**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-KSB**

 

**ý**** ANNUAL REPORT PURSUANT TO SECTION 13 OR15 (d) OF THESECURITIES EXCHANGE ACT OF 1934**

 

**FOR THE FISCAL YEAR ENDED APRIL30, 2005**

 

**o**** TRANSITION REPORT PURSUANT TO SECTION13 OR 15 (d) OF THESECURITIES EXCHANGE ACT OF 1934**

 

**CommissionFile No. 000 30432**

 

**ARBOR ENTECH CORPORATION**

(Name of Smallbusiness issuer in its charter)

 
| **State of Delaware**                                            | ** ** | **22-2335094**                        |
|------------------------------------------------------------------|------------|---------------------------------------|
| (State or other  jurisdiction of  Incorporation or organization) |       | (I.R.S. Employer  Identification No.) |
|                                                             |       |                                  |
| **PO Box  656, Tuxedo Park, New York**                           |       | **10987**                             |
| (Address of  principal executive offices)                        |       | (Zip Code)                            |

 

**Issuer’stelephone numbering:  **(201) 782-9237

 

Securities registeredunder Section 12(b) of the Exchange Act: **none**

 

Securities registeredunder Section 12(g) of the Exchange Act: **CommonStock, par value $.001 per share**

 

Check whether the issuer(1) filed all reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  YES ý   NO o

 

Check if there is nodisclosure of delinquent filers in response to Item 405 of Regulations S-Bcontained in this form, and no disclosure will be contained, to the best of theregistrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB or any amendment tothis Form 10-KSB. ý

 

State issuer’s revenuesfor its most recent fiscal year.  $-0-.

 

The aggregate marketvalue of the voting and non-voting common equity held by non-affiliatescomputed by reference to the average between the closing bid ($3.45) and asked($3.60) price of the issuer’s Common Stock as of July 28, 2005, was $194,781based upon the average between the closing bid and asked price ($3.525)multiplied by the 55,257 shares of the issuer’s Common Stock held bynon-affiliates. (In computing this number, issuer has assumed all recordholders of greater than 5% of the common equity and all directors and officersare affiliates of the issuer.). ** **There is no material tradingactivity for the Company’s Common Stock. The last reported trade occurred on March 29, 2005.  Accordingly, the foregoing information shouldnot be taken as an accurate indicator of the aggregate market value of theCompany’s voting stock held by non-affiliates.

 

The number ofshares outstanding of each of the issuer’s classes of common equity as of July26, 2005: **7,050,540.**

 

DOCUMENTSINCORPORATED BY REFERENCE:  **None.**

 

Transitional SmallBusiness Disclosure Format: Yes o  No ý

 

 

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ARBOR ENTECHCORPORATION

Form 10-KSB

April 30, 2005

** **

Table of Contents

 
|                     | Part I                                                                                                             |   |
|--------------------------|--------------------------------------------------------------------------------------------------------------------|--------|
|                     |                                                                                                               |   |
| Item 1.                  | Description of  Business.                                                                                          |   |
| Item 2.                  | Description of  Properties.                                                                                        |   |
| Item 3.                  | Legal Proceedings.                                                                                                 |   |
| Item  4.                 | Submission  of Matters to a Vote of Security Holders.                                                              |   |
|                     |                                                                                                               |   |
|                     | Part II                                                                                                            |   |
|                     |                                                                                                               |   |
| Item 5.                  | Market for Common Equity,  Related Stockholder Matters and Small Business Issuer Purchases of Equity  Securities.  |   |
| Item  6.                 | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                        |   |
| Item 7.                  | Financial  Statements.                                                                                             |   |
| Item  8.                 | Changes  in and Disagreement with Accountants on Accounting and Financial Disclosure.                              |   |
| Item 8A                  | Controls and  Procedures.                                                                                          |   |
| Item 8B                  | Other Information.                                                                                                 |   |
|                     |                                                                                                               |   |
|                     | Part III                                                                                                           |   |
|                     |                                                                                                               |   |
| Item 9.                  | Directors, Executive  Officers, Promoters and Control Persons; Compliance with Section 16(a) of the  Exchange Act. |   |
| Item 10.                 | Executive  Compensation.                                                                                           |   |
| Item 11.                 | Security Ownership of  Certain Beneficial Owners and Management and Related Stockholder Matters.                   |   |
| Item  12.                | Certain  Relationships and Related Transactions.                                                                   |   |
| Item  13.                | Exhibits                                                                                                           |   |
| Item  14.                | Principal  Accountant Fees and Services                                                                            |   |
| Signatures               |                                                                                                               |   |
| Supplemental Information |                                                                                                               |
| Financial Statements     |                                                                                                               |

 

ii

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**PART I**

 

**Item 1.  Descriptionof Business**

 

We, Arbor EnTechCorporation, are a Delaware corporation organized in 1980 under the name ArborEnergy Corporation.  Our name change waseffected in 1984.

 

Until September 2, 2003,we engaged in the production and wholesale distribution of wood products forhome use, principally fireplace wood and garden stakes.  Our products were packaged in and distributedfrom our facility in Little Marsh, Pennsylvania.

 

Substantially all of ourproducts were sold to The Home Depot, Inc. for resale at its retail outlets. Weinformed Home Depot that we would no longer do business with that company dueto increased difficulties in transacting business with Home Depot on aprofitable basis.  We stated to HomeDeport that these difficulties included Home Depot’s prohibition against priceincreases despite increases in our costs of production, a diminution in theHome Depot territories we were allowed to sell product to, and Home Depot’sdemands regarding returns of ordered products that we were unwilling to accedeto for economic reasons.  As a result, onSeptember 2, 2003, we discontinued our wood products business.

 

At present, we ourseeking other business opportunities, but there can be no assurance that suchopportunities will be identified, engaged in, or result in any profits.

 

We currently have noemployees. Mr. Shefts, one of our three officers, devotes a small portion of histime to us.

 

Since the sale of ourreal estate, we have no principal executive office.  We utilize a mailing address of PO Box 656,Tuxedo Park, New York 10987. We utilize a telephone number at Mr. Shefts’Office.  Our telephone number is (201)782-9237.

 

**Item 2.  Description of Properties**

 

We owned 102 acres ofproperty in Little Marsh, Pennsylvania. There is a wood packaging facility located on the property.  The facility consists of an enclosed structureof 17,000 square feet, with a 7,000 foot outdoor overhang and another 10,000foot outdoor overhang.** **Approximately 12 acres of theproperty were devoted to our work area and the remaining 90 acres are forestland.  The real property was mortgaged toMark Shefts, our Secretary/Treasurer and one of our directors, to secure acredit line.  Mr. Shefts extended to usin the amount of $100,000.   We sold theproperty to an unaffiliated party on July 20, 2005.

