As filed with the Securities and Exchange Commission on May 21, 1999
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U.S. Securities and Exchange Commission
Washington, D. C. 20549
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Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
of the Securities Exchange Act of 1934
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ICY SPLASH FOOD & BEVERAGE, INC.
(Name of small business issuer in its charter)
New York 11-3329510
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Icy Splash Food & Beverage, Inc.
9-15 166th Street, Suite 5-B
Whitestone, New York 11357
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (718) 746-3585
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
(Title of Class)
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Icy Splash Food & Beverage, Inc.
CROSS REFERENCE SHEET
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Item Number and Caption in Form 10-SB Caption in Form 10-SB
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<S> <C> <C>
1. Item 101. Description of Business ......................... Description of Business
2. Item 303. Management's Discussion and Analysis Management's Discussion and
or Plan of Operation ....................................... and Analysis
3. Item 102. Description of Property ......................... Description of Property
4. Item 403. Security Ownership of Certain Security Ownership of Certain
Beneficial Owners and Management ........................... Beneficial Owners and Management
5. Item 401. Directors, Executives Officers, Directors, Executives Officers,
Promoters and Control Persons .............................. Promoters and Control Persons
6. Item 402. Executive Compensation........................... Executive Compensation
7. Item 404. Certain Relationships and Related Certain Relationships and Related
Transactions ............................................... Transactions
8. Item 202. Description of Securities ....................... Description of Securities
9. Item 201. Market for Common Equity and Market for Common Equity and
Related Stockholder Matters ................................ Related Stockholder Matters
10. Item 103. Legal Proceedings ............................... Legal Proceedings
11. Item 304. Changes in and Disagreements with Changes in and Disagreements with
Accountants on Accounting and Financial Accountants and Financial
Disclosure ................................................. Disclosure
12. Item 701. Recent Sales of Unregistered Securities ......... Recent Sales of Unregistered
Securities
13. Item 702. Indemnification of Directors and Indemnification of Directors and
Officers ................................................. Officers
14. Item 601. Index to Exhibits ............................... Index to Exhibits
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Icy Splash Food & Beverage, Inc.
TABLE OF CONTENTS
Part Item Description of Item Page
- ---- ---- -------------------
Part I Item 1 Description of Business ............................. 5
Business Development ........................... 5
Business of the Issuer ......................... 5
Reports to Securities Holders .................. 10
Item 2 Management's Discussion and Analysis and Results of
Operations .......................................... 11
Forward-Looking Statements ..................... 11
Results of Operation ........................... 11
Liquidity and Capital Resources ................ 13
Seasonality .................................... 15
Impact of the Year 2000 on Information Systems . 15
Item 3 Description of Property ............................. 16
Item 4 Security Ownership of Certain Beneficial Owners and
Management .......................................... 16
Item 5 Directors, Executive Officers, Promoters and Control
Persons ............................................. 18
Directors and Executive Officers ............... 18
Business Experience ............................ 18
Directors of Other Reporting Companies ......... 19
Significant Employees .......................... 19
Involvement in Certain Legal Proceedings ....... 19
Item 6 Executive Compensation .............................. 19
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Item 7 Certain Relationships and Related Transactions ...... 20
Item 8 Description of Securities ........................... 20
Common Stock ................................... 20
Preferred Stock ................................ 21
Private Placement Units ........................ 21
"Anti-Takeover" Provisions ..................... 21
Part II Item 1 Market Price of and Dividends on Registrant's Common
Equity and Related Shareholder Matters .............. 22
Market Information ............................. 22
Holders ........................................ 22
Dividends ...................................... 22
Item 2 Legal Proceedings ................................... 22
Item 3 Changes in and Disagreements with Accountants ....... 22
Item 4 Recent Sales of Unregistered Securities ............. 23
Item 5 Indemnification of Directors and Officers ........... 24
Part F/S Item 1 Financial Statements ................................ 26
Part III Item 1 Index to Exhibits ................................... 26
Item 2 Index to Financial Statements........................ 27
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
a. Business Development
Icy Splash Food & Beverage, Inc. is a New York Corporation which was
incorporated on June 17, 1996 (hereinafter, "Icy Splash;" "the Company;" "we;"
"us;" and "our;" will each refer to Icy Splash Food & Beverage, Inc.). We were
authorized to issue an aggregate of 200 shares of no par common stock.
As of May 6, 1998, we were authorized to issue 50,000,000 shares of common
stock with a par value of $0.001 per share and 1,000,000 shares of preferred
stock with a par value of $0.001 per share. As of May 21, 1999, 6,600,000 shares
of our authorized shares of common stock were issued and outstanding.
To our knowledge we have not been subject to bankruptcy, receivership or
any similar proceedings.
Icy Splash maintains an office at 9-15 166th Street, Suite 5-B, Whitestone,
New York 11357.
b. Business of the Issuer
In 1997, the United States soft drink industry reported annual sales of
approximately $55 billion. Soft drinks are carbonated beverages, excluding clear
carbonated beverages and natural sodas, which belong to a category called "New
Age" or "Alternative Beverages." Alternative Beverage sales were approximately
$13 billion in 1997. This category of alternative beverages include still
waters, teas, juices, juice drinks, sparkling waters and natural sodas. Icy
Splash is a producer and distributor of Icy Splash soft drinks, an innovative
and refreshing line of carbonated beverages. We market and distribute two lines
of soft drinks: (1) Icy Splash - 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.
Production and distribution of our products is entirely outsourced.
Independent contractors produce components for production to exact
specifications and ship them to an
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independent co-packer bottling facility. The components include prelabeled
bottles, caps, flavors and preprinted boxes. The product is directly shipped
from the bottling plant in trailer loads to distributors and chain stores. The
direct delivery system has allowed us to eliminate our warehouse facility, which
we maintained until June 1997. This has greatly reduced overhead expenses and
has improved our bottom line.
Acquisition of Distributors and Strategic Alliances: As part of our
business operations, we expect to acquire full-service distributors and
marketers of our products and other beverage products. Through direct ownership
of distribution facilities, we expect to lower distribution costs and increase
distribution volume of Icy Splash products. Also, the distribution of large name
brand beverages will give management greater negotiating power to command shelf
space for Icy Splash products in more competitive markets. To date, we have not
entered into any agreements or letters of intent to purchase such entities.
We also intend to enter into strategic alliances with other full-service
distributors. Currently, we are developing a strategic alliance with NY Soft
Drink Distributors ("NYSD"), a full-service distributor of Icy Splash and other
beverage products, incorporated in New York, which we view as an acquisition
candidate. This strategic alliance has provided management with valuable
opportunities to research and develop Icy Splash products for new and existing
markets. It has also given management hands-on experience in the distribution
side of our business. As a result of management's direct involvement with NYSD,
sales volume for NYSD has grown from approximately $38,000 during the first week
of operations at January 1, 1999 to approximately $70,000 in the second week of
April, and profit margins have increased from 10.8% to 14%.
The strategic alliance with NYSD has allowed us to get "hands on"
experience in distributing, marketing and promoting our products to retail
sellers. Since part of management's business plan is to acquire full service
distributors and to form strategic alliances with other distributors in the
Tri-state area, the relationship with NYSD has helped us to develop operating
and financial control systems and procedures to apply to other distributors.
