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 November 30, 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: 15,000,000
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [ ]
E AND S HOLDINGS, INC.
(A Development Stage Company)
BALANCE SHEETS
NOVEMBER 30, 2005 AND MAY 31, 2005
November 30, 2005 May 31, 2005
----------------- ------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash in bank $ 1,144 $ 136
Accounts receivable 238 2,209
Inventory 23,140 24,281
--------- ---------
Total Current Assets 24,522 26,626
--------- ---------
OTHER ASSETS
Patent - net of amortization of $3,463 at
November 30, 2005, $2,969 at May 31, 2005 9,236 9,730
--------- ---------
Total Assets $ 33,758 $ 36,356
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 34,961 $ 23,549
Accounts payable - stockholder 20,520 18,520
Note payable-stockholder 4,000 0
Accrued wages - officer and stockholder 25,000 25,000
Accrued royalties 46 110
Accrued interest 197 0
Accrued warranty 117 134
--------- ---------
Total Liabilities 84,841 67,313
--------- ---------
STOCKHOLDERS' EQUITY
Common stock - 100,000,000 shares authorized,
15,000,000 outstanding as of November 30 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 (277,182) (257,056)
--------- ---------
Total Stockholders' Equity (51,083) (30,957)
--------- ---------
Total Liabilities and Stockholders' Equity $ 33,758 $ 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 AND SIX MONTHS ENDED NOVEMBER 30, 2005
AND THE PERIOD FROM JUNE 20, 2001 (INCEPTION) TO NOVEMBER 30, 2005
Three Months Six Months June 20, 2001
Ended Ended (Inception) to
November 30, 2005 November 30, 2005 November 30, 2005
----------------- ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
SALES - NET $ 282 $ 1,831 $ 11,432
COST OF SALES 111 1,065 5,463
GROSS PROFIT 171 766 5,969
OPERATING EXPENSES
Wage expense 0 0 116,600
Advertising 23 23 17,272
Legal and accounting 3,561 15,307 91,125
Product development 0 0 814
Bank charges 138 240 626
Rent-stockholder 0 0 11,000
License and permits 0 0 1,943
Amortization 248 495 3,465
Franchise tax 0 0 169
Commission 3 16 75
Royalty expense 2 79 562
Office and administrative expense 0 520 16,361
Travel 1 1,028 3,957
Freight and delivery 0 0 825
Transfer agent expense 2,141 2,141 2,141
Postage 96 0 973
Payroll taxes 0 10 876
Insurance 0 0 1,042
Supplies 0 0 2,589
Telephone 113 227 1,939
Trade shows 0 176 3,890
UCC code and filing expense 280 280 1,180
Dues, subscriptions and membership fees 121 121 821
Warranty expense 5 36 216
--------- --------- ---------
(6,732) (20,699) (280,461)
--------- --------- ---------
NET INCOME (LOSS) FROM OPERATIONS (6,561) (19,933) (274,492)
OTHER INCOME (EXPENSE)
Miscellaneous income 0 0 29
Interest expense 100 193 (2,445)
Bad debts 0 0 (71)
Miscellaneous expense 0 0 (203)
--------- --------- ---------
(100) (193) (2,690)
--------- --------- ---------
Net Income (Loss) before income taxes (6,661) (20,126) (277,182)
Provision for income taxes 0 0 0
--------- --------- ---------
NET INCOME (LOSS) $ (6,661) $ (20,126) $(277,182)
========= ========= ---------
Net income (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 OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2004
Three Months Six Months
Ended Ended
November 30, 2004 November 30, 2004
----------------- -----------------
(Unaudited) (Unaudited)
SALES - NET $ 3,506 $ 5,638
COST OF SALES
Purchases 1,768 2,448
-------- --------
GROSS PROFIT 1,738 3,190
OPERATING EXPENSES
Wage expense 3,000 10,800
Payroll taxes (65) --
Insurance -- --
Commissions 6 18
Freight & delivery (8) 119
Legal and accounting 1,000 8,050
Professional fees -- --
Product development -- --
Bank charges 24 40
Rent - stockholder 1,000 2,500
License and permits -- --
UCC code 150 150
Franchise tax -- --
Workers' compensation -- 89
Amortization 248 495
Advertising 300 903
Royalty expense 234 282
Telephone 45 341
Trade show expense -- 823
Travel and lodging -- --
Office supplies and expense 1,684 4,990
-------- --------
7,618 29,600
NET INCOME (LOSS) FROM OPERATIONS (5,880) (26,410)
OTHER INCOME (EXPENSE)
Interest expense -- --
-------- --------
Net Income (Loss) (5,880) (26,410)
before income taxes
Provision for income taxes -- --
-------- --------
NET INCOME (LOSS) $ (5,880) $(26,410)
======== ========
Net income (loss)
per common share - basic $ (.00) $ (.00)
======== ========
See accompanying notes to financial statements.
