SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
(RULE 14C-101)
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF
THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-5(d) (1))
[ ] Definitive Information Statement
ENTRUST FINANCIAL SERVICES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
Fee previously paid with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ENTRUST FINANCIAL SERVICES, INC.
47 SCHOOL AVENUE
CHATHAM, NEW JERSEY 07928
(973) 635-4047
December ___, 2006
Dear Shareholder:
This Information Statement is furnished to holders of shares of common stock,
par value $.0000001 per share ("Common Stock"), of ENTRUST FINANCIAL SERVICES,
INC. ("Entrust"). We are sending you this Information Statement to inform you
that on December 4, 2006, Entrust's Board of Directors (the "Board")
unanimously adopted resolutions, subject to shareholder approval, to
reincorporate Entrust in the State of Delaware by merger with and into a
Delaware corporation with the same name ("Entrust Delaware") which Entrust
formed for such purpose (the "Migratory Merger"). Effective as of November ,
2006, pursuant to, the By-Laws and Articles of Incorporation of the company and
Colorado Business Corporation Act ss.7-107-104, certain of our principal
shareholders (identified in the section entitled "Voting Securities and
Principal Holders Thereof") holding 1,907,143 shares of Common Stock,
representing approximately 92.7% of Entrust's total issued and outstanding
shares of Common Stock, adopted resolutions to authorize the Migratory Merger.
On the effective date of the Migratory Merger: 1) Entrust will adopt the capital
structure of Entrust Delaware which includes total authorized capital stock of
101,000,000 shares, of which 100,000,000 shares are common stock, with a par
value of $.0000001 per share (the "Entrust Delaware Common Stock") and 1,000,000
shares are blank check preferred stock, with a par value of $.0000001 per share
(the "Preferred Stock"). The Preferred Stock may be issued from time to time in
one or more series with such designations, preferences and relative
participating, optional or other special rights and qualifications, limitations
or restrictions thereof, as shall be stated in the resolutions adopted by
Entrust Delaware's Board of Directors providing for the issuance of such
Preferred Stock or series thereof; and 2) the issued and outstanding shares of
Common Stock will automatically convert into the right to receive shares of
Entrust Delaware Common Stock at a ratio of one (1) share of Common Stock for
one (1) share of Entrust Delaware Common Stock (the "Conversion Ratio"). In
addition, notwithstanding approval of this proposal by the shareholders, the
Board may, in its sole discretion, determine not to effect, and abandon, the
Migratory Merger without further action by shareholders.
The Board believes that the proposed Migratory Merger will be beneficial to
Entrust and its shareholders because it will enhance Entrust's ability to
attract a transaction consistent with its current plan and purpose.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT
REQUESTED TO SEND US A PROXY.
The enclosed Information Statement is being furnished to you to inform you that
the foregoing action has been approved by the holders of 92.7% of the
outstanding shares of Common Stock. The Migratory Merger will not become
effective before the date which is 20 days after this Information Statement is
first mailed to Entrust's shareholders. You are urged to read the Information
Statement in its entirety for a description of the action taken by the Board and
92.7% of the shareholders of Entrust.
This Information Statement is being mailed on or about December __, 2006 to
shareholders of record on December 12, 2006 (the "Record Date").
/s/ Arnold Kling
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Arnold Kling, President
ENTRUST FINANCIAL SERVICES, INC.
47 SCHOOL AVENUE
CHATHAM, NEW JERSEY 07928
(973) 635-4047
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INFORMATION STATEMENT
PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14C-2 THEREUNDER
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NO VOTE OR OTHER ACTION OF ENTRUST'S SHAREHOLDERS IS REQUIRED IN
CONNECTION WITH THIS INFORMATION STATEMENT.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
Entrust Financial Services, Inc. ("Entrust") is distributing this Information
Statement to its shareholders in full satisfaction of any notice requirements it
may have under Securities and Exchange Act of 1934, as amended, and the Colorado
Business Corporation Act. No additional action will be undertaken by Entrust
with respect to the receipt of written consents, and no dissenters' rights with
respect to the receipt of the written consents, and no dissenters' rights under
Colorado Business Corporation Act are afforded to Entrust's shareholders as a
result of the adoption of the resolutions approving Entrust's migration from
Colorado to Delaware.
Expenses in connection with the distribution of this Information Statement,
which are anticipated to be less than $5,000.00, will be paid by Entrust.