While the relationship between Icy Splash and NYSD is synergistic, our
management is shielding the Company from the risks of start-up losses and
capital drain by taking personal ownership and financial responsibility of NYSD.
See "Certain Relationships and Related Transactions."
The Product and Marketing: The Company's flagship product, Icy Splash -
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 generally
well informed and 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
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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 distance
ourselves from the more competitive leading soda brand names. Icy Splash - 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 - Clear in 24-
packs of plastic 20 oz. bottles, although customers of retailers can purchase
one bottle at a time.
The primary targets for Icy Splash - Clear are the major supermarket chain
stores in the New York, New Jersey and Connecticut area. In order to sell
Icy-Splash - 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 "new age" and water beverage
retailing. In addition to shelf space, the retailer will also promote Icy Splash
- - Clear by publishing and distributing coupons and placing promotional displays
on its shelves.
Icy Splash - Second Generation is a new 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 product.
Unlike the clear product, Icy Splash - Second Generation has been developed
for the "Up and Down the Street" market, consisting of 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 24-packs of plastic 24 oz. bottles. Most flavors are
also sold in plastic 2 and 3 liter bottles. Again, customers of retailers can
purchase one bottle at a time.
Rather than spending money to obtain shelf space, as required in "new age"
and water retailing 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.
Distribution: The primary distributors of our products are I Epstein,
Hadden House and NYSD. The product line is distributed primarily to supermarket
chains, and, to a lesser
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extent, to grocery stores and convenience stores in the New York, New Jersey and
Connecticut area. We currently sell to the following supermarket chain stores:
Waldbaums NY; Key Food NY; Food Town NJ; King Kullen NJ; Edwards NJ; Shop Rite
NJ; C-Town NY; Bravo NY; Associated NY; A&P NY/NJ; Acme NJ; and Drug Fair Cost
Cutters NJ. Our products are also being sold in D'agostino and Gristedes
supermarkets in Manhattan. Some of the aforementioned retailers only carry our
products in the summer months. While Icy Splash enjoys a long term relationship
with I Epstein, Hadden House and NYSD, the loss of these companies as
distributors could have an adverse effect upon our business.
Status of Publicly Announced New Products or Services: To date, we have not
yet begun to sell previously announced new products or services. We had
announced that we will obtain new food and beverage products through development
and acquisition of intellectual property rights, exclusive distribution rights
for domestic and foreign products and distributorships owning rights to viable
products. Although these plans have not yet been fully developed, management
anticipates that future products will be introduced to the public in the near
future, although there can be no assurance.
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 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.
Icy Splash - Clear is primarily competing in the clear carbonated beverage
industry. Our direct competitors are large corporations such as Mystic, 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 - 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
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greater financial resources, as well 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.
Our products will be differentiated from those of our competitors on the basis
of taste, appearance and quality at competitive price points.
Sources and Availability of Raw Materials and Suppliers and Dependence on
Major Customers: We will specialize in production and distribution of soft
drinks. Therefore, 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. 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.
To date, we believe that our business is not dependent on any major
customer.
Patents and Trademarks: The Company's registered trademark is "Icy
Splash(R)". We intend to apply for numerous United States and International
patents, trademarks and copyrights in connection with certain of our products.
Although intellectual property may derive the Company some value, at the present
time, we believe that other factors, such as product innovations, are of more
significance in the Company's particular industry. We attempt to avoid
infringing patents of others by monitoring on a regular basis patents issued
with respect to food processing equipment.
All trademarks or service marks appearing in this Form 10-SB that do not
relate to our products are the property of their respective holders.
Governmental Approval and Effect of Governmental 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
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state of New York.
We cannot predict the impact of possible changes that may be required in
response to future legislation, rules or inquiries 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.
Employees: Because all production, distribution and marketing of our
products are outsourced to independent contractors, the Company has not hired
any full or part-time employees.
Amount Spent on Research and Development: To date, we have not made any
expenditures for research and development of our products.
Cost and Effects of Compliance with Environmental Laws: We believe that our
current environmental compliance programs adequately address federal, state and
local environmental laws and 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
$2,187.81 in 1997, $3,145.59 in 1998 and $732.61 for the first three months
ended March 31, 1999. 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.
c. Reports to Security Holders
Prior to filing this Form 10-SB, we have not been required to deliver
annual reports. However, once we become a reporting company, we shall deliver
annual reports to securities holders as required by the Securities Exchange Act
of 1934 (the "Exchange Act"), as amended. Also, we shall deliver annual reports
to securities holders as required by the rules or regulations of any exchange
upon which our shares may be traded. If we are not required to deliver annual
reports, it is not likely that we will go to the expense of producing and
delivering such reports. If we are required to deliver annual reports, such
reports will contain audited financial statements as required.
Prior to the filing of this Form 10-SB, we have not filed reports with the
Securities and Exchange Commission (the "Commission"). Once we become a
reporting company, management anticipates that Forms 3, 4, 5, 10-K-SB, 10-Q-SB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If we issue additional shares, then we may file
additional registration statements for those shares.
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The public may read and copy any materials Icy Splash files with the
Commission at the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission. The Internet address of the Commission's Web
site is http://www.sec.gov.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION
a. Forward-Looking Statements
Some of the information in this Form 10-SB may constitute forward-looking
statements which are subject to various risks and uncertainties. Such statements
can be identified by the use of forward-looking terminology such as "may,"
"will," "expect," "anticipate," "estimate," "continue," "plan," or other similar
words. These statements discuss future expectations, contain projections of
results of operations or of financial conditions or state other forward-looking
information. Actual results could differ materially from those contemplated by
the forward-looking statements as a result of certain factors, including but not
limited to: competitive factors and pricing pressures; relationships with its
manufacturers and distributors; legal and regulatory requirements; general
economic conditions; and other risk factors which may be described in our future
filings with the Commission. We do not promise to update forward-looking
information to reflect actual results or changes in assumptions or other factors
that could affect those statements. In addition, when considering such
forward-looking statements, you should keep in mind the factors described in
other cautionary statements appearing elsewhere in this Form 10-SB. Such
statements describe circumstances which could cause actual results to differ
materially from those contained in any forward-looking statement.
This Form 10-SB may also include statistical data regarding the beverage
and soft drink industries. This data may have been obtained from industry
publications and reports which we believe to be reliable sources. We have not
independently verified such data nor sought the consent of any organizations to
refer to their reports herein.
b. Results of Operations
Three Months ended March 31, 1999 and March 31, 1998:
Icy Splash's net sales for the three months ended March 31, 1999 and March
31, 1998 were $108,809 and $31,992 respectively, an increase of 240%. The
significant volume for the first three months of 1999 was partially due to the
success of Icy Splash - Second Generation which was introduced in December of
1998. In the three months ended March 31, 1999, sales of
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Icy Splash - Second Generation accounted for approximately 38% of sales of Icy
Splash products. Additionally, the increase in net sales can also be attributed
to the high volume and efficiency of distribution of Icy Splash products through
NYSD which began in January of 1999.
Gross profits for the three months ended March 31, 1999 and 1998 were
$27,310 and $12,866 respectively, an increase of 112%. The increase in gross
profits is attributable to the sharp increase in net sales as discussed above.