3
E AND S HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2005,
AND THE PERIOD FROM JUNE 20, 2001 (INCEPTION) TO NOVEMBER 30, 2005
Three Months Six Months June 20, 2001
Ended Ended (Inception) to
November 30, 2005 November 30, 2005 November 30, 2005
----------------- ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
Cash Flows From Operating Activities
Net Income (Loss) $ (6,661) $ (20,126) $(277,182)
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization 247 494 3,463
Interest added to note payable 0 0 1,296
Decrease (Increase) in accounts receivable 931 1,971 (238)
Decrease (Increase) decrease in inventory 152 1,141 (23,140)
(Decrease) Increase in accounts payable 3,716 11,412 34,961
(Decrease) Increase in accounts payable-stockholder 2,000 2,000 20,520
(Decrease) Increase in accrued wages - officer & stockholder 0 0 114,200
(Decrease) in other accrued taxes (88) -- --
(Decrease) in accrued director's fees 0 0 5,000
(Decrease) Increase in accrued royalties (25) (64) 46
(Decrease)Increase in accrued interest 104 197 197
(Decrease) Increase in accrued rent 0 0 2,500
(Decrease) Increase in accrued warranty (12) (17) 117
--------- --------- ---------
Net Cash From (Used By) Operating Activities 452 (2,992) (118,260)
--------- --------- ---------
Cash Flows Used by Investing Activities
Purchase of patent 0 0 (10,800)
--------- --------- ---------
Cash Flows From Financing Activities
Loans from (repayments to) stockholders 0 4,000 2,704
Proceeds from issuance of common stock,
Net of issuance costs of $2,500 0 0 127,500
--------- --------- ---------
Net Cash Provided By Financing Activities 0 4,000 130,204
--------- --------- ---------
Net Increase (Decrease) In Cash 452 1,008 1,144
Cash At Beginning Of Period 692 136 0
--------- --------- ---------
Cash At End of Period $ 1,144 $ 1,144 $ 1,144
========= ========= =========
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
NOVEMBER 30, 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 $259 during the three-month period ending November 30,
2005. E & S has received no significant revenues since its inception.
As of November 30, 2005, E & S has cash assets of $1,144. However, it also
had accounts receivable of $238 and inventory of $23,140. 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.
Recently, E & S has sent samples of its product to established national
marketing representatives in an effort to secure a national account in a major
retail chain. In addition, in an effort to expand exposure of its product, E & S
has secured a booth for the 2006 National Hardware Show in Las Vegas, Nevada
that runs between May 9th and May 11th.
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 has succeeded in its efforts to list the shares of E & S on the OTC
Bulletin Board. The shares were listed effective December 16, 2005 under the
symbol ESHI.
Over the last three months, E & S has sustained operating losses in the
amount of $6,661. Of this amount, $3,561 involves costs for legal and accounting
fees incurred during the last quarter. As of November 31, 2005, E & S has total
liabilities of $84,841.
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
Reports on Form 8-K - 12/16/2005
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: January 17, 2006 By: /s/ Edward A. Barth
--------------------------------------------
Edward A. Barth, Principal Financial Officer
Date: January 17, 2006 By: /s/ Edward A. Barth
--------------------------------------------
Edward A. Barth, Principal Executive Officer
8