U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarter ended March 31, 2007
[ ] TRANSITION UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-23965
ENTHRUST FINANCIAL SERVICES, INC.
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(Exact name of small business issuer in its charter)
DELAWARE 84-1374481
------------------------ -----------------------------
(State of incorporation) (I.R.S. Employer File Number)
47 SCHOOL AVENUE, CHATHAM, NEW JERSEY 07928
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(Address of principal executive offices)
(973) 635-4047
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(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's common equity as
of the last practicable date: There were a total of 2,057,771 shares of the
issuer's common stock, par value $.001 per share, outstanding as of April 26,
2007.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
ENTHRUST FINANCIAL SERVICES, INC.
FORM 10-QSB
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of March 31, 2007 (unaudited) and
December 31, 2006 3
Unaudited Statements of Operations Cumulative During the
Development Stage (August 1, 2005 to March 31, 2007) and
for the three months ended March 31, 2007 and 2006 4
Unaudited Statements of Cash Flows Cumulative During the
Development Stage (August 1, 2005 to March 31, 2007) and
for the three months ended March 31, 2007 and 2006 5
Notes to the Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Controls and Procedures 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits 11
SIGNATURES 12
EXHIBIT INDEX 13
FORWARD-LOOKING STATEMENTS
Certain statements made in this Quarterly Report on Form 10-QSB are
"forward-looking statements" regarding the plans and objectives of management
for future operations and market trends and expectations. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. The forward-looking statements included herein are
based on current expectations that involve numerous risks and uncertainties. Our
plans and objectives are based, in part, on assumptions involving the continued
expansion of our business. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive and
market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
Although we believe that our assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included in this report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our objectives and plans will be achieved. We undertake
no obligation to revise or update publicly any forward-looking statements for
any reason. The terms "we", "our", "us", or any derivative thereof, as used
herein refer to Enthrust Financial Services, Inc., a Delaware corporation, and
its predecessors.
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PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements:
ENTHRUST FINANCIAL SERVICES, INC
(A Development Stage Company)
BALANCE SHEETS
AS OF AS OF
MARCH 31, 2007 DECEMBER 31,
ASSETS (UNAUDITED) 2006
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Cash $ 13,876 $ 16,867
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TOTAL ASSETS $ 13,876 $ 16,867
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable & accrued expenses $ 9,925 $ 23,734
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Total liabilities 9,925 23,734
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SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock; $0.001 par value, 1,000,000
authorized, none issued - -
Common stock, $0.001 par value; 100,000,000 shares
authorized, 2,057,771 shares issued and outstanding 2,058 2,058
Additional paid-in capital 8,179,998 8,154,998
Accumulated deficit (8,062,548) (8,062,548)
Deficit accumulated during the development period (115,557) (101,375)
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Total shareholders' equity (deficit) 3,951 (6,867)
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,876 $ 16,867
=========== ===========
The accompanying notes are an integral part of these financial statements.
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ENTHRUST FINANCIAL SERVICES, INC
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
Cumulative During
the Development
Stage Three Months Ended
August 1, 2005 to March 31,
March 31, 2007 2007 2006
------------------ ----------- ------------------
REVENUES $ - $ - $ -
----------- ----------- -----------
Expenses
Compensation expense 15,600 - -
Professional fees 78,529 7,500 14,535
Filing fees 20,875 6,657 4,474
Other expenses 553 25 -
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Total expenses 115,557 14,182 19,009
----------- ----------- -----------
Net loss $ (115,557) $ (14,182) $ (19,009)
=========== =========== ===========
Basic and diluted loss per share $ (0.01) $ (0.01)
----------- -----------
Basic and diluted weighted average
shares outstanding 2,057,771 2,057,771
=========== ===========
The accompanying notes are an integral part of these financial statements.