 

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Since the sale of ourreal estate, we have no principal executive office.  We utilize a mailing address of PO Box 656,Tuxedo Park, New York 10987. We utilize a telephone number at Mr. Shefts’Office.  Our telephone number is (201)782-9237.

 

**Item 3.  Legal Proceedings**

 

We are not presently aparty to any material litigation. 

 

**Item 4.  Submission of Matters to a Vote ofSecurity Holders**

 

No matters were submittedto a vote of our stockholders during the fourth quarter of fiscal 2004.

 

**PART II**

 

**Item 5.  Market for Common Equity, RelatedStockholder Matters and Small Business Issuer Purchases of Equity Securities.**

 

(a)                                  MarketingInformation — The principal U.S. market in which our common stock, all of whichare of one class, is traded or may trade is in the over-the-countermarket.  The stock is quoted on theElectronic Bulletin Board of the OTC market, under the symbol “ARBE.OB”  Our stock is not traded or quoted on anyautomated quotation system.

 

The following table setsforth, for the fiscal quarters indicated during the last two fiscal years, thehigh and low bid quotations of our common stock. The quotations reflectinter-dealer prices, without retail mark-up, mark-down, or commission and maynot represent actual transactions. The market for the common stock has beensporadic and there have been long periods during which there were few, if any,transactions in the common stock and no reported quotations.  Accordingly, reliance should not be placed onthe quotes listed below, as the trades and depth of the market may be limited,and therefore, such quotes may not be a true indication of the current marketvalue of our common stock, especially in light of our current businessinactivity.

 

THE LAST REPORTED SALE OFCOMPANY COMMON STOCK WAS ON MARCH 29, 2005. TRADING PRIOR THERETO WAS EXTREMELY LIMITED.  ACCORDINGLY, THE FOLLOWING PRICES SHOULD NOTBE TAKEN AS AN ACCURATE INDICATION OF THE MARKET VALUE OF THE COMPANY’S COMMONSTOCK. 

 

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MARKET PRICE OF COMMONSTOCK

 
| ** **                      | ** ** | **BID**    | ** ** |
|---------------------------------|------------|------------|------------|
| **Quarter Ending**              | ** ** | **High**   | ** ** | **Low** | ** ** |
| ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| **2004**                        |       |       |       |   |   |
| Quarter ended  July 31, 2003    |       | $          | 2.00       |   | $ | 2.00 |   |
| Quarter ended  October 31, 2003 |       | $          | 2.00       |   | $ | 0.54 |   |
| Quarter ended  January 31, 2004 |       | $          | 2.10       |   | $ | 0.54 |   |
| Quarter ended  April 30, 2004   |       | $          | 6.00       |   | $ | 2.10 |   |
|                            |       |       |       |   |   |
| **2005**                        |       |       |       |   |   |
| Quarter ended  July 31, 2004    |       | $          | 4.50       |   | $ | 4.50 |   |
| Quarter ended  October 31, 2004 |       | $          | 4.50       |   | $ | 4.50 |   |
| Quarter ended  January 31, 2005 |       | $          | 4.50       |   | $ | 3.00 |   |
| Quarter ended  April 30, 2005   |       | $          | 4.00       |   | $ | 3.00 |   |
|                                 |            |            |            |  |  |  |  |  |

 

(b)                                 Holders— There were approximately 173 holders of record of our common stock as of July26, 2005 inclusive of those brokerage firms and/or clearing houses holding oursecurities for their clientele, with each such brokerage house and/or clearinghouse being considered as one holder. The aggregate number of shares of common stock outstanding as of July26, 2005 was 7,050,540 shares.

 

(c)                                  Dividends— A cash dividend of $.15 per share was declared in April 2004 and paid on May1, 2004 to all stockholders of record as of March 22, 2004.  No other dividends were declared on our stockin the last two fiscal years and we do not anticipate paying dividends on ourcommon stock in the foreseeable future.

 

During the quarter ended April 30, 2005, we did not issue anyshares of our Common Stock. 

 

We did not repurchase anyof our securities during the fiscal year ended April 30, 2005.

 

We haveno options, warrants or other rights under any equity compensation plans as ofApril 30, 2005.

 

5

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**Item 6.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.**

 

**CAUTIONARY NOTICEREGARDING FORWARD-LOOKING STATEMENTS**

 

Statements contained inthis report which are not historical fact are “forward-looking statements” thatinvolve various important assumptions, risks, uncertainties and other factorsthat could cause our actual results to differ materially from those expressedin such forward-looking statements. These important factors include, withoutlimitation, competitive factors and pricing pressures, changes in legal andregulatory requirements, technological change or difficulties, productdevelopment risks, commercialization and trade difficulties and generaleconomic conditions, as well as other risks previously disclosed in oursecurities filings and press releases.

 

These forward-looking statements often canbe identified by the use of predictive, future-tense or forward-lookingterminology, such as “believes,” “anticipates,” “expects,” “estimates,” “plans,”“may,”  or similar terms.

 

***General***

 

We were a wood productscompany that had been in business since 1980. Our business fluctuated over theyears. We were almost wholly dependent on sales to The Home Depot, Inc. Asdiscussed below in “Discontinued Operations,” on September 2, 2003, wediscontinued our wood products business.

 

At present, we ourseeking other business opportunities, but there can be no assurance that suchopportunities will be identified, engaged in, or result in any profits.

 

***Fiscal year ended April 30, 2005 compared to the fiscalyear ended April 30, 2004***

 

Since we discontinued ourwood products business, there were no sales from continuing operations duringthe years ended April 30, 2005 and 2004.

 

Selling, general andadministrative expenses were approximately $41,000 for the fiscal year endedApril 30, 2005, a decrease of approximately $241,000 or 85% over selling,general and administrative expenses of approximately $282,000 for the fiscalyear ended April 30, 2004. The decrease in selling, general andadministrative expenses is a result of our discontinued operations of our woodproducts business.

 

Our net loss decreasedfrom approximately $357,000 for the fiscal year ended April 30, 2004 tonet income of approximately $146,000 for the fiscal year ended April 30,2005. This $503,000 change resulted from the both the discontinuance of ongoingexpenses during a period

 

6

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when we had no operatingrevenues and the gain from the sale of our real estate of approximately$186,000.

 

***Discontinued Operations***

 

On September 2, 2003, we informed Home Depot that wewould no longer do business with that company due to increased difficulties intransacting business with Home Depot on a profitable basis.  We stated to Home Deport 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.  As a result, onSeptember 2, 2003, we discontinued our wood products business.

 

The sale of our real estate resulted in a gain ofapproximately $186,000 for the year ended April 30, 2005.

 

Net sales of the wood products business wereapproximately $139,000 for the year ended April 30, 2004. The net income(loss) from discontinued operations was $(103,000) for the year endedApril 30, 2004.

