production and wholesale distribution of woodproducts for home use, principally fireplace wood and garden stakes.  Arbor’s products were packaged in and distributedfrom Arbor’s facility in Little Marsh, Pennsylvania.

 

On September 2, 2003, we discontinuedour wood products business.  We ourseeking other business opportunities, but there can be no assurance that suchopportunities will be identified, engaged in, or result in any profits.

 

***Customers***

 

Substantially all of Arbor’s products weresold to The Home Depot, Inc. for resale at its retail outlets.  On September 2, 2003, we informed HomeDepot that we would no longer do business with that company due to increaseddifficulties in transacting business with Home Depot on a profitablebasis.  We stated to Home Deport thatthese difficulties included Home Depot’s prohibition against price increasesdespite increases in our costs of production, a diminution in the Home Depotterritories we were allowed to sell product to, and Home Depot’s demandsregarding returns of ordered products that we were unwilling to accede to foreconomic reasons.  As a result, theCompany discontinued its wood products business.

 

***Suppliers***

 

Arbor obtained logs, cut firewood and gardenstakes from many independent loggers.

 

***Competition***

 

Arbor competed with many other wood productcompanies.  Some of the majorcompetitors were Ultraflame and Ossipee. Arbor also competed with numerous small suppliers, local tree companiesand others who sell wood by the cord. Arbor competed on the basis of price, consistency of product quality andprompt delivery.  Arbor also competedwith paper firelog companies and with suppliers of metal plant cages andstakes.  Arbor has no information on itscompetitive position within the industry because of the lack of publicavailability of relevant information.

 

***Search for aBusiness Opportunity***

 

The procedures and practices described in the following generalized discussionare intended only to provide a background against which Arbor’s business andits search for a business opportunity may be evaluated.  There can be no assurance that theprocedures and practices described in the following generalized discussion haveor will apply in any particular instances to our search for a businessopportunity.

 

Arbor has no current business operations and no representation is made,nor is any intended, that we will be able to carry on future businessactivities successfully.  Further, therecan be no assurance that we will have the ability to acquire or merge with anoperating business, business opportunity or property that will be of materialvalue to Arbor.

 

Arbor’s management anticipates that the Company may be able to participatein only one potential business venture. We may seek a business opportunity in the form of a firm that hasrecently commenced operations, is a developing company in need of additionalfunds for expansion into new products or markets, is seeking to develop a newproduct or service, or is an established business that may be experiencingfinancial or operating difficulties and needs additional capital.  Some business opportunities may involve theacquisition or merger with a company that does not need substantial additionalcash but that desires to establish a public trading market for its stock.  A company that seeks Arbor’s participationin attempting to consolidate its operations through a merger, reorganization,asset acquisition, or some other form of combination may desire to do so toavoid what it may deem to be adverse consequences of undertaking a publicoffering itself.  Factors considered mayinclude time delays, significant expense, loss of voting control and theinability or unwillingness to comply with various federal and state lawsenacted for the protection of investors.

 

The selection of a business opportunity is complex and extremelyrisky.  Because of general economicconditions, rapid technological advances being made in some industries, andshortages of available capital, we believe that there are numerous firmsseeking the benefits of a publicly traded corporation.  Those perceived benefits may includefacilities or improving the terms on which additional equity financing may besought, providing liquidity for the principals of a business, creating a meansfor providing incentive stock options or similar benefits to keep employees,providing liquidity (subject to restriction of applicable statues) for allshareholders, and other factors. Potentially available business opportunities may occur in many differentindustries at various stages of development, all of which will make the task ofcomparative investigation and analysis of such business opportunities extremelydifficult and complex.

 

We believe Arbor offers owners of business opportunities theopportunity to acquire a controlling ownership interest in a public company atsubstantially less cost than is required to conduct an initial publicoffering.  The owners of the businessopportunities will, however,, incur significant post-merger or acquisitionregistration costs in the event they wish to register a portion of their sharesfor subsequent sale.  Arbor will alsoincur significant legal and accounting costs in connection with the acquisitionof a business opportunity, including the costs of preparing required SECdisclosure reports, agreements and related reports and documents.

 

In analyzing prospective business opportunities, management considerssuch matters as the available technical, financial and managerial resources;working capital and other financial requirements; history or operation, if any;prospects for the future; nature of present and expected competition; thequality and experience of management services that may be available and thedepth of that management; the potential for further research, development orexploration; specific risk factors not now foreseeable but which then may beanticipated to impact the proposed activities of the Company; the potential forgrowth or expansion; the potential for profit; the perceived public recognitionor acceptance of products, services or trades; name identification; and otherrelevant factors.  Arbor’s Managementwill meet personally with management and key personnel of the firm sponsoringthe business opportunity as part of its investigation.

 

Any opportunity in which Arbor participates will present certainrisks.  Many of these risks cannot beadequately identified prior to selection of the specific opportunity, andArbor’s shareholders must, therefore, depend on the ability of Management toidentify and evaluate such risks.

 

In implementing a structure for a particular business acquisition, itis likely that the consideration utilized to make any acquisitions will consistof equity securities.  In the event thatan acquisition is made utilizing primarily equity securities, the percentageownership of present shareholders may be diluted and persons acquiring sharesin connection with any acquisition of a business may obtain an amount of equitysecurities sufficient to control Arbor. Additionally, Arbor’s Directors may, as part of the terms of theacquisition transaction, resign and be replaced by new directors without a voteof the Arbor’s shareholders.  Further,if Arbor were to issue substantial additional securities in any acquisition,such issuance might have an adverse effect on the trading market in Arbor’ssecurities in the future.

 

In connection with its search for a business opportunity, Arbor hasbeen and will remain an insignificant participant among firms that engage inthe acquisition of business opportunities. There are many established venture capital and financial concerns thathave significantly greater financial and personnel resources and technicalexpertise than Arbor.

 

2

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***IntellectualProperty***

 

The trademark “Arborlogs®” has beenregistered with the U.S. Trademark and Copyright Office.  This trademark expired on March 13,2004.  Arbor did not renew the trademarkbecause it discontinued its wood products business.

