-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O5hlwbHAz/ESGQ83dVQSWP9PbJXEzZZyAFO9Kt4Dtm4HoNKltm6+xWnwu/azCAiB /Ytq/ewgh/6oIszVooF3wA== 0001144204-04-004769.txt : 20040414 0001144204-04-004769.hdr.sgml : 20040414 20040414154614 ACCESSION NUMBER: 0001144204-04-004769 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICY SPLASH FOOD & BEVERAGE INC CENTRAL INDEX KEY: 0001070906 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 113329510 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26155 FILM NUMBER: 04733066 BUSINESS ADDRESS: STREET 1: 9-15 166TH STREET STREET 2: STE 5B CITY: WHITESTONE STATE: NY ZIP: 13357 BUSINESS PHONE: 2127463585 MAIL ADDRESS: STREET 1: 9-15 166TH STREET STREET 2: STE 5 B CITY: WHITESTONE STATE: NY ZIP: 11357 10KSB 1 v02643_10ksb.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003 [_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ___________ COMMISSION FILE NUMBER: 0-26155 ICY SPLASH FOOD & BEVERAGE, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEW YORK 11-3329510 ---------------------------------------------- ----------------------- (STATE OR OTHER JURISDICTION OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NUMBER) 535 WORTMAN AVENUE, BROOKLYN, NY 11208 ------------------------------------------ ----------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (718) 272-2765 SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: TITLE OF EACH CLASS REGISTERED: NONE SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT: COMMON STOCK, PAR VALUE $0.001 (Title of class) 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 [_] Check if no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State the registrant's revenues for its most recent fiscal year: $683,108 State the aggregate market value of the voting and non-voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant is approximately $696,160 as of April 10, 2004. State the number of shares outstanding of each of the registrant's classes of common equity as of the latest practicable date: 11,430,600 shares of the registrant's common stock were issued and outstanding as of April 15, 2004. DOCUMENTS INCORPORATED BY REFERENCE None Transitional Small Business Disclosure Format (check one): Yes [_] No [X] TABLE OF CONTENTS Page PART I Item 1. Description of Business 1 Item 2. Description of Property 6 Item 3. Legal Proceedings 6 Item 4. Submission of Matters to a Vote of Security Holders 6 PART II Item 5. Market for Common Equity and Related Stockholder Matters 7 Item 6. Management's Discussion and Analysis or Plan of Operation 7 Item 7. Financial Statements 9 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 9 Item 8A. Controls and Procedures 9 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons 9 Item 10. Executive Compensation 10 Item 11. Security Ownership of Certain Beneficial Owners and Management 11 Item 12. Certain Relationships and Related Transactions 12 Item 13. Exhibits and Reports on Form 8-K 12 Item 14. Principal Accountant Fees and Services 13 Signatures 13 This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements included in this report regarding our financial position, business strategy and other plans and objectives for future operations, and assumptions and predictions about future product demand, supply, manufacturing, costs, marketing and pricing factors are all forward-looking statements. When we use words like "intend," "anticipate," "believe," "estimate," "plan" or "expect," we are making forward-looking statements. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning. We have disclosed certain important factors that could cause our actual results to differ materially from our current expectations elsewhere in this report. You should understand that forward-looking statements made in this report are necessarily qualified by these factors. We are not undertaking to publicly update or revise any forward-looking statement if we obtain new information or upon the occurrence of future events or otherwise. ---------------------------- In this Annual Report, "Icy Splash," "the Company," "we," "us," and "our" each refers to Icy Splash Food & Beverage, Inc. PART I Item 1. Description of Business. Icy Splash is a producer and distributor of the brand name "Icy Splash" soft drinks, a line of carbonated beverages. We market and distribute two lines of soft drinks: (1) Icy Splash (TM) Clear, a naturally fruit-flavored, clear, carbonated soda; and (2) Icy Splash - Second Generation, a colored, fruit-flavored and cola, carbonated soda. The product line is offered to supermarket chains, grocery stores and convenience stores primarily in the New York, New Jersey and Connecticut area. Icy Splash has recently developed it's local distribution division. The Company sells other manufacturer's products, as well as Icy Splash clear to a local customer base and offers direct delivery to stores. This system helps management have a "hands-on" experience with the customers and the products at store level. Production of our "Icy Splash" soft drink products is entirely outsourced. Independent contractors produce components for production to exact specifications and ship them to an independent co-packer bottling facility. The components include pre-labeled bottles, caps, labels, flavors and preprinted boxes. The product is directly shipped from the bottling plant in trailer loads to distributors, chain stores and our warehouse in Brooklyn, New York. We distribute "Icy Splash" soft drinks as well as food and beverage products for other manufacturers from our Brooklyn, New York location to supermarkets, discount stores, delis and convenience stores in the New York City area. Sales and billing for local distribution are facilitated in Brooklyn as well. We employ two sales and marketing managers and a local sales and marketing group to carry out sales in New York City and Westchester County. Currently, we have a total of four employees. Two of our executive officers are the employees that facilitate the management and administration of the Company. We are a regional business, with distribution and sales limited primarily to the New York, New Jersey and Connecticut area. Our expansion, if any, beyond our current region would require hiring of additional qualified employees and reliance on national distributors, which would be a change from our operating policies followed since our inception. We intend to develop a network of distributors which will be given exclusivity and priority status for Icy Splash and other products. Our pilot project with our former distributor, New York Soft Drink Distributors (NYSD), has helped us develop working knowledge of all aspects of the distribution business in order to assist future distributors with management, marketing and logistics expertise as well as products. Icy Splash Products and Marketing The Company's flagship product, Icy Splash (TM) Clear, comes in four flavors: Blackberry; Wild Cherry; Lime Kiwi; and Raspberry & Boysenberry. Icy Splash products are produced using all natural flavors. The drink is most appealing to young adults, sport fans and health conscious individuals. We believe that customers from these market segments are health conscious, and prefer an all-natural flavored drink with no artificial colors or additives. We initially created Icy Splash Clear in order to focus on the clear carbonated beverage industry rather than competing with the larger beverage corporations who offer a more extensive line of soft drinks. Also, we have marketed Icy Splash as a leader of "new age" and water beverages in order to distanced ourselves from the more competitive leading soda brand names. Icy Splash (TM) Clear is strategically placed with bottled water and other alternative beverages on supermarket shelves to identify with the fast-growing alternative beverage market segment. The Company packages and distributes Icy Splash (TM) Clear in 24-packs of plastic 20 oz. bottles, although customers of retailers can purchase one bottle at a time. 1 The primary targets for Icy Splash (TM) Clear are the major supermarket chain stores in the New York, New Jersey and Connecticut area. In order to sell Icy Splash (TM) Clear in supermarkets and grocery stores, we must spend money to obtain shelf space for our product. In other words, the Company must pay retailers to have the Clear products placed on their shelves to be sold for a set amount of time. This arrangement is standard in the beverage industry. In addition to shelf space, the retailer will also promote Icy Splash (TM) Clear by publishing and distributing coupons and placing promotional displays on its shelves. Icy Splash - Second Generation is a line of soft drinks which was launched in December of 1998. It comes in 14 flavors including Natural Lemon Tea; Blue Raspberry; Orange; Pineapple; Fruit Punch; Root Beer; Black Cherry; Lemon Lime; Grape; Kola Champagne; Strawberry; Peach; Ginger Ale; and Cola. Although there are a few cola flavors, most of the line is fruit flavored and will capitalize on the growth trend for non-cola beverages. This new line of product has