**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-QSB**

 

**(MarkOne)**

 

**ý****                                ****QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT 0F1934**

 

**Forthe period ended: January 31, 2005**

 

**o****                                ****TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF1934**

 

**Forthe transition period from**

 

**CommissionFile Number 0-30432**

 

**ARBOR ENTECH CORPORATION**

(Exact name ofsmall business issuer as specified in its charter)

 

| **Delaware**                                                     | ** ** | **22-2335094**                           |
|------------------------------------------------------------------|------------|------------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification Number) |
|                                                             |       |                                     |
| **Route  349, RD 1, Box 1076, Little Marsh, PA**                 |       | **16931**                                |
| (Address of  Principal Executive Offices)                        |       | (Zip Code)                               |

 

Issuer’s TelephoneNumber, including Area Code:   **(570)376-2217**

 

 

(Former name,former address and former fiscal year, if changed since last report)

 

Check whether the issuer(1) filed all reports required to be filed by Section 13 or 15(d) of theExchange Act  during the past 12 months(or for such shorter period that the registrant was required to file suchreports), and (2) has been subject to such filing requirements for the past 90days.

 

ý   Yes     o   No

 

State the number ofshares outstanding of each of the issuer’s classes of common equity as of thelatest practicable date.

 

| **Class**                                | ** ** | **Outstanding at****January 31, 2005** |
|------------------------------------------|------------|---------------------------------------------|
| Common Stock,  par value $.001 per share |       | 7,050,540                                   |

 

Transitional SmallBusiness Format (check one):  Yes   o     No   ý

 

 

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## *** ***

## ***ARBORENTECH CORPORATION***

CONDENSED BALANCE SHEET

JANUARY 31, 2005

(Unaudited)

 

 
| ASSETS                                                                                                 |   |       |    |
|--------------------------------------------------------------------------------------------------------|--------|------------|---------|
|                                                                                                   |   |       |    |
| Current Assets:                                                                                        |   |       |    |
| Cash and Cash  Equivalents                                                                             |   | $          | 289,915 |   |
| Prepaid Expenses                                                                                       |   | 511        |    |
|                                                                                                   |   |       |    |
| Total Current  Assets                                                                                  |   | 290,426    |    |
|                                                                                                   |   |       |    |
| Property and  Equipment - Net                                                                          |   | 28,056     |    |
|                                                                                                   |   |       |    |
|                                                                                                   |   | $          | 318,482 |   |
|                                                                                                   |   |       |    |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                              |   |       |    |
|                                                                                                   |   |       |    |
| Current  Liabilities:                                                                                  |   |       |    |
| Accounts Payable  and Accrued Liabilities                                                              |   | $          | 4,639   |   |
|                                                                                                   |   |       |    |
| Total Current  Liabilities                                                                             |   | 4,639      |    |
|                                                                                                   |   |       |    |
| 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)                                                                           |   | (2,058,648 | )       |
|                                                                                                   |   |       |    |
| Total  Stockholders’ Equity                                                                       |   | 313,843    |    |
|                                                                                                   |   |       |    |
|                                                                                                   |   | $          | 318,482 |   |

 

The accompanying notes are an integral part of the financialstatements.

 

2

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## ***ARBORENTECH CORPORATION***

CONDENSED STATEMENT OFOPERATIONS

(Unaudited)

 

 