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ENTHRUST FINANCIAL SERVICES, INC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
Cumulative During
the Development
Stage Three Months Ended
August 1, 2005 to March 31,
March 31, 2007 2007 2006
------------------ ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(115,557) $ (14,182) $ (19,009)
Non-cash items:
Common stock issued for services 22,000 - -
Increase (decrease) in:
Accounts payable and accrued expenses 9,925 (13,809) 9,354
Net cash provided (used) by operating activities (83,632) (27,991) (9,655)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Additional paid-in-capital contributions 54,500 25,000 -
--------- --------- ---------
Net cash provided (used) by financing activities 54,500 25,000 -
--------- --------- ---------
Decrease in cash (29,132) (2,991) (9,655)
Cash, at beginning of period 43,008 16,867 34,673
--------- --------- ---------
Cash, at end of period $ 13,876 $ 13,876 $ 25,018
========= ========= =========
SUPPLEMENTAL INFORMATION
Cash Paid for Income Taxes $ - $ - $ -
Cash Paid for Interest $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
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ENTHRUST FINANCIAL SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2007
(unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
We were organized on November 8, 1996 under the laws of the State of Colorado
initially as "Centennial Banc Share Corporation". We subsequently changed our
name to "Entrust Financial Services, Inc." on April 6, 2001 ("Entrust
Colorado"). On December 4, 2006, Entrust Colorado's Board of Directors approved
the merger of Entrust Colorado with and into Enthrust Financial Services, Inc.
("EFS" or the "Company"), a corporation organized on December 20, 2006 under the
laws of the State of Delaware solely for the purpose of the merger.
Effective January 11, 2007, Entrust Colorado was merged with and into EFS which
became the surviving corporation (the "Delaware Merger") and as a result, (i)
every issued and outstanding share of Entrust Colorado common stock was
automatically converted into the right to receive one share of EFS common stock;
(ii) our name changed to Enthrust Financial Services, Inc.; and (iii) we adopted
the EFS's capital structure which consists of 100,000,000 shares of common
stock, par value $0.001 per share, and 1,000,000 shares of blank check preferred
stock, par value $0.001 per share.
Prior to the Delaware Merger, effective September 18, 2006, Entrust Colorado
completed a one-for twenty eight reverse split of its issued and outstanding
shares of common stock. As a result, the number of issued and outstanding shares
of Entrust Colorado common stock was reduced from 57,612,295 to 2,057,771 shares
(the "Reverse Split").
Unless otherwise stated, all share and per share information in the financial
statements and description below is presented as if the Reverse Split and
Delaware Merger took place at the beginning of all periods presented.
We were initially formed for the purpose of developing and maintaining a
mortgage brokerage business. In April 1999, we acquired Entrust Mortgage, Inc.,
a mortgage banking business which became our wholly-owned subsidiary and was our
primary business until July 31, 2005 ("Entrust Mortgage"). Entrust Mortgage
engaged primarily in the origination and wholesale purchase of non-conforming
residential mortgage loans in thirty-eight states.
On July 31, 2005, Entrust Mortgage was sold to BBSB, LLC in exchange for the
cancellation of all obligations owed by us and Entrust Mortgage to BBSB and the
assumption of certain of our third party obligations (the "Entrust Mortgage
Sale").
Our stockholders did not receive any consideration in the Entrust Mortgage Sale,
but stockholders of record on July 25, 2005, received a one time aggregate
dividend from the Entrust Stock Sale (as described below) of $400,000, or
approximately $0.153 per share (pre-split). The remaining $100,000 of the
consideration paid by the Entrust Stock Purchasers (as described below) was
reserved by us to satisfy our then existing and future liabilities and to pay
the expenses related to the Entrust Stock Sale.
Following the Entrust Mortgage Sale, we had no operations. Since August 1, 2005,
our purpose has been to serve as a vehicle to acquire an operating business and
we are currently considered a "shell" company inasmuch as we are not generating
revenues, do not own an operating business, and have no specific plan other than
to engage in a merger or acquisition transaction with a yet-to-be identified
company or business. We have no employees and no material assets. Accordingly,
we are considered to be a development stage entity beginning on August 1, 2005.
As of August 6, 2005, our executive offices were relocated to Chatham, New
Jersey.
Due to our lack of financial resources and accumulated deficit, there is doubt
about our ability to continue as a going concern. We are seeking to acquire a
business and currently considered a "blank check" company in as much as we are
not generating revenues, do not own an operating business and have no specific
business plan other than to engage in a merger or acquisition transaction with a
yet-to-be identified company or business. We have no employees and no material
assets. Administrative services are currently being provided by an entity
controlled by an officer of the Company at no charge.
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ENTHRUST FINANCIAL SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2007
(unaudited)
NOTE 2 - BASIS OF PRESENTATION
The Company's financial statements have been presented on the basis that the
Company will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The
Company incurred a loss from continuing operations during the three months ended
March 31, 2007 of $14,182 and there are no prospects of it generating revenue in
the near term. There is substantial doubt about the Company's ability to
continue operating as a going concern. The Company's present material
commitments consist of professional and administrative fees and expenses
associated with the preparation of its filings with the Securities and Exchange
Commission (the "SEC") and other regulatory requirements.