been developed with the same care, quality, and attention to the desires of consumers as the clear products. Unlike the Clear product, Icy Splash (TM) Second Generation has been developed for neighborhood grocery stores and small grocery chains in the New York City boroughs. This market requires a different type of distributor, with only local distributors functioning effectively in this marketplace. The sales persons typically deal with the store owners on a weekly basis. Icy Splash - Second Generation is packaged and distributed in cases of 24 oz., 2 liter and 3 liter bottles. Like our Clear product, customers of retailers can purchase the Second Generation product one bottle at a time. Rather than spending money to obtain shelf-space, as required when selling our Clear product to supermarkets and food chains, distributors of Icy Splash - Second Generation sell the product to store owners at prices and terms usually agreed upon on a weekly basis. Furthermore, our distributors promote the product through product give-away and significant retail price discounting. In 2002, gross revenues from Icy Splash - Clear, Icy Splash (TM) Second Generation and other products, before price discounts and other sales incentives, were $352,529 (77.2%), $33,488 (7.3%) and $70,709 (15.5%), respectively. In 2003, gross revenues from Icy Splash - Clear, Icy Splash (TM) Second Generation and other products, before price discounts and other sales incentives, were $318,017 (43.3%), $0 (0%) and $416,447 (56.7%), respectively. Historically, our other products sold included C & C beverages. Beginning in 2002 we became the distributor or exclusive distributor in the New York City area for some food products targeted for the same retail customer base as Icy Splash - Clear products. The food products include tea bags, instant soup and gourmet olives. In 2004, Icy Splash expanded its product line to include Health & Beauty Aids (HBA). Since the Company has expanded into local distribution, adding HBA to its product line was a natural development because of customer demand. The Company has been purchasing small quantities of HBA products from various manufacturers and plans to focus its distribution on a couple of lines and increase purchase quantities and buying power. HBA products are essential to the Company's customer base and helps increase sales in general but also the size of individual customer orders. Distribution of Icy Splash Products and Dependence on Major Customers The primary distributors of our products are Haddon House, Millbrook Distribution Services and Community Distributors. The product lines are distributed primarily to supermarket chains, and, to a lesser extent, to grocery stores, dollar stores and convenience stores in the New York, New Jersey and Connecticut area. For the year ended December 31, 2003, sales to one customer (Haddon House) exceeded 10% of the Company's total sales. The net sales to this customer were $152,621. The corresponding accounts receivable from this customer was $7,572. Beginning in 2002, new food products were distributed mainly through our local distribution operation with outsourced delivery and distribution services. Throughout 2003 the company's local distribution division has grown in sales from $60,342 in 2002 to $393,623 in 2003. The number of product lines increased from 5 lines in 2002 to 12 lines in 2003 and the number of independent sales people grew from 2 in 2002 to 7 in 2003. 2 Sources and Availability of Raw Materials and Suppliers We are dependent upon a ready supply of raw materials including, but not limited to, water, concentrates, syrups, carbon dioxide, plastic bottles, closures and other packaging materials. The prices for these materials are determined by the general market, and may change at any time. Furthermore, we are not engaged in any purchasing agreements with our suppliers which provide for mechanisms alleviating price fluctuations of raw materials. Therefore, increases in prices for any of these raw materials could have a material adverse impact on our financial position. While management believes that there are numerous alternative suppliers for the raw materials, the loss of a supplier could disrupt the Company's operations. While we believe that alternatives to these suppliers and manufacturers are readily available, the time to effect a change could adversely impact our business in the short term should a change become necessary. We are also subject to price changes from vendors of food and beverage products manufactured by others and distributed by us. We have agreements in place with our vendors of these products for pricing, exclusivity and/or volume commitments, which allows us to maintain pricing to customers. Competition The beverage industry is highly competitive. Our products are sold in competition with all liquid refreshments. The soft drink business is highly competitive and there can be no assurance that we will be able to compete successfully. Many of our competitors have far greater financial, operational and marketing resources than the Company. Furthermore, the soft drink industry is characterized by rapid changes, including changes in consumer tastes and preferences, which may result in product obsolescence or short product life cycles. As a result, competitors may be developing products of which we are unaware that may be similar or superior to our products. Accordingly, there is no assurance that we will be able to compete successfully or that our competitors or future competitors will not develop products that render our products less marketable. Competitors in the soft drink industry include bottlers and distributors of nationally advertised and marketed products as well as chain store and private label soft drinks. The principal method of competition include brand recognition, price and price promotion, retail space management, service to the retail trade, new product introductions, packaging changes, distribution methods and advertising. Icy Splash (TM) Clear is primarily competing in the clear carbonated beverage industry. Our direct competitors are large corporations such as Canada Dry, Adirondack and Crystal Bay. We believe that our flexibility and innovation in developing and implementing new methods of marketing and distributing our product will permit us to compete effectively against these competitors. Icy Splash (TM) Second Generation is primarily competing against bottlers and distributors of nationally advertised and marketed products, such as Top Pop, City Club and Stars and Stripes products, as well as chain store and private label soft drinks. Because of greater financial resources, as well as greater experience in the soft drink business, these companies have greater brand recognition of their products. Management believes that the Company's unique capability to offer products that are fresh, nutritious, economical and aesthetically appealing to the consumer will make Icy Splash a viable competitor in the soft drink industry. Food products distributed by us have competing products in the marketplace. Our strategy is to price food products competitively. However, we will discontinue products that prove to be too expensive or have too much competition. 3 Government Regulation The production, distribution and sale of our products are subject to the Federal Food, Drug and Cosmetic Act, the Occupational Safety and Health Act and various federal and state statutes regulating the production, sale, safety, advertising, labeling and ingredients of such products. Compliance with all such regulations may be time-consuming and expensive. To the best of management's knowledge, the Company complies with necessary state and federal laws necessary to operate a beverage production and distribution company in the state of New York. We cannot predict the impact of possible changes that may be required in response to future legislation, rules or inquires made from time to time by governmental agencies. Food and Drug Administration regulations may, in certain circumstances, affect the ability of the Company, as well as others in the industry, to develop and market new products. However, we do not presently believe that existing applicable legislative and administrative rules and regulations will have a significant impact on operations. We believe that we are in compliance with such laws. In all of our markets, we offer our bottled products in returnable containers in compliance with applicable recycling laws. Also, in compliance with applicable recycling laws, we employ the services of various recycling companies to recycle our used bottles. The cost to the Company of these recycling services were $2,650 in 2003 and $1,504 in 2002. Compliance with, or any violation of, current and future laws or regulations could require material expenditures by us or otherwise have a material adverse effect on our business. We require all vendors of other manufacturers products to include Icy Splash as additionally insured on their product liability insurance policies and provide us with insurance certificates. Trademarks The