UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended February 28, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to _____________
Commission file number 000-50101
E and S Holdings, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 91-2135425
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5046 E. Boulevard, NW, Canton, OH 44718
(Address of principal executive officer)
(330) 966-8120
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,500,000
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [ ]
E AND S HOLDINGS, INC.
(A Development Stage Company)
BALANCE SHEETS
FEBRUARY 28, 2005 AND MAY 31, 2004
February 28, 2005 May 31, 2004
----------------- ------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash in bank $ 313 $ 3,760
Accounts receivable 1,949 0
Inventory 25,898 28,893
--------- ---------
Total Current Assets 28,160 32,653
--------- ---------
OTHER ASSETS
Patent - net of amortization of $2,721 at
February 28, 2005 and $1,979 at May 31, 2004 9,978 10,720
--------- ---------
Total Assets $ 38,138 $ 43,373
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 18,340 $ 4,555
Accounts payable - stockholder 17,500 16,500
Accrued wages - stockholder 25,000 102,400
Accrued payroll taxes 0 379
Accrued other taxes 0 88
Accrued directors' fees 0 5,000
Accrued royalties 156 0
Accrued rent - stockholder 0 1,000
--------- ---------
Total Liabilities 60,996 129,922
--------- ---------
STOCKHOLDERS' EQUITY
Common stock - 100,000,000 shares authorized,
.001 par value, 1,500,000 outstanding at
February 28, 2005 and May 31, 2004 1,500 1,500
Additional paid-in capital 224,599 127,899
Deficit accumulated during the development stage (248,957) (215,948)
--------- ---------
Total Stockholders' Equity (22,858) (86,549)
--------- ---------
Total Liabilities and Stockholders' Equity $ 38,138 $ 43,373
========= =========
Note: The balance sheet at May 31, 2004 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.
See accompanying notes to financial statements.
1
E AND S HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2004
AND THE PERIOD FROM JUNE 20, 2001 (INCEPTION) TO FEBRUARY 28, 2005
Three Months Nine Months June 20, 2001
Ended Ended (Inception) to
February 28, 2005 February 28, 2005 February 28, 2005
----------------- ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
SALES - NET $ 1,194 $ 6,761 $ 7,255
COST OF SALES
Purchases 547 2,995 3,191
--------- --------- ---------
GROSS PROFIT 647 3,766 4,064
OPERATING EXPENSES
Wage expense 0 10,800 115,600
Payroll taxes 19 19 582
Insurance 0 0 519
Commissions 40 59 59
Freight and delivery 393 441 525
Legal and accounting 4,041 12,091 65,398
Professional fees 0 0 5,340
Product development 0 0 814
Bank charges 14 64 355
Rent - Stockholder 0 2,500 12,000
License and permits 0 0 1,263
UCC code 0 150 900
Franchise tax 50 50 150
Workers' compensation 19 99 312
Amortization 247 742 2,722
Advertising 0 903 15,959
Marketing 958 958 958
Royalty expense 28 310 354
Telephone 62 403 1,480
Trade show expense 200 1,023 3,890
Travel and lodging 0 0 2,930
Office supplies and expense 1,175 6,163 18,659
--------- --------- ---------
7,246 36,775 250,769
--------- --------- ---------
NET INCOME (LOSS) FROM OPERATIONS (6,599) (33,009) (246,705)
OTHER INCOME (EXPENSE)
Interest expense 0 0 (2,252)
--------- --------- ---------
NET INCOME (LOSS) BEFORE INCOME TAXES (6,599) (33,009) (248,957)
PROVISION FOR INCOME TAXES 0 0 0
--------- --------- ---------
NET INCOME (LOSS) $ (6,599) $ (33,009) $(248,957)
========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE - BASIC $ (.00) $ (.02) $ (.22)
========= ========= =========
See accompanying notes to financial statements.