 

***Liquidity and capital resources***

 

In the prior periodsdiscussed above, our working capital requirements were met primarily from salesgenerated by our discontinued wood products business. At April 30, 2005,we had working capital of approximately $484,000.

 

As at April 30,2005, we had cash and cash equivalents of approximately $285,000, whichrepresented 49% of total assets. We believe we have adequate working capital tofund our operations for at least the next 12 months.

 

On July 20, 2005, we closedon the sale of our real property located in Little Marsh, Pennsylvania andrealized net proceeds of approximately $214,000.  This amount was reported as a receivable atApril 30, 2005 because we entered into the contract of sale on April 15, 2005.

 

Net cash used inoperating activities amounted to approximately $(42,000) for the fiscal yearended April 30, 2005.  This wasprimarily attributable to the loss from continuing operation of approximately$40,000.

 

Net cash used byfinancing activities was $38,000 for the fiscal year ended April 30, 2005as a result of related party loan repayments of $1,020,000, offset by dividendpayments of $1,058,000.

 

7

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Off-BalanceSheet Transactions

 

We do not have anytransactions, agreements or other contractual arrangements that constituteoff-balance sheet arrangements.

 

**Application Of Critical Accounting Policies**

 

Ourfinancial statements and accompanying notes are prepared in accordance withaccounting principles generally accepted in the United States of America.Preparing financial statements requires management to make estimates andassumptions that affect the reported amounts of assets, liabilities, revenue,and expenses. These estimates and assumptions are affected by management’sapplication of accounting policies. Critical accounting policies for use ofestimates, accounting for stock-based compensation and environmentalremediation costs.

 

The****preparationof financial statements in conformity with U.S. generally accepted accountingprinciples requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and the disclosure of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period.  Actual results could differ from thoseestimates.

 

**Item 7. Financial Statements.**

 

For the FinancialStatements required by Item 7 see the Financial Statements included at the endof this Form 10-KSB.

 

**Item 8.  Changes in and Disagreements withAccountants on Accounting and Financial Disclosures.**

 

There have been no changes in or disagreements withaccountants with respect to accounting and/or financial disclosure.

 

**Item 8A.  Controls and Procedures.**

 

OurChief Executive Officer and our Chief Financial Officer performed an evaluationof our disclosure controls and procedures, which have been designed to permitus to effectively identify and timely disclose important information. Theyconcluded that the controls and procedures were effective as of April 30, 2005to ensure that material information was accumulated and communicated to ourmanagement, including our Chief Executive Officer and Chief Financial Officer,as appropriate to allow timely decisions regarding required disclosure. Duringthe quarter ended April 30, 2005, we have made no change in our internalcontrols over financial reporting that has materially affected, or isreasonably likely to materially affect, our internal controls over financialreporting.

 

8

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**Item 8B.  Other Information.**

 

None.

 

**PART III**

 

**Item 9.  Directors, Executive Officers, Promotersand Control Persons; Compliance with Section 16(a) of the Exchange Act. **

 

The following table setsforth certain information concerning our directors and executive officers:

 
| **Name**       | ** ** | **Age** | ** ** | **Position**                                               |
|----------------|------------|---------|------------|------------------------------------------------------------|
|           |       |    |       |                                                       |
| Harvey Houtkin |       | 56      |       | Chairman of the Board,  Chief Executive Officer, President |
|           |       |    |       |                                                       |
| Wanda Shefts   |       | 47      |       | Executive Vice  President, Director                        |
|           |       |    |       |                                                       |
| Mark Shefts    |       | 47      |       | Secretary/Treasurer,  Director                             |
|           |       |    |       |                                                       |
| Sherry Houtkin |       | 54      |       | Director                                                   |

 

Each director has been elected to serve until the nextannual meeting of stockholders, or until his earlier resignation, removal fromoffice, death or incapacity. Officers are elected by the directors at meetingscalled by the directors for such purpose.

 

**HarveyI. Houtkin** foundedArbor EnTech Corporation in October 1980 and has been our Chairman of theBoard, Chief Executive Officer and President since inception.  Mr. Houtkin held a seat on the New York StockExchange from 1984 to 1988 and is Chairman of the Board, Chief ExecutiveOfficer, Secretary and co-owner of Domestic Securities, Inc.(“DomesticSecurities”), an NASD registered broker/dealer which operated a floor brokeragebusiness 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 through thepresent, 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 University of NewYork in 1970 with a Bachelor of Science Degree and in 1973 with a MastersDegree in Business Administration.

 

9

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**Wanda****Shefts** has beenour Vice President and a director since February 1993.  She previously held these positions from 1982through April 1987.  She has anAssociates Degree from Kingsborough Community College.

 

**MarkD. Shefts** has beenour Secretary/Treasurer and a director since February 1993.  He previously held these positions from 1982through April 1987.  He is a member ofthe Chicago Stock Exchange and is President, Treasurer and a co-owner ofDomestic Securities.  He has been aprincipal of All-Tech since early 1988 and has been its President, ChiefOperating Officer, Chief Financial Officer, Treasurer and a Director since thattime.   Mr. Shefts is licensed as aCommodity Pool Operator and a Commodity Trading Advisor by the National FuturesAssociation.  He is also a CertifiedFinancial Services Auditor of the National Association of Financial ServicesAuditors, a Certified Fraud Examiner of the Association of Certified FraudExaminers, and an arbitrator for the American Arbitration Association and NASDDispute Resolution, Inc.  Mr. Sheftsgraduated in 1979 from Brooklyn College of the City of New York with a Bachelorof Science Degree in Accounting.

 

**SherryHoutkin** has been one of our directors since February 1994.

 

Family relationships

 

Mark Shefts and WandaShefts are husband and wife.  HarveyHoutkin and Wanda Shefts are brother and sister.  Harvey Houtkin and Sherry Houtkin are husbandand wife.

 

Our Board of Directorsdoes not currently have a compensation committee, audit committee of nominatingcommittee.  We do not have an AuditCommittee financial expert.  We believe thatthe cost of retaining a financial expert at this time is too prohibitive givenour current financial condition.

 

### Compliance withSection 16(a) of The Securities Exchange Act of 1934

 

To our knowledge, basedsolely on a review of such materials as are required by the Securities andExchange Commission, no officer, director or beneficial holder of more than tenpercent of our issued and outstanding shares of Common Stock failed to timelyfile with the Securities and Exchange Commission any form or report required tobe so filed pursuant to Section 16(a) of the Securities Exchange Act of 1934.

 

Audit Committee FinancialExpert

 

We do not have afinancial expert.  We believe that thecost of retaining a financial expert at this time is too prohibitive given ourcurrent financial condition and lack of operating revenues.

 

Code of Ethics

 

We have not adopted a code of ethics as of the datehereof.  We are considering whether toadopt such a plan in the future.