Company has a registered trademark, "Icy Splash", with the United States Patent and Trademark Office (Reg. No. 2,338,880). We attempt to avoid infringing patents of others by monitoring on a regular basis patents issued with respect to food processing equipment. Additionally, there is no assurance that we will be able to prevent competitors from using the same or similar marks, products or appearances of our products (See Note 10 to "Notes to Financial Statements"). Employees The Company presently has four employees, Joseph Aslan, the Company's President, Yifat Aslan, who conducts all of the operations of the Company, a Company sales manager, and a sales manager for Brooklyn and Bronx. The Company's sales force consists of 7 independent sales people. Charles Tokarz, the Company's Chief Financial Officer and Treasurer, primarily provides systems consulting, staff training and assistance in the preparation of our financial statements and disclosure required under the Securities Exchange Act of 1934. Mr. Tokarz serves as an independent contractor of the Company pursuant to his consulting agreement. See "Certain Relationships and Related Transactions." RISK FACTORS An investment in our common stock is speculative in nature and involves a high degree of risk. You should carefully consider the following risks and the other information contained in this prospectus before investing in the common stock offered hereby. The price of our common stock could decline due to any of these risks, and you could lose all or part of your investment. You also should refer to the other information included in this prospectus, including the financial statements and related notes. If any of the events described below were to occur, our business, prospects, financial condition or results of operations or cash flow could be materially adversely affected. When we say that something could or will have a material adverse effect on it, we mean that it could or will have one or more of these effects. INCREASES IN PRICES OF RAW MATERIALS USED IN THE COMPANY'S OPERATIONS COULD ADVERSELY EFFECT OUR FINANCIAL POSITION. 4 The Company will be dependent upon a ready supply of raw materials including, but not limited to, water, concentrates, syrups, carbon dioxide, plastic bottles, closures and other packaging materials. The prices for these materials are determined by the market, and may change at any time. Furthermore, we are not engaged in any purchasing agreements with our suppliers which provide for mechanisms alleviating price fluctuations of raw materials. Therefore, increases in prices for any of these raw materials could have a material adverse impact on our financial position. The loss of a supplier could disrupt the Company's operations and the time to effect a change to a new supplier could adversely impact our business in the short term should a change become necessary. The Company is also dependent on price increases for other manufacturers' products, but reserves the option to discontinue items that become too expensive. WE HAVE HAD LOSSES AND SUCH LOSSES MAY CONTINUE, WHICH MAY NEGATIVELY IMPACT OUR ABILITY TO ACHIEVE OUR BUSINESS OBJECTIVES. We had net loss of $40,648 for the year ended December 31, 2003 and a net loss of $522,190 for the fiscal year ended December 31, 2002. Our operations are subject to the risks and competition inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including whether we will be able to continue expansion of our revenue. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us. IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDING OUR BUSINESS OPERATIONS WILL BE HARMED AND IF WE DO OBTAIN ADDITIONAL FINANCING OUR THEN EXISTING SHAREHOLDERS MAY SUFFER SUBSTANTIAL DILUTION. We will require additional funds to sustain and expand our sales and marketing activities. We anticipate that we will require up to approximately $1,000,000 to fund our continued operations for the next twelve months, depending on revenue from operations. Additional capital will be required to effectively support the operations and to otherwise implement our overall business strategy. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations. Any additional equity financing may involve substantial dilution to our then existing shareholders. WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE BEVERAGE INDUSTRY. The beverage industry is highly competitive. Our products are sold in competition with all liquid refreshments. The soft drink business is highly competitive and there can be no assurance that we will be able to compete successfully. Many of our competitors have far greater financial, operational and marketing resources than the Company. Furthermore, the soft drink industry is characterized by rapid changes, including changes in consumer tastes and preferences, which may result in product obsolescence or short product life cycles. As a result, competitors may be developing products of which we are unaware which may be similar or superior to our products. Accordingly, there is no assurance that we will be able to compete successfully or that our competitors or future competitors will not develop products that render our products less marketable. Competitors in the soft drink industry include bottlers and distributors of nationally advertised and marketed products as well as chain store and private label soft drinks. The principal method of competition include brand recognition, price and price promotion, retail space management, service to the retail trade, new product introductions, packaging changes, distribution methods and advertising. See "Business - Competition." 5 THE SEASONAL NATURE OF OUR BUSINESS MAKES MANAGEMENT MORE DIFFICULT, SEVERELY REDUCES CASH FLOW AND LIQUIDITY DURING PARTS OF THE YEAR AND COULD FORCE US TO CURTAIL OPERATIONS Our business is seasonal. Our greatest volume of shipments and sales occur during the spring and summer months, which coincides with our second and third fiscal quarters. Our cash flow is strongest in the third and fourth fiscal quarters. Cool or wet whether during the spring or summer months could result in decreased sales of our products and could have an adverse effect on our financial position. We are likely to experience periods of negative cash flow throughout each year and a drop-off in business commencing each December, which could force us to curtail operations if adequate liquidity is not available. We cannot assure you that the effects of such seasonality will diminish in the future. WE MAY INCUR MATERIAL LOSSES AS A RESULT OF PRODUCT RECALL AND PRODUCT LIABILITY. We may be liable if the consumption of any of our products causes injury, illness or death. We also may be required to recall some of our products if they become contaminated or are damaged or mislabeled. A significant product liability judgment against us or a widespread product recall could have a material adverse effect on our business, financial condition and results of operations. Icy Splash is listed as additional insured on product liability insurance policies for all food items we distribute. OUR PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS OWN A CONTROLLING INTEREST IN OUR VOTING STOCK AND INVESTORS WILL NOT HAVE ANY VOICE IN OUR MANAGEMENT. Our officers and directors, in the aggregate, beneficially own approximately 70.3% of our outstanding common stock. As a result, these stockholders, acting together, will have the ability to control substantially all matters submitted to our stockholders for approval, including: o election of our board of directors; o removal of any of our directors; o amendment of our certificate of incorporation or bylaws; and o adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us. As a result of their ownership and positions, our directors and executive officers collectively are able to influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price. OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK. Our Common Stock is Subject to the "Penny Stock" Rules of the SEC and the Trading Market in Our Securities is Limited, Which Makes Transactions in Our Stock Cumbersome and May Reduce the Value of an Investment in Our Stock. The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: o that a broker or dealer approve a person's account for transactions in penny stocks; and o the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. 