 

***GovernmentalRegulation***

 

There were no government regulations whichmaterially impacted our packaging and distribution operations, except forregulations promulgated by OSHA (the U.S. Occupational Safety and HealthAgency), pursuant to which we were required to maintain a safe warehouseenvironment for our workers, and by state departments of weights and measureswith respect to the labeling of our products.

 

***Personnel***

 

Arbor was a seasonal employer.  The number of employees ranged from a highof approximately 31 from September to January to 4 in the remainingmonths.  There are currently noemployees of Arbor.

 

***How to Contact Arbor***

 

Arbor’s principal executive offices arelocated on Route 349,  RD 1, Box 1076,Little Marsh, Pennsylvania, and its telephone number is (570) 376-2217.

 

Arbor is required to file quarterly andannual reports with the Securities and Exchange Commission.  In the event Arbor’s obligation to filethese reports is suspended under the Securities and Exchange Act of 1934, it isArbor’s intention to continue to file such reports; however, this determinationmay be modified.  The public may readand copy this Form 10-KSB and any other materials filed with the SEC at theSEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.20549.  The public may obtaininformation on the operation of the Public Reference Room by calling the SEC at1-800-SEC-0330.  The SEC maintains anInternet site that contains reports, proxy and information statements, andother information regarding issuers that file electronically with the SEC athttp://www.sec.gov.

 

**ITEM 2. DESCRIPTION OF PROPERTY**

 

Arbor owns a lumber mill facility located on102 acres of property in Little Marsh, Pennsylvania.  The mill consists of an enclosed structure of 17,000 square feet,with a 7,000 foot outdoor overhang and another 10,000 foot outdoor overhang.** **Approximately12 acres of the property was devoted to Arbor’s work area and the remaining 90acres are forest land.  The real

 

3

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property is mortgaged to Mark Shefts,Secretary/Treasurer and a director of Arbor, to secure a credit line Mr. Sheftsextended to Arbor in the amount of $100,000.

 

**ITEM 3. LEGAL PROCEEDINGS**

 

Arbor is not currently involved in anyoutstanding legal proceedings nor was it in the fiscal year endedApril 30, 2004.

 

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

 

No matter was submitted to a vote of securityholders during the fourth quarter of the fiscal year.

 

PART II

 

**ITEM 5.****     MARKET FOR COMMON EQUITY ANDRELATED STOCKHOLDER MATTERS**

 

Arbor’s Common Stock is traded on the NASDOTC Bulletin Board.

 

Arbor’s Common Stock is currently consideredto be “penny stock” and as such is subject to a variety of requirements underthe Securities Exchange Act of 1934, as amended.  Penny stocks are low-priced shares of small companies not tradedon an exchange or quoted on Nasdaq. Prices often are not available. Investors in penny stocks often are unable to sell stock back to thebroker/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 thecustomer which describes the risks involved, the duties of the broker to thecustomer and the rights and remedies available, the nature of bid and askprices in the penny stock market and a toll-free telephone number to provideinformation on disciplinary histories. Further, the broker/dealer must disclose the bid and ask prices, thenumber of shares to which the prices apply, and the amount and description ofany compensation received by the broker/dealer.  Prior to the transaction the broker/dealer must approve theperson’s account for transactions involving penny stocks by obtaining from theperson information concerning the person’s financial situation, investmentexperience and investment objectives and reasonably determine, based on suchinformation, that transactions in penny stocks are suitable for that person andthat the person has sufficient knowledge and experience in financial mattersthat the person reasonably may be expected to be capable of evaluating therisks of transactions in penny stocks. Finally, the broker/dealer must receivefrom the customer a signed and dated written acknowledgment of receipt of thedisclosure document disclosing the basis on which the 

 

4

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broker/dealer made the suitabilitydetermination, and on which the person agrees in writing to the specifictransaction.  Each customer must alsoreceive a monthly statement indicating the market value of the penny stocksowned by the customer.  Theserequirements, while offering a great deal of customer protection, negativelyaffect liquidity in the penny stock market by making the process both moreselective and more time consuming.

 

A cash dividend of $.15 a share was declaredin April 2004 and paid on May 1, 2004 to all shareholders of record as ofMarch 22, 2004.  No other dividendswere declared on our stock in the last two fiscal years.

 

There were no sales of securities by Arborduring the last three years.

 

5

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**ITEM 6. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

The Board of Directors and Stockholders

Arbor EnTech Corporation

 

We have audited the accompanying balance sheet of Arbor EnTechCorporation as of April 30, 2004, and the related statements of operations,stockholders’ equity, and cash flows for each of the two years in the periodended April 30, 2004.  Thesefinancial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinionon these financial statements based on our audits.

 

We conducted our audits in accordance withthe standards of the Public Company Accounting Oversight Board (UnitedStates).  Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement.  An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements.  An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.  We believe that ouraudits provide a reasonable basis for our opinion.

 

In our opinion, the financial statementsreferred to above present fairly, in all material respects, the financialposition of Arbor EnTech Corporation as of April 30, 2004, and the resultsof its operations and its cash flows for each of the two years in the periodended April 30, 2004 in conformity with accounting principles generallyaccepted in the United States of America.

 

 

WOLINETZ, LAFAZAN & COMPANY,P.C.

 

 

Rockville Centre, New York

July 12, 2004

 

6

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ARBOR ENTECH CORPORATION

BALANCE SHEET

APRIL 30, 2004

 
| ASSETS                                                                                                |   |       |      |
|-------------------------------------------------------------------------------------------------------|--------|------------|-----------|
|                                                                                                  |   |       |      |
| Current Assets:                                                                                       |   |       |      |
| Cash and Cash Equivalents                                                                             |   | $          | 365,128   |   |
| Notes Receivable — Related Parties                                                               |   | 1,019,850  |      |
| Prepaid Expenses                                                                                      |   | 511        |      |
|                                                                                                  |   |       |      |
| Total Current Assets                                                                                  |   | 1,385,489  |      |
|                                                                                                  |   |       |      |
| Property and Equipment (Net of Accumulated  Depreciation of $54,254)                                  |   | 28,918     |      |
|                                                                                                  |   |       |      |
|                                                                                                  |   | $          | 1,414,407 |   |
|                                                                                                  |   |       |      |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                             |   |       |      |
|                                                                                                  |   |       |      |
| Current Liabilities:                                                                                  |   |       |      |
| Accounts Payable and Accrued Liabilities                                                              |   | $          | 18,026    |   |
| Dividends Payable                                                                                     |   | 1,057,581  |      |
|                                                                                                  |   |       |      |
| Total Current Liabilities                                                                             |   | 1,075,607  |      |
|                                                                                                  |   |       |      |
| 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)                                                                           |   | (2,033,691 | )         |
|                                                                                                  |   |       |      |
| Total Stockholders’ Equity                                                                       |   | 338,800    |      |
|                                                                                                  |   |       |      |
|                                                                                                  |   | $          | 1,414,407 |   |

 

The accompanying notes are an integral partof the financial statements.