General and administrative expenses for the three months ended March 31,
1999 and March 31, 1998 were $10,486 and $9,744 respectively, an increase of
7.6%. Although the Company did not incur any professional fees in 1999, compared
with like expenses of $4,000 for the three months ended March 31, 1998, the
nominal increase in general and administrative expenses in 1999 is attributable
to several factors including but not limited to sharp increases in insurance,
interest, rent and office expenses.
Selling expenses for the three months ended March 31, 1999 and 1998 were
$9,905 and $5,036 respectively, an increase of 96.7%. This increase is primarily
attributable to an increase in freight and delivery expenses which increased
from a credit adjustment of $1,268 for the three months ended March 31, 1998 to
$8,328 for the comparable period in 1999. The increase in freight and delivery
expenses is attributable to the increase in volume of Icy Splash sales in 1999.
Although advertising expenses have decreased from $6,304 for the first three
months of 1998 to only $179 for the first three months of 1999, only the type of
advertising and promotion has changed. During 1998, there were significant
expenditures for advertising media, including video. During 1999, $5,425 of
sales discounts were given to promote sales of the Icy Splash - Second
Generation product line, compared with none in 1998. Sales discounts are
recorded as an offset to sales rather than an advertising expense.
Net income for the three months ended March 31, 1999 was $6,239 compared to
a loss of $2,626 for the comparable period in 1998, an increase of 136%.
Management believes that the increase in net income is due to the aggressive
distribution and marketing of Icy Splash - Second Generation which commenced in
the beginning of 1999.
Years Ended December 31, 1998 and December 31, 1997:
Icy Splash's net sales for the years ended December 31, 1998 and 1997 were
$320,802 and $224,490 respectively, an increase of 43%. Management believes that
this increase resulted from increased market penetration of the Icy Splash brand
in the Northeastern United States through existing distributors and new
distributors. Through our relationship with NYSD, I Epstein and Hadden House
distributors, we have had success in reaching new and more lucrative markets,
including large supermarkets and grocery stores. In addition, we believe that
our intense promotion, including payment of $22,504 for advertising in 1998, an
increase of over 350% from the previous year, resulted in an increase in sales.
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The gross profit in the year ended December 31, 1998 increased to $134,180
from $60,880 the previous year. This represents an increase from 27.1% of sales
in 1997 to 41.8% in 1998. The large increase is attributed predominantly to the
introduction of a new co-packer and increased purchasing power from buying
larger quantities of raw materials.
General and administrative expenses for the years ended December 31, 1998
and December 31, 1997 were $49,381 and $32,304 respectively. The increase was
primarily due to an increase in bad debt expenses from $8,402 in 1997 to $16,507
in 1998. This represents an increase from 3.7% of sales to 5.2% of sales for the
respective periods. The major components of general and administrative expenses
for the year ended December 31, 1998 were bad debt expenses of $16,570,
automotive expenses of $9,748, telephone expenses of $7,163 and professional
fees of $5,000. The major components of the expenses for the year ended December
31, 1997 were bad debt expenses of $8,402 and administrative expenses of $5,662.
Selling expenses for the years ended December 31, 1998 and December 31,
1997 were $55,319 and $52,860 respectively. Although selling expenses remained
constant in these periods, freight and delivery expenses declined sharply from
$24,370 in the year ended December 31, 1997 to $11,657 in the year ended
December 31, 1998. This decline was attributable to changing co-packers. The new
co-packer provided plastic bottles, which had previously been purchased from
another vendor and shipped to the co-packer.
Net income for the year ended December 31, 1998 amounted to $26,265 after
the Company incurred a net loss of $24,964 for the year ended December 31, 1997.
The increase in net income was due to management increasing sales by 43% and
gross profit by 14.7%, while increasing sales and general and administrative
expenses by only 26%, from $85,164 in 1997 to $107,235 in 1998. Increases in
sales were due to engaging new and additional distributors in late 1997 and
improved gross profit was achieved by hiring a more efficient co-packer in 1998.
c. Liquidity and Capital Resources:
Three Months Ended March 31, 1999 and March 31, 1998:
Cash flow generated by operations were $(3,076) for the three months ended
March 31, 1999 and $(8,492) for the three months ended March 31, 1998. Negative
cash flow from operating activities for the first three months of 1998 is
primarily attributable to a $20,002 increase in accounts receivable. Although
there was an increase in accounts receivable of $16,924 for the comparable
period in the following year, cash flow from operating expenses was negative in
1999 primarily due to a decrease in accounts payable of $20,297 and an increase
in inventories of $7,895.
Cash used for investing activities during the three months ended March 31,
1999 was $2,385 which was primarily used to purchase computer equipment. There
was no cash
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provided or used by investing activities during the same period in 1997.
Cash flow generated from financing activities was $1,866 for the three
months ended March 31, 1999 and $9,227 for the three months ended March 31,
1998. Net cash provided by financing activities decreased due to a significant
increase in deferred offering costs. While proceeds from shareholder loans only
increased by $450 from the first three months of 1998 to the comparable period
in 1999, deferred offering costs increased from $3,323 to $11,134 during the
same periods.
Cash decreased during the three months ended March 31, 1999 by $3,595 and
increased by $735 for the same period in 1998. Although profitable operations
produced a smaller cash usage in 1999 - $3,076 in 1999 compared with $8,492 in
1998 - cash was used to purchase equipment during 1999 and the cost of making
Icy Splash a reporting company in order to engage in proposed financing
activities was nearly $8,000 greater in 1999 than the cost of the Company's
initial private placement offering. See "Recent Sales of Unregistered
Securities."
Years Ended December 31, 1998 and December 31, 1997:
Cash flow generated by operations were $9,698 for the year ended December
31, 1998 and $3,986 for the year ended December 31, 1997. Positive cash flow
from operating activities for the year ended December 31, 1997 was achieved,
despite a net loss of $24,964, primarily due to an decrease in inventories and
an increase in accrued expenses and other current liabilities. With net income
for the year ended December 31, 1998 of 26,265, cash flow from operating
activities increased to $9,698 despite significant increases of $45,822 in
accounts receivable and $25,565 in inventories. This was primarily due to an
increase in accounts payable of $47,557
Cash flow from investing activities were negative for the years ended
December 31, 1998 and 1997. Net cash used in investing activities for the years
ended December 31, 1998 and 1997 were $19,015 and $8,295 respectively. The
significant increase in net cash used in investing activities in 1998 was
primarily due to a sharp increase of $53,620 in notes receivable in 1998 owed by
a co-packer of the Company's products and by a distributor of the Company's
products. Both have agreed with the Company to make their notes current through
alternative payment plans.
Financing cash flows were provided by loans and issuance of stock for the
year ended December 31, 1998. The Company had a negative cash flow from
financing activities of $3,816 for the year ended December 1, 1997 due to
deferred offering costs which exceeded proceeds from shareholder loans. Positive
cash flow from operating activities for the year ended December 31, 1998 was
attributable to proceeds from short-term debt on an unsecured loan aggregating
$100,00 with an annual interest rate of 10%, payable on May 31, 1999. At
December 31, 1998 the loan balance was $65,000. In addition, positive financing
cash flow was attributable to net proceeds of $33,837 raised in a private
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placement offering under Rule 504 of the Securities Act, as amended. In this
offering, 10,000 private placement units were sold, with each unit consisting of
50 shares of common stock at $5.00 per unit, and 95 redeemable stock purchase
warrants ("1998 Private Placement"). Each redeemable stock purchase warrant
entitles the registered holder to purchase one share of the Company's common
stock for $1.00.