6 In order to approve a person's account for transactions in penny stocks, the broker or dealer must: o obtain financial information and investment experience objectives of the person; and o make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form: o sets forth the basis on which the broker or dealer made the suitability determination; and o that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Item 2. Description of Property. The Company utilizes 1200 square feet of office space (including the use of conference rooms and other common areas) at 535 Wortman Avenue, Brooklyn, New York 11208. The space is subletted from Aslanco, Inc., a corporation owned by Joseph Aslan, an executive officer and director of the Company. For the use of such premises, the Company pays a monthly rent of $400 to Aslanco, Inc. There is no written lease and the Company is considered to be a month-to-month tenant. Item 3. Legal Proceedings. On March 19, 1997, the Company filed suit against Icy Splash, Inc., a predecessor of the Company, and a former shareholder of Icy Splash, Inc. This case was concluded in the Supreme Court, Kings County. On March 5, 2003, the Kings County Supreme Court entered a permanent injunction against the defendants enjoining it from utilizing or misappropriating the Company's intellectual property including the Company's trademark "Icy Splash" or from misappropriating converting or interfering with the Company's mail, receivables, or other assets. From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results. Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted to a vote of security holders during the fourth quarter of 2003. 7 PART II Item 5. Market for Common Equity and Related Stockholder Matters. Since June 14, 2001, our common stock has been quoted on the OTC Bulletin Board under the symbol "IFBV". The following table sets forth the range of high and low bid quotations of our common stock for the periods indicated. The prices represent inter-dealer quotations, which do not include retail markups, markdowns or commissions, and may not represent actual transactions. HIGH LOW ------- ------ YEAR ENDED DECEMBER 31, 2003 First Quarter $0.51 $0.15 Second Quarter $0.51 $0.24 Third Quarter $1.10 $0.29 Fourth Quarter $0.85 $0.36 SECURITY HOLDERS At March 31, 2004 there were 11,430,600 shares our common stock outstanding which were held by approximately 36 stockholders of record. Dividends The Company has never declared or paid cash dividends on its common stock. The Company currently intends to retain earnings, if any, to support its growth strategy and does not anticipate paying cash dividends in the foreseeable future. Payment of future dividends, if any, will be at the discretion of the Company's Board of Directors after taking into account various factors, including the Company's financial condition, operating results, current and anticipated cash needs and plans for expansion. RECENT SALE OF UNREGISTERED SECURITIES None. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion is intended to provide an analysis of our financial condition and should be read in conjunction with our audited financial statements and the related footnotes. The matters discussed in this section that are not historical or current facts deal with potential future circumstances and developments. Such forward-looking statements include, but are not limited to, the development plans for our growth, trends in the results of our development, anticipated development plans, operating expenses and our anticipated capital requirements and capital resources. Our actual results could differ materially from the results discussed in the forward-looking statements. CRITICAL ACCOUNTING POLICIES Our financial statements are prepared based on the application of accounting principles generally accepted in the United States of America. These accounting principles require us to exercise significant judgment about future events that affect the amounts reported throughout our financial statements. Actual events could unfold quite differently than our previous judgments had predicted. Therefore the estimates and assumptions inherent in the financial statements included in this report could be materially different once those actual events are known. We believe the following policies may involve a higher degree of judgment and complexity in their application and represent critical accounting policies used in the preparation of our financial statements. If different 8 assumptions or estimates were used, our financial statements could be materially different from those included in this report. Revenue Recognition: - -------------------- The Company recognizes operating revenue at the point of passage of title, which is generally upon shipment of goods to customers. Price Discounts and Other Sales Incentives: - ------------------------------------------- Price discounts and other sales incentives given to customers are recorded as reductions of revenue in accordance with EITF 01-9. Inventories: - ------------ Inventories are stated at the lower of cost or market (first-in first-out method) and consist mainly of raw materials. Earnings Per Share: - ------------------- The Company utilizes Financial Accounting Standards Board Statement No. 128 "Earnings Per Share" ("SFAS 128"), which changed the method for calculating earnings per share. SFAS 128 requires the presentation of basic and diluted earnings per share on the face of the statement of operations. Earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding and for diluted earnings per share, also common equivalent shares outstanding. Income Taxes: - ------------- The Company utilizes Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes"("SFAS 109"), which requires the use of the asset and liability approach of providing for income taxes. SFAS 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 2002 Net sales for the Company increased by 70.6%, from $400,508 in 2002 to $683,108 in 2003. For the year ended December 31, 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 43.3%, 0% and 56.7%, respectively. For the year ended December 31, 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 77.2%, 7.3% and 15.5%, 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. Management's 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 $345,738 for 2003 versus 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. The Company's gross profit margin increased to 25.9% for the fiscal year ended December 31, 2003 from a gross loss of (3.5%) for the fiscal year ended December 31, 2002. The increase in profit margin was primarily caused by a write-off of $106,310 of bottle labels and $20,053 worth of expired Second Generation syrup during 2002. There have been no sales of Icy Splash(TM) Second Generation since 9 the first quarter of 2002 because the Company was unable to raise financing required to follow through on its marketing strategy and was forced to adjust to market conditions. The Company plans to re-launch Icy Splash(TM) Second Generation at a date not yet determined. At that time, the bottle labels, which are in the possession of the Company with a book value of $0, will be used in the production process with no associated income statement expenses. Selling expenses were $91,022 for the year ended 2003, compared with $59,272 for the year ended 2002, 13.3% and 14.8% of sales, respectively. The increase in selling expenses is due to the costs associated with Company's starting its own distribution activities in the New York City area. General and administrative expenses were $124,651 for the year ended 2003, compared with $444,741 for the year ended December 31, 2002, 18.2% and 111.0% of sales, respectively. The significant decrease was largely due to professional fees, which were $40,042 in 2003, compared with $386,314 in 2002, 5.9% and 96.5% of sales, respectively. The decrease in professional fees was due to the issuance of 2,000,000 shares of common stock in 2002 to a related party corporation owned by one of the Corporation's shareholders as compensation for consulting, marketing, distribution and production development assistance services rendered, while no such issuances were done during 2003. During 2002, the Company compensated consultants and employees with $334,000 of stock, which was recorded as professional fees. During 2002, 2,730,000 shares were issued for services rendered currently or to be rendered. 430,000 shares were being held by the Company at December 31, 2003 pending successful completion of contracted services. The 2,730,000 shares were issued for $400,000, the market price at the date of issuance. The $334,000 stock compensation expense for 2002 is $400,000 less $66,000, the value of the 430,000 shares held for completion of services. The 430,000 shares are classified as "Unearned compensatory stock" in the equity section of the balance sheet. The shares issued during 2002 are stated in the supplementary disclosure of the Statement of Cash Flows as $453,200 composed of $119,000 and $334,000 as described above. Bad debt expense was $7,155 for the 2003 fiscal year versus $9,105 for the 2002 fiscal year, 1.0% and 2.3% of sales, respectively. There was a loss from operations for 2003 of $38,489, compared with a loss of $518,014 for 2002, with an operating loss percentage of 5.6% for 2003 and 129.3% for 2002. Net loss and net loss as a percent of sales for 2003 were $40,648 and 6.0%, compared to $522,190 and 130.0% for 2002. Interest expense decreased from $4,176 to $2,159 for 2003 versus 2002. During 2003, the Company paid off a $65,000 note payable to a bank. LIQUIDITY AND CAPITAL RESOURCES Working capital decreased $12,490 from $15,069 in December 31, 2002 to $2,688 at December 31, 2003. Net cash flow used by operating activities was $72,221 and $37,545 for 2003 and 2002, respectively. The Company purchased $552 of fixed assets during 2003 and $2,600 during 2002. During 2003, the Company borrowed $201,852 from shareholders and paid back $67,384 and repaid $37,286 due to a related party. Also, a note payable to a bank for $65,000 was repaid. During 2003 the Company received $28,210 from a subscription receivable for common stock. 