BACKGROUND
Since Entrust's disposition of its Entrust Mortgage, Inc. subsidiary in August
2005, its plan has consisted of exploring potential targets for a business
combination with Entrust through a purchase of assets, share purchase or
exchange, merger or similar type of transaction. In order to facilitate such a
transaction, the Board believes that, among other things, Entrust should
reincorporate in the State of Delaware by merger with and into a Delaware
corporation with the same name ("Entrust Delaware") which Entrust formed for
such purpose (the "Migratory Merger"). The Board believes that the Migratory
Merger would make Entrust more attractive for a potential business combination
and therefore be in the best interest of Entrust's shareholders and Entrust. No
further action on the part of shareholders will be required to either implement
or abandon the Migratory Merger. The Migratory Merger will be effective upon the
filing of the Merger Certificates, as described below, or on such later date as
determined by the Board (the "Effective Date"). The Board will determine when to
file the Merger Certificates. The Board reserves the right to elect not to
proceed, and abandon, the Migratory Merger if it determines, in its sole
discretion, that this proposal is no longer in the best interests of Entrust's
shareholders.
CERTAIN RISK FACTORS ASSOCIATED WITH THE MIGRATORY MERGER
THERE CAN BE NO ASSURANCE THAT IF THE MIGRATORY MERGER IS EFFECTED, THE
RESULTING COMPANY WILL ATTRACT ANY, OR SATISFY POTENTIAL ACQUISITION, TARGETS
AND THERE IS NO GUARANTEE THAT ANY TRANSACTION WILL BE EFFECTED.
THE MARKET PRICE OF ENTRUST'S COMMON STOCK COULD DECLINE IF INVESTORS DISLIKE
THE MIGRATORY MERGER.
IMPACT OF THE MIGRATORY MERGER IF IMPLEMENTED
If effected, the Migratory Merger will affect all of Entrust's shareholders
uniformly and will not affect any shareholder's percentage ownership interests
in Entrust or proportionate voting power.
The principal effect of the Migratory Merger will be that:
o Subsequent to the Effective Date of the merger Entrust will be
domiciled in the State of Delaware;
o The issued and outstanding shares of Common Stock will automatically
convert into the right to receive shares of Entrust Delaware Common
Stock at a ratio of one (1) share of Common Stock for one (1) share of
Entrust Delaware Common Stock (the "Conversion Ratio");
o Following the Effective Date, any and all issued and outstanding
options, warrants or other rights to acquire any Common Stock will be
converted into an option, warrant or other right, as the case may be,
to purchase shares of Entrust Delaware Common Stock on the same terms,
at the same Conversion Ratio as Common Stock are converted into Entrust
Delaware Common Stock and at a price equal to the current exercise
price; and
o Entrust will adopt the capital structure of Entrust Delaware which
includes total authorized capital stock of 101,000,000 shares, of which
100,000,000 shares are common stock, with a par value of $.0000001 per
share (the "Entrust Delaware Common Stock") and 1,000,000 shares are
blank check preferred stock, with a par value of $.0000001 per share
(the "Preferred Stock"). The Preferred Stock may be issued from time to
time in one or more series with such designations, preferences and
relative participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as shall be stated
in the resolutions adopted by Entrust Delaware's Board of Directors
providing for the issuance of such Preferred Stock or series thereof.
EFFECT ON REGISTERED AND BENEFICIAL SHAREHOLDERS
Upon effectuating the Migratory Merger, we intend to treat shareholders holding
Entrust Delaware Common Stock in "street name", through a bank, broker or other
nominee, in the same manner as registered shareholders whose shares are
registered in their names. If you hold your shares with a bank, broker or other
nominee and if you have any questions in this regard, we encourage you to
contact your nominee.
EFFECT ON REGISTERED CERTIFICATED SHARES
Some of our registered shareholders hold all their shares in certificate form.
If any of your shares are held in certificate form, you will receive a
transmittal letter from our transfer agent, Corporate Stock Transfer, Inc. as
soon as practicable after the Effective Date. The letter of transmittal will
contain instructions on how to surrender your certificate(s) representing the
shares of Common Stock owned by you to the transfer agent. Upon receipt of your
certificate, subject to the aforementioned Conversion Ratio, you will be issued
a new stock certificate for shares of Entrust Delaware Common Stock.
SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT
ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
POTENTIAL ANTI-TAKEOVER EFFECT
The Preferred Stock may be issued from time to time in one or more series with
such designations, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions thereof, as shall
be stated in the resolutions adopted by Entrust Delaware's Board of Directors
providing for the issuance of such Preferred Stock or series thereof without the
need for shareholder approval. The authorization of the Preferred Stock, could
adversely affect the ability of third parties to takeover or effect a change in
control of Entrust Delaware by, for example, permitting issuances that would
dilute the stock ownership of a person seeking to effect a change in the
composition of the Entrust Delaware's Board or contemplating a tender offer or
other transaction for the combination of Entrust Delaware with another company.
Although the authorization of the Preferred Stock could, under certain
circumstances, have an anti-takeover effect, the authorization of the Preferred
Stock is not in response to any effort of which Entrust is aware to accumulate
its shares or shares of Entrust Delaware or obtain control of Entrust or Entrust
Delaware.