 

10

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**Item 10.  ExecutiveCompensation**

 

The following table showsall the cash compensation paid or to be paid by us, as well as certain othercompensation paid or accrued, during the fiscal years indicated, to our ChiefExecutive Officer for such period in all capacities in which such officerserved.  No other executive officerreceived total annual salary and bonus in excess of $100,000.

 

**SUMMARY COMPENSATION TABLE**

 
| ** **                        | ** ** | ** **             | ** ** | **Annual Compensation** | ** ** | **Long Term Compensation** | ** ** |
|-----------------------------------|------------|------------------------|------------|-------------------------|------------|----------------------------|------------|
| **(a)**                           | ** ** | **(b)**                | ** ** | **(c)**                 | ** ** | **(d)**                    | ** ** | **(e)** | ** ** | **(f)** | ** ** | **(g)** | ** ** | **(h)** | ** ** | **(i)** | ** ** |
| **Name and  Principal  Position** | ** ** | **Fiscal  Year  4/30** | ** ** | **Salary($)**           | ** ** | **Bonus($)**               | ** ** | **Other  Annual  Compensa-  Tion ($)** | ** ** | **Restricted  Stock  Award ($)** | ** ** | **Securities  Underlying  Options/  SARs** | ** ** | **LTIP  Payouts ($)** | ** ** | **All Other Compensa-  tion** | ** ** |
| Harvey Houtkin                    |       | 2005                   |       | $                       | -0-        |                       | -0-        |   | -0- |   | -0- |   | -0- |   | -0- |   | -0- |   |
| CEO                               |       | 2004                   |       | $                       | -0-        |                       | 31,527     |   | -0- |   | -0- |   | -0- |   | -0- |   | -0- |   |
|                              |       | 2003                   |       | $                       | -0-        |                       | -0-        |   | -0- |   | -0- |   | -0- |   | -0- |   | -0- |   |
|                              |       |                   |       |                    |       |                       |       |   |   |   |   |   |   |   |   |   |   |
| Wanda Shefts                      |       | 2005                   |       | $                       | -0-        |                       | -0-        |   | -0- |   | -0- |   | -0- |   | -0- |   | -0- |   |
| Vice President                    |       | 2004                   |       | $                       | 84,084     |                       | -0-        |   | -0- |   | -0- |   | -0- |   | -0- |   | -0- |   |
|                              |       | 2003                   |       | $                       | 125,000    |                       | 15,000     |   | -0- |   | -0- |   | -0- |   | -0- |   | -0- |   |

 

Directors generally donot receive any compensation for serving as such or for attending meetings ofthe Board.  They are reimbursed theiraccountable expenses for attending meetings.

 

We do not have anyemployment agreements or stock option or bonus plans with any of its executiveofficers and we do not have any employees.

 

**Item11.  Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters.**

 

The following table setsforth information as of July 26, 2005, with respect to

 

•                  anyperson known by us to own beneficially more than 5% of our common stock;

•                  commonstock beneficially owned by each of our officers and directors; and

•                  theamount of common stock beneficially owned by our officers and directors as agroup.

 

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| **Name & Address of  Beneficial Owner**                  | ** ** | **Number of Shares  Beneficially Owned** | ** ** | **Approximate Percent  of Common Stock  Outstanding (1)** | ** ** |
|--------------------------------------------------------------|------------|------------------------------------------|------------|-----------------------------------------------------------|------------|
|                                                         |       |                                     |       |                                                      |       |
| Harvey  Houtkin(2)                                           |       | 3,590,505                                | (3)(4)     | 50.9                                                      | %          |
|                                                         |       |                                     |       |                                                      |       |
| Wanda Shefts(2)                                              |       | 3,582,088                                | (3)        | 50.8                                                      | %          |
|                                                         |       |                                     |       |                                                      |       |
| Mark Shefts(2)                                               |       | 3,582,088                                | (5)        | 50.8                                                      | %          |
|                                                         |       |                                     |       |                                                      |       |
| Sherry  Houtkin(2)                                           |       | 3,590,505                                | (6)        | 50.9                                                      | %          |
|                                                         |       |                                     |       |                                                      |       |
| All directors  and Executive officers as a group (4 persons) |       | 6,995,283                                |       | 99.2                                                      | %          |

 

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(1)                                  Basedupon 7,050,540 shares of common stock issued and outstanding as of July 26,2005 and includes, for each person, the shares issuable upon exercise ofwarrants, if any.

 

(2)                                  Theaddress of such person is 160 Summit Avenue, Montvale, NJ 07645.

 

(3)                                  Includes177,310 shares owned by Rushmore Financial Services, Inc. because thestockholder is a control person or spouse of a control person of that company.

 

(4)                                  Includes2,000 shares owned by Mr. Houtkin’s wife.

 

(5)                                  Consistsof shares owned by Mr. Shefts’ wife and shares owned by Rushmore FinancialServices, Inc.

 

(6)                                  Includesan aggregate of 3,588,505 shares owned directly and indirectly by Ms. Houtkin’shusband.

 

**Item 12.  Certain Relationships and RelatedTransactions.**

 

Duringthe fiscal year ended April 30, 2005, Mr. Shefts provided bookkeeping,accounting and administrative services to us for which we paid him $5,000.  In addition, upon the sale of our real estatein July 2005,  the credit facility thatwe had with Mr. Shefts was terminated.

 

In May 2004 we repaidprincipal and interest on two pre-existing related party loans. The borrowerswere Attain Technology, Inc. and Rushmore Financial Services, Inc.  Attain Technology is wholly owned byRushmore.  Rushmore is owned 50% byHarvey Houtkin and 50% by Mark Shefts, two of our officers, directors andprincipal shareholders.

 

In April 2004 the Boardof Directors declared a dividend of $.15 a share that was paid on May 1, 2004,to each shareholder of record as of March 22, 2004.

 

During the fiscal yearended April 30, 2004, we paid a total of $54,220.00 for accounting andadministrative services throughout the year, to Rushmore Financial Services,Inc., a company owned 50% by Mark Shefts and 50% by Harvey Houtkin, two of ourofficers, directors and principal shareholders.

 

12

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**Item 13.  Exhibits.**

 

3.a.                        Our Articles of Incorporation(1)

3.b.                       Our By-Laws(1)

 

31.1                           Certificationpursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from the Company’sChief Executive Officer

 

31.2                           Certificationpursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from the Company’sChief Financial Officer

 

32.1                           Certificationpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from the Company’sChief Executive Officer

 

32.2                           Certificationpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from the Company’sChief Financial Officer

 

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(1)            Previouslyfiled as an exhibit to the Company’s Registration Statement on Form 10-SB (SECFile No. 0-30432) filed on orabout July 30, 1999, and incorporated herein by this reference.