 

7

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## ARBOR ENTECH CORPORATION

STATEMENT OF OPERATIONS

 
|                                                                     |   | **Years  Ended**   |     |
|--------------------------------------------------------------------------|--------|--------------------|----------|
|                                                                     |   | **April 30,** |     |
|                                                                     |   | **2004**           |     | **2003** |   |
|                                                                     |   |               |     |   |   |
| Net Sales                                                                |   | $                  | —   |   | $ | — |   |
|                                                                     |   |               |     |   |   |
| Costs and Expenses:                                                      |   |               |     |   |   |
| Selling, General and Administrative  Expenses                            |   | 281,626            |     | 353,665 |   |
|                                                                     |   | 281,626            |     | 353,665 |   |
|                                                                     |   |               |     |   |   |
| Loss from Operations                                                     |   | (281,626           | )        | (353,665 | ) |
|                                                                     |   |               |     |   |   |
| Other Income:                                                            |   |               |     |   |   |
| Interest Income                                                          |   | 936                |     | 1,577 |   |
| Other                                                                    |   | —             |     | 780 |   |
|                                                                     |   | 936                |     | 2,357 |   |
|                                                                     |   |               |     |   |   |
| Loss from Continuing Operations Before  Income                           |   |               |     |   |   |
| Tax Provision (Benefit)                                                  |   | (280,690           | )        | (351,308 | ) |
|                                                                     |   |               |     |   |   |
| Income Tax Provision (Benefit)                                           |   | (27,230            | )        | 200 |   |
|                                                                     |   |               |     |   |   |
| Loss from Continuing Operations                                          |   | (253,460           | )        | (351,508 | ) |
|                                                                     |   |               |     |   |   |
| Discontinued Operations:                                                 |   |               |     |   |   |
| Gain on Disposal of Property and Equipment  from Discontinued Operations |   | 31,162             |     | — |   |
| Income (Loss) from Discontinued Operations                               |   | (134,401           | )        | 171,769 |   |
|                                                                     |   |               |     |   |   |
| Net Income (Loss) from Discontinued  Operations                          |   | (103,239           | )        | 171,769 |   |
|                                                                     |   |               |     |   |   |
| Net Loss                                                                 |   | $                  | (356,699 | ) | $ | (179,739 | ) |
|                                                                     |   |               |     |   |   |
| Loss Per Common Share – Basic:                                      |   |               |     |   |   |
| Loss from Continuing Operations                                          |   | $                  | (.04     | ) | $ | (.05 | ) |
| Income (Loss) from Discontinued Operations                               |   | (.01               | )        | .02 |   |
|                                                                     |   |               |     |   |   |
| Net Loss                                                                 |   | $                  | (.05     | ) | $ | (.03 | ) |
|                                                                     |   |               |     |   |   |
| Weighted Average Shares Outstanding                                      |   | 7,050,540          |     | 7,050,540 |   |

 

The accompanying notes are an integral partof the financial statements.

 

8

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ARBOR ENTECH CORPORATION

STATEMENT OF STOCKHOLDERS’EQUITY

YEARS ENDED APRIL 30, 2003 AND 2004

 
|                                                     |   | **Common  Stock  Shares** |   | **Amount** |   | **Additional  Paid-In  Capital** |   | **Retained  Earnings  (Deficit)** |   | **Notes  Receivable -  Related  Parties** |       | **Total**  |   |
|----------------------------------------------------------|--------|---------------------------|--------|------------|--------|----------------------------------|--------|-----------------------------------|--------|-------------------------------------------|------------|------------|--------|
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Balance – April 30, 2002                       |   | 7,050,540                 |   | $          | 7,050  |                             | $      | 2,228,369                         |   | $                                         | (439,672   | )          | $      | (1,054,052 | ) | $ | 741,695 |   |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Capital Contributed                                      |   | —                    |   | —     |   | 68,536                           |   | —                            |   | —                                    |       | 68,536     |   |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Accrued Interest on Loans to Related  Parties – Net |   | —                    |   | —     |   | —                           |   | —                            |   | (14,536                                   | )          | (14,536    | )      |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Net Loss                                                 |   | —                    |   | —     |   | —                           |   | (179,739                          | )      | —                                    |       | (179,739   | )      |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Balance – April 30, 2003                       |   | 7,050,540                 |   | 7,050      |   | 2,296,905                        |   | (619,411                          | )      | (1,068,588                                | )          | 615,956    |   |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Capital Contributed                                      |   | —                    |   | —     |   | 68,536                           |   | —                            |   | —                                    |       | 68,536     |   |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Net Repayment on Loans to                                |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Related Parties                                          |   | —                    |   | —     |   | —                           |   | —                            |   | 48,738                                    |       | 48,738     |   |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Reclassification of Notes                                |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Receivable – Related                                |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Parties to Current Assets                                |   | —                    |   | —     |   | —                           |   | —                            |   | 1,019,850                                 |       | 1,019,850  |   |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Net Loss                                                 |   | —                    |   | —     |   | —                           |   | (356,699                          | )      | —                                    |       | (356,699   | )      |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Dividends to Stockholders                                |   | —                    |   | —     |   | —                           |   | (1,057,581                        | )      | —                                    |       | (1,057,581 | )      |
|                                                     |   |                      |   |       |   |                             |   |                              |   |                                      |       |       |   |
| Balance – April 30, 2004                       |   | 7,050,540                 |   | $          | 7,050  |                             | $      | 2,365,441                         |   | $                                         | (2,033,691 | )          | $      | — |   | $ | 338,800 |   |

 

The accompanying notes are an integral partof the financial statements.

