10QSB/A 1 v02633_10-qsba.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A Amendment No. 1 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2003 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-26155 ICY SPLASH FOOD & BEVERAGE, INC. ------------------------------------ (Exact name of small business issuer as specified in its charter) NEW YORK 11-3329510 --------- ----------- (State or Other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 535 WORTMAN AVENUE, BROOKLYN, NY 11208 (Address of Principal Executive Offices) (718) 746-3585 ----------------- Issuer's Telephone Number 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. ___ There were 11,435,500 shares of the registrant's common stock outstanding as of July 21, 2003. Transitional Small Business Disclosure Format Yes ___ No _X_
INDEX PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) Balance Sheets as of June 30, 2003 (unaudited) and December 31, 2002 3. b) Statements of Operations for the three and six months ended June 30, 2003 and 2002 (unaudited) 4. c) Statements of Cash Flows for the six months ended June 30, 2003 and 2002 (unaudited) 5. d) Notes to Financial Statements (unaudited) 6. to 7. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8. to 9. ITEM 3. CONTROLS AND PROCEDURES 10. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11. a) EXHIBITS 11. b) REPORTS ON FORM 8-K 11. SIGNATURES 11.
ICY SPLASH FOOD AND BEVERAGE, INC. BALANCE SHEETS - ASSETS - (Unaudited)
June 30, December 31, 2003 2002 --------- ---------- CURRENT ASSETS: Cash $ 6,974 $ 15,069 Accounts receivable, net of allowance for doubtful accounts of $5,831 and $1,325 for June 30, 2003 and December 31, 2002, respectively 116,390 11,368 Inventory 86,516 57,324 --------- --------- TOTAL CURRENT ASSETS 209,880 83,761 --------- --------- FIXED ASSETS: Production equipment 2,600 2,600 Warehouse equipment 5,000 5,000 Office equipment 15,301 14,749 --------- --------- 22,901 22,349 Less: accumulated depreciation 20,083 18,333 --------- --------- 2,818 4,016 --------- --------- $ 212,698 $ 87,777 ========= ========= - LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)- CURRENT LIABILITIES: Note payable $ -- $ 65,000 Accounts payable 95,306 47,642 Accrued expenses and other current liabilities 9,406 3,889 Shareholder's loans 193,592 59,297 Related party loans 37,285 37,285 Income taxes payable 229 456 --------- --------- TOTAL CURRENT LIABILITIES 335,818 213,569 --------- --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, $.001 par value, 1,000,000 shares authorized, zero shares issued and outstanding for 2003 and 2002 -- -- Common stock, $.001 par value, 50,000,000 shares authorized, 11,435,500 shares issued and outstanding at June 30,2003 and December 31, 2002 11,436 11,436 Additional paid-in capital 854,488 854,488 Accumulated deficit (909,782) (912,454) Unearned compensatory stock (66,000) (66,000) Stock subscription receivable (13,262) (13,262) --------- --------- (123,120) (125,792) --------- --------- $ 212,698 $ 87,777 ========= =========
See notes to financial statements. Page 3. ICY SPLASH FOOD AND BEVERAGE, INC. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2003 2002 2003 2002 ---------- --------- ---------- --------- NET SALES $ 225,498 $182,416 $ 426,100 $264,149 COST OF SALES 170,671 124,581 305,195 186,849 ---------- --------- ---------- --------- GROSS PROFIT 54,827 57,835 120,905 77,300 ---------- --------- ---------- --------- OPERATING EXPENSES: Selling expenses 6,247 6,730 10,168 8,257 General and administrative expenses 54,323 46,237 106,039 77,755 ---------- --------- ---------- --------- 60,570 52,967 116,207 86,012 ---------- --------- ---------- --------- INCOME (LOSS) FROM OPERATIONS (5,743) 4,868 4,698 (8,712) OTHER EXPENSES: Interest expense (1,020) (1,072) (2,026) (2,103) ---------- --------- ---------- --------- INCOME (LOSS) BEFORE TAXES (6,763) 3,796 2,672 (10,815) Provision for income taxes - - - - ---------- --------- ---------- --------- NET INCOME (LOSS) $(6,763) $ 3,796 $ 2,672 $(10,815) ========== ========= ========== ========= INCOME (LOSS) PER SHARE: Basic $ - $ - $ - $ - ========== ========= ========== ========= Diluted $ - $ - $ - $ - ========== ========= ========== =========