 
| ** **                                                               | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                               | ** ** | **January 31,**        | ** ** | **January 31,**       | ** ** |
| ** **                                                               | ** ** | **2005**               | ** ** | **2004**              | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Net Sales                                                                |       | $                      | —     |                  | $          | — |   | $ | — |   | $ | — |   |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Costs and  Expenses:                                                     |       |                   |       |                  |       |   |   |   |   |
| Selling, General  and Administrative Expenses                            |       | 6,024                  |       | 19,478                |       | 25,776 |   | 147,371 |   |
|                                                                     |       | 6,024                  |       | 19,478                |       | 25,776 |   | 147,371 |   |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Loss from  Operations                                                    |       | (6,024                 | )          | (19,478               | )          | (25,776 | ) | (147,371 | ) |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Other Income:                                                            |       |                   |       |                  |       |   |   |   |   |
| Interest                                                                 |       | 255                    |       | 241                   |       | 797 |   | 631 |   |
| Other                                                                    |       | —                 |       | —                |       | 22 |   | — |   |
|                                                                     |       | 255                    |       | 241                   |       | 819 |   | 631 |   |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Loss from  Continuing Operations                                         |       | (5,769                 | )          | (19,237               | )          | (24,957 | ) | (146,740 | ) |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Discontinued  Operations:                                                |       |                   |       |                  |       |   |   |   |   |
| Gain on Disposal  of Property and Equipment from Discontinued Operations |       | —                 |       | 10,401                |       | — |   | 10,401 |   |
| Loss from  Discontinued Operations                                       |       | —                 |       | (56,268               | )          | — |   | (132,841 | ) |
|                                                                     |       | —                 |       | (45,867               | )          | — |   | (122,440 | ) |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Net Loss                                                                 |       | $                      | (5,769     | )                     | $          | (65,104 | ) | $ | (24,957 | ) | $ | (269,180 | ) |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Loss Per Common  Share — Basic:                                     |       |                   |       |                  |       |   |   |   |   |
| Loss from  Continuing Operations                                         |       | $                      | (.00       | )                     | $          | .00 |   | $ | (.00 | ) | $ | (.02 | ) |
| Loss from  Discontinued Operations                                       |       | (.00                   | )          | (.01                  | )          | (.00 | ) | (.02 | ) |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Net Loss                                                                 |       | $                      | (.00       | )                     | $          | (.01 | ) | $ | (.00 | ) | $ | (.04 | ) |
|                                                                     |       |                   |       |                  |       |   |   |   |   |
| Weighted Average  Shares Outstanding                                     |       | 7,050,540              |       | 7,050,540             |       | 7,050,540 |   | 7,050,540 |   |

 

The accompanying notes are an integral part of the financial statements.

 

3

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## *** ***

## ***ARBORENTECH CORPORATION***

CONDENSED STATEMENT OFCASH FLOWS

(Unaudited)

 
| ** **                                                                                               | ** ** | **Nine Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                               | ** ** | **January 31,**       | ** ** |
| ** **                                                                                               | ** ** | **2005**              | ** ** | **2004** | ** ** |
|                                                                                                     |       |                  |       |   |   |
| Cash Flows from  Operating Activities:                                                                   |       |                  |       |   |   |
| (Loss) from  Continuing Operations                                                                       |       | $                     | (24,957    | ) | $ | (146,740 | ) |
| Adjustments to  Reconcile (Loss) from Continuing Operations to Net Cash (Used) by Operating  Activities: |       |                  |       |   |   |
| Depreciation                                                                                             |       | 862                   |       | 4,201 |   |
| Gain on Sale of  Property and Equipment                                                                  |       | —                |       | (10,402 | ) |
| Changes in  Operating Assets and Liabilities:                                                            |       |                  |       |   |   |
| Decrease in  Prepaid Expenses                                                                            |       | —                |       | 18,582 |   |
| (Decrease) in  Accounts Payable and Accrued Liabilities                                                  |       | (13,387               | )          | (28,679 | ) |
|                                                                                                     |       |                  |       |   |   |
| Total  Adjustments                                                                                       |       | (12,525               | )          | (16,298 | ) |
| Net Cash (Used)  by Operating Activities                                                                 |       | (37,482               | )          | (163,038 | ) |
|                                                                                                     |       |                  |       |   |   |
| Cash Flows from  Investing Activities:                                                                   |       |                  |       |   |   |
| Proceeds from  Sale of Property and Equipment                                                            |       | —                |       | 18,000 |   |
|                                                                                                     |       |                  |       |   |   |
| Net Cash  Provided by Investing Activities                                                               |       | —                |       | 18,000 |   |
|                                                                                                     |       |                  |       |   |   |
| Cash Flows from  Financing Activities:                                                                   |       |                  |       |   |   |
| Proceeds of Loans  to Related Parties                                                                    |       | 1,019,850             |       | 40,500 |   |
| Dividends Paid                                                                                           |       | (1,057,581            | )          | — |   |
|                                                                                                     |       |                  |       |   |   |
| Net Cash  Provided (Used) by Financing Activities                                                        |       | (37,731               | )          | 40,500 |   |
|                                                                                                     |       |                  |       |   |   |
| Net Cash  Provided by Discontinued Operations                                                            |       | —                |       | 167,621 |   |
|                                                                                                     |       |                  |       |   |   |
| Increase  (Decrease) in Cash and Cash Equivalents                                                        |       | (75,213               | )          | 63,083 |   |
| Cash and Cash  Equivalents — Beginning of Period                                                    |       | 365,128               |       | 302,287 |   |
|                                                                                                     |       |                  |       |   |   |
| Cash and Cash  Equivalents — End of Period                                                          |       | $                     | 289,915    |   | $ | 365,370 |   |
|                                                                                                     |       |                  |       |   |   |
| Supplemental  Cash Flow Information:                                                                     |       |                  |       |   |   |
| Cash Paid for  Interest                                                                                  |       | $                     | —     |   | $ | — |   |
|                                                                                                     |       |                  |       |   |   |
| Cash Paid for  Income Taxes                                                                              |       | $                     | —     |   | $ | — |   |
|                                                                                                     |       |                  |       |   |   |
| Supplemental  Disclosure of Non-Cash Financing Activities:                                               |       |                  |       |   |   |
| Accrued Interest  on Related Parties Loans Receivable Credited to Additional Paid-In Capital             |       | $                     | —     |   | $ | 51,402 |   |
|                                                                                                          |            |                       |            |  |  |  |  |  |  |