 

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ARBOR ENTECH CORPORATION

STATEMENT OF CASH FLOWS

 
|                                                                                                    |   | **Years  Ended**   |      |
|---------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                                                    |   | **April 30,** |      |
|                                                                                                    |   | **2004**           |      | **2003** |   |
|                                                                                                    |   |               |      |   |   |
| Cash Flows from Operating Activities:                                                                   |   |               |      |   |   |
| (Loss) from Continuing Operations                                                                       |   | $                  | (253,460  | ) | $ | (351,508 | ) |
| Adjustments to Reconcile (Loss) from  Continuing Operations to Net Cash (Used) in Operating Activities: |   |               |      |   |   |
| Depreciation                                                                                            |   | 4,487              |      | 14,923 |   |
| Gain on Sale of Property and Equipment                                                                  |   | (31,162            | )         | — |   |
| Changes in Operating Assets and  Liabilities:                                                           |   |               |      |   |   |
| (Increase) Decrease in Prepaid Expenses                                                                 |   | 2,165              |      | (7,596 | ) |
| Increase (Decrease) in Accounts Payable and  Accrued Liabilities                                        |   | (18,652            | )         | 13,979 |   |
| (Decrease) in Taxes Payable                                                                             |   | —             |      | (1,479 | ) |
|                                                                                                    |   |               |      |   |   |
| Total Adjustments                                                                                       |   | (43,162            | )         | 19,827 |   |
|                                                                                                    |   |               |      |   |   |
| Net Cash (Used) in Operating Activities                                                                 |   | (296,622           | )         | (331,681 | ) |
|                                                                                                    |   |               |      |   |   |
| Cash Flows from Investing Activities:                                                                   |   |               |      |   |   |
| Proceeds from Sale of Property and  Equipment                                                           |   | 38,760             |      | — |   |
|                                                                                                    |   |               |      |   |   |
| Net Cash Provided by Investing Activities                                                               |   | 38,760             |      | — |   |
|                                                                                                    |   |               |      |   |   |
| Cash Flows from Financing Activities:                                                                   |   |               |      |   |   |
| Proceeds of Loans to Related Parties                                                                    |   | 117,274            |      | 54,000 |   |
|                                                                                                    |   |               |      |   |   |
| Net Cash Provided by Financing Activities                                                               |   | 117,274            |      | 54,000 |   |
|                                                                                                    |   |               |      |   |   |
| Net Cash Provided by Discontinued  Operations                                                           |   | 203,429            |      | 327,942 |   |
|                                                                                                    |   |               |      |   |   |
| Increase in Cash and Cash Equivalents                                                                   |   | 62,841             |      | 50,261 |   |
|                                                                                                    |   |               |      |   |   |
| Cash and Cash Equivalents – Beginning of  Year                                                     |   | 302,287            |      | 252,026 |   |
|                                                                                                    |   |               |      |   |   |
| Cash and Cash Equivalents – End of Year                                                            |   | $                  | 365,128   |   | $ | 302,287 |   |
|                                                                                                    |   |               |      |   |   |
| Supplemental Cash Flow Information:                                                                     |   |               |      |   |   |
| Cash Paid for Interest                                                                                  |   | $                  | —    |   | $ | — |   |
|                                                                                                    |   |               |      |   |   |
| Cash Paid for Income Taxes                                                                              |   | $                  | —    |   | $ | 5,662 |   |
|                                                                                                    |   |               |      |   |   |
| Supplemental Disclosures of Non-Cash  Investing and Financing Activities:                               |   |               |      |   |   |
| Accrued Interest on Related Parties Loans  Receivable Credited to Additional Paid-In Capital            |   | $                  | 68,536    |   | $ | 68,536 |   |
|                                                                                                    |   |               |      |   |   |
| Dividends Payable on Common Stock                                                                       |   | $                  | 1,057,581 |   | $ | — |   |

 

The accompanying notes are an integral part of the financialstatements.

 

10

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ARBOR ENTECH CORPORATION

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2004

 

 

NOTE 1 -                                             Nature of Business

 

Arbor EnTech Corporation (the “Company”) is a Delaware corporation thatengaged in the production and wholesale distribution of wood products for homeuse, principally fireplace wood and garden stakes.  The Company’s products were produced, packaged in and distributedfrom its facility in Little Marsh, Pennsylvania.  The products were delivered by independent truckers to customerlocations in the Northeastern United States. On September 22, 2003, the Company discontinued its wood productsbusiness.  The Company is seeking otherbusiness opportunities but has not yet identified any such opportunity.

 

NOTE 2 -                                             Summary of Significant Accounting Policies

 

Cash and Cash Equivalents

 

The Company considers all highly liquidshort-term investments with a maturity of three months or less at time ofpurchase to be cash equivalents.

 

Property and Equipment

 

Property and equipment is stated atcost.  Depreciation is computed usingthe straight-line method over the estimated useful lives of the relatedassets.  Expenditures for maintenanceand repairs are charged to expense as incurred where as major betterments andrenewals are capitalized.

 

Use of Estimates

 

The preparation of financial statements inconformity with U.S. generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

 

Sales are recorded as products are shipped.

 

Income Taxes

 

The Company utilizes the liability method ofaccounting for income taxes.  Under suchmethod, deferred tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the financial statementcarrying amounts of existing assets and liabilities and their respective taxbases.  Deferred tax assets andliabilities are measured using enacted tax rates in effect at the balance sheetdate.  The resulting asset or liabilityis adjusted to reflect enacted changes in tax law.  Future tax benefits attributable to temporary differences arerecognized to the extent that realization of such benefits is more likely thannot.

 

11

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Loss Per Common Share

 

The computation of earnings (loss) per share of common stock iscomputed by dividing income (loss) for the year by the weighted average numberof common shares outstanding during that period.  Since the Company has no common stock equivalents, outstandingdiluted earnings (loss) per share is the same as basic earnings (loss) pershare.

 

Fair Value of FinancialInstruments

 

The fair value of the Company’s financialinstruments, which consist primarily of cash and cash equivalents and accountspayable, approximate their carrying amounts reported due to their short-termnature.