8 While the Company has no material capital commitments, we have experienced losses and except for the sale of common stock and net loans from a shareholder have negative cash flow for the year ended December 31, 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. OTHER 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 10 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. Investors are directed to consider, among other items, the risks and uncertainties discussed in documents filed by us with the Securities and Exchange Commission. We are not aware of any material trend, event or capital commitment which would potentially adversely affect liquidity. In the event a material trend develops, we believe that we will have sufficient funds available to satisfy working capital needs through lines of credit and the funds expected from possible future equity sales. Item 7. Financial Statements. Our Financial Statements are filed herewith immediately following the signature page. Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. None. Item 8A. CONTROLS AND PROCEDURES Evaluation of disclosure controls and procedures - ------------------------------------------------ As of December 31, 2003, we carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer. Based upon that evaluation, they concluded that our disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act. Changes in internal controls There were no significant changes in our internal controls or in other factors that could significantly affect those controls since the most recent evaluation of such controls. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. The following table sets forth the officers and directors of Icy Splash as of April 10, 2004, the date of this Report: Name Age Position - ---------------- ----- ------------------------------------------ Joseph Aslan 49 President and Director Charles Tokarz 57 Chief Financial Officer, Treasurer and Director Sy Aslan 60 Director Directors are elected in accordance with the Company's by-laws to serve until the next annual stockholders meeting and until their successors are elected in their stead. Icy Splash does not currently pay compensation to 11 directors for services in that capacity. Officers are elected by the Board of Directors and hold office until their successors are chosen and qualified, until their death or until they resign or have been removed from office. All corporate officers serve at the discretion of the Board of Directors. Joseph Aslan and Sy Aslan are brothers. Joseph Aslan has served as the Company's President and Director since the Company's inception in June of 1996. Prior to joining the Company, from 1994 to 1996, Mr. Aslan was the co-owner and manager of Tribeca Classics, Inc., his family-owned textile business. Mr. Aslan has over 15 years of experience in finance and business management. Charles Tokarz is the Chief Financial Officer, Treasurer and Director of the Company. He has held this position since April of 1998. He is also President and founder of Select CFO Partners, Inc., a company providing financial and accounting services to small public and private businesses. Prior to joining the Company, Mr. Tokarz served from 1997 to 1998 as Chief Financial Officer and Treasurer for Silver Star International, Inc., a publicly traded wholesale distributor of clothing and novelty items. From 1987 to 1997, he was self-employed as a Certified Public Accountant ("CPA"). From 1986 to 1987, Mr. Tokarz served as President of Gardner Capital, Corp., a small NASD broker-dealer specializing in equity financing for real estate projects. From 1984 to 1986, he served as Vice President of Finance for Retirement Corporation of America, a developer and manager of elderly housing and nursing home facilities. From 1978 to 1984, he served as Vice President and Controller for Fininvest, Ltd. and Appalachian Joint Venture, developers of luxury condominiums and office buildings. From 1976 to 1978, he served as Comptroller of the California Club, Inc., a country club owned by Caesar's World, Inc., a company listed on the New York Stock Exchange. He is a CPA and has over 20 years of business, financial and financial planning experience. Mr. Tokarz holds a BS and an MBA. Sy Aslan is a Director of the Company. He has held this position since the Company's incorporation in June of 1996. Since 1989, he has served as Director of Operations of United Management Technologies, a consulting firm focusing on developing and supporting effective management practices. He has been involved in the development and implementation of strategic management solutions for numerous Fortune 500 financial institutions for over 20 years. Mr. Aslan holds BS and MS degrees in management and Industrial Engineering. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS We are not aware of any material legal proceedings that have occurred within the past five years concerning any director, director nominee, or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Based solely upon a review of Forms 3, 4 and 5, and amendments thereto, furnished to the Company during fiscal year 2003, the Company is not aware of any director, officer or beneficial owner of more than ten percent of the Company's Common Stock that, during fiscal year 2003, failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934. Item 10. Executive Compensation. The following table sets forth certain compensation paid or accrued by us to certain of our executive officers during fiscal years ended 2003, 2002 and 2001. Summary Compensation Table 12
Other Annual Restricted Options LTIP Name & Principal Salary Bonus Compen- Stock SARs Payouts All Other Position Year ($) ($) sation ($) Awards ($) (#)(1) ($) Compensation - --------------------- --------- ------------ ----------- ------------ -------------- ----------- ------------ -------------- Joseph Aslan, 2003 3,203 0 0 0 0 0 0 CEO 2002 0 0 0 0 0 0 0 2001 0 0 0 0 0 0 0 - --------------------- --------- ------------ ----------- ------------ -------------- ----------- ------------ --------------
The Company does not have long term compensation or other compensation plans. Director Compensation For the fiscal year ended December 31, 2003, the Company's directors have not been compensated for their services as directors. Employment Agreements None. Item 11. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth certain information regarding beneficial ownership of the Company's common stock as of April 10, 2004, by (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each director of the Company; (iii) each executive officer of the Company; and (iv) all executive officers and directors of the Company as a group. Number of Shares Percentage of Common Beneficially Equity Beneficially Name of Beneficial Owner(1) Owned Owned(2) - -------------------------------- ------------------- ----------------------- Joseph Aslan(3) 7,640,000(3)(6) 66.8% Charles Tokarz(4) 100,000 * Sy Aslan(5) 300,000 2.6% All officers and directors as a group (3 persons) 8,040,000 70.3% - ---------------- * Represents less than 1%. (1) To our knowledge, except as set forth in the footnotes to this table, we believe that the persons named in this table have sole voting and investment power with respect to the shares shown. Except as otherwise indicated, the business address of each of the directors and executive officers in this table is as follows: Icy Splash Food & Beverage, Inc., 535 Wortman Avenue, Brooklyn, NY 11208. (2) Percentage beneficially owned is based upon 11,430,600 shares of common stock issued and outstanding as of April 15, 2004. (3) Joseph Aslan is the President and Director of the Company and a brother of Sy Alsan. The ownership stated for Mr. Aslan does not include 200,000 shares owned by Mr. Aslan's spouse or 310,000 shares of the Company's common stock owned by Mr. Aslan's daughter who is not a minor. (4) Charles Tokarz is the Chief Financial Officer, Treasurer and Director of the Company. (5) Sy Aslan is a Director of the Company and a brother of Joseph Aslan. (6) Aslanco, Inc., was issued 2,000,000 shares of common stock and is owned by Joseph Aslan. Item 12. Certain Relationships and Related Transactions. On March 19, 1998, we entered into a consulting agreement with Charles Tokarz, our Chief Financial Officer, Treasurer and Director, for services 13 rendered as Chief Financial Officer. The agreement provides that beginning March 20, 1998, Mr. Tokarz would provide services to the Company including assistance in correspondence and due diligence, liaisons with auditors, assistance in preparation of financial projections and assumptions, review of accounting reports and systems, analysis of acquisitions