 

The accompanying notes are an integral part of the financialstatements.

 

4

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## *** ***

## ***ARBORENTECH CORPORATION***

NOTES TO CONDENSEDFINANCIAL STATEMENTS

JANUARY 31, 2005

(Unaudited)

 

 

 

NOTE 1 -                UnauditedInterim Financial Statement

 

                                Inthe opinion of the Company’s management, the accompanying unaudited condensedfinancial statements contain all adjustments (consisting of only normalrecurring adjustments) necessary to present fairly the information set forththerein.  These financial statements arecondensed and therefore do not include all of the information and footnotesrequired by accounting principles generally accepted in the United States ofAmerica for complete financial statements.

 

                                Resultsof operations for interim periods are not necessarily indicative of the resultsof operations for a full year.

 

 

NOTE 2 -                Propertyand Equipment

 
| Property and  equipment consists of the following: |   |   |   |
|----------------------------------------------------|--------|--------|--------|
|                                               |   |   |   |
| Land                                               |   | $      | 22,058 |   |
| Building and  Improvements                         |   | 61,114 |   |
|                                               |   | 83,172 |   |
| Less:  Accumulated Depreciation                    |   | 55,116 |   |
|                                               |   | $      | 28,056 |   |

 

                                Depreciationamounted to $862 and $4,201 for the nine months ended January 31, 2005 and2004, respectively.

 

                                Theland and building are collateralized by a mortgage held by the Company’sSecretary/Treasurer (see Note 3).

 

 

NOTE 3 -                Commitmentsand Contingencies

 

                                Lineof Credit

 

                                TheCompany has a revolving credit facility with its Secretary/Treasurer, securedby a mortgage of the Company’s real property located in Tioga County, Pennsylvania.  This revolving line of credit provides forthe extension of credit in the aggregate principal amount of $100,000 withinterest at 11% per annum.  Principal andinterest are payable on demand.  Therewas no balance due at January 31, 2005 on this credit facility.

 

 

NOTE 4 -                NotesReceivable — Related Party

 

                                Notesreceivable in the amount of $1,019,850 were paid in full in May 2004.

 

5

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ARBOR ENTECH CORPORATION

NOTES TO CONDENSEDFINANCIAL STATEMENTS

JANUARY 31, 2005

(Unaudited)

 

 

NOTE 5 -                Dividends

 

                                OnMay 1, 2004, the board of directors paid a dividend of $.15 per share for atotal of $1,057,581 to each shareholder of record as of March 22, 2004.

 

 

NOTE 6 -                DiscontinuedOperations

 

                                OnSeptember 2, 2003, the Company informed The Home Depot, Inc., the customer thatpurchased more than 99 percent of the Company’s wood products, that the Companywould no longer do business with Home Depot due to increased difficulties intransacting business with Home Depot on a profitable basis.  The Company stated to Home Depot that thesedifficulties included Home Depot’s prohibition against price increases despiteincreases in the Company’s increased costs of production, a diminution in HomeDepot territories the Company was allowed to sell products to, and Home Depot’sdemands regarding returns of ordered products that the Company was unwilling toaccede to for economic reasons.