 

Concentration of Credit Risk

 

The Company’s financial instruments that areexposed to concentration of credit risk consist of cash and cashequivalents.  At times, such amounts arein excess of the FDIC insurance limits.

 

NOTE 3 -                                             Property and Equipment

 

Property and equipment consists of thefollowing:

 
|                                  |   |   |   | **Estimated  Useful Life** |   |
|---------------------------------------|--------|--------|--------|----------------------------|--------|
| Land                                  |   | $      | 22,058 |                       | — |   |
| Building and Improvements             |   | 61,114 |   | 15 & 31 Years          |   |
|                                  |   | 83,172 |   |                       |   |
| Less:   Accumulated Depreciation |   | 54,254 |   |                       |   |
|                                  |   |   |   |                       |   |
|                                  |   | $      | 28,918 |                       |   |   |

 

Depreciation amounted to $4,487 and $14,923for the years ended April 30, 2004 and 2003, respectively.

 

The land and building are collateralized by amortgage held by the Company’s Secretary/Treasurer (see Note 7).

 

NOTE 4 -                                             Notes Receivable — Related Parties

 

Notes receivable from related partiesconsists of amounts due from two affiliated companies.  As of April 30, 2004, these loans werereclassified from reductions of stockholders’ equity to current assets sincethey were repaid in full in May 2004 (see Note 10).  Although the loans carried interest, such interest is notrecorded as income for financial statement purposes but as additionalcontributed capital.  InNovember 1999, the two loans were memorialized into 10 year promissorynotes bearing interest at 10% per annum, which was reduced to 7% per annum inOctober 2001.  The notes werepayable in equal annual installments of $108,789 and interest on the notes waspayable semi-annually.

 

12

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The notes consisted of the following:

 
| Receivable from:                      |   |    |      |
|---------------------------------------|--------|---------|-----------|
| Rushmore Financial Services, Inc. (a) |   | $       | 784,024   |   |
| Attain Technology, Inc. (b)           |   | 184,934 |      |
|                                  |   | 968,958 |      |
| Accrued Interest                      |   | 50,892  |      |
|                                  |   |    |      |
|                                  |   | $       | 1,019,850 |   |

 

----

(a)          Acorporation wholly owned by Mr. Shefts and Mr. Houtkin.

(b)         Awholly owned subsidiary of Rushmore Financial Services, Inc.

 

NOTE 5 -                                             Income Taxes

 

Income tax provision (benefit) consisted ofthe following:

 
|                        |   | **Years  Ended**   |    |
|-----------------------------|--------|--------------------|---------|
|                        |   | **April 30,** |    |
|                        |   | **2004**           |    | **2003** |   |
| Current                     |   |               |    |   |   |
| Federal (Income Tax Refund) |   | $                  | (27,420 | ) | $ | — |   |
| State                       |   | 190                |    | 200 |   |
|                        |   | (27,230            | )       | 200 |   |
| Deferred                    |   |               |    |   |   |
| Federal                     |   | —             |    | — |   |
| State                       |   | —             |    | — |   |
|                        |   | —             |    | — |   |
|                        |   |               |    |   |   |
|                        |   | $                  | (27,230 | ) | $ | 200 |   |

 

The following is a reconciliation of the USstatutory income tax rate and the effective tax rate on pretax income:

 
|                                    |   | **Years  Ended**   |   |
|-----------------------------------------|--------|--------------------|--------|
|                                    |   | **April 30,** |   |
|                                    |   | **2004**           |   | **2003** |   |
|                                    |   |               |   |   |   |
| US federal statutory rate               |   | 34                 | %      | 34 | % |
| State taxes, net of federal tax benefit |   | (0                 | )      | (0 | ) |
| Permanent differences                   |   | (4.21              | )      | (14.46 | ) |
| Other, net                              |   | (29.79             | )      | (19.54 | ) |
|                                    |   |               |   |   |   |
| Effective tax rate                      |   | (.00               | )%     | (.00 | )% |

 

For income tax purposes, the Company had availablenet operating loss carryforwards (“NOL”) at April 30, 2004 ofapproximately $343,000 expiring in 2024 to reduce future federal taxableincome, if any.

 

13

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The Company had deferred tax assets ofapproximately $160,000 at April 30, 2004, resulting primarily from netoperating loss carryforwards.  Thedeferred tax assets have been fully offset by a valuation allowance resultingfrom the uncertainty surrounding the future realization of the net operatingloss carryforwards.

 

NOTE 6 -                                             Commitments and Contingencies

 

Line of Credit

 

The Company has a revolving credit facilitywith its Secretary/Treasurer, secured by a mortgage on the Company’s realproperty located in Tioga County, Pennsylvania.  This revolving line of credit provides for the extension ofcredit in the aggregate principal amount of $100,000 with interest at 11% perannum.  Principal and interest arepayable on demand.  There was nooutstanding balance due at April 30, 2004 on this credit facility.

 

NOTE 7 -                                             Discontinued Operations

 

On September 2, 2003, the Companyinformed The Home Depot, Inc., the customer that purchased more than 99 percentof the Company’s wood products, that the Company would no longer do businesswith Home Depot due to increased difficulties in transacting business with HomeDepot on a profitable basis.  TheCompany stated to Home Depot that these difficulties included Home Depot’sprohibition against price increases despite increases in the Company’sincreased costs of production, a diminution in the Home Depot territories theCompany was allowed to sell products to, and Home Depot’s demands regardingreturns of ordered products that the Company was unwilling to accede to foreconomic reasons.

 

The Financial Accounting Standards Board’sSFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”,addresses financial accounting and reporting for the impairment of long-livedassets and for long-lived assets to be disposed of.  SFAS No. 144 supersedes SFAS No. 121, “Accounting for theImpairment of Long-Lived Assets and Long-Lived Assets to be Disposed of,”retains the fundamental provisions of Statement 121 for (a) recognition andmeasurement of the impairment of long-lived assets to be held and used and (b)measurement of long-lived assets to be disposed of by sale.  SFAS 144 also supersedes the accounting andreporting provisions of APB Opinion No. 30, “Reporting and Results ofOperations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,Unusual and Infrequently Occurring Events and transactions,” for segments of abusiness to be disposed of, but retains the requirement of Opinion 30 to reportdiscontinued operations separately from continuing operations and extends thatreporting to a component of an entity that either has been disposed of (bysale, by abandonment, or in a distribution to owners) or is classified as heldfor sale.