The interim financial information as of March 31, 2007 and for the three month
periods ended March 31, 2007 and 2006 has been prepared without audit, pursuant
to the rules and regulations of the SEC. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although we believe that the disclosures
made are adequate to provide for fair presentation. These financial statements
should be read in conjunction with the financial statements and the notes
thereto, included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2006, as filed with the SEC.
In the opinion of management, all adjustments (which include normal recurring
adjustments) necessary to present a fair statement of financial position as of
March 31, 2007, and results of operations and cash flows for the three months
ended March 31, 2007 and 2006, as applicable, have been made. The results of
operations for the three months ended March 31, 2007 are not necessarily
indicative of the operating results for the full fiscal year or any future
periods.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's accounting policies are in accordance with accounting principles
generally accepted in the United States of America. Outlined below are those
policies considered particularly significant.
(a) USE OF ESTIMATES:
In preparing financial statements in accordance with accounting principles
generally accepted in the United States of America, management makes certain
estimates and assumptions, where applicable, that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. While actual results could
differ from those estimates, management does not expect such variances, if any,
to have a material effect on the financial statements.
(b) EARNINGS (LOSS) PER SHARE:
Basic earnings (loss) per share has been computed on the basis of the weighted
average number of common shares outstanding during each period presented
according to the provisions of SFAS No. 128 "EARNINGS PER SHARE".
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ENTHRUST FINANCIAL SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2007
(unaudited)
NOTE 4 - STOCKHOLDERS' EQUITY
On July 26, 2005, at a special meeting of the stockholders, the Company's
stockholders ratified and approved the amendment of the Articles of
Incorporation of the Company to increase the authorized shares of common stock
("Common Stock") from 50,000,000 to 100,000,000 shares.
On August 5, 2005, Arnold P. Kling and R&R Biotech Partners, LLC purchased
1,767,857 shares (49,500,000 pre-reverse split shares) of our Common Stock in
exchange for aggregate gross proceeds of $500,000 (the Entrust Stock Sale"). Mr.
Kling subsequently assigned his interests under the Purchase Agreement to Moyo
Partners, LLC ("Moyo") an entity which Mr. Kling controls.
On November 1, 2005, a total of 196,429 shares (5,500,000 pre-reverse split
shares) of our Common Stock were authorized for issuance to three individuals
who provided services to the Company. We issued 69,643 shares (1,950,000
pre-reverse split shares) to each of Arnold Kling and Kirk Warshaw for their
services as the Company's president and chief financial officer, respectively,
and 57,143 shares (1,600,000 pre-reverse split shares) to MBA Investors, Ltd.,
an affiliated company of Thomas Pierson, a consultant, for services rendered.
Messrs. Kling and Warshaw's services were valued at $7,800 each and Mr.
Pierson's services at $6,400.
During the year ended December 31, 2006, a principal stockholder contributed
$29,500 to the Company as Additional Paid-in-Capital.
On September 18, 2006, the Company effected a one-for-twenty eight reverse split
of its issued and outstanding shares of Common Stock. As a result, as of that
date, the number of issued and outstanding shares of Common Stock was reduced
from 57,612,295 to 2,057,771 shares. As of September 30, 2006, the Company had
100,000,000 shares of Common Stock authorized of which 2,057,771 shares of
Common Stock were issued and outstanding.
Effective January 11, 2007, Entrust Colorado was merged with and into EFS which
became the surviving corporation (the "Delaware Merger") and as a result, (i)
every issued and outstanding share of Entrust Colorado common stock was
automatically converted into the right to receive one share of EFS common stock;
(ii) our name changed to Enthrust Financial Services, Inc.; and (iii) we adopted
the EFS's capital structure which consists of 100,000,000 shares of common
stock, par value $0.001 per share, and 1,000,000 shares of blank check preferred
stock, par value $0.001 per share.
During the three months ended March 31, 2007, a principal stockholder
contributed $25,000 to the Company as Additional Paid-in-Capital.