We anticipate that a market for trading our securities will be established
on the system of the National Association of Securities Dealers, Inc. known as
the OTC - Bulletin Board (the "Bulletin Board") for the 500,000 shares of common
stock sold in the 1998 Private Placement, although we cannot be certain of this.
If such a market is established, and the market price for our common stock
exceeds the exercise price of our warrants, it may result in the exercise of
950,000 warrants sold in the 1998 Private Placement. There are no assurances
that we will become eligible to be quoted on the Bulletin Board or that a
trading market will be accomplished. The creation of a trading market in our
common stock and warrants may provide us with a basis upon which we can procure
additional capital through an exercise of the warrants or a sale by us of
additional common stock. A failure to create this secondary market for our
shares of common stock may require us to seek other financing. See "Recent Sales
of Unregistered Securities" and "Description of Business - Acquisitions of
Distributors and Strategic Alliances."
d. Seasonality:
The Company's sales are seasonal. The soft drink beverage industry
generally experiences its highest sales by volume during the spring and summer
months and its lowest sales by volume during the winter months. As a result, our
working capital requirements and cash flow vary substantially throughout the
year. Consumer demand for our products are affected by weather conditions. Cool,
wet spring or summer weather could result in decreased sales of our products and
could have an adverse effect on our financial position.
e. Impact of the Year 2000 on Information Systems:
The Year 2000 issue arises as the result of computer programs having been
written, and systems having been designed, using two digits rather than four to
define the applicable year ("Year 2000"). Consequently, such software has the
potential to recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculation causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
We do not expect to be affected by Year 2000 as we do not rely on
date-sensitive software or affected hardware. Our current accounting and other
systems were purchased "off-the-shelf". We intend to timely update our
accounting and other systems which are determined to be affected by Year 2000 by
purchasing Year 2000 compliant software and hardware available from retail
vendors at reasonable cost.
We have not yet contacted other companies on whose services we depend to
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<PAGE>
determine whether such companies' systems are Year 2000 compliant. If the
systems of the companies or other companies on whose services we depend,
including our customers, are not Year 2000 compliant, there could be a material
adverse effect on the Company's financial condition or result of operations.
ITEM 3. DESCRIPTION OF PROPERTY
Since January 1, 1999, we have been occupying office and warehouse space
owned by NYSD. Although we do not lease this property, we conduct our daily
business operations from this property as a condition of our strategic alliance
with NYSD. The warehouse and office space, aggregating approximately 10,000
square feet, is located at 929 Shepherd Avenue, Brooklyn, New York 11208. NYSD
has been leasing the office space on a month-to-month basis since January 1,
1999. We decided not to execute a long-term commitment at this location while
searching for alternative locations. NYSD's monthly rental payment is $4,500.
We have signed an agreement to purchase a commercial property located at
494-504 Wortman Avenue, Brooklyn, New York 11208. There is a commercial building
situated on the premises, aggregating approximately 25,000 square feet, which
will provide warehouse and office space for a majority of our business
operations. Adjacent to the building lies a parcel of land aggregating
approximately 20,000 square feet which we may decide to develop for business
purposes at a later date. The purchase price for the premises is $800,000. We
have received an inducement resolution acknowledging that the New York City
Industrial Development Agency will provide certain tax benefits to us if we
acquire the property. The closing date for the purchase is on or around June 15,
1999.
We intend to finance the purchase of the property through mortgage loans
for the entire acquisition cost, although we have not yet received any loan
commitment offers. However, our two principal shareholders, Joseph Aslan and
Shlomo Aslan, have agreed to provide financing if we do not obtain a mortgage
loan, or to lend to us the shortfall between any mortgage loan received and the
acquisition costs.
We intend to cover a major portion of the carrying costs for the property
by leasing a portion of the premises to NYSD and other companies which are
affiliates of Joseph Aslan and Shlomo Aslan. We believe that ownership of the
property will not materially change our operating costs.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of shares of voting
stock of
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<PAGE>
Icy Splash, as of May 21, 1999, of (i) each person known by Icy Splash to
beneficially own 5% or more of the shares of outstanding common stock; (ii) each
of Icy Splash's executive officers and directors; and (iii) all of Icy Splash's
executive officers and directors as a group. Except as otherwise indicated, all
shares are beneficially owned, and investment and voting power is held by the
persons named as owners.
Amount and
Name and Address of Nature of Shares Percentage
Title of Class Beneficial Owner Beneficially Owned Ownership
- -------------- ---------------- ------------------ ---------
Common Joseph Aslan(1)(2)(6) 2,970,000 45%
Common Shlomo Aslan(1)(3)(6) 2,970,000 45%
Common Sy Aslan(1)(4)(6) 100,000 1.5%
Common Charles Tokarz(1)(5)(7) 20,000 0.30%
Common All officers and 6,060,000 91.8%
directors as a group(4
persons)
- ----------
(1) The business address for Joseph Aslan, Shlomo Aslan and Charles Tokarz
is 9-15 166th Street, Suite 5B, Whitestone, New York 11357.
(2) Joseph Aslan serves as the Company's President and as a Director.
(3) Shlomo Aslan serves as the Company's Vice President, Secretary and as
a Director.
(4) Sy Aslan serves as a Director of the Company.
(5) Charles Tokarz serves as the Company's Chief Financial Officer,
Treasurer and as a Director.
(6) Joseph, Shlomo and Sy Aslan are brothers.
(7) Charles Tokarz has the right to acquire beneficial ownership of these
20,000 shares of common stock pursuant to a consulting agreement dated
April 1, 1998. These shares have not yet been issued. See "Certain
Relationships
17
<PAGE>
and Related Transactions."
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
a. Directors and Executive Officers:
As of May 21, 1999, the directors and executive officers of the Company,
their ages, positions in the Company and the dates of their initial election or
appointment as director or executive officer are as follows:
Positions and Offices Presently Held with
Name Age the Company
- ---- --- -----------
Joseph Aslan 44 President, Director
Shlomo Aslan 50 Vice President, Secretary, Director
Charles Tokarz 52 Chief Financial Officer, Treasurer, Director
Sy Aslan 55 Director
b. Business Experience
Joseph Aslan has served as the Company's President and Director since the
Company's inception in July 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.
Shlomo Aslan has served as the Vice President, Secretary and Director of
the Company since the Company's inception in July of 1996. Prior to joining the
Company, from 1994 to 1996, Mr. Aslan was the co-owner of Tribeca Classics,
Inc., his family textile business. He has more than 25 years of business
ownership experience, particularly in the restaurant and textile business. Mr.
Aslan holds a BA in Accounting.