 

The Company has discontinued its woodproducts business.  Consequently, theaccompanying financial statements reflect the wood products business asdiscontinued operations in accordance with SFAS No. 144.

 

14

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Summarized below are the results ofdiscontinued operations:

 
|                                       |   | **Year Ended**     |     |
|--------------------------------------------|--------|--------------------|----------|
|                                       |   | **April 30,** |     |
|                                       |   | **2004**           |     | **2003** |   |
|                                       |   |               |     |   |   |
| Net Sales                                  |   | $                  | 139,287  |   | $ | 791,332 |   |
|                                       |   |               |     |   |   |
| Income (Loss) from Discontinued Operations |   | $                  | (103,239 | ) | $ | 171,769 |   |

 

The Company is seeking other businessopportunities, but there can be no assurance that such opportunities will beidentified, engaged in, or result in any profits.

 

NOTE 8 -                                             Related Party Transactions

 

The Company paid $54,220 and $54,000 inadministrative fees to a Company owned by two of its significant stockholdersduring the years ended April 30, 2004 and 2003, respectively.

 

NOTE 9 -                                             Dividends Payable

 

In April 2004, the board of directorsdeclared a dividend of $.15 per share that was paid on May 1, 2004, to eachshareholder of record as of March 22, 2004.  These dividends in the amount of $1,057,581 have been included asa liability and reduction of stockholders’ equity on the accompanying balancesheet.

 

NOTE 10 -                                       Subsequent Events

 

In May 2004, notes receivable from relatedparties were paid in full and therefore have been classified as a current asseton the accompanying balance sheet.

 

15

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**ITEM7 -****                                               MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

Safe Harbor Statement under thePrivate Securities Litigation Reform Act of 1995

 

The statements contained in this report which are not historical factare “forward-looking statements” that involve various important assumptions,risks, uncertainties and other factors that could cause the Company’s actualresults for 2004 and beyond to differ materially from those expressed in suchforward-looking statements.  Theseimportant factors include, without limitation, competitive factors and pricingpressures, changes in legal and regulatory requirements, technological changeor difficulties, product development risks, commercialization and tradedifficulties and general economic conditions, as well as other risks previouslydisclosed in the Company’s securities filings and press releases.

 

***General***

 

We were a wood products company that has beenin business since 1980.  Our business fluctuatedover the years.  We were almost whollydependent on sales to The Home Depot, Inc.

 

On September 2, 2003, the Company informed Home Depot, thecustomer that purchased more than 99 percent of our wood products, that wewould no longer do business with Home Deport due to increased difficulties intransacting business with Home Depot on a profitable basis.  We stated to Home Depot that thesedifficulties included Home Depot’s prohibition against price increases despiteincreases in our costs of production, a diminution in the Home Depotterritories we were allowed to sell product to, and Home Depot’s demandsregarding returns of ordered products that we were unwilling to accede to foreconomic reasons.

 

The Company has discontinued its wood products business.  We are seeking other business opportunities,but there can be no assurance that such opportunities will be identified,engaged in, or result in any profits.

 

16

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***Fiscalyear ended April 30, 2004 compared to the fiscal year ended April 30,2003***

 

Since we discontinued our wood productsbusiness, there were no sales from continuing operations during the years endedApril 30, 2004 and 2003, respectively.

 

Selling, general and administrative expenses were approximately$282,000 for the fiscal year ended April 30, 2004, a decrease ofapproximately $57,000 or 17% over selling, general and administrative expensesof approximately $339,000 for the fiscal year ended April 30, 2003.  The decrease in selling, general andadministrative expenses is a result of our discontinued operations of our woodproducts business.

 

Our net loss increased from approximately$180,000 for the fiscal year ended April 30, 2003 to approximately$357,000 for the fiscal year ended April 30, 2004.  This was an increase of approximately$177,000 or 98% and resulted from a continuance of certain ongoing expensesduring a period when we had no operating revenues.

 

***DiscontinuedOperations***

 

On September 2, 2003, we informed Home Depot, the customer thatpurchased more than 99 percent of our wood products, that we would no longer dobusiness with Home Depot due to increased difficulties in transacting businesswith Home Depot on a profitable basis. We stated to Home Depot that these difficulties included Home Depot’sprohibition against price increases despite increases in our costs ofproduction, a diminution in the Home Depot territories we were allowed to sellproduct to, and Home Depot’s demands regarding returns of ordered products thatwe were unwilling to accede to for economic reasons.

 

Net sales of the wood products business wereapproximately $139,000 and $791,000 for the years ended April 30, 2004 and2003, respectively.  The net income(loss) from discontinued operations was $(103,000) and $172,000 for the yearsended April 30, 2004 and 2003, respectively.

 

***Liquidityand capital resources***

 

In the prior periods discussed above, our working capital requirementswere met primarily from sales generated by our discontinued wood products business.  At April 30, 2004, we had workingcapital of approximately $310,000.

 

As at April 30, 2004, we had cash andcash equivalents of approximately $365,000, which represented 26% of totalassets.  We believe we have adequateworking capital to fund our operations for at least the next 12 months.

 

Net cash used in operating activitiesamounted to approximately $(297,000) for the fiscal year ended April 30,2004.  Loss from continuing operationsof $253,000 for the fiscal year ended April 30, 2004 was increased bydecreases in accounts payable of $19,000 offset by decreases in prepaidexpenses of $2,000.

 

Net cash provided by financing activities was$117,274 for the fiscal year ended April 30, 2004 as a result of relatedparty loan repayments.

 

17

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**ITEM8.****                                                   MAJORCUSTOMERS**

 

More than 99 percent of our sales were toHome Depot.