 

The Financial Accounting Standards Board’s SFAS No. 144, “Accountingfor the Impairment or disposal of Long-Lived Assets”, addresses financialaccounting and reporting for the impairment of long-lived assets and forlong-lived assets to be disposed of. SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment ofLong-Lived Assets and Long-Lived Assets to be Disposed of,” retains thefundamental provisions of Statements 121 for (a) recognition and measurement ofthe impairment of long-lived assets to be held and used and (b) measurement oflong-lived assets to be disposed of by sale. SFAS 144 also supersedes the accounting and reporting provisions of APBOpinion No. 30, “Reporting and Results of Operations — Reporting the Effects ofDisposal of a Segment of a Business, and Extraordinary, Unusual andInfrequently Occurring Events and Transaction,” for segments of a business tobe 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.

 

                                TheCompany has discontinued its wood products business.  Consequently, the accompanying financialstatements reflect the wood products business as discontinued operations inaccordance with SFAS No. 144.

 

                                Summarizedbelow are the results of discontinued operations:

 
| ** **                         | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                         | ** ** | **January 31,**        | ** ** | **January 31,**       | ** ** |
| ** **                         | ** ** | **2005**               | ** ** | **2004**              | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net Sales                          |       | $                      | —     |                  | $          | — |   | $ | — |   | $ | 571,337 |   |
|                               |       |                   |       |                  |       |   |   |   |   |
| Loss from  Discontinued Operations |       | $                      | —     |                  | $          | (56,268 | ) | $ | — |   | $ | (132,841 | )  |

 

                                TheCompany is seeking other business opportunities, but there can be no assurancethat such opportunities will be identified, engaged in, or result in any profits.

 

6

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Item 2 -                   Management’sDiscussion and Analysis of Financial Condition and Results of Operations

 

                                SafeHarbor Statement under the Private Securities Litigation Reform Act of 1995

 

                                Thestatements contained in this report which are not historical fact are“forward-looking statements” that involve various important assumptions, risks,uncertainties and other factors which could cause the Company’s actual resultsfor 2005 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

 

                                Wewere a wood products Company which has been in business since 1980.  Our business has fluctuated over theyears.  We were almost wholly dependenton sales to Home Depot.

 

                                OnSeptember 2, 2003, the Company informed The Home Depot, Inc., the customer thatpurchased more than 99 percent of the Company’s wood products, that the Companywould no longer do business with Home Deport due to increased difficulties intransacting business with Home Depot on a profitable basis.  The Company stated to Home Depot that thesedifficulties included Home Depot’s prohibition against price increases despiteincreases in the Company’s increased costs of production, a diminution in theHome Depot territories the Company was allowed to sell product to, and HomeDepot’s demands regarding returns of ordered products that the Company wasunwilling to accede to for economic reasons.

 

                                TheCompany has discontinued its wood products business.  The Company intends to seek other businessopportunities, but there can be no assurance that such opportunities will beidentified, engaged in, or result in any profits.

 

                                Resultsof operations

 

                                **Quarter ended January 31, 2005 compared to the quarterended January 31, 2004.**

 

                                Sincethe Company discontinued its wood products business there were no sales fromcontinuing operations during the quarters ended January 31, 2005 and 2004.

 

                                Selling,general and administrative expenses were approximately $6,000 for the quarterended January 31, 2005, a decrease of approximately $13,000 or 68% overselling, general and administrative expenses of approximately $19,000 for thequarter ended January 31, 2004.  Thisdecrease is a direct result of the Company’s discontinued operations andcurtailment of virtually all operating expenses.

 

                                Arbor’snet loss decreased from approximately $65,000 for the quarter ended January 31,2004 to a net loss of approximately $6,000 for the quarter ended January 31,2005.  This was a decrease ofapproximately $59,000 or 91%.

 

7

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**                                Ninemonths ended January 31, 2005 compared to the nine months ended****January 31, 2004**

 

                                Sincethe Company discontinued its wood products business there were no sales fromcontinuing operations during the nine months ended January 31, 2005 and 2004.