See notes to financial statements. Page 4. ICY SPLASH FOOD AND BEVERAGE, INC. STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30, 2003 2002 --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 2,672 $ (10,815) Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation 1,750 1,500 Provision for bad debts 4,506 6,772 Stock issued for services -- 126,700 Changes in assets and liabilities: (Increase) in accounts receivable (109,528) (9,544) (Increase) decrease in inventories (29,192) 19,538 Increase (decrease) in accounts payable 47,665 (18,853) Increase (decrease) in accrued expenses and other current liabilities 5,289 (118,705) --------- --------- Net cash used by operating activities (76,838) (3,407) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (552) -- --------- --------- Net cash (used in) investing activities (552) -- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from related party loan -- 48,500 Repay note payable (65,000) -- Proceeds from shareholder's loans 164,498 39,985 Repayments of shareholder's loans (30,203) (85,911) --------- --------- Net cash provided by financing activities 69,295 2,574 --------- --------- NET (DECREASE) IN CASH AND CASH EQUIVALENTS (8,095) (833) Cash and cash equivalents, at beginning of year 15,069 3,968 --------- --------- CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 6,974 $ 3,135 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash during the period for: Income taxes paid $ 455 $ 455 Interest paid $ 2,026 $ 2,103 SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS: 865,000 shares of common stock issued as compensation for professional services rendered $ -- $126,700 155,000 shares of common stock issued as compensation for professional services to be rendered $ -- $ 46,500
See notes to financial statements. Page 5. ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS June 30, 2003 (UNAUDITED) NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: In the opinion of management, the accompanying unaudited interim financial statements of Icy Splash Food and Beverage, Inc. contain all adjustments necessary to present fairly the Company's financial position as of June 30, 2003 and December 31, 2002 (audited) and the results of operations for the three and six months ended June 30, 2003 and 2002 and cash flows for the six months ended June 30, 2003 and 2002. The results of operations for the three and six months ended June 30, 2003 and 2002 are not necessarily indicative of the results to be expected for the full year. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements included in its Annual Report on Form 10-KSB for the year ended December 31, 2002, which is incorporated herein by reference. Certain notes included in Form 10-KSB have been condensed or omitted from this report in accordance with the rules for Forms 10-Q and 10-QSB. Certain reclassifications have been made in the June 30, 2002 financial statements to conform to the current fiscal year presentation. NOTE 2 - GOING CONCERN: As shown in the accompanying financial statements, while the Company has a net operating profit of $2,672 for the six month period ending June 30, 2003, it has an accumulated deficit of $909,782 as of June 30, 2003 as well as negative working capital. The ability of the Company to continue as a going concern is dependent on obtaining additional capital and financing and operating at a profitable level. Management is actively pursuing additional capital and has initiated new distribution agreements with established distributors of its products. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. NOTE 3 - LOANS PAYABLE - SHAREHOLDER: At June 30, 2003 and December 31, 2002 the Company owed an aggregate of $193,592 and $59,297, respectively to one of its shareholders. The loan is non-interest bearing and has no formal repayment terms. During the second quarter of 2003, the shareholder paid a $65,000 note payable to a bank on behalf of the Company. The payment was recorded as an increase to the shareholder's loan. NOTE 4 - RELATED PARTY TRANSACTIONS: (a) The Company has transactions with one corporate entity owned by one of the Company's shareholders: During September 1999, the Company initiated sales of product to this corporation which is owned by one of the Company's shareholders. For the year ended December 31, 2002, approximate sales to the distributor and accounts receivable were $34,420 and $0, respectively. There were no sales for the six months ended June 30, 2003. Since the third quarter of 2002, the Company has borrowed from this corporation which is owned by one of the Company's shareholders. The loan outstanding is $37,285 at June 30, 2003. This loan which is unsecured and non-interest bearing is payable upon demand. Accordingly, it has been reflected as a current liability on the Company's balance sheet. Page 6. NOTE 4 - RELATED PARTY TRANSACTIONS (cont): During the third quarter of 2002, the Company issued 2,000,000 shares of common stock to the corporation which is owned by one of the Company's shareholders. The stock issuance was compensation for consulting, marketing, distribution and product development assistance services rendered (see Note 5). (b) During the third quarter of 2002, the Company issued 200,000 