 

PART III

 

**ITEM9.****                 DIRECTORS,EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITHSECTION 16(a) OF THE EXCHANGE ACT**

 
| **Executive Officers and Directors** |   | **Age** |   | **Positions**                                             |
|--------------------------------------|--------|---------|--------|-----------------------------------------------------------|
|                                 |   |    |   |                                                      |
| Harvey Houtkin                       |   | 55      |   | Chairman of the Board, Chief Executive Officer, President |
|                                 |   |    |   |                                                      |
| Wanda Shefts                         |   | 46      |   | Executive Vice President, Director                        |
|                                 |   |    |   |                                                      |
| Mark Shefts                          |   | 46      |   | Secretary/Treasurer, Director                             |
|                                 |   |    |   |                                                      |
| Sherry Houtkin                       |   | 53      |   | Director                                                  |

 

***Harvey I. Houtkin***founded Arbor EnTech Corporation in October 1980 and has been our Chairmanof the Board, Chief Executive Officer and President since inception.  Mr. Houtkin held a seat on the New YorkStock Exchange from 1984 to 1988 and is Chairman of the Board, Chief Executive

 

18

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Officer, Secretary and co-owner of DomesticSecurities, Inc., an NASD registered broker/dealer which operated a floorbrokerage business on that Exchange during the time the seat was owned.  Domestic operates the ATTAIN® electroniccommunications network and engages in market making and proprietarytrading.  From April 1993 throughthe present Mr. Houtkin has been Chairman of the Board, Chief Executive Officerand Secretary of All-Tech Direct, Inc. (“All-Tech”), which formerly operated asa securities broker/dealer and is now inactive.  Mr. Houtkin graduated from Baruch College of the City Universityof New York in 1970 with a Bachelor of Science Degree and in 1973 with aMasters Degree in Business Administration.

 

***Wanda******Shefts***was the Vice President and a director of Arbor 1982 through April 1987 andfrom 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 throughApril 1987 and from February 1993 through the present.  He is a member of the Chicago Stock Exchangeand is President, Treasurer and a co-owner of Domestic Securities, Inc., anNASD registered broker/dealer which operated a floor brokerage business on theNew York Stock Exchange from 1984 to 1988 and which now owns the ATTAIN® ECNand engages in market making and proprietary trading.  He has been a principal of All-Tech Direct, Inc., which formerlyoperated as a securities broker/dealer, since early 1988 and has been itsPresident, Chief Operating Officer, Chief Financial Officer, Treasurer and aDirector since such time.  Mr. Shefts islicensed as a Commodity Pool Operator and a Commodity Trading Advisor by theNational Futures Association.  He isalso a Certified Financial Services Auditor of the National Association ofFinancial Services Auditors, a Certified Fraud Examiner of the Association ofCertified Fraud Examiners, and an arbitrator for the American ArbitrationAssociation and NASD Dispute Resolution, Inc. Mr. Shefts graduated in 1979 from Brooklyn College of the City of NewYork with a Bachelor of Science Degree in Accounting.

 

***Sherry Houtkin***has been a director of Arbor since February 1994.  She has studied at Rockland CommunityCollege and Ramapo College.

 

Mark Shefts and Wanda Shefts are husband andwife.  Harvey Houtkin and Wanda Sheftsare brother and sister.  Harvey Houtkinand Sherry Houtkin are husband and wife.

 

Mark Shefts and Harvey Houtkin, officers,directors and principal shareholders of Arbor, have not been required to fileany Form 4’s during the most recent fiscal year because they neither bought norsold shares of Arbor.

 

19

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**ITEM 10. EXECUTIVE COMPENSATION**

 
|                            |   | **Summary  Compensation Table** |   |
|---------------------------------|--------|---------------------------------|--------|
| **Name and Principal Position** |   | **Year**                        |   | **Salary** |   | **Bonus** |   | **Other  Annual Compensation** |   |
|                            |   |                            |   |   |   |   |   |   |   |
| Harvey Houtkin: CEO & Pres. |   | 2004                            |   | — |   | 31,527 |   | — |   |
|                            |   | 2003                            |   | — |   | — |   | — |   |
|                            |   | 2002                            |   | — |   | — |   | — |   |
|                            |   |                            |   |   |   |   |   |   |   |
| Wanda Shefts, VP, Dir.          |   | 2004                            |   | $ | 84,084 |   | — |   | — |   |
|                            |   | 2003                            |   | 125,000 |   | 15,000 |   | — |   |
|                            |   | 2002                            |   | 127,404 |   | 20,000 |   | — |   |
|                            |   |                            |   |   |   |   |   |   |   |
| Mark Shefts, SEC/Treas Director |   | 2004                            |   | — |   | 31,527 |   | — |   |
|                            |   | 2003                            |   | — |   | — |   | — |   |
|                            |   | 2002                            |   | — |   | — |   | — |   |
|                                 |        |                                 |        |  |  |  |  |  |  |  |

 

***EmploymentAgreements***

 

Arbor had no employment agreements with anyof its employees.

 

***Stock Option Plans***

 

Arbor has no stock option or bonus plans forits employees.

 

***Limitations onLiability and Indemnification Matters***

 

As authorized by the Delaware GeneralCorporation Law, Arbor’s By-Laws provide that Arbor will indemnify any personwho was or is a party or is threatened to be made a party to any action orproceeding by reason of such person’s being an officer, director, employee or agentof Arbor if that person acted in good faith in a manner that person reasonablybelieved to be in or not opposed to the best interest of Arbor.  Section 145 of the Delaware GeneralCorporation Law permits indemnification of any person who was or is a party oris threatened to be made a party to any threatened, pending or completed actionsuit or proceeding, whether civil, criminal, administrative or investigative,by reason of the fact that such person was an officer, director, employee oragent of the corporation if the person acted in good faith and in a manner theperson reasonably believed to be in or not opposed to the best interests of thecorporation, and, with respect to any criminal action or proceeding, hadreasonable cause to believe that the person’s conduct was not unlawful.

 

Insofar as indemnification for liabilitiesarising under the Securities Act of 1933, as amended (the “Securities Act”),may be permitted to Arbor’s directors, officers and controlling personspursuant to the foregoing provisions, or otherwise, we have been advised thatin the opinion of the Securities and Exchange Commission such indemnificationis against public policy as expressed in the Securities Act and is, therefore,unenforceable.