Charles Tokarz is the Chief Financial Officer, Treasurer and Director of
the Company. He has held this position since April of 1998. 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,
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<PAGE>
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. He has held this position since the Company's
incorporation in July 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.
c. Directors of Other Reporting Companies
None of the directors are directors of other reporting companies.
d. Significant Employees
The officers and directors who are identified above are the significant
employees of the Company.
e. Involvement in Certain Legal Proceedings
None of the officers and directors of the Company have been involved in the
past 5 years in any of the following:
(1) Bankruptcy proceedings; or
(2) Subject to criminal proceedings or convicted of a criminal act; or
(3) Subject to any order, judgment or decree entered by any Court for
violating any laws relating to business, securities or banking
activities; or
(4) Subject to any order for violation of federal or state securities laws
or commodities laws.
ITEM 6. EXECUTIVE COMPENSATION
To date, management has not collected any compensation from the Company. No
other executive officers earned over $100,000 in any fiscal year.
19
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 1997, Icy Splash was owed $13,466 by a former shareholder.
As of December 31, 1997 we deemed this receivable uncollectible and accordingly
reserved 100% as a bad debt.
On January 18, 1998, we authorized the issuance of 2,970,000 shares of
common stock to Joseph Aslan and 2,970,000 shares of common stock to Shlomo
Aslan in consideration for $210,000 loaned to the Company and invested time and
effort into the Company's business estimated to equate approximately $400,000.
On March 19, 1998, we entered into a consulting agreement with Charles
Tokarz, our Chief Financial Officer, Treasurer and director, for services
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.
On or about November of 1998, Joseph and Shlomo Aslan, Directors of Icy
Splash, entered into an arms length agreement with NYSD, resulting in a
strategic alliance between both corporations. The Aslans agreed to personally
contribute organizational, financial and strategic planning experience, as well
as a complete line of soft drinks to be distributed by NYSD. In addition, the
Aslans agreed to provide future financing to NYSD and, to date, have
individually invested approximately $120,000 in NYSD. In exchange, NYSD agreed
to provide experience, sales representatives, contacts and a full-service
operating distribution business including a warehouse for, but not limited to,
Icy Splash products. Both parties have agreed to finalize the terms of this
agreement at a later date.
ITEM 8. DESCRIPTION OF SECURITIES
We are authorized to issue 50,000,000 shares of common stock, with a par
value of $0.001 per share, and 1,000,000 shares of preferred stock, with a par
value of $0.001 per share.
a. Common Stock:
Holders of common stock do not have subscription, redemption, conversion or
preemptive rights. The shares of common stock held by shareholders are fully
paid and non-assessable. Each share of common stock is entitled to
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<PAGE>
participate pro rata in distribution upon liquidation, subject to the rights of
holders of preferred stock, and to one vote on all matters submitted to a vote
of shareholders. The shareholders of common stock may receive cash dividends as
declared by the Board of Directors out of funds legally available therefor,
subject to the rights of any shareholders of preferred stock. Shareholders of
common stock are entitled to elect all directors.
b. Preferred Stock:
The Company's certificate of incorporation, as amended, authorizes the
issuance of up to 1,000,000 shares of preferred stock, with a par value of
$0.001 per share. The preferred stock shall have such voting rights,
designations, preferences and relative participating, optional or other rights,
qualifications, limitations or restrictions as may be determined and set forth
in resolution or resolutions adopted from time to time by the Board of Directors
of the Company.
c. Private Placement Units:
On January 20, 1998, we issued an aggregate of 10,000 units pursuant to
Rule 504 under Regulation D of the Securities Act, as amended. Each unit
consists of 50 shares of common stock at $5.00 per unit, and 95 redeemable stock
purchase warrants. Each redeemable stock purchase warrant entitles the
registered holder to purchase one share of the Company's common stock for $1.00.
The exercise price of the warrants and the number of shares issuable upon
exercise of such warrants is subject to adjustment to protect against dilution
in the event of stock dividends, stock splits, combinations, subdivisions and
reclassification. Furthermore, the Company may redeem the warrants at a price of
$.01 per warrant by giving not less than 30 days prior written notice to the
record holders if the closing bid price of the common stock equals or exceeds
$2.50 for the 10 consecutive trading days ending on the third day prior to the
date on which the notice of redemption is given. In the event the Company
notifies record holders of its intent to redeem any warrants, the record holders
may exercise at any time prior to the close of business on the day immediately
preceeding the date fixed for redemption provided that there is a registration
statement in effect or there is an exemption from such registration. Unless
extended by the Company at its discretion, the warrants will expire on January
20, 2000. The Company reserves the right to lower the exercise price of the
warrants, which reduction may be for a limited time, not less than 60 days, or
the balance of the term of the warrants.
d. "Anti-Takeover" Provisions:
Although management is not presently aware of any takeover attempts, our
Certificate of Incorporation defers to provisions in the New York Business
Corporation Law (the "B.C.L.") which may be deemed to be "anti-takeover" in
nature in that such provisions may deter, discourage or make more difficult the
assumption of control of the Company by another entity or person.
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<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
a. Market Information
The common stock of Icy Splash currently is not trading on any exchange.
Management anticipates that the Company's shares will be qualified on the
Bulletin Board.
There has been no market for the Company's stock in the last two years.
Accordingly, the Company has no range of high and low bid prices for the
Company's common stock to report.
b. Holders
There were 35 holders of record of the Company's common stock as of May 21,
1999.
c. Dividends
The Company has never paid cash dividends on its stock and does not intend
to do so in the foreseeable future. We currently intend to retain our earnings
for the operation and expansion of the business. Our continued need to retain
earnings for operations and expansion are likely to limit our ability to pay
dividends in the future.
ITEM 2. LEGAL PROCEEDINGS
On March 19,1997, we filed suit against Icy Splash, Inc., a predecessor of
the Company, and a former shareholder of Icy Splash, Inc. This case is presently
pending in the Supreme Court, Kings County. The Company secured a preliminary
injunction against the defendants enjoining them from misappropriating the
Company's intellectual property rights including the use of the trademark "Icy
Splash." The defendants initially filed a notice of appeal relating to the
injunction. However, their time to perfect the appeal has expired. The case to
convert the preliminary injunction to a permanent injunction is proceeding on
the merits. Management believes that this suit will be resolved in favor of the
Company, although there can be no assurance.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no disagreements with our independent accountants over any
item involving the Company's financial statements. Our independent accountants
are Lazar
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Levine & Felix LLP, Certified Public Accountants, 350 Fifth Avenue, Suite 6820,
New York, NY 10118-0170.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On January 20, 1998, we issued an aggregate of 10,000 private placement
units pursuant to Rule 504 under Regulation D of the Securities Act, as amended.
All 10,000 units were sold to a total of thirty investors. We received $33,837,
net of commission and offering costs.
Each unit consists of 50 shares of common stock at $5.00 per unit, and 95
redeemable stock purchase warrants. Each redeemable stock purchase warrant
entitles the registered holder to purchase one share of the Company's common
stock for $1.00. See "Description of Securities - Private Placement Units."