and preparation of quarterly unaudited financial statements. In consideration for these services, Icy Splash would provide payments of: (i) 20,000 shares of Icy Splash common stock; (ii) a retainer of $500; and (iii) payment of $35.00 per hour for services rendered as Chief Financial Officer. The Company believes that the agreement with Charles Tokarz was obtained on terms as favorable as could have been obtained from a non-affiliated party. The shares of stock were issued on February 23, 2001, cancelled during March 2001 in accordance with the advice of counsel and reissued on March 15, 2002. The Company reflected an accrual for compensation expense in 1998. In addition, an additional 40,000 shares of common stock were granted to this individual pursuant to December 2001 Board Resolution. These shares were valued at $0.16 per share, the fair market value at the time of grant. Our 1998 agreement with Mr. Tokarz has expired and we now utilize Mr. Tokarz's services on an hourly basis through his company, Select CFO, Inc. During September 1999, the Company initiated sales of product to a Distributor, Aslanco, Inc., which is owned by one of the Company's shareholders. For the year ended December 31, 2003, approximate sales to this distributor and accounts receivable were $55 and $0, respectively. For the year ended December 31, 2002, approximate sales to this distributor and accounts receivable were $34,420 and $0, respectively. For the year ended December 31, 2001, approximate sales to this distributor and accounts receivable were $45,423 and $25,836, respectively. At December 31, 2003 the Company owed Joe Aslan, one of its shareholders, $193,765. The loan which is unsecured and non-interest bearing is payable upon demand. The Company currently occupies approximately 1200 square feet of office space subletted from Aslanco, Inc., a corporation wholly owned by Joseph Aslan, an executive officer and director of the Company. See "Description of Property." Rent of $400 per month has been paid since January 1, 2000. Item 13. Exhibits and Reports on Form 8-K. (a) Exhibits
EXHIBIT NO. DESCRIPTION 3.1 Certificate of Incorporation of Icy Splash* 3.2 By-Laws of Icy Splash* 4.1 Specimen Common Stock certificate of Icy Splash* 10.1 Agreement between the Company and Pinnacle Capital, LLC.* 10.2 Consulting Agreement between Charles Tokarz and Icy Splash, dated March 19, 1998* 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.
- ------------- * 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. (b) Reports on Form 8-K Icy Splash did not file any reports on Form 8-K during the fourth quarter of the fiscal year ended December 31, 2003. 14 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees For the Company's fiscal year ended December 31, 2003, we were billed approximately $15,000 for professional services rendered for the audit of our financial statements. We also were billed approximately $9,000 for the review of financial statements included in our periodic and other reports filed with the Securities and Exchange Commission for our year ended December 31, 2003. Tax Fees For the Company's fiscal year ended December 31, 2003, we were billed approximately $3,000 for professional services rendered for tax compliance, tax advice and tax planning. All Other Fees The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal year ended December 31, 2003. SIGNATURES In accordance with section 13 or 15(d) of the exchange act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 14, 2004. ICY SPLASH FOOD & BEVERAGE, INC. By: /s/ Joseph Aslan ----------------------- Joseph Aslan, President and Director In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date - --------------------- -------------------------- --------------- /s/ Joseph Aslan President and Director April 14, 2004 - --------------------- Joseph Aslan /s/ Charles Tokarz Chief Financial Officer, April 14, 2004 - --------------------- Treasurer and Director Charles Tokarz /s/ Sy Aslan Director April 14, 2004 - --------------------- Sy Aslan 15 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders Icy Splash Food and Beverage, Inc. Brooklyn, New York We have audited the accompanying balance sheets of Icy Splash Food and Beverage, Inc. as of December 31, 2003 and 2002, and the related statements of operations, changes in shareholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Icy Splash Food and Beverage, Inc. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ LAZAR LEVINE & FELIX LLP ----------------------------------- LAZAR LEVINE & FELIX LLP New York, New York March 23, 2004 F-1 ICY SPLASH FOOD AND BEVERAGE, INC. BALANCE SHEETS AS OF DECEMBER 31, 2003 AND 2002 - ASSETS - 2003 2002 --------- --------- CURRENT ASSETS: Cash $ 2,688 $ 15,069 Accounts receivable, net of allowance for doubtful accounts of $8,479 for 2003 and $1,325 for 2002 (Notes 7 and 9) 38,784 11,368 Inventory (Note 3d) 107,539 57,324 --------- --------- TOTAL CURRENT ASSETS 149,011 83,761 --------- --------- FIXED ASSETS (Note 3c): 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 21,833 18,333 --------- --------- 1,068 4,016 --------- --------- Other assets 3,000 -- --------- --------- $ 153,079 $ 87,777 ========= ========= - LIABILITIES AND SHAREHOLDERS' EQUITY - CURRENT LIABILITIES: Note payable (Note 4) $ -- $ 65,000 Accounts payable 93,535 47,642 Accrued expenses and other current liabilities 3,552 3,889 Shareholders' loans (Note 5) 193,765 59,297 Related party loans (Note 7a) -- 37,285 Income taxes payable (Notes 3e and 6) 457 456 --------- --------- TOTAL CURRENT LIABILITIES 291,309 213,569 --------- --------- COMMITMENTS AND CONTINGENCIES (Notes 2,7,9 and 10) SHAREHOLDERS' EQUITY (DEFICIT) (Notes 7 and 8): Preferred stock, $.001 par value, 1,000,000 shares authorized, zero shares issued and outstanding for 2002 and 2001 -- -- Common stock, $.001 par value, 50,000,000 shares authorized, 11,430,600 and 11,435,500 shares issued and outstanding for 2002 and 2001, respectively 11,431 11,436 Additional paid-in capital 869,441 854,488 Accumulated deficit (953,102) (912,454) Unearned compensatory stock (66,000) (66,000) Stock subscription receivable -- (13,262) --------- --------- (138,230) (125,792) --------- --------- $ 153,079 $ 87,777 ========= ========= The accompanying notes are an integral part of these financial statements. F-2 ICY SPLASH FOOD AND BEVERAGE, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 2003 2002 --------- --------- NET SALES (Notes 3i,3l, 7 and 9) $ 683,108 $ 400,508 --------- --------- COST OF GOODS SOLD: Inventory - beginning of year 57,324 173,845 Purchases 556,139 297,988 --------- --------- 613,463 471,833 Inventory - end of year 107,539 57,324 --------- --------- TOTAL COST OF GOODS SOLD 505,924 414,509 --------- --------- GROSS PROFIT (LOSS) 177,184 (14,001) --------- --------- OPERATING EXPENSES: Selling expenses 91,022 59,272 General and administrative expenses 124,651 444,741 --------- --------- 215,673 504,013 --------- --------- (L0SS) FROM OPERATIONS (38,489) (518,014) OTHER INCOME (EXPENSES): Interest expense (2,159) (4,176) --------- --------- (LOSS) BEFORE TAXES (40,648) (522,190) Provision for income taxes (Notes 3e and 6) -- -- --------- --------- NET (LOSS) $ (40,648) $(522,190) ========= ========= (LOSS) PER SHARE (Note 3j): Basic and diluted $ -- $ (.06) ========= ========= The accompanying notes are an integral part of these financial statements F-3 ICY SPLASH FOOD AND BEVERAGE, INC. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Common Stock Additional Stock ----------------------- Paid-in Accumulated Unearned Subscription Shares Amount Capital Deficit Compensation Receivable Total --------- --------- --------- --------- ------------ ------------ --------- BALANCE, DECEMBER 31, 2001 6,865,500 6,866 409,696 (390,264) -- (143,100) (116,802) Issuance of common stock (Note 8) 4,570,000 4,570 574,630 -- -- -- 579,200 Stock subscription write-down (Note 8) -- -- (129,838) -- -- 129,838 -- Stock issued and to be earned as compensation (Note 8) -- -- -- -- (66,000) -- (66,000) Net loss, December 31, 2002 -- -- -- (522,190) -- -- (522,190) ----------- ----------- ----------- ----------- ----------- ----------- ----------- BALANCE, DECEMBER 31, 2002 11,435,500 11,436 854,488 (912,454) (66,000) (13,262) (125,792) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Stock cancelled (Note 8) (4,900) (5) 5 -- -- -- -- Payment of stock subscription receivable -- -- 14,948 -- -- 13,262 28,210 Net loss, December 31, 2003 -- -- -- (40,648) -- -- (40,648) ----------- ----------- ----------- ----------- ----------- ----------- ----------- BALANCE, DECEMBER 31, 2003 11,430,600 $ 11,431 $ 869,441 $ (953,102) $ (66,000) $ -- $ (138,230) =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. F-4 ICY SPLASH FOOD AND BEVERAGE, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: 2003 2002 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) $ (40,648) $(522,190) Adjustments to reconcile net (loss) to net cash (used in) operating activities: Depreciation 3,500 2,950 Provision for bad debts 7,155 9,105 Stock issued for