 

                                Selling,general and administrative expenses were approximately $26,000 for the ninemonths ended January 31, 2005, a decrease of approximately $121,000 or 82% overselling, general and administrative expenses of approximately $147,000 for thenine months ended January 31, 2004.  Thisdecrease is a direct result of the Company’s discontinued operations andcurtailment of virtually all operating expenses.

 

                                Arbor’snet loss decreased from approximately $269,000 for the nine months endedJanuary 31, 2004 to approximately $25,000 for the nine months ended January 31,2005.  This was a decrease ofapproximately $244,000 or 91%.

 

                                **Discontinued Operations**

 

                                OnSeptember 2, 2003, the Company informed The Home Depot, Inc., the customer thatpurchased more than 99 percent of the Company’s wood products, that the Companywould no longer do business with Home Depot due to increased difficulties intransacting business with Home Depot on a profitable basis.  The Company stated to Home Depot that thesedifficulties included Home Depot’s prohibition against price increases despiteincreases in the Company’s increased costs of production, a diminution in theHome Depot territories the Company was allowed to sell product to, and HomeDepot’s demands regarding returns of ordered products that the Company wasunwilling to accede to for economic reasons.

 

                                Netsales of the wood products business were $0 and $0 for the quarters endedJanuary 31, 2005 and 2004, respectively. The net loss from discontinued operations was $0 and $56,000 for thequarters ended January 31, 2005 and 2004, respectively.

 

                                Liquidityand capital resources

 

                                Inprior years, Arbor’s working capital requirements have been met primarily fromsales generated by its discontinued wood products business.  At January 31, 2005 we had working capital ofapproximately $286,000.

 

                                Asat January 31, 2005, we had cash and cash equivalents of approximately$290,000, which represented 91% of total assets.  Arbor believes it has adequate workingcapital to fund its operations for at least the next 12 months.

 

                                Netcash used in operating activities amounted to approximately $37,000 for thenine months ended January 31, 2005.  Lossfrom continuing operations of $25,000 for the nine months ended January 31,2005 was increased by decreases in accounts payable of $13,000.

 

                                Netcash used in financing activities was approximately $38,000 for the nine monthsended January 31, 2005 as a result of related party loan repayments of$1,020,000 offset by dividend payments of $1,058,000.

 

8

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Item 3Controlsand Procedures

 

Our management,with the participation of our Chief Executive Officer and Chief FinancialOfficer, evaluated the effectiveness of our disclosure controls and procedures(as defined in Rule 13a-15(e) or Rule 15a-15(e) of the Exchange Act) as of theend of the period covered by this report. Based on that evaluation, our Chief Executive Officer and ChiefFinancial Officer concluded that our disclosure controls and procedures as of theend of the period covered by this report were effective in ensuring thatinformation required to be disclosed by us in reports that we file or submitunder the Exchange Act is recorded, processed, summarized and reported withinthe time periods specified in the Securities and Exchange Commission’s rulesand forms.

 

There was nochange in our internal control over financial reporting (as defined in Rule13a-15(f) of the Exchange Act) that occurred during the fiscal quarter to whichthis report relates that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

 

PART II - OTHERINFORMATION

 

Item 6.  Exhibits and Reports on Form 8-K

 

(a) The followingexhibits are filed with this report:

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                          |
|---------------------|------------|-----------------------------------------------------------------------------------------------------|
|                |       |                                                                                                |
| Exhibit 31.1        |       | Certification of Chief  Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|                |       |                                                                                                |
| Exhibit 31.2        |       | Certification of Chief  Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|                |       |                                                                                                |
| Exhibit 32.1        |       | Certification of Chief  Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|                |       |                                                                                                |
| Exhibit 32.2        |       | Certification of Chief  Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

 

(b) None

 

SIGNATURES

 

In accordance with the requirementsof the Exchange Act, the registrant caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

 
|                        | ARBOR ENTECH  CORPORATION |                    |
|-----------------------------|---------------------------|-------------------------|
|                        | Registrant                |                    |
|                        |                      |
|                        | By:                       | /s/ Harvey Houtkin      |   |
|                        |                      | Harvey Houtkin          |
|                        |                      | President               |
|                        |                      |
|                        |                      |
|                        | By:                       | /s/ Mark Shefts         |   |
|                        |                      | Mark Shefts             |
|                        |                      | Chief Financial Officer |
|                        |                      |
| Dated:  March 16, 2005 |                      |
|                             |                           |                         |  |  |  |  |

 

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