All 10,000 private placement units were sold to a total of thirty investors
as follows:
Date of Number of Units
Purchaser Purchase Purchased
- --------- -------- ---------
Arvin Scott 4/4/98 400
Steven Michaels 4/16/98 400
Meshulam Elmaliach 3/24/98 100
Tova Sadka 3/25/98 300
Gatznyo Moshe 4/3/98 400
Emile Ohayon 3/24/98 200
George Tsatsos 4/4/98 400
Yehuda Tzur 4/9/98 400
Debra Millman 5/6/98 300
Bianka Dalal 5/7/98 300
Victoria Tokarz 7/30/98 600
Robert and Karen Eaves 9/3/98 1,000
Dennis Olden 9/10/98 300
Edward Roach and Elizabeth Cronin 9/14/98 500
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Elaine O'Neil 9/14/98 250
John J. O'Neil 9/14/98 250
John A. O'Neil 9/14/98 500
Donna O'Neil 9/14/98 500
George Gerson 9/15/98 500
Deborah Kline 9/17/98 400
Arthur Krepps, III 9/18/98 500
Krista Killius 10/2/98 100
James Killius 10/2/98 100
Gina Russo 10/8/98 100
W. Gordon and Sharon Freeman 10/8/98 100
Huon Consulting, Inc. 10/8/98 500
Quinn Truckenbrod 10/3/98 100
Mia Truckenbrod 10/3/98 100
Diane Leon Pekarek 10/9/98 200
Bruce Pekarek 10/9/98 200
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Certificate of Incorporation contains certain provisions permitted
under the B.C.L. relating to the liability of directors. The provisions
eliminate a director's liability for monetary damages for a breach of fiduciary
duty, except in certain circumstances involving wrongful acts, such as the
breach of a director's duty of loyalty or acts or omissions which involve
intentional misconduct or a knowing violation of law. Our Certificate of
Incorporation also contains provisions obligating the Company to indemnify its
directors and officers to the fullest extent permitted by the B.C.L.
Such indemnification provisions are intended to increase the protection
provided to directors and, thus, increase our ability to attract and retain
qualified persons to serve as directors. Because directors liability insurance
is only available at considerable cost and with low dollar limits of coverage
and broad policy exclusions, we do not currently maintain a liability insurance
policy for the benefit of our directors, although we may attempt to
24
<PAGE>
acquire such insurance in the future. We believe that the substantial increase
in the number of lawsuits being threatened or filed against corporations and
their directors and the general unavailability of directors liability insurance
to provide protection against the increased risk of personal liability resulting
from such lawsuits have combined to result in a growing reluctance on the part
of capable persons to serve as members of boards of directors of companies,
particularly of companies which intend to become public companies. We also
believe that the increased risk of personal liability without adequate insurance
or other indemnity protection for our directors could result in overcautious and
less effective direction and management of Icy Splash. Although no directors
have resigned or have threatened to resign as a result of our failure to provide
insurance or other indemnity protection from liability, it is uncertain whether
our directors would continue to serve in such capacities if improved protection
from liability were not provided.
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to Icy Splash and its shareholders, but eliminates personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.
The provisions regarding indemnification provide, in essence, that we will
indemnify our directors against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with any action, suit or proceeding arising out of the director's
status as a director of Icy Splash, including actions brought by or on behalf of
the Company (shareholder derivative actions). The provisions do not require a
showing of good faith. Moreover, they do not provide indemnification for
liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, we do not currently provide such
insurance to our directors, and there is no guarantee that we will provide such
insurance to our directors in the near future, although we may attempt to obtain
such insurance.
These provisions diminish the potential rights of action which might
otherwise be available to shareholders by limiting the liability of officers and
directors to the maximum extent allowable under New York law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any
25
<PAGE>
shareholder derivative action. However, the provisions do not have the effect of
limiting the right of a shareholder to enjoin a director from taking actions in
breach of his fiduciary duty, or to cause the Company to rescind actions already
taken, although as a practical matter courts may be unwilling to grant such
equitable remedies in circumstances in which such actions have already been
taken. Also, because we do not presently have directors liability insurance and
because there is not assurance that we will retain such insurance or that if
such insurance is procured it will provide coverage to the extent directors
would be indemnified under the provision, we may be forced to bear a portion or
all of the cost of the director's claims for indemnification under such
provisions. If we are forced to bear the cost for indemnification, the value of
our stock may be adversely affected.
Insofar as indemnification for liabilities arising under the Securities
Act, as amended, may be permitted to directors, officers and controlling persons
of Icy Splash pursuant to the foregoing provisions, or otherwise, Icy Splash has
been advised that such indemnification, in the opinion of the SEC, is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
We believe that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as directors.
PART F/S
ITEM 1. FINANCIAL STATEMENTS
For information regarding this item, reference is made to the "Index of
Financial Statements."
PART III
ITEM 1. INDEX TO EXHIBITS
The following exhibits are filed with this Form 10-SB:
Assigned
Number Description of Exhibit
- ------ ----------------------
3.1 ........... Certificate of Incorporation.
3.2 ........... Certificate of Amendment of Certificate of Incorporation,
dated April 20, 1999.
3.3 ........... By-Laws.
10.1 .......... Revised Financial Consulting Agreement between Icy Splash
and The Southern Companies, dated April 27, 1999.
10.2 .......... Consulting Agreement between Icy Splash and Charles Tokarz,
dated March 19, 1998.
10.3 .......... Contract of Sale for 494-504 Wortman Avenue, Brooklyn, N.Y.
11208.
26
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ITEM 2 INDEX TO FINANCIAL STATEMENTS
The following documents are filed as part of this Registration Statement:
Assigned
Number Description of Exhibit
- ------ ----------------------
F.1 .............. Internal Preparer's Letter for Unaudited Financial
Statements for the three months ended March 31, 1999 and
1998.
F.2 .............. Unaudited Balance Sheets as of March 31, 1999 and 1998.
F.3 .............. Unaudited Statements of Operations for the three months
ended March 31, 1999 and 1998.
F.4 .............. Unaudited Statements of Changes in Shareholders' Equity for
the three months ended March 31, 1999 and 1998.
F.5 .............. Unaudited Statements of Cash Flows for the three months
ended March 31, 1999 and 1998.
F.6 .............. Notes to Financial Statements for the three months ended
March 31, 1999 and 1998.
F.7 .............. Unaudited Schedules Supporting Statements of Operations for
the three months ended March 31, 1999 and 1998.
F.8 .............. Independent Auditors' Report for Audited Financial
Statements for the years ended December 31, 1998 and 1997.
F.9 .............. Audited Balance Sheets for the years ended December 31, 1998
and 1997.
F.10 ............. Audited Statements of Operations for the years ended
December 31, 1998 and 1997.
F.11 ............. Audited Statements of Changes in Shareholders' Equity for
the years ended December 31, 1998 and 1997.
F.12 ............. Audited Statements of Cash Flow for the years ended December
31, 1998 and 1997.
F.13 ............. Notes to Financial Statements for the years ended December
31, 1998 and 1997.
F.14 ............. Independent Auditors' Report on Supplemental Information for
the years ended December 31, 1998 and 1997.
F.15 ............. Audited Schedules Supporting Statements of Operations for
the years ended December 31, 1998 and 1997.
27
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: May 21, 1999
ICY SPLASH FOOD & BEVERAGE, INC.
By: /s/ Joseph Aslan
----------------------------
Joseph Aslan, President
By: /s/ Shlomo Aslan
----------------------------
Shlomo Aslan, Secretary
28
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<PAGE>
Icy Splash Food and Beverage, Inc.