 

(2)            Previouslyfiled as an exhibit to Amendment No. 1 to the Company’s Registration Statementon Form 10-SB (SEC File No. 01-15207)filed on or about August 2, 1999, and incorporated herein by this reference.

 

Statements contained in thisForm 10-KSB as to the contents of any agreement or other document referred toare not complete, and where such agreement or other document is an exhibit tothis Report or is included in any forms indicated above, each such statement isdeemed to be qualified and amplified in all respects by such provisions.

 

**Item 14.  Principal Accountant Fees And Services.**

 

Wolinetz, Lafazan &Company, P.C. (“WL”), Certified Public Accountants, is the independentregistered public accounting firm that audited our financial statements for thefiscal years ended April 30, 2005 and 2004. WL has performed the followingservices and has been paid the following fees for these fiscal years.

 

Audit Fees

 

WL billed $12,000 and$14,000 for its audit of our financial statements for the fiscal years endedApril 30, 2005 and 2004 and its review of the financial statements included inour filing of our quarterly reports on form 10-QSB during these fiscal years.

 

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----

 

Audit-Related Fees

 

WL was not paid anyadditional fees for the fiscal years ended April 30, 2005 and 2004 forassurance and related services reasonably related to the performance of theaudit or review of our financial statements.

 

Tax Fees

 

WL billed $1,000 and$1,000 for the fiscal years ended April 30, 2005 and 2004 for professionalservices rendered for tax compliance, tax advice and tax planning. 

 

All Other Fees

 

WL was paid no other feesfor professional services during the fiscal years ended April 30, 2005 and2004.

 

Audit CommitteePre-Approval Policies

 

The Board of Directors, which performs the equivalentfunctions of an audit committee, currently does not have any pre-approvalpolicies or procedures concerning services performed by WL. All the servicesperformed by WL that are described above were pre-approved by the Board ofDirectors. Less than 50% of the hours expended on WL’s engagement to audit ourfinancial statements for the fiscal years ended April 30, 2005 and 2004 wereattributed to work performed by persons other than WL’s full-time, permanentemployees.

 

14

----

 

**SIGNATURES**

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
|                 | ARBOR ENTECH  CORPORATION |
|----------------------|---------------------------|
|                 |                      |
|                 |                      |
|                 | By:                       | s/ Harvey  Houtkin |   |
|                 |                      | Harvey Houtkin,  Chairman of the Board, |
|                 |                      | Chief Executive  Officer, President |
|                 |                      |   |
| Dated: July 29, 2005 |                      |   |

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and onthe dates indicated.

 

| **SIGNATURES**     | ** ** | **TITLE**              | ** **                | **DATE** |
|--------------------|------------|------------------------|---------------------------|----------|
|               |       |                   |                      |     |
| s/ Harvey  Houtkin |       |                   | President and             |     | July 29,  2005 |
| Harvey Houtkin     |       | a Director             |                      |     |
|               |       |                   |                      |     |
|               |       |                   |                      |     |
| s/ Mark Shefts     |       |                   | Secretary/Treasurer,      |     | July 29,  2005 |
| Mark Shefts        |       | Principal Financial    |                      |     |
|               |       | and Accounting Officer |                      |     |
|               |       | and Director           |                      |     |
|               |       |                   |                      |     |
|               |       |                   |                      |     |
| s/ Wanda Shefts    |       |                   | Exec. V. Pres.,  Director |     | July 29, 2005 |
| Wanda Shefts       |       |                   |                      |     |
|               |       |                   |                      |     |
|               |       |                   | Director                  |     | July    ,  2005 |
| Sherry Houtkin     |       |                   |                      |     |

 

15

----

 

SUPPLEMENTAL INFORMATION

 

Supplemental Information to be Furnished With ReportsFiled Pursuant to Section 15(d) of the Act by Registrants Which Have NotRegistered Securities Pursuant to Section 12 of the Act.

 

NOT APPLICABLE.

 

16

----

 

REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

The Board of Directorsand Stockholders

Arbor EnTech Corporation

 

We have audited theaccompanying balance sheet of Arbor EnTech Corporation as of April 30, 2005,and the related statements of operations, stockholders’ equity, and cash flowsfor each of the two years in the period ended April 30, 2005.  These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audits.

 

We conducted our auditsin accordance with the standards of the Public Company Accounting OversightBoard (United States).  Those standardsrequire that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.  The Company is not required to have, nor werewe engaged to perform, an audit of its internal control over financialreporting.  Our audit includedconsideration of internal control financial reporting as a basis for designingaudit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the Company’s internalcontrol over financial reporting. Accordingly, we express no such opinion. Also, an audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements.  An audit also includes assessing theaccounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonablebasis for our opinion.

 

In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the financial position of Arbor EnTech Corporation as of April 30,2005, and the results of its operations and its cash flows for each of the twoyears in the period ended April 30, 2005 in conformity with accountingprinciples generally accepted in the United States of America.

 

 
|                        | WOLINETZ,  LAFAZAN & COMPANY, P.C. |
|-----------------------------|----------------------------------------|
|                        |
|                        |
| Rockville Centre, New  York |
| July 20, 2005               |

 

 

F-1

----

 

ARBOR ENTECH CORPORATION

BALANCE SHEET

APRIL 30, 2005

 
| ASSETS                                                                                                 |   |       |    |
|--------------------------------------------------------------------------------------------------------|--------|------------|---------|
| Current Assets:                                                                                        |   |       |    |
| Cash and Cash  Equivalents                                                                             |   | $          | 285,071 |   |
| Receivable from  Sale of Real Property                                                                 |   | 213,589    |    |
| Miscellaneous  Receivable                                                                              |   | 826        |    |
| Deferred Taxes                                                                                         |   | 81,762     |    |
| Prepaid Expenses                                                                                       |   | 2,242      |    |
|                                                                                                   |   |       |    |
| Total Current  Assets                                                                                  |   | 583,490    |    |
|                                                                                                   |   |       |    |
| Total Assets                                                                                           |   | $          | 583,490 |   |
|                                                                                                   |   |       |    |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                              |   |       |    |
|                                                                                                   |   |       |    |
| Current  Liabilities:                                                                                  |   |       |    |
| Accounts Payable  and Accrued Liabilities                                                              |   | $          | 17,220  |   |
| Deferred Taxes                                                                                         |   | 81,762     |    |
|                                                                                                   |   |       |    |
| Total Current  Liabilities                                                                             |   | 98,982     |    |
|                                                                                                   |   |       |    |
| 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)                                                                           |   | (1,887,983 | )       |
|                                                                                                   |   |       |    |
| Total  Stockholders’ Equity                                                                       |   | 484,508    |    |
|                                                                                                   |   |       |    |
| Total  Liabilities and Stockholders’ Equity                                                       |   | $          | 583,490 |   |

 

The accompanying notesare an integral part of the financial statements.