2
E AND S HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 29, 2004
Three Months Nine Months
Ended Ended
February 29, 2004 February 29, 2004
----------------- -----------------
(Unaudited) (Unaudited)
SALES - NET $ 0 $ 0
COST OF SALES
Purchases 0 0
-------- --------
GROSS PROFIT 0 0
OPERATING EXPENSES
Advertising 924 1,449
Legal and accounting 3,403 10,272
Professional fees 3,061 3,061
Bank charges 17 93
Rent - stockholder 500 500
License and permits 25 375
Marketing expenses 8,139 8,139
Amortization 247 742
Franchise tax 50 50
Insurance 10 20
Telephone, fax, and internet 374 374
Travel 400 400
Meals and entertainment 347 347
Office supplies and expense 1,797 2,514
-------- --------
19,294 28,336
-------- --------
NET LOSS FROM OPERATIONS (19,294) (28,336)
OTHER INCOME (EXPENSE)
Interest expense 0 (680)
-------- --------
NET LOSS BEFORE INCOME TAXES (19,294) (29,016)
PROVISION FOR INCOME TAXES 0 0
-------- --------
NET LOSS $(19,294) $(29,016)
======== ========
NET LOSS PER COMMON SHARE - BASIC $ (.01) $ (.02)
======== ========
See accompanying notes to financial statements.
3
E AND S HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2005
AND FEBRUARY 29, 2004, AND THE PERIOD
FROM JUNE 20, 2001 (INCEPTION) TO FEBRUARY 28, 2005
Nine Months Nine Months June 20, 2001
Ended Ended (Inception) to
February 28, 2005 February 29, 2004 February 28, 2005
----------------- ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (33,009) $ (29,016) $(248,957)
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization 742 742 2,722
(Increase) in accounts receivable (1,949) 0 (1,949)
(Increase) Decrease in inventory 2,995 0 (25,898)
(Increase) in Deposits 0 (6,525) 0
(Increase) in prepaid expenses 0 (1,975) 0
Increase (Decrease) in accounts payable 13,785 (23,720) 18,340
Increase in accrued wages - officer and stockholder 11,800 0 114,200
(Decrease) in accrued payroll taxes (379) 0 0
Increase in accrued director's fees 0 0 5,000
(Decrease) in accrued other taxes (88) 0 0
Increase (Decrease)in accrued interest 0 (276) 0
Increase (Decrease) in accrued rent 1,500 (4,500) 2,500
Increase in accrued royalties 156 0 156
Increase (Decrease) in stockholder payable 1,000 16,000 17,500
--------- --------- ---------
Net Cash From (Used By) Operating Activities (3,447) (49,270) (116,387)
--------- --------- ---------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of patent 0 0 (10,800)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from (repayments to) stockholders 0 (12,096) 0
Proceeds from issuance of common stock,
Net of issuance costs of $2,500 0 100,000 127,500
--------- --------- ---------
Net Cash Provided By Financing Activities 0 87,904 127,500
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH (3,447) 38,634 313
CASH AT BEGINNING OF PERIOD 3,760 86 0
--------- --------- ---------
CASH AT END OF PERIOD $ 313 $ 38,720 $ 313
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Interest paid $ 0 $ 0 $ 956
========= ========= =========
Taxes paid $ 0 $ 0 $ 0
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
On September 27, 2001, 700,000 shares of stock were issued at a value of
$1,899 in return for contribution of the patent option. The patent was
subsequently purchased for $10,800 in March 2002.
During the three months ended November 30, 2004, certain officers and
directors and shareholders of the Company forgave accrued wages, director's
fees, and rents totaling $96,700. These transactions are reflected as increases
to paid-in capital.
See accompanying notes to financial statements.
4
E AND S HOLDINGS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2005
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form
10-QSB and item 310(b) of Regulation S-B. Accordingly, they do not include all
the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the financial statements and footnotes thereto
included in the E and S Holdings, Inc. Form 10-KSB filing for the year ended May
31, 2004.
NOTE B - DEVELOPMENT STAGE COMPANY
E and S Holdings, Inc. (a Nevada corporation) has been in the development
stage since its formation on June 20, 2001. It is primarily engaged in the
development and marketing of new products on which it holds the patent.