INTERNAL PREPARER'S LETTER
The Board of Directors
Icy Splash Food and Beverage, Inc.
The attached balance sheet of Icy Splash Food and Beverage, Inc. ("the Company")
as of March 31, 1999 and 1998, and the related statements of operations,
shareholders' equity and cash flows for the periods then ended were prepared
internally, in accordance with generally accepted accounting principles, from
the Company's accounting records by Company personnel and have not been audited.
The most recent audit was conducted as of December 31, 1998.
I am aware of no material errors or misrepresentations in the statements as to
the financial position of Icy Splash Food and Beverage, Inc.
/s/ Charles Tokarz
---------------------------
Charles Tokarz
Chief Financial Officer
April 30, 1999
F.1
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
BALANCE SHEETS
AS OF MARCH 31, 1999 AND 1998
- ASSETS -
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 16,719 $ 735
Accounts receivable, net of allowance for doubtful accounts of
$4,163 and $16,721 for 1999 and 1998, respectively 52,909 79,627
Notes receivable (Note 3) 34,110
Inventory (Note 2d) 68,776 29,216
Prepaid expenses 3,000 3,000
--------- ---------
TOTAL CURRENT ASSETS 175,514 112,578
FIXED ASSETS (Note 2c):
Warehouse equipment 5,000 5,000
Office equipment 12,279 5,945
--------- ---------
17,279 10,945
Less: accumulated depreciation 5,423 2,645
--------- ---------
11,856 8,300
OTHER ASSETS:
Deferred offering costs (Note 2e) 73,784 31,209
--------- ---------
$ 261,154 $ 152,087
========= =========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Notes payable (Note 4) $ 65,000 $ --
Accounts payable 33,603 14,286
Accrued expenses and other current liabilities 15,140 25,819
Income taxes payable 454 --
--------- ---------
TOTAL CURRENT LIABILITIES 114,197 40,105
LONG-TERM LIABILITIES
Shareholders' loans (Note 6) 13,000 46,992
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY (Note 5):
Preferred stock, $.001 par value, 1,000,000 shares authorized,
zero shares issued and outstanding for 1999 and 1998 -- --
Common stock, $.001 par value, 50,000,000 shares authorized, 6,600,000
and 6,100,000 shares issued and outstanding for 1999 and 1998, respectively 6,600 6,100
Additional paid-in capital 237,237 203,900
Accumulated deficit (109,880) (145,010)
--------- ---------
133,957 64,990
--------- ---------
$ 261,154 $ 152,087
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F.2
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
-------- --------
NET SALES $108,809 $ 31,992
COST OF SALES 81,499 19,126
-------- --------
GROSS PROFIT 27,310 12,866
OPERATING EXPENSES:
Selling expenses - Schedule 1 9,905 5,036
General and administrative expenses - Schedule 2 10,486 9,744
-------- --------
20,391 14,780
-------- --------
INCOME FROM OPERATIONS 6,919 (1,914)
Provision for income taxes (Note 2f) 680 712
-------- --------
NET INCOME $ 6,239 $ (2,626)
======== ========
The accompanying notes are an integral part of these financial statements.
F.3
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 6,600,000 $ 6,600 $ 237,237 $(116,119) $ 127,718
Net income, March 31, 1999 -- -- -- 6,239 6,239
--------- --------- --------- --------- ---------
BALANCE, MARCH 31, 1999 6,600,000 $ 6,600 $ 237,237 $(109,880) $ 133,957
========= ========= ========= ========= =========
Balance, December 31, 1997 6,100,000 $ 6,100 $ 203,900 $(142,384) $ 67,616
Net loss, March 31, 1998 -- -- -- (2,626) (2,626)
--------- --------- --------- --------- ---------
BALANCE, MARCH 31, 1998 6,100,000 $ 6,100 $ 203,900 $(145,010) $ 64,990
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F.4
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss) $ 6,239 $ (2,626)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation 750 550
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 16,924 (20,002)
Decrease (increase) in inventories (7,895) 6,100
Increase (decrease) in accounts payable (20,297) 7,943
Increase (decrease) in accrued expenses and other current liabilities 1,203 (457)
-------- --------
Net cash provided by operating activities (3,076) (8,492)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (2,885) --
Repayments of note receivable 500 --
-------- --------
Net cash used in investing activities (2,385) --
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shareholder loans 13,000 12,550
Deferred offering costs (11,134) (3,323)
-------- --------
Net cash provided by financing activities 1,866 9,227
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,595) 735
Cash and cash equivalents, at beginning of period 20,314 --
-------- --------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 16,719 $ 735
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash during the period for:
Income taxes paid $ -- $ --
Interest paid $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F.5
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
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. The product line
is currently supplied in a variety of flavors to supermarkets,
grocery stores and convenience stores in the tri-state area. The
Company was incorporated in the State of New York on June 17,
1996.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with
generally accepted accounting principles. Outlined below are
those policies considered particularly significant.
(a) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, 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
Maintenance and repairs are charged to expense as incurred; major
renewals and betterments are capitalized.
F.6
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
NOTE 2 - 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 of finished product as well as
flavoring, bottles and certain packaging materials.
Inventory consists of the following:
March 31, March 31,
1999 1998
--------- ---------
Finished product $ 1,664 $ --
Flavoring , bottles and packaging materials 67,112 29,216
------- -------
$68,776 $29,216
======= =======
(e) Deferred Offering Costs:
Deferred offering costs incurred by the Company in conjunction
with a proposed private placement and initial public offering
will be charged against additional paid-in capital upon the
completion of the offering, if successful, or charged to
operations if abandoned.
(f) Income Taxes:
The Company utilizes Financial Accounting Standard 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 carryforward as of its year
end, December 31, 1998, of approximately $100,000 which may be
applied against future taxable income, and which expires in the
year 2012. Since there is no assurance that the Company will
generate future taxable income to utilize the deferred tax asset
resulting from the net operating loss carryforward, the Company
has not recognized this asset.
(g) Statements of Cash Flows:
For purposes of the statement of cash flows, the Company
considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(h) Comprehensive Income:
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130 "Reporting Comprehensive Income"("SFAS 130"),
which prescribes standards for reporting comprehensive income and
its components. SFAS 130 is effective for fiscal years beginning
after December 15, 1997. Since the Company currently does not
have any items of comprehensive income, a statement of
comprehensive income is not yet required.
(i) Advertising Costs:
Advertising costs, which are included in selling expenses, are
expensed as incurred. For the three months ended March 31, 1999
and 1998 advertising costs aggregated $178 and $6,304,
respectively.
NOTE 3 - NOTES RECEIVABLE:
At March 31, 1999, the Company was owed $15,565 from a vendor who
is a co-packer of the Company's products. The vendor has agreed
to pay back the loan by providing services equal to $1,500 a
month for 12 months beginning June 1, 1998. At March 31, 1999,
the co-packer had not provided services to make payments, but
instead has paid two $1,500 payments. Management has an agreement
with the co-packer to provide services in April of 1999
sufficient to bring the note current.