AUTHORIZED SHARES
On the Effective Date, Entrust will adopt the capital structure of Entrust
Delaware which includes total authorized capital stock of 101,000,000 shares, of
which 100,000,000 shares are Entrust Delaware Common Stock and 1,000,000 shares
of Preferred Stock which preferred stock may be issued from time to time in one
or more series with such designations, preferences and relative participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, as shall be stated in the resolutions adopted by Entrust Delaware's
Board of Directors providing for the issuance of such Preferred Stock or series
thereof. A draft of the Certificate of Incorporation of Entrust Delaware is
attached as Exhibit A to this Information Statement. As of the Record Date,
Entrust had 100,000,000 shares of authorized Common Stock of which 2,057,582
shares are issued and outstanding. After the Effective Date, the number of
authorized shares that are issued and outstanding would remain unchanged.
Authorized but unissued shares of Entrust Delaware will be available for
issuance, and although Entrust presently has no specific plans to issue any
shares, Entrust Delaware may issue such shares in the future. If Entrust
Delaware issues additional shares, the ownership interest of Entrust Delaware's
shareholders will be diluted.
ACCOUNTING MATTERS
The Migratory Merger will have no affect on the par value, stated capital or the
additional paid-in capital of the Common Stock. The per-share net income or loss
and net book value of Common Stock will also be unchanged.
PROCEDURE FOR EFFECTING THE MIGRATORY MERGER
On or about the 20th day after this Information Statement is first mailed to
shareholders of record on the Record Date, Entrust will promptly cause Articles
of Merger to be filed with the Secretary of State of Colorado and a Certificate
of Merger to be filed with the Secretary of State of Delaware (collectively both
are the "Merger Certificates"). The Migratory Merger will become effective on
the date of filing of the Merger Certificates or on such later date as
determined by the Board, which is referred to as the "Effective Date." Beginning
on the Effective Date, each stock certificate representing Common Stock
pre-Migratory Merger, subject to the Conversion Ratio, will be deemed for all
corporate purposes to evidence ownership of Entrust Delaware Common Stock.
APPRAISAL RIGHTS
Shareholders who have not consented to and are not in favor of the Migratory
Merger may have the right to seek payment in cash of the fair value of their
Common Stock by complying with the requirements of Article 113 of the Colorado
Business Corporations Act. Entrust's shareholders have the right to dissent from
the Migratory Merger by filing with Entrust prior to the Effective Date a
written notice of the shareholder's intention to demand payment for the
shareholder's shares if the Board effects the Migratory Merger. Thereafter, the
dissenting shareholder may make a written demand on Entrust for payment of the
fair value of the shareholder's shares and deposit the shareholder's
certificates for certificated shares. Upon demand, Entrust will pay to the
shareholder the amount it estimates to be the fair value of the dissenter's
shares. If a dissenting shareholder believes that the amount paid by Entrust is
not the fair value of the dissenter's shares, the dissenter may demand
additional payment in an amount representing what the dissenter estimates is the
fair value of the shares and accrued interest. After receiving the dissenter's
demand, Entrust may choose either to accept the shareholder's estimate of the
fair value or to petition a court to determine the fair value of the shares and
accrued interest. This discussion is not a complete description of the
procedures that must be followed for a shareholder to perfect his dissenter's
rights. Failure of a shareholder to strictly adhere to the requirements of
Article 113 will result in the loss of the shareholder's dissenter's rights. A
copy of Article 113 is attached hereto as Exhibit B. Any shareholder who
anticipates dissenting from the action to be taken by the Board should consult
his or her own counsel to establish the requisite time requirements.
THE PROVISIONS OF ARTICLE 113 ARE COMPLEX AND TECHNICAL IN NATURE.
SHAREHOLDERS DESIRING TO EXERCISE DISSENTERS' RIGHTS MAY WISH TO CONSULT
COUNSEL, SINCE THE FAILURE TO COMPLY STRICTLY WITH THESE PROVISIONS WILL RESULT
IN THE LOSS OF THEIR DISSENTERS' RIGHTS.
FEDERAL INCOME TAX CONSEQUENCES OF THE MIGRATORY MERGER
The following is a summary of certain material United States federal income tax
consequences of the conversion of Common Stock at the Conversion Ratio, does not
purport to be a complete discussion of all of the possible federal income tax
consequences of such conversion and is included for general information only.
Further, it does not address any state, local or foreign income or other tax
consequences. Also, it does not address the tax consequences to holders that are
subject to special tax rules, such as banks, insurance companies, regulated
investment companies, personal holding companies, foreign entities, nonresident
alien individuals, broker-dealers and tax-exempt entities. The discussion is
based on the provisions of the United States federal income tax law as of the
date hereof, which is subject to change retroactively as well as prospectively.