 

F-2

----

 

ARBOR ENTECH CORPORATION

STATEMENT OFOPERATIONS

 
| ** **                                                                        | ** ** | **Years Ended** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------|------------|
| ** **                                                                        | ** ** | **April 30,**   | ** ** |
| ** **                                                                        | ** ** | **2005**        | ** ** | **2004** | ** ** |
|                                                                              |       |            |       |   |   |
| Net Sales                                                                         |       | $               | —     |   | $ | — |   |
|                                                                              |       |            |       |   |   |
| Costs and  Expenses:                                                              |       |            |       |   |   |
| Selling, General  and Administrative Expenses                                     |       | 41,331          |       | 281,626 |   |
|                                                                              |       | 41,331          |       | 281,626 |   |
|                                                                              |       |            |       |   |   |
| Loss from  Operations                                                             |       | (41,331         | )          | (281,626 | ) |
|                                                                              |       |            |       |   |   |
| Other Income:                                                                     |       |            |       |   |   |
| Interest Income                                                                   |       | 997             |       | 936 |   |
| Other                                                                             |       | 22              |       | — |   |
|                                                                              |       | 1,019           |       | 936 |   |
|                                                                              |       |            |       |   |   |
| Loss from  Continuing Operations Before Income Tax Provision (Benefit)            |       | (40,312         | )          | (280,690 | ) |
|                                                                              |       |            |       |   |   |
| Income Tax  Provision (Benefit)                                                   |       | (200            | )          | (27,230 | ) |
|                                                                              |       |            |       |   |   |
| Loss from  Continuing Operations                                                  |       | (40,112         | )          | (253,460 | ) |
|                                                                              |       |            |       |   |   |
| Discontinued  Operations:                                                         |       |            |       |   |   |
| Gain on Disposal  and Sale of Property and Equipment from Discontinued Operations |       | 185,820         |       | 31,162 |   |
| (Loss) from  Discontinued Operations                                              |       | —          |       | (134,401 | ) |
|                                                                              |       |            |       |   |   |
| Net Income  (Loss) from Discontinued Operations                                   |       | 185,820         |       | (103,239 | ) |
|                                                                              |       |            |       |   |   |
| Net Income  (Loss)                                                                |       | $               | 145,708    |   | $ | (356,699 | ) |
|                                                                              |       |            |       |   |   |
| Income (Loss)  Per Common Share – Basic:                                     |       |            |       |   |   |
| Loss from  Continuing Operations                                                  |       | $               | (.00       | ) | $ | (.04 | ) |
| Income (Loss)  from Discontinued Operations                                       |       | .02             |       | (.01 | ) |
|                                                                              |       |            |       |   |   |
| Net Income  (Loss)                                                                |       | $               | .02        |   | $ | (.05 | ) |
|                                                                              |       |            |       |   |   |
| Weighted Average  Shares Outstanding                                              |       | 7,050,540       |       | 7,050,540 |   |

 

The accompanying notesare an integral part of the financial statements.

 

F-3

----

 

ARBOR ENTECH CORPORATION

STATEMENT OFSTOCKHOLDERS’ EQUITY

YEARS ENDED APRIL 30,2004 AND 2005

## ** **

| ** **                                                                     | ** ** | ** **       | ** ** | ** **  | ** ** | ** **     | ** ** | ** **    | ** ** | **Notes**        | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------|------------|------------------|------------|-------------|------------|----------------|------------|---------------|------------|------------------|------------|------------|------------|
| ** **                                                                     | ** ** | ** **       | ** ** | ** **  | ** ** | **Additional** | ** ** | **Retained**  | ** ** | **Receivable -** | ** ** | ** ** | ** ** |
| ** **                                                                     | ** ** | **Common Stock** | ** ** | **Paid-In** | ** ** | **Earnings**   | ** ** | **Related**   | ** ** | ** **       | ** ** |
| ** **                                                                     | ** ** | **Shares**       | ** ** | **Amount**  | ** ** | **Capital**    | ** ** | **(Deficit)** | ** ** | **Parties**      | ** ** | **Total**  | ** ** |
|                                                                           |       |             |       |        |       |           |       |          |       |             |       |       |       |
| 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    |       |
|                                                                           |       |             |       |        |       |           |       |          |       |             |       |       |       |
| Net Income                                                                     |       | —           |       | —      |       | —         |       | 145,708       |       | —           |       | 145,708    |       |
|                                                                           |       |             |       |        |       |           |       |          |       |             |       |       |       |
| Balance – April  30, 2005                                                 |       | 7,050,540        |       | $           | 7,050      |           | $          | 2,365,441     |       | $                | (1,887,983 | )          | $          | — |   | $ | 484,508 |   |

 

The accompanying notesare an integral part of the financial statements.

 

F-4

----

## ** **

ARBOR ENTECH CORPORATION

STATEMENT OF CASHFLOWS

 
| ** **                                                                                               | ** ** | **Years Ended** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|-----------------|------------|
| ** **                                                                                               | ** ** | **April 30,**   | ** ** |
| ** **                                                                                               | ** ** | **2005**        | ** ** | **2004** | ** ** |
|                                                                                                     |       |            |       |   |   |
| Cash Flows from  Operating Activities:                                                                   |       |            |       |   |   |
| (Loss) from  Continuing Operations                                                                       |       | $               | (40,112    | ) | $ | (253,460 | ) |
| Adjustments to  Reconcile (Loss) from Continuing Operations to Net Cash (Used) in Operating  Activities: |       |            |       |   |   |
| Depreciation                                                                                             |       | 1,149           |       | 4,487 |   |
| Gain on Sale of  Property and Equipment                                                                  |       | —          |       | (31,162 | ) |
| (Increase) in  Deferred Tax Assets                                                                       |       | (81,762         | )          | — |   |
| Increase in  Deferred Tax Liabilities                                                                    |       | 81,762          |       | — |   |
| Changes in  Operating Assets and Liabilities:                                                            |       |            |       |   |   |
| (Increase) in  Miscellaneous Receivable                                                                  |       | (826            | )          |   |   |
| (Increase)  Decrease in Prepaid Expenses                                                                 |       | (1,731          | )          | 2,165 |   |
| (Decrease) in  Accounts Payable and Accrued Liabilities                                                  |       | (806            | )          | (18,652 | ) |
|                                                                                                     |       |            |       |   |   |
| Total  Adjustments                                                                                       |       | (2,214          | )          | (43,162 | ) |
|                                                                                                     |       |            |       |   |   |
| Net Cash (Used)  in Operating Activities                                                                 |       | (42,326         | )          | (296,622 | ) |
|                                                                                                     |       |            |       |   |   |
| 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                                                                    |       | 1,019,850       |       | 117,274 |   |
| Dividends Paid                                                                                           |       | (1,057,581      | )          | — |   |
|                                                                                                     |       |            |       |   |   |
| Net Cash  Provided (Used) by Financing Activities                                                        |       | (37,731         | )          | 117,274 |   |
|                                                                                                     |       |            |       |   |   |
| Net Cash  Provided by Discontinued Operations                                                            |       | —          |       | 203,429 |   |
|                                                                                                     |       |            |       |   |   |
| Increase  (Decrease) in Cash and Cash Equivalents                                                        |       | (80,057         | )          | 62,841 |   |
|                                                                                                     |       |            |       |   |   |
| Cash and Cash  Equivalents – Beginning of Year                                                      |       | 365,128         |       | 302,287 |   |
|                                                                                                     |       |            |       |   |   |
| Cash and Cash  Equivalents – End of Year                                                            |       | $               | 285,071    |   | $ | 365,128 |   |

 

The accompanying notesare an integral part of the financial statements.

