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 August 31, 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
AUGUST 31, 2005 AND MAY 31, 2005
August 31, 2005 May 31, 2005
--------------- ------------
(Unaudited) (Audited)
ASSETS
Current Assets
Cash in bank $ 692 $ 136
Accounts receivable 1,169 2,209
Inventory 23,292 24,281
--------- ---------
25,153 26,626
OTHER ASSETS
Patent - net of amortization of $3,216 at
August 31, 2005 and $2,969 at May 31, 2005 9,483 9,730
--------- ---------
Total Other Assets 9,483 9,730
--------- ---------
Total Assets $ 34,636 $ 36,356
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Accounts payable $ 31,245 $ 23,549
Accounts payable - stockholder 18,520 18,520
Note payable-stockholder 4,000 0
Accrued wages 25,000 25,000
Accrued royalties 71 110
Accrued warranty 129 134
Accrued interest 93 0
--------- ---------
Total Liabilities 79,058 67,313
--------- ---------
STOCKHOLDERS' EQUITY
Common stock - 100,000,000 shares authorized,
15,000,000 outstanding as of August 31 and
and May 31, 2005 at .001 par value 15,000 15,000
Additional paid-in capital 211,099 211,099
Deficit accumulated during the development stage (270,521) (257,056)
--------- ---------
Total Stockholders' Equity (Deficit) (44,422) (30,957)
--------- ---------
Total Liabilities and Stockholders' Equity (Deficit) $ 34,636 $ 36,356
========= =========
Note: The balance sheet at May 31, 2005 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 MONTHS ENDED AUGUST 31, 2005,
THE THREE MONTHS ENDED AUGUST 31, 2004 AND
THE PERIOD FROM JUNE 20, 2001 (INCEPTION) TO AUGUST 31, 2005
Three Months Three Months June 20, 2001
Ended Ended (Inception) to
August 31, 2005 August 31, 2004 August 31, 2005
--------------- --------------- ---------------
(Unaudited) (Unaudited) (Unaudited)
SALES - NET $ 1,549 $ 2,132 $ 11,150
COST OF SALES
Purchases 954 680 5,352
--------- --------- ---------
GROSS PROFIT 595 1,452 5,798
OPERATING EXPENSES
Wage expense 0 7,800 116,600
Advertising 0 603 17,249
Legal and accounting 10,580 7,050 81,058
Professional fees 1,166 0 6,506
Product development 0 0 814
Bank charges 102 16 488
Rent - stockholder 0 1,500 11,000
License and permits 0 0 1,943
Amortization 247 247 3,217
Franchise tax 0 0 169
Workers' compensation 10 89 313
Commission 13 12 71
Royalty expense 77 48 560
Office and administrative expense 520 3,335 16,361
Travel 1,027 0 3,957
Freight and delivery 0 127 825
Postage 80 0 877
Payroll tax 0 65 563
Insurance 0 0 1,042
Supplies 0 0 2,589
Telephone 114 296 1,826
Trade shows 0 823 3,890
UCC code 0 0 900
Membership fees 0 0 700
Warranty expense 31 0 211
--------- --------- ---------
13,967 22,011 273,729
--------- --------- ---------
NET LOSS FROM OPERATIONS (13,372) (20,559) (267,931)
OTHER INCOME (EXPENSE)
Miscellaneous income 0 29 29
Interest expense (93) 0 (2,345)
Bad debts 0 0 (71)
Miscellaneous expense 0 0 (203)
--------- --------- ---------
(93) 29 (2,590)
NET LOSS BEFORE INCOME TAXES (13,465) (20,530) (270,521)
PROVISION FOR INCOME TAXES 0 0 0
--------- --------- ---------
NET LOSS $ (13,465) $ (20,530) $(270,521)
========= ========= =========
NET LOSS PER COMMON SHARE - BASIC $ (.00) $ (.00) $ (.02)
========= ========= =========
See accompanying notes to financial statements.