This summary also assumes that the shares of Common Stock were, and the shares
of Entrust Delaware Common Stock will be, held as a "capital asset," as defined
in the Internal Revenue Code of 1986, as amended (i.e., generally, property held
for investment). The tax treatment of a shareholder may vary depending upon the
particular facts and circumstances of such shareholder. Each shareholder is
urged to consult with such shareholder's own tax advisor with respect to the tax
consequences of the conversion of Common Stock at the Conversion Ratio. As used
herein, the term United States holder means a shareholder
that is, for federal income tax purposes: a citizen or resident of the United
States; a corporation or other entity taxed as a corporation created or
organized in or under the laws of the United States, any State of the United
States or the District of Columbia; an estate the income of which is subject to
federal income tax regardless of its source; or a trust if a U.S. court is able
to exercise primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial decisions of the
trust.
No gain or loss should be recognized by a shareholder upon the conversion of
Common Stock at the Conversion Ratio by such shareholder. The aggregate tax
basis of the shares of Entrust Delaware Common Stock received in such conversion
will be the same as the shareholder's aggregate tax basis in the shares of
Common Stock converted therefor. The shareholder's holding period for the shares
of Entrust Delaware Common Stock will include the period during which the
shareholder held the shares of Common Stock surrendered in such conversion.
Our view regarding the tax consequences of the Migratory Merger is not binding
on the Internal Revenue Service or the courts. ACCORDINGLY, EACH SHAREHOLDER
SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL OF THE
POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE CONVERSION OFCOMMON STOCK AT THE
CONVERSION RATIO.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table lists, as of December 4, 2006, the number of shares of
Common Stock beneficially owned by (i) each person or entity known to Entrust to
be the beneficial owner of more than 5% of the outstanding common stock; (ii)
each officer and director of Entrust; and (iii) all officers and directors as a
group. Information relating to beneficial ownership of Common Stock by our
principal shareholders and management is based upon information furnished by
each person using "beneficial ownership" concepts under the rules of the
Securities and Exchange Commission. Under these rules, a person is deemed to be
a beneficial owner of a security if that person has or shares voting power,
which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the voting of the
security. The person is also deemed to be a beneficial owner of any security of
which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest.
The percentages below are calculated based on 2,057,582 shares of Common Stock
issued and outstanding.
Percentage of
Name and Address of Number of Shares Shares
Beneficial Owner Beneficially Owned (1) Beneficially Owned
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R&R Biotech Partners, LLC
1270 Avenue of the Americas 16th Floor
New York, NY 10020
Attention: Thomas Pinou, CFO 1,414,286 68.7%
Moyo Partners, LLC (2)
c/o Arnold Kling, Esq.
712 Fifth Ave, 11th Floor
New York, NY 10019 353,571 17.2%
Arnold Kling(3)
712 Fifth Ave, 11th Floor
New York, NY 10019 69,643 3.4%
Kirk Warshaw(4)
47 School Avenue
Chatam, New Jersey 07928 69,643 3.4%
Officers and Directors as a 492,857 24.0%
group (2 persons)
(1) Unless otherwise indicated, Entrust believes that all persons named in
the table have sole voting and investment power with respect to all
shares of the Common Stock beneficially owned by them. A person is
deemed to be the beneficial owner of securities which may be acquired by
such person within 60 days from the date indicated above upon the
exercise of options, warrants or convertible securities. Each beneficial
owner's percentage ownership is determined by assuming that options,
warrants or convertible securities that are held by such person (but not
those held by any other person) and which are exercisable within 60 days
of the date indicated above, have been exercised.
(2) Arnold Kling controls Moyo Partners, LLC and therefore is the beneficial
owner of the shares held by this entity.
(3) Arnold Kling is the President and sole director of Entrust.
(4) Kirk Warshaw is the Chief Financial Officer and Secretary of Entrust.
INTEREST OF CERTAIN PERSONS IN OR IN OPPOSITION TO MATTERS TO BE ACTED UPON.
No director, executive officer, associate of any director or executive officer
or any other person has any substantial interest, direct or indirect, by
security holdings or otherwise, in the Migratory Merger proposal which is not
shared by all other holders of Common Stock. See "Voting Securities And
Principal Holders Thereof," above.
OTHER MATTERS
The Board knows of no other matters other than those described in this
Information Statement which have been approved or considered by the holders of a
majority of the shares of Entrust's voting stock.
IF YOU HAVE ANY QUESTIONS REGARDING THIS INFORMATION STATEMENT, PLEASE CONTACT:
Kirk Warshaw
47 School Avenue
Chatham, New Jersey 07928
(973) 635-4047
BY ORDER OF THE BOARD OF DIRECTORS OF ENTRUST FINANCIAL SERVICES, INC.