 

F-5

----

 
| ** **                                                                                   | ** ** | **Years Ended** | ** ** |
|----------------------------------------------------------------------------------------------|------------|-----------------|------------|
| ** **                                                                                   | ** ** | **April 30,**   | ** ** |
| ** **                                                                                   | ** ** | **2005**        | ** ** | **2004** | ** ** |
|                                                                                         |       |            |       |   |   |
| Supplemental  Cash Flow Information:                                                         |       |            |       |   |   |
| Cash Paid for  Interest                                                                      |       | $               | —     |   | $ | — |   |
|                                                                                         |       |            |       |   |   |
| Cash Paid for  Income Taxes                                                                  |       | $               | —     |   | $ | — |   |
|                                                                                         |       |            |       |   |   |
| Supplemental  Disclosures of Non-Cash Investing and Financing Activities:                    |       |            |       |   |   |
| Accrued Interest  on Related Parties Loans Receivable Credited to Additional Paid-In Capital |       | $               | —     |   | $ | 68,536 |   |
|                                                                                         |       |            |       |   |   |
| Dividends  Payable on Common Stock                                                           |       | $               | —     |   | $ | 1,057,581 |   |
|                                                                                         |       |            |       |   |   |
| Receivable from  Sale of Real Property                                                       |       | $               | 213,589    |   | $ | — |   |
|                                                                                         |       |            |       |   |   |
| Net Carrying  Amount of Real Property Sold                                                   |       | $               | 27,769     |   | $ | — |   |

 

The accompanying notesare an integral part of the financial statements.

 

F-6

----

## ** **

ARBOR ENTECH CORPORATION

NOTES TO FINANCIALSTATEMENTS

 

NOTE 1 -                Natureof Business

 

Arbor EnTech Corporation (the “Company”) is a Delawarecorporation that engaged in the production and wholesale distribution of woodproducts for home use, principally fireplace wood and garden stakes.  The Company’s products were produced,packaged in and distributed from its facility in Little Marsh,Pennsylvania.  The products weredelivered by independent truckers to customer locations in the NortheasternUnited States.  On September 22, 2003,the Company discontinued its wood products business.  The Company is seeking other businessopportunities but has not yet identified any such opportunity.

 

NOTE 2 -                Summaryof Significant Accounting Policies

 

Cash and CashEquivalents

 

The Company considers all highly liquid short-terminvestments with a maturity of three months or less at time of purchase to becash equivalents.

 

Property andEquipment

 

Property and equipment is stated at cost.  Depreciation is computed using thestraight-line method over the estimated useful lives of the related assetswhich approximated 15 and 31 years. Expenditures for maintenance and repairs are charged to expense asincurred where as major betterments and renewals are capitalized.  Depreciation expense was $1,149 and $4,487for the years ended April 30, 2005 and 2004, respectively.

 

Use of Estimates

 

The preparation offinancial statements in conformity with U.S. generally accepted accountingprinciples requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period.  Actual results could differ from thoseestimates.

 

RevenueRecognition

 

Sales were recorded as products are shipped.  The Company uses the accrual method ofaccounting.

 

Income Taxes

 

The Company utilizes theliability method of accounting for income taxes.  Under such method, deferred tax assets andliabilities are recognized for the future tax consequences attributable todifferences between the financial statement carrying amounts of existing assetsand liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax ratesin effect at the balance sheet date.  Theresulting asset or liability is adjusted to reflect enacted changes in taxlaw.  Future tax benefits attributable totemporary differences are recognized to the extent that realization of suchbenefits is more likely than not.

 

F-7

----

 

Loss Per CommonShare

 

The computation of earnings (loss) per share of commonstock is computed by dividing income (loss) for the year by the weightedaverage number of common shares outstanding during that period.  Since the Company has no common stockequivalents, diluted earnings (loss) per share is the same as basic earnings(loss) per share.

 

Fair Value of Financial Instruments

 

The fair value of the Company’s financial instruments,which consist primarily of cash and cash equivalents and accounts payable,approximate their carrying amounts reported due to their short-term nature.

 

Concentration of Credit Risk

 

The Company’s financial instruments that are exposedto concentration of credit risk consist of cash and cash equivalents.  At times, such amounts are in excess of theFDIC insurance limits.

 

NOTE 3 -                NotesReceivable – Related Parties

 

Notes receivable from related parties consisted ofamounts due from two affiliated companies. As of April 30, 2004, these loans were reclassified from reductions ofstockholders’ equity to current assets since they were repaid in full in May2004.  Although the loans carriedinterest, such interest was not recorded as income for financial statementpurposes but as additional contributed capital. The notes were payable in equal annual installments of $108,789 andinterest on the notes was payable semi-annually.  Notes in the amounts of $1,019,850 were paidin full in May 2004.

 

NOTE 4 -                IncomeTaxes

 

Income tax provision (benefit) consisted of thefollowing:

 
| ** **                   | ** ** | **Years  Ended****April 30,** | ** ** |
|------------------------------|------------|-------------------------------|------------|
| ** **                   | ** ** | **2005**                      | ** ** | **2004** | ** ** |
|                         |       |                          |       |   |   |
| Current                      |       |                          |       |   |   |
| Federal (Income  Tax Refund) |       | $                             | —     |   | $ | (27,420 | ) |
| State                        |       | (200                          | )          | 190 |   |
|                         |       | (200                          | )          | (27,230 | ) |
| Deferred                     |       |                          |       |   |   |
| Federal                      |       | —                        |       | — |   |
| State                        |       | —                        |       | — |   |
|                         |       | —                        |       | — |   |
|                         |       |                          |       |   |   |
|                         |       | $                             | (200       | ) | $ | (27,230 | ) |

 

F-8

----

 