2
E AND S HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2005
THE THREE MONTHS ENDED AUGUST 31, 2004 AND THE PERIOD FROM JUNE 20, 2001
(INCEPTION) TO AUGUST 31, 2005
Three Months Three Months June 20, 2001
Ended Ended (Inception) to
August 31, 2005 August 31, 2004 August 31, 2005
--------------- --------------- ---------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (13,465) $ (20,530) $(270,521)
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization 247 247 3,216
Interest capitalized 0 0 1,296
Decrease (Increase) in accounts receivable 1,040 (1,562) (1,169)
(Increase) in inventory 989 681 (23,292)
Increase (Decrease) in accounts payable 7,696 7,445 31,245
Increase in accrued wages - stockholder 0 7,800 114,200
Increase in accrued director's fees 0 0 5,000
Increase in accrued interest 93 0 93
Increase in accrued rent 0 1,500 2,500
Increase (Decrease) in accrued taxes 0 (88) 0
Increase (Decrease) in stockholder payable 0 1,000 18,520
Increase (decrease) in accrued royalties (39) 0 71
Increase (Decrease) in accrued warranty (5) 0 129
--------- --------- ---------
Net Cash Used By Operating Activities (3,444) (3,507) (118,712)
--------- --------- ---------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of patent 0 0 (10,800)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from stockholders 4,000 0 14,800
Repayment of loans 0 0 (12,096)
Proceeds from issuance of common stock,
Net of issuance costs of $2,500 0 0 127,500
--------- --------- ---------
Net Cash Provided By Financing Activities 4,000 0 130,204
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH 556 (3,507) 692
CASH AT BEGINNING OF PERIOD 136 3,760 0
--------- --------- ---------
CASH AT END OF PERIOD $ 692 $ 253 $ 692
========= ========= =========
See accompanying notes to financial statements.
3
E AND S HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2005
THE THREE MONTHS ENDED AUGUST 31, 2004 AND THE PERIOD FROM JUNE 20, 2001
(INCEPTION) TO AUGUST 31, 2005
Three Months Three Months June 20, 2001
Ended Ended (Inception) to
August 31, 2005 August 31, 2004 August 31, 2005
--------------- --------------- ---------------
(Unaudited) (Unaudited) (Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Interest paid $ 0 $ 0 $ 680
======== ======== ========
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.
In March of 2003, interest accrued on stockholder loans payable in the
amount of $1,296 was added to the outstanding loan balance when the stockholder
notes due March, 2003 were renewed.
In November of 2004, certain officers, 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
AUGUST 31, 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, 2005.
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 $1,549 during the three-month period ending August 31,
2005. E & S has received no significant revenues since its inception.
As of August 31, 2005, E & S has cash assets of $692. However, it also had
accounts receivable of $1,169 and inventory of $23,292. Because the liquid
assets of the company are low, management is contemplating increasing needed
capital through a private offering of additional shares, although no definite
plans have been formulated at this time. E & S continues 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. 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 has notified its representatives that unless the
representatives commence producing orders for E & S, their contracts will not be
renewed. Management has altered its marketing strategy and now is emphasizing
direct sales to large retail outlets and direct sales through its
website,WWW.PORTABLEPIPEVISE.COM. These moves have been initiated to reduce
costs of sales. 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 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 $13,465. Of this amount, $10,580 involves costs for legal and
accounting fees incurred during the last quarter. As of February 28, 2005, E & S
has total liabilities of $79,058.
There are no off balance sheet arrangements involving E & S at this time.
ITEM 3 - CONTROLS AND PROCEDURES
The management of E & S recognize its responsibility for establishing and
maintaining adequate internal controls over financial reporting for E & S. Due
to the small size of E & S, the company's Chief Executive Officer and Chief
Operating Officer is aware of all matters pertaining to the operations of E & S
Holdings, Inc and has reviewed all aspects of the financial information included
in the company's financial reporting. At the present time, management is of the
opinion that the company's internal controls over financial reporting for the
past fiscal year is adequate. However, management has identified a material
weakness in its procedures in that the small size of management causes a lack of
segregation of duties and limits management's ability to recognize potential
inadequacies of the internal controls over the financial reporting.
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 annual statement for the
year ending May 31, 2005.
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 - 9/21/2005
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: October 16, 2005 By: /s/ Edward A. Barth
--------------------------------------------
Edward A. Barth, Principal Financial Officer
Date: October 16, 2005 By: /s/ Edward A. Barth
--------------------------------------------
Edward A. Barth, Principal Executive Officer
8