services -- 453,200 Changes in assets and liabilities: (Increase) decrease in accounts receivable (34,570) 20,429 (Increase) decrease in inventories (50,215) 116,521 Decrease in prepaid expenses -- 3,369 Increase in other assets (3,000) -- Increase (decrease) in accounts payable 45,894 (4,041) (Decrease) in accrued expenses and other current liabilities (337) (116,888) --------- --------- Net cash (used) by operating activities (72,221) (37,545) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (552) (2,600) --------- --------- Net cash (used in) investing activities (552) (2,600) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the sale of common stock -- 60,000 Proceeds from subscriptions receivable 28,210 -- Repayment of note payable (65,000) -- Proceeds from shareholders loans 201,852 88,546 Repayments of shareholders loans (67,384) (134,585) Proceeds from related party loans -- 48,500 Repayments of related party loans (37,286) (11,215) --------- --------- Net cash provided by financing activities 60,392 51,246 --------- --------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (12,381) 11,101 Cash and cash equivalents, at beginning of year 15,069 3,968 --------- --------- CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 2,688 $ 15,069 --------- --------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash used during the period for: Income taxes paid $ 455 $ 455 Interest paid $ 2,159 $ 3,841 SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS 3,140,000 shares of common stock issued at market value as compensation for professional services rendered $ -- $ 453,200 430,000 shares of common stock issued at market value as compensation for professional services to be rendered $ -- $ 66,000 The accompanying notes are an integral part of these financial statements. F-5 ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 NOTE 1 - NATURE OF BUSINESS: Icy Splash Food and Beverage, Inc. (the "Company") is the producer and distributor of an all natural, fruit flavored, clear and colored, carbonated, refreshing soft drink, as well as the distributor of specialty foods. The product lines are currently supplied to supermarkets, grocery stores and convenience stores in the tri-state New York, New Jersey and Connecticut area. The Company was incorporated in the State of New York on June 17, 1996. NOTE 2 - GOING CONCERN As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $953,102 and has a deficit in working capital of $142,298 as of December 31, 2003. 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. 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 - 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 these estimates, management does not expect such variances, if any, to have a material effect on the financial statements. (b) Concentration of Credit Risk/Fair Value: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company, from time-to-time, may maintain cash balances which exceed the federal depository insurance coverage limit. The Company performs periodic reviews of the relative credit rating of its bank to lower its risk. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term nature of these items. (c) Fixed Assets and Depreciation: Fixed assets are reflected at cost. Depreciation and amortization are provided on a straight-line basis over the following useful lives: Warehouse equipment 5 years Office equipment 5 years Production equipment 7 years Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. F-6 ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): (d) Inventories: Inventories are stated at the lower of cost or market (first-in first-out method) and consist mainly of raw materials. Inventory consists of the following: 2003 2002 --------- --------- Finished product $ 74,529 $ 45,953 Flavoring, bottles and packaging materials 33,010 11,389 -------- -------- $ 107,539 $ 57,342 ======== ======== During the first quarter of 2002, the Company suspended the production of its Second Generation line of products. Although Management intends to re-launch the product line in the future, $20,053 of expired syrup was charged to cost of sales during 2002. Additionally, $106,310 of bottle labels were charged to cost of sales during 2002 because their utility had been impaired due to the uncertainty of the timing and resumption of producing the product line. The labels remain in possession of the Company and the book value of the label inventory is $0 at December 31, 2003. (e) Income Taxes: The Company utilizes Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes"("SFAS 109"), which requires the use of the asset and liability approach of providing for income taxes. SFAS 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company has a net operating loss carry forward as of its year end, December 31, 2003, of approximately $840,000 which may be applied against future taxable income, and which begins to expire in the years 2012 and 2013 (See Note 6). (f) Statements of Cash Flows: For purposes of the statements of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. (g) Comprehensive Income: In June 1997, the Financial Accounting Standards Board issued Statement No. 130 "Reporting Comprehensive Income"("SFAS 130"), which prescribes standards for reporting other comprehensive income and its components. SFAS 130 was effective for fiscal years beginning after December 15, 1997. Since the Company currently does not have any items of other comprehensive income, a statement of comprehensive income is not required. (h) Advertising Costs: Advertising costs, which are included in selling expenses, are expensed as incurred. For the years ended December 31, 2003 and 2002 advertising costs, including promotion, aggregated $0 and $5,618, respectively. F-7 ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): (i) Revenue Recognition: The Company recognizes operating revenue at the point of passage of title, which is generally upon shipment of goods to customers, except for sales to a related party (See Note 7a), where the Company recognizes revenue upon shipment by the related party to its customer. (j) Earnings Per Share: The Company utilizes Financial Accounting Standards Board Statement No. 128 "Earnings Per Share" ("SFAS 128"), which changed the method for calculating earnings per share. SFAS 128 requires the presentation of basic and diluted earnings per share on the face of the statement of operations. Earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding and for diluted earnings per share, also common equivalent shares outstanding. For 2003 and 2002, the impact of conversion of warrants would have been anti-dilutive and therefore were not considered in the calculation of diluted earnings per share. The following average shares were used for the computation of basic and diluted earnings per share: Year ended December 31, 2003 2002 ------- ------- Basic 11,434,869 8,711,308 Diluted 11,434,869 8,711,308 (k) Stock-Based Compensation: Financial Accounting Standards Board Statement No. 123 "Accounting For Stock Based Compensation" ("SFAS 123") requires the Company to either record compensation expense or to provide additional disclosure with respect to stock awards and stock option grants made after December 31, 1994. The accompanying notes to financial statements include the disclosures required by SFAS No. 123. (See also - Recent Pronouncements - SFAS No. 148) (l) Price Discounts and Other Sales Incentives: Price discounts and other sales incentives given to customers are recorded as reductions of revenue in accordance with EITF 01-9. (m) Reclassifications: Certain items in the 2002 financial statements have been reclassified to conform with the current year's presentation. (n) Recent Pronouncements: In May 2003, Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," was issued effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The adoption of SFAS No. 150 did not result in the reclassification of any financial instruments in the Company's financial statements. F-8 ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): In April 2003, SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," was issued effective for contracts entered into or modified after June 30, 2003, with certain exceptions. This statement amends and clarifies financial accounting and reporting for derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activity." The Company does not currently engage in hedging activities and the adoption of this statement did not have a material effect on its financial statements. In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN No. 46"). FIN No. 46 addresses consolidation by business enterprises of variable interest entities that posses certain characteristics. The interpretation requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities and results of operations of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. This interpretation applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. In December 2003, the FASB issued FASB Interpretation No. 46R, "Consolidation of Variable Interest Entities - an interpretation of ARB 51 (revised December 2003)" ("FIN No. 46R"), which includes significant amendments to previously issued Fin No. 46. Among other provisions, FIN No. 46R includes revised transition dates for public entities. The Company is now required to adopt the provisions of FIN No. 46R no later than the end of the first reporting period that ends after March 15, 2004. The adoption of this interpretation is not expected to have a material effect on the Company's financial statements or results of operations. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment to FASB Statement No.123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods for transition to SFAS No. 123's fair value method of accounting for stock-based compensation. As amended by SFAS No. 148, SFAS No. 123 also requires additional disclosure regarding stock-based compensation in annual condensed interim financial statements. NOTE 4 - NOTE PAYABLE: On June 25, 1999, the Company received a bank loan aggregating $65,000 with an annual interest rate of 4.5%, payable on December 22, 1999, which was subsequently renewed with an annual interest rate of 6.19% and was due on June 22, 2003. The bank loan which was secured by certificates of deposit belonging to two major shareholders, was repaid during 2003. NOTE 5 - LOANS PAYABLE - SHAREHOLDER: At December 31, 2003 and 2002 , the Company owed one of its shareholders $193,765 and $59,297, respectively. 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. F-9 ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 NOTE 6 - INCOME TAXES: The tax effects of temporary differences that give rise to deferred tax assets are presented below: 2003 2002 -------- -------- Accounts receivable $ 4,000 $ 1,000 Net operating losses 385,000 245,000 Valuation allowances (389,000) (246,000) -------- -------- $ -- $ -- ======== ======== A full valuation allowance was provided for such deferred tax assets since, in managements' opinion, the realizability of such assets was uncertain in light of the operating losses incurred to date. The Company periodically reviews the adequacy of the valuation allowance and will recognize benefits only if a reassessment indicates that it is more likely than not that the benefits will be realized. NOTE 7 - 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 a corporation which is owned by one of the Company's shareholders. For the year ended December 31, 2003, approximate sales to the distributor and accounts receivable were $55 and $0, respectively. For the year ended December 31, 2002, approximate sales to the distributor and accounts receivable were $34,420 and $0, respectively. During the third quarter of 2002, the Company borrowed $48,500, of which $11,215 was repaid at December 31, 2002, from the related entity. The remaining balance was repaid during 2003. This loan which was unsecured and non-interest bearing was payable upon demand. Accordingly, it had been reflected as a current liability on the Company's balance sheet. During the third quarter of 2002, the Company issued 2,000,000 shares of common stock to the related entity. The stock issuance was compensation for consulting, marketing, distribution and product development assistance services rendered (see Note 8). The Company currently occupies approximately 1,200 square feet of office space sublet from the related entity. The Company paid rent of $4,800 for 2003 and $4,800 for 2002. There is no written lease and the Company is considered to be a month-to-month tenant. (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 8). F-10 ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 NOTE 8 - STOCKHOLDERS' EQUITY: 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 appeared 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. During 2003 the remaining shares were sold for $28,210, an amount $14,948 greater than their book value. 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 December 31, 2002, 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 (Note 7b), 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. F-11 ICY SPLASH FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 NOTE 9 - ECONOMIC DEPENDENCY: For the year ended December 31, 2002, sales to one customer exceeded 10% of the Company's total sales. The sales to this customer were $204,244. The corresponding accounts receivable from this customer was $8,089. For the year ended December 31, 2003, sales to one customer each exceeded 10% of the Company's total sales. The sales to this customer were $152,621. The corresponding accounts receivable from this customer was $7,572. NOTE 10 - COMMITMENTS AND CONTINGENCIES: Litigation: On March 19, 1997, the Company filed suit against Icy Splash, Inc., a predecessor of the Company, and a former shareholder of Icy Splash, Inc. This case was concluded in the Supreme Court, Kings County. The Company has secured a permanent injunction against the defendants enjoining them from misappropriating the Company's intellectual property rights, including the use of the trademark "Icy Splash". This case was concluded in the Supreme Court, Kings County. On March 5, 2003, the Kings County Supreme Court entered a permanent injunction against Icy Splash, Inc., a predecessor of the Company, and a former shareholder of Icy Splash, Inc. enjoining them from utilizing or misappropriating the Company's intellectual property including the Company's trademark "Icy Splash" or from misappropriating converting or interfering with the Company's mail, receivables, or other assets. Consulting Agreement: On March 19, 1998, the Company entered into a consulting agreement with an individual to act as the Company's Chief Financial Officer. As part of the consideration for these services, the Company would issue 40,000 shares of common stock, at a value of $3,200. The value of $.08 per share was determined based upon the estimated value placed on each share of the Company's stock that was sold within each $5 unit (consisting of 50 shares of stock and 95 warrants) of the 10,000 units sold during 1998 through a private placement memorandum. The shares of stock were issued on February 23, 2001, cancelled during March 2001 in accordance with the advice of counsel and reissued on March 15, 2002. The Company reflected an accrual for compensation expense in 1998. In addition, an additional 40,000 shares of common stock were granted to this individual pursuant to December 2001 Board of Directors' Resolution. Theses shares were valued at $0.16 per share, the fair market value at the time of grant. The Company recorded an accrual for compensation expense in the amount of $6,400 in 2001 to reflect the above offering. These shares were issued March 15, 2002. Lease: On November 7, 2003, the Company entered into an operating lease for a delivery truck. The lease term is three years. The lease payment consists of a base amount and a mileage charge. Under the terms of the lease, all maintenance and repairs are paid by the lessor. Minimum lease payments (which exclude mileage) are $13,692 for 2004, $13,692 for 2005 and $11,585 for 2006. F-12 EX-31.1 3 v02643_ex31-1.txt EXHIBIT 31.1 ICY SPLASH FOOD & BEVERAGE, INC. OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 I, Joseph Aslan, the Chief Executive Officer of Icy Splash Food & Beverage, Inc., certify that: 1. I have reviewed this Form 10-KSB of Icy Splash Food & Beverage, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: April 14, 2004 /s/ Joseph Aslan - ---------------- Joseph Aslan Chief Executive Officer EX-31.2 4 v02643_ex31-2.txt EXHIBIT 31.2 ICY SPLASH FOOD & BEVERAGE, INC. OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 I, Charles Tokarz, the Chief Financial Officer of Icy Splash Food & Beverage, Inc., certify that: 1. I have reviewed this Form 10-KSB of Icy Splash Food & Beverage, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: April 14, 2004 /s/ Charles Tokarz - ------------------ Charles Tokarz Chief Financial Officer EX-32.1 5 v02643_ex32-1.txt EXHIBIT 32.1 ICY SPLASH FOOD & BEVERAGE, INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Icy Splash Food & Beverage, Inc. (the Company) on Form 10-KSB for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Joseph Aslan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 has been provided to Icy Splash Food & Beverage, Inc. and will be retained by Icy Splash Food & Beverage, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Date: April 14, 2004 /s/ Joseph Aslan - ----------------- Joseph Aslan Chief Executive Officer EX-32.2 6 v02643_ex32-2.txt EXHIBIT 32.2 ICY SPLASH FOOD & BEVERAGE, INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Icy Splash Food & Beverage, Inc. (the Company) on Form 10-KSB for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Charles Tokarz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 has been provided to Icy Splash Food & Beverage, Inc. and will be retained by Icy Splash Food & Beverage, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Date: April 14, 2004 /s/ Charles Tokarz - ------------------- Charles Tokarz Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----