Income tax provision (benefit) consisted of thefollowing:

 
| ** **                   | ** ** | **Years Ended** | ** ** |
|------------------------------|------------|-----------------|------------|
| ** **                   | ** ** | **April 30,**   | ** ** |
| ** **                   | ** ** | **2005**        | ** ** | **2004** | ** ** |
|                         |       |            |       |   |   |
| Current                      |       |            |       |   |   |
| Federal (Income  Tax Refund) |       | $               | —     |   | $ | (27,420 | ) |
| State                        |       | (200            | )          | 190 |   |
|                         |       | (200            | )          | (27,230 | ) |
| Deferred                     |       |            |       |   |   |
| Federal                      |       | —          |       | — |   |
| State                        |       | —          |       | — |   |
|                         |       | —          |       | — |   |
|                         |       |            |       |   |   |
|                         |       | $               | (200       | ) | $ | (27,230 | ) |

 

The following is areconciliation of the US statutory income tax rate and the effective tax rateon pretax income:

 
| ** **                               | ** ** | **Years Ended  April 30,** | ** ** |
|------------------------------------------|------------|----------------------------|------------|
| ** **                               | ** ** | **2005**                   | ** ** | **2004** | ** ** |
|                                     |       |                       |       |   |   |
| US federal  statutory rate               |       | 34                         | %          | 34 | % |
| State taxes, net  of federal tax benefit |       | 10.0                       |       | (0 | ) |
| Permanent  differences                   |       | (0                         | )          | (4.21 | ) |
| Other, net                               |       | (44.00                     | )          | (29.79 | ) |
|                                     |       |                       |       |   |   |
| Effective tax  rate                      |       | (.00                       | )%         | (.00 | )% |

 

Forincome tax purposes, the Company had available net operating loss carryforwards(“NOL”) at April 30, 2005 of approximately $380,000 expiring in various yearsthrough 2025 to reduce future federal taxable income, if any.

 

The tax effects ofsignificant items comprising deferred income taxes are as follows:

 
| ** **                        | ** ** | **April 30,**    | ** ** |
|-----------------------------------|------------|------------------|------------|
| ** **                        | ** ** | **2005**         | ** ** | **2004** | ** ** |
| ** **                        | ** ** | **Deferred Tax** | ** ** | **Deferred Tax** | ** ** |
| ** **                        | ** ** | **Assets**       | ** ** | **Liabilities** | ** ** | **Assets** | ** ** | **Liabilities** | ** ** |
|                              |       |             |       |   |   |   |   |   |   |
| Capital Loss  Carryforwards       |       | $                | 40,000     |   | $ | — |   | $ | 40,000 |   | $ | — |   |
| Net Operating  Loss Carryforwards |       | 152,656          |       | — |   | 120,000 |   | — |   |
| Sale of Real  Property            |       | —           |       | 81,762 |   | — |   | — |   |
|                              |       | 192,656          |       | 81,762 |   | 160,000 |   | — |   |
| Less: Valuation  Allowance        |       | 110,894          |       | — |   | 160,000 |   | — |   |
|                              |       |             |       |   |   |   |   |   |   |
|                              |       | $                | 81,762     |   | $ | 81,762 |   | $ | — |   | $ | — |   |

 

F-9

----

 

NOTE 5 -                Commitmentsand Contingencies

 

Line of Credit

 

The Company had a revolving credit facility with itsSecretary/Treasurer, secured by a mortgage on the Company’s real propertylocated in Tioga County, Pennsylvania. This revolving line of credit provided for the extension of credit inthe aggregate principal amount of $100,000 with interest at 11% per annum.  Principal and interest are payable ondemand.  There was no outstanding balancedue at April 30, 2005 on this credit facility. The credit facility terminated in July 2005.

 

NOTE 6 -                DiscontinuedOperations

 

On September 2, 2003, theCompany informed The Home Depot, Inc., the customer that purchased more than 99percent of the Company’s wood products, that the Company would no longer dobusiness with Home Depot due to increased difficulties in transacting businesswith Home Depot on a profitable basis. The Company stated to Home Depot that these difficulties included HomeDepot’s prohibition 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 for economicreasons.

 

The Financial AccountingStandards Board’s SFAS No. 144, “Accounting for the Impairment or Disposal ofLong-Lived Assets”, addresses financial accounting and reporting for theimpairment of long-lived assets and for long-lived assets to be disposedof.  SFAS No. 144 supersedes SFAS No.121, “Accounting for the Impairment of Long-Lived Assets and Long-Lived Assetsto be Disposed of,” retains the fundamental provisions of Statement 121 for (a)recognition and measurement of the impairment of long-lived assets to be heldand used and (b) measurement of long-lived assets to be disposed of bysale.  SFAS 144 also supersedes theaccounting and reporting provisions of APB Opinion No. 30, “Reporting andResults of Operations – Reporting the Effects of Disposal of a Segment of aBusiness, and Extraordinary, Unusual and Infrequently Occurring Events andtransactions,” for segments of a business to be disposed of, but retains therequirement of Opinion 30 to report discontinued operations separately fromcontinuing operations and extends that reporting to a component of an entitythat either has been disposed of (by sale, by abandonment, or in a distributionto owners) or is classified as held for sale.

 

The Company hasdiscontinued its wood products business. Consequently, the accompanying financial statements reflect the woodproducts business as discontinued operations in accordance with SFAS No. 144.

 

On July 20, 2005 theCompany closed on the sale of real property located in Tioga County, Pennsylvaniapursuant to a contract entered into on April 15, 2005.  The Company recognized a gain of $185,820from the sale.

 

F-10

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Summarized below are theresults of discontinued operations:

 
| ** **                                           | ** ** | **Year Ended  April 30,** | ** ** |
|------------------------------------------------------|------------|---------------------------|------------|
| ** **                                           | ** ** | **2005**                  | ** ** | **2004** | ** ** |
|                                                 |       |                      |       |   |   |
| Net Sales                                            |       | $                         | —     |   | $ | 139,287 |   |
|                                                 |       |                      |       |   |   |
| (Loss) from  Discontinued Operations                 |       | $                         | —     |   | $ | (134,401 | ) |
|                                                 |       |                      |       |   |   |
| Gain on Disposal  and Sale of Property and Equipment |       | $                         | 185,820    |   | $ | 31,162 |   |

 

The Company is seekingother business opportunities, but there can be no assurance that suchopportunities will be identified, engaged in, or result in any profits.

 

NOTE 7 -                RelatedParty Transactions

 

The Company paid $54,220 in administrative fees to aCompany owned by two of its significant stockholders during the year endedApril 30, 2004.

 

Included in accountspayable and accrued liabilities is $5,000 owed to an officer of the Company foraccounting and administrative services.

 

NOTE 8 -                Stockholders’Equity

 

In April 2004, the boardof directors declared a dividend of $.15 per share that was paid on May 1, 2004to each shareholder of record as of March 22, 2004.

 

F-11

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