Realization of a major portion of its assets is dependent upon the Company's
ability to successfully develop and market the patent, meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
5
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
E & S Holdings (E & S) is a developmental stage company that has received
revenues of approximately $1,194 during the three-month period ending February
28, 2005. E & S has received no significant revenues since its inception.
As of February 28, 2005, E & S has cash assets of $313. However, it also
had accounts receivable of $1,949 and inventory of $25,898. Because E & S' cash
balance is extremely low, the management of E & S is contemplating the sale of
additional shares of common stock of the company through a private placement
during the next twelve months. E & S has begun to receive small orders for its
Portable Pipe Vise. In order to promote additional sales, management has
continued to do direct mailing as funds permit. As a result of the direct
mailing, E & S has, over the last month, established a new major retail account
and has received orders from that account for 144 units. E & S has previously
secured the services of seven independent sales representatives in various parts
of the United States to promote the sale of its Portable Pipe Vise.
Unfortunately, management efforts to obtain dealers/representatives have not
produced any substantial sales. Management is currently notifying its
representatives that unless the representatives commence producing orders for E
& S, their contracts will not be renewed.
The Portable Pipe Vise is currently placed in the catalog of a nationally
recognized tool retailer and in the Black Book of Tools catalog. Management is
currently working on multiple rounds of direct mailing to retail outlets for
direct sales of the Portable Pipe Vise through the company. It is also seeking
contacts to make direct sales to multiple outlet retail establishments so that
volume orders can be obtained. E & S is maintaining its merchant website to
permit direct sales to the public at www.portablepipevise.com.
Management is attempting to focus on specific industries in which the
Portable Pipe Vise would be most useful. Therefore, its first marketing effort
is focused toward the welding equipment suppliers. Its second round of direct
marketing will focus on plumbing suppliers and retailers of heating, ventilating
and air conditioning supplies. Management intends to increase its marketing
efforts at such time as additional funds are made available through sales of the
product.
E & S continues in its efforts to list the shares of E & S on the OTC
Bulletin Board. It is currently consulting with a new broker/dealer in order to
establish a market and obtain clearance from NASD for trading.
Over the last three months, E & S has sustained operating losses in the
amount of $6,599. Of this amount, $4,041 involves costs for legal and accounting
fees incurred during the last quarter. As of February 28, 2005, E & S has total
liabilities of $60,996.
There are no off balance sheet arrangements involving E & S at this time.
ITEM 3 - CONTROLS AND PROCEDURES
Due to the fact that E & S is a corporation in its development stages and
has only two individuals involved in all facets of E & S, it is the conclusion
of E & S' principal executive officer that E & S' disclosure controls and
procedures are effective, since all significant matters are within the personal
knowledge of E & S' principal executive officer.
During this reporting, there were no significant changes in E & S internal
controls or in other factors that could significantly affect these controls
subsequent with the date that the effectiveness of E & S' internal controls were
evaluated by its principal executive officer.
6
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
To the best of its knowledge, management of E & S is not aware of any legal
proceedings in which E & S is currently involved.
ITEM 2 - CHANGES IN SECURITY
There are no changes in security since the last quarterly statement for the
quarter ending November 30, 2004.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
There are no defaults upon any senior securities.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no submissions of any matters to security holders to vote
upon during this reporting period.
ITEM 5 - OTHER INFORMATION
There are no items of information required to be disclosed pursuant to this
item at this time.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. The following are filed as Exhibits to this quarter of the report. The
numbers refer to the exhibit table of Item 601 of regulation S-K: Reference is
hereby made to the exhibits contained in the registration statement (Form SB-2)
filed by E & S.
Exhibit 31 - Certification Pursuant to Section 302 of the Sarbanes Oxley
Act of 2002
Exhibit 32 - Certification Pursuant to Section 906 of the Sarbanes Oxley
Act of 2002
B. Reports on Form 8-K - None
7
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
E & S HOLDINGS, INC.
Date: April 12, 2005 By: /s/ Edward A. Barth
--------------------------------------------
Edward A. Barth, Principal Financial Officer
Date: April 12, 2005 By: /s/ Edward A. Barth
--------------------------------------------
Edward A. Barth, Principal Executive Officer
8