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
USE OF FORWARD-LOOKING STATEMENTS
Some of the statements in this Form 10-QSB, including some statements in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" are forward-looking statements about what may happen
in the future. They include statements regarding our current beliefs, goals, and
expectations about matters such as our expected financial position and operating
results, our business strategy, and our financing plans. These statements can
sometimes be identified by our use of forward-looking words such as
"anticipate," "estimate," "expect," "intend," "may," "will," and similar
expressions. We cannot guarantee that our forward-looking statements will turn
out to be correct or that our beliefs and goals will not change. Our actual
results could be very different from and worse than our expectations for various
reasons. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason. You are urged to carefully consider
these factors, as well as other information contained in this Form 10-QSB and in
our other periodic reports and documents filed with the Securities and Exchange
Commission ("SEC").
In our Form 10-KSB filed with the SEC for the year ended December 31, 2006 and
in the notes to the unaudited financial statements in this report, we have
identified critical accounting policies and estimates for our business.
RESULTS OF CONTINUING OPERATIONS
On July 31, 2005, our mortgage brokerage business carried out by our wholly
owned subsidiary Entrust Mortgage, Inc. ("Entrust Mortgage"), was sold to BBSB,
LLC ("BBSB") in exchange for the cancellation of all obligations owed by us and
Entrust Mortgage to BBSB and the assumption of certain of our third-party
obligations. On August 5, 2005, we sold in a private placement, pursuant to a
Stock Purchase Agreement, 1,767,857 shares (49,500,000 pre-reverse split shares)
of common stock to R&R Biotech Partners, LLC and Moyo Partners, LLC in exchange
for aggregate gross proceeds to us of $500,000. Simultaneously with this sale of
common stock, our management changed. From the date of consummation of the Stock
Purchase Agreement on August 5, 2005 to-date, we have had no operations. See
Note 1 to our notes to unaudited financial statements for further information
related to the organization and description of our business since these two
transactions.
The following is a discussion of our operations for the three months ended March
31, 2007 and 2006:
THREE MONTHS ENDED MARCH 31, 2007 AND MARCH 31, 2006
We did not have any revenues during the three months ended March 31, 2007 and
March 31, 2006, respectively. Total expenses for the three months ended March
31, 2007 were $14,182 and $19,009 for the same period in 2006. The expenses
incurred in 2007 and 2006 consisted primarily of professional and administrative
fees.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2007, we did not have any revenues from
operations. Absent a merger or other combination with an operating company we do
not expect to have any revenues from operations. No assurance can be given that
such a merger or other combination will occur or that we can engage in any
public or private sales of our equity or debt securities to raise working
capital. We are dependent upon future loans or capital contributions from our
present stockholders and/or management and there can be no assurances that our
present stockholders or management will make any loans or capital contributions
to us. At March 31, 2007, we had cash of $13,876 and working capital of $3,951.
Our present material commitments are professional and administrative fees and
expenses associated with the preparation of our filings with the SEC and other
regulatory requirements. In the event that we engage in any merger or other
combination with an operating company, we will have additional material
commitments, although we presently are not engaged in any material discussions
regarding any merger or other combination with an operating company and cannot
offer any assurances that we will engage in any merger or other combination with
an operating company within the next twelve months.
-9-
ITEM 3. CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our president and chief financial
officer, carried out an evaluation of the effectiveness of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934 (the
"Exchange Act") Rules 13a-15(e) and 15-d-15(e)) as of the end of the period
covered by this report (the "Evaluation Date"). Based upon that evaluation, the
president and chief financial officer concluded that, as of the Evaluation Date,
our disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act (i) is recorded, processed, summarized and reported, within the
time periods specified in the SEC's rules and forms and (ii) is accumulated and
communicated to our management, including our president and chief financial
officer, as appropriate to allow timely decisions regarding required disclosure.
(b) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibits: See the attached Exhibit Index following the signature page,
incorporated herein by reference.
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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.
ENTHRUST FINANCIAL SERVICES, INC.
Dated: April 27, 2007 /s/ Arnold P. Kling
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Arnold P. Kling, President
(Principal Executive Officer)
Dated: April 27, 2007 /s/ Kirk M. Warshaw
-------------------------------------------
Kirk M. Warshaw, Chief Financial Officer
(Principal Financial and Accounting Officer)
-12-
EXHIBIT INDEX
Form 10-QSB
Quarter Ended March 31, 2007
EXHIBIT
NO. DESCRIPTION
------- -----------
31.1 Certification of President pursuant to Sec. 302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification of CFO pursuant to Sec. 302 of the Sarbanes-Oxley Act of
2002.
32.1 Certification of President pursuant to Sec. 906 of the Sarbanes-Oxley
Act of 2002.
32.2 Certification of CFO pursuant to Sec. 906 of the Sarbanes-Oxley Act of
2002.
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