 

20

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**ITEM 11.****                                              SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

 

The following table sets forth informationknown to Arbor, as of the date of this Annual Report, relating to thebeneficial ownership of shares of common stock of Arbor: by each person who isknown by Arbor to be the beneficial owner of more than five percent of theoutstanding shares of common stock; each director or person who has agreed tobecome a director; and all executive officers and directors as a group.

 

Unless otherwise indicated, the address ofeach beneficial owner in the table set forth below is 160 Summit Avenue,Montvale, New Jersey 07645.

 

A person is deemed to be the beneficial ownerof securities that can be acquired by him or her within 60 days from the dateof this annual report upon the exercise of options, warrants or convertiblesecurities.  Each beneficial owner’spercentage ownership is determined by assuming that options, warrants orconvertible securities that are held by him or her, but not those held by anyother person, and which are exercisable within 60 days of the date of thisannual report, have been exercised and converted.

 
| **Name and Address of  Beneficial Owner**                    |   | **Number of  Shares  Beneficially Owned** |   | **Percentage  of Shares  Beneficially Owned** |   |
|--------------------------------------------------------------|--------|-------------------------------------------|--------|-----------------------------------------------|--------|
|                                                         |   |                                      |   |                                          |   |
| Harvey Houtkin((1)(2)                                        |   | 3,554,000                                 |   | 50.4                                          | %      |
| Wanda Shefts(1)(2)                                           |   | 159,100                                   |   | 2.6                                           | %      |
| Mark Shefts(1)(2)                                            |   | 3,554,000                                 |   | 50.4                                          | %      |
| Sherry Houtkin(1)(2)                                         |   | 159,000                                   |   | 2.2                                           | %      |
| All directors and executive officers as a  group (4 persons) |   | 6,949,900                                 |   | 98.6                                          | %      |

 

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(1) The address of such person is 160 SummitAvenue, Montvale, NJ 07645.

 

(2) Such person may be deemed to be the ownerof 159,100 of such shares by virtue of his/her being a control person of SolarProducts, Sun-Tank, Inc.  In the case ofthese 159,000 shares, the beneficial owner has shared voting and investmentpower.  With respect to all othershares, the record owner has sole investment and voting power over the shares.

 

**ITEM 12.    RELATED PARTY TRANSACTIONS**

 

During the fiscal year ended April 30,2004, Arbor acted as lender to two affiliated companies under two pre-existingten year loans which bore interest at 7% a year.  The borrowers were Attain Technology, Inc. and Rushmore FinancialServices, Inc.  Attain Technology iswholly owned by Rushmore.  Rushmore isowned 50% by Harvey Houtkin and 50% by Mark Shefts, officers, directors andprincipal shareholders of Arbor.  In May2004 interest on and principal of these loans were paid in full.

 

In April 2004 the Board of Directorsdeclared a dividend of $.15 a share that was paid on May 1, 2004, to eachshareholder of record as of March 22, 2004.

 

During the fiscal year ended April 30,2004, Arbor paid a total of $54,220.00 for accounting and administrativeservices throughout the year, to

 

21

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Rushmore Financial Services, Inc., a companyowned 50% by Mark Shefts and 50% by Harvey Houtkin, officers, directors andprincipal shareholders of Arbor.

 

**ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K**

 
|         | (a) Exhibit 3(i)                           |   | Articles of Incorporation            |       | Incorporated by reference to          |   |
|--------------|--------------------------------------------|--------|--------------------------------------|------------|---------------------------------------|--------|
|         |                                       |   |                                 |       | Exhibit 2 of Arbor’s Form 10-SB  |   |
|         | (b) Exhibit 3(ii)                          |   | By-Laws                              |       | Incorporated by reference to          |   |
|         |                                       |   |                                 |       | Exhibit 2 of Arbor’s Form 10-SB. |   |
|         |                                       |   |                                 |       |                                  |   |
|         | (c) Exhibit 31.1                           |   | Certification of Chief Executive     |       |                                  |   |
|         |                                       |   | Officer Pursuant to Section 302 |       |                                  |   |
|         |                                       |   | of the Sarbanes-Oxley Act of 2002    |       |                                  |   |
|         |                                       |   |                                 |       |                                  |   |
|         | (d) Exhibit 31.2                           |   | Certification of Chief Financial     |       |                                  |   |
|         |                                       |   | Officer Pursuant to Section 302 |       |                                  |   |
|         |                                       |   | of the Sarbanes-Oxley Act of 2002    |       |                                  |   |
|         |                                       |   |                                 |       |                                  |   |
|         | (e) Exhibit 32.1                           |   | Certification of Chief Executive     |       |                                  |   |
|         |                                       |   | Officer Pursuant to Section 906 |       |                                  |   |
|         |                                       |   | of the Sarbanes-Oxley Act of 2002    |       |                                  |   |
|         |                                       |   |                                 |       |                                  |   |
|         | (f) Exhibit 32.2                           |   | Certification of Chief Financial     |       |                                  |   |
|         |                                       |   | Officer Pursuant to Section 906 |       |                                  |   |
|         |                                       |   | of the Sarbanes-Oxley Act of 2002    |       |                                  |   |
|         |                                       |   |                                 |       |                                  |   |
| **ITEM 14.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES** |
|         |                                       |   |                                 |       |                                  |
|         | (1)                                        | 2004   |                                 | $20,000.00 |                                  |
|         |                                       | 2003   |                                 | $20,000.00 |                                  |
|         | (2)                                        | N/A    |                                 |       |                                  |
|         | (3)                                        | N/A    |                                 |       |                                  |
|         | (4)                                        | N/A    |                                 |       |                                  |
|         | (5)                                        | N/A    |                                 |       |                                  |
|         | (6)                                        | N/A    |                                 |       |                                  |
|              |                                            |        |                                      |            |                                       |        |  |  |  |

 

 

**SIGNATURES**

 

In accordance with Section 12 of theSecurities Exchange Act of 1934, the registrant caused this registrationstatement to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 
|                       | ARBOR ENTECH CORPORATION |
|----------------------------|--------------------------|
|                       |                     |
|                       |                     |   |
| Date: August 12, 2004 | By:                      |  /s/ Harvey Houtkin |   |
|                       |                     | Harvey Houtkin |
|                       |                     | Chairman of the Board, |
|                       |                     | Chief Executive Officer, |
|                       |                     | President |

 

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