shares of common stock to a related party for marketing and consulting services. (see Note 5). NOTE 5 - CAPITAL STOCK: During the year ended December 31, 2001, the Company issued 265,500 shares of common stock upon exercise of outstanding common stock purchase warrants. The Company was to receive $235,375 on exercise of such warrants which represented the exercise price of $1.00 per share less direct offering costs of $3,575 and less $.10 per share which were required to be paid to Southern Financial Services, Inc. ("Southern"), the Company's financial consultant and escrow agent. To date, the Company received only $92,275 in connection with such exercise and 78,050 shares have been recovered by a successor escrow agent. At December 31, 2001 the difference between the amount due and the amount received had been recorded as equity and a subscription receivable. As funds are received from recoveries, subscriptions receivable will be reduced until all recoveries have been made, at which time equity and subscriptions receivable will be adjusted accordingly. As of December 31, 2002 it appears that recoveries will be limited to the sale of shares held in escrow. During 2002, 25,000 of the shares held in escrow were transferred to an internet information vendor to provide information about the Company to investors. At December 31, 2002 the 53,050 shares remaining in escrow were written-down to $0.25 per share to reflect the market value of the common stock at that time. On February 19, 2002, the Company signed a nine month consulting agreement with a financial services group to review and analyze the Company's formal and informal financial, strategic and business plans, prepare and update a formal business plan, along with the appropriate financial projections, and perform other financial services requested by the Company. Compensation is 330,000 shares of the Company's common stock, to be paid as follows: 100,000 upon execution of the agreement, 75,000 shares on March 15, 2002, 75,000 shares on May 15, 2002 and 80,000 shares on July 15, 2002. In March 2002, the Company issued 330,000 registered shares of common stock to this consultant as compensation for services rendered and to be rendered. The shares were valued at $0.30 per share. At June 30, 2003, with the agreement of the financial services group, 80,000 shares of stock, recorded as $24,000 of unearned compensatory stock, was still held by the Company for the total value of services still to be rendered. In March 2002, the Company issued 690,000 shares of common stock, which were granted in 2001, to the Company's officers and consultants as compensation for services rendered. These shares were valued at prices varying from $0.08 to $0.16 per share, which were the market prices at the time of grant. During the third quarter of 2002, the Company issued 2,000,000 Section 144 restricted common shares of stock for services rendered to a corporation which is owned by one of the Company's shareholders. The shares were valued at $.14 per share, the market price at the time of the grant. Additionally, during the third quarter of 2002, 350,000 Section 144 restricted shares of common stock were issued to an entity and 200,000 Section 144 restricted shares of common stock were issued to a related party, for marketing and financial consulting services pursuant to verbal consulting agreements entered into by the Company. The consulting agreements have no specific terms and can be terminated by either party at any time. The total 350,000 shares issued to the entity, which were valued at $.12 per share, are being held in escrow by management until certain performance criteria are met. During the third quarter of 2002, 1,000,000 shares of Section 144 restricted common stock were issued to an individual for $60,000. Page 7. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Critical Accounting Policies and Estimates Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. The Company evaluates its estimates, including those related to bad debts, inventories, contingencies and litigation on an ongoing basis. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies, among others, involve the more significant judgments and estimates used in the preparation of our financial statements: The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Inventories are recorded at the lower of cost or market. Write-downs of inventories to market value are based upon contractual provisions governing obsolescence, as well as assumptions about future demand and market conditions. If assumptions about future demand change and/or actual market conditions are less favorable than those projected by management, additional write-downs of inventories may be required and estimates made regarding adjustments to the cost of inventories. Actual amounts could be different from those estimated. RESULTS OF OPERATIONS Net sales for Icy Splash Food & Beverage, Inc. (the "Company") increased 23.6%, from $182,416 in the three months ended June 30, 2002 to $225,498 in the three months ended June 30, 2003, and increased 61.3%, from $264,149 in the six months ended June 30, 2002 to $426,100 in the six months ended June 30, 2003. For the three months ended June 30, 2003 gross sales of Icy Splash (TM) Clear, Icy Splash (TM) Second Generation and other manufacturers' products, before price discounts and other sales incentives, were 44.1%, 0% and 55.9%, respectively. For the three months ended June 30, 2002 gross sales of Icy Splash (TM) Clear, Icy Splash (TM)Second Generation and other manufacturers' products, before price discounts and other sales incentives, were 95.4%, 0% and 4.6%, respectively. For the six months ended June 30, 2003 gross sales of Icy Splash (TM) Clear, Icy Splash (TM) Second Generation and other manufacturers' products, before price discounts and other sales incentives, were 46.0%, 0% and 54.0%, respectively. For the six months ended June 30, 2002 gross sales of Icy Splash (TM) Clear, Icy Splash (TM)Second Generation and other manufacturers' products, before price discounts and other sales incentives, were 78.6%, 2.4% and 19.0%, respectively. The increase in sales and increase in sales mix for other manufacturers' products is a result of managements decision during the third quarter of 2002 to engage a number of selling/marketing entities to promote and distribute the Company's products and to increase the products available for distribution. During November 2002, two employees were hired to physically distribute products in the New York City area. Managements decision to suspend sales of Icy Splash Second Generation was due to the inability to raise funds to produce adequate quantities of the lower margin product. The Company plans to re-launch the second generation in the future. The increase of other manufacturers' products of $129,621 for the three months ended June 30, 2003 versus the same three month period last year and $197,224 for the six months ended June 30, 2003 versus the same six month period last year is predominately due to new product lines added to local distribution. The new items are less seasonal than soft drinks and should help to lessen the effect of seasonal sales. Page 8. The gross profit margin was 24.3% in the second quarter of 2003 versus 31.7% in the second quarter of 2002, and 28.4% in the first six months of 2003 versus 29.3% in the first six months of 2002. Selling expenses were $6,247 in the second quarter of 2003, compared with $6,730 in the second quarter of 2002, 2.8% and 3.7% of sales, respectively, and $10,168 in the first six months of 2003, compared with $8,257 in the first six months of 2002, 2.4% and 3.13% of sales, respectively. General and administrative expenses were $54,323 in the second quarter of 2003, compared with $46,237 in the second quarter of 2002, 21.8% and 22.3% of sales, respectively, and $106,039 in the six months ended June 30, 2003, compared with $77,755 in the six months ended June 30, 2002, 22.6% and 26.0% of sales, respectively. Management has continued its efforts to keep administrative costs low until the Company raises additional capital. Professional fees were $10,193 in the second quarter of 2003, compared with $20,106 in the second quarter of 2002, 4.1% and 9.7% of sales, respectively, and $25,011 for the six months ended June 30, 2003, compared with $37,579 for the six months ended June 30, 2002, 5.3% and 12.6% of sales, respectively. Vehicle expenses were $1,528 in the second quarter of 2003, compared with $1,769 in the second quarter of 2002, 0.6% and 0.9% of sales, respectively, and $5,127 for the six months ended June 30, 2003, compared with $2,078 for the six months ended June 30 ,2002, 1.1% and 0.7% of sales, respectively. Payroll expenses were $10,295 for the second quarter of 2003, compared with $0 in the second quarter of 2002, 4.1% and 0% of sales,respectively, and $15,493 for the first six months of 2003, compared with $0 for the first six months of 2002, 3.3% and 0% of sales, respectively. Both vehicle and payroll expenses are a reflection of management's decision to distribute a larger variety of products, with some local distribution. Additionally, management has started paying an administrative employee and an office as cash from profitable operations is available. Previously, they were paid with common stock. Bad debt expense was $2,489 for the second quarter of 2003 versus $2,020 for the second quarter of 2002, 1.0% and 1.0% of sales, respectively. Bad debt expense was $4,506 for the six months ended June 30, 2003 versus $3,772 for the six months ended June 30, 2002, 1.0% and 1.3% of sales, respectively. Interest expense was $1,020 for the second quarter of 2003 versus $1,072 for the second quarter of 2002, 0.4% and 0.5% of sales, respectively, and $2,026 for the six months ended June 30, 2003 versus $2,103 for the six months ended June 30, 2002, 0.4% and 0.7% of sales, respectively. There was a loss from operations for the second quarter of 2003 of $5,743, compared with a profit of $4,868 for the second quarter of 2002, with an operating loss percentage of 2.3% of sales for the second quarter of 2003 and an operating profit percentage of 2.4% for the second quarter of 2002. There was a profit from operations for the six months ended June 30, 2003 of $4,698, compared with a loss of $8,712 for the six months ended June 30, 2002, with an operating profit of 1.0% for the six months ended June 30, 2003 and an operating loss of 2.9% for the six months ended June 30, 2002. Net profit (loss) and net profit (loss) as a percent of sales for the second quarter of 2003 were $(6,763) and (2.7%), compared to $3,796 and 1.8% for the second quarter of 2002. Net profit (loss) and net profit (loss) as a percent of sales for the six months ended June 30, 2003 were $2,672 and 0.6% compared to $(10,815) and (3.6%) for the six months ended June 30, 2002. LIQUIDITY AND CAPITAL RESOURCES Working capital increased $3,861 from December 31, 2002 to June 30, 2003. Net cash flow used by operating activities was $76,838 and $3,407 for the six months ended June 30, 2003 and 2002, respectively. During the first six months of 2003, the Company purchased $552 of fixed assets. Page 9. During the first six months of 2003, the Company borrowed $164,498 from a shareholder, while repaying $30,203 and during the first six months of 2002 it borrowed $39,985 from a shareholder, while repaying $85,911. Of the $164,498 borrowed from a shareholder during the first six months of 2003, $65,000 reflected the pay off of a bank note payable by the shareholder. This report contains forward-looking statements and information that is based on management's beliefs and assumptions, as well as information currently available to management. When used in this document, the words "anticipate, "estimate," "expect," "intend" and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. While the Company has no material capital commitments, we have experienced losses and have negative cash flow from operating activities as of June 30, 2003. There is no assurance that we will be able to generate enough funds from either operations or equity/debt financing to sustain the Company in the future. However, management has hired a consulting firm to assist in strategic planning for capital formation and is optimistic about future efforts to raise equity. ITEM 3. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to the Securities Exchange Act of 1934. Rule 13a - 14. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company's periodic SEC filings. (b) Changes in internal control. Not applicable. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS: Not Applicable ITEM 2. CHANGES IN SECURITIES: Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES: Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: Not Applicable Page 10. ITEM 5. OTHER INFORMATION: Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: (a) Exhibits 3.1 Certificate of Incorporation of Icy Splash(1) 3.2 By-Laws of Icy Splash(1) 4.1 Specimen Common Stock certificate of Icy Splash(1) 10.1 Agreement between the Company and Pinnacle Capital, LLC. (2) 10.2 Consulting Agreement between Charles Tokarz and Icy Splash, dated March 19, 1998(1) 11 Computation of Earnings Per Share 31.1 Certification by Chief Executive Officer pursuant to Sarbanes-Oxley Section 302. 31.2 Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 302. 32.1 Certification by Chief Executive Officer pursuant to 18 U.S. C. Section 1350. 32.2 Certification by Chief Financial Officer pursuant to 18 U.S. C. Section 1350. ---------------- (1) Previously filed as an exhibit to our registration statement on Form 10-SB, which was filed on May 21, 1999, and incorporated herein by reference (2) Previously filed as exhibit 10,1 to our annual report on Form 10-KSB filed with the Commission on April 15, 2003 and incorporated herein by reference (b) Reports on Form 8-K The Company did not file any Reports on Form 8-K during the period ended June 30, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: April 14, 2004 ICY SPLASH FOOD & BEVERAGE, INC. By: /s/Joseph Aslan ---------------------- Joseph Aslan President /s/Charles Tokarz ---------------------- Charles Tokarz Chief Financial Officer Page 11.