At March 31, 1999, the company was owed $25,544 by a customer
(distributor) for the Company's products. The customer has agreed
to pay at least $1,000 a month beginning August 15, 1998, with no
interest if the entire balance is paid by June 1999 and 1.1%
interest per month on the unpaid balance thereafter. At March 31,
1999, the customer had paid approximately four of eight payments
due. A new agreement with the customer for brokerage services
should accelerate the payments by providing services for
payments. Although Management is confident the balance due will
ultimately be paid, a collection allowance of $6,500 has been
recorded against this note.
NOTE 4 - NOTE PAYABLE:
On August 31, 1998, the Company received an unsecured loan
aggregating $100,000 with an annual interest rate of 10%, payable
on May 31, 1999. At March 31, 1999 the loan balance was $65,000.
There are no penalties to prepay the loan.
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
NOTE 5 - RELATED PARTY TRANSACTIONS:
(a) During December 1998, the Company initiated sales of product to a
distributor who is engaged in a strategic alliance with the
Company. As a condition of this strategic alliance, certain
members of management have personally agreed to provide financing
and organizational support to the distributor. For the three
months ended March 31, 1999, sales were $80,215. At March 31,
1999 accounts receivable were $39,022.
NOTE 6 - STOCKHOLDERS' EQUITY:
Recapitalization:
On February 13, 1997 the stockholders and directors of the
Company adopted resolutions to amend the Certificate of
Incorporation to change the capitalization of the Company from
200 shares no par value to 50,000,000 shares at $.001 par value
and to restate the number of issued and outstanding shares to
6,100,000 shares.
Private Placement Offering:
During 1998, the Company commenced selling common stock through a
private placement memorandum. The offering is for the sale of
10,000 units at an offering price of $5.00 per unit, of which,
each unit consists of 50 shares of common stock and 95 redeemable
common stock purchase warrants. The common stock and warrants may
be separately transferred at any time after issuance, subject to
restrictions contained in the private placement memorandum. Each
warrant entitles the holder to purchase one share of the
Company's common stock for $1. The exercise price of the warrants
and the number of shares issuable upon exercise of the warrants
are also subject to adjustment to protect against dilution. The
Company may also redeem the warrants at a price of $.01 per
warrant upon the occurrence of certain market conditions. Unless
extended by the Company, the warrants will expire on January 20,
2000. As of March 31, 1999, all 10,000 units have been sold. The
Company received $33,837, net of commission.
The common stock and warrants included in the unit have not been
registered, and are not required to be, under the Securities Act
of 1933 ("the Act"). These securities have been offered in the
absence of any registration under the Act through the Company's
intended compliance with Rule 504 under Regulation D promulgated
under the Act. Pursuant to Rule 504, the shares are freely
transferable subject to various state securities laws.
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
NOTE 7 - COMMITMENTS AND CONTINGENCIES:
Litigation:
The Company was a defendant in a lawsuit involving leasehold
property for which the plaintiff claims the Company is
responsible. A motion to dismiss was pending before the court.
The likelihood of a favorable outcome was anticipated by the
Company's counsel, therefore no provision has been made in the
financial statements relating to this matter. As of December 31,
1998 this lawsuit was dismissed.
The Company is a plaintiff in a lawsuit with a predecessor
company, "Icy Splash, Inc.," and a former shareholder of Icy
Splash, Inc. This case is presently pending in the Supreme Court,
Kings County. The Company has secured a preliminary injunction
against the defendants enjoining them from misappropriating the
Company's intellectual property rights including the use of the
trademark "Icy Splash". The defendants initially filed a notice
of appeal relating to the injunction. However, their time to
perfect the appeal has expired. The case to convert the
preliminary injunction to a permanent injunction is proceeding on
the merits.
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
SCHEDULES SUPPORTING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
-------- --------
SELLING EXPENSES - Schedule 1:
Freight and delivery $ 8,328 $ (1,268)
Slotting fees 712 --
Advertising 178 6,304
Other selling expenses 687 --
-------- --------
TOTAL SELLING EXPENSES $ 9,905 $ 5,036
======== ========
GENERAL AND ADMINISTRATIVE EXPENSES - Schedule 2:
Automotive expenses $ 1,335 $ 1,472
Depreciation 750 550
Insurance 2,376 754
Interest 1,625 --
Miscellaneous expense (income) (15) 205
Professional fees -- 4,000
Rent 1,079 --
Repairs and maintenance 898 --
Office expense 151 --
Telephone 2,050 1,403
Travel end entertainment 237 1,360
-------- --------
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES $ 10,486 $ 9,744
======== ========
F.7
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- CONTENTS -
Page(s)
-------
Independent Auditors' Report 1.
Financial Statements:
Balance Sheets 2.
Statements of Operations 3.
Statements of Changes in Shareholders' Equity 4.
Statements of Cash Flows 5.
Notes to Financial Statements 6. - 10.
Additional Information:
Independent Auditors' Report on Supplemental Information 11.
Schedules Supporting Statements of Operations 12.
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
<PAGE>
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
350 Fifth Avenue - Suite 6820 4 Becker Farm Road
New York, NY 10118-0170 Roseland, NJ 07068
(212) 736-1900 (973) 533-1040
Fax (212) 629-3219 Fax (973) 535-1603
- -----------------------------
www.lazarcpa.com
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Icy Splash Food and Beverage, Inc.
Whitestone, New York
We have audited the balance sheets of Icy Splash Food and Beverage, Inc. as of
December 31, 1998 and 1997, 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 generally accepted auditing
standards. 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, 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, 1998 and 1997, and the results of its operations and its cash
flows for the periods then ended in conformity with generally accepted
accounting principles.
/s/ LAZAR LEVINE & FELIX LLP
------------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
March 10, 1999
F.8
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
- ASSETS -
1998 1997
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 20,314 $ --
Accounts receivable, net of allowance for doubtful accounts of
$4,163 and $16,721 for 1998 and 1997, respectively 69,833 59,625
Notes receivable (Note 3) 34,610 --
Inventory (Note 2d) 60,881 35,316
Prepaid expenses 3,000 3,000
--------- ---------
TOTAL CURRENT ASSETS 188,638 97,941
--------- ---------
FIXED ASSETS (Note 2c):
Warehouse equipment 5,000 5,000
Office equipment 9,394 5,945
--------- ---------
14,394 10,945
Less: accumulated depreciation 4,673 2,095
--------- ---------
9,721 8,850
--------- ---------
OTHER ASSETS:
Deferred offering costs (Note 2e) 62,650 27,886
--------- ---------
$ 261,009 $ 134,677
========= =========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Cash overdraft $ -- $ 677
Notes payable (Note 4) 65,000 --
Accounts payable 53,900 6,343
Accrued expenses and other current liabilities 13,937 24,919
Income taxes payable 454 680
--------- ---------
TOTAL CURRENT LIABILITIES 133,291 32,619
--------- ---------
LONG-TERM LIABILITIES
Shareholders' loans (Note 6) -- 34,442
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY (Note 6):
Preferred stock, $.001 par value, 1,000,000 shares authorized,
zero shares issued and outstanding for 1998 and 1997 -- --
Common stock, $.001 par value, 50,000,000 shares authorized, 6,600,000
and 6,100,000 shares issued and outstanding for 1998 and 1997, respectively 6,600 6,100
Additional paid-in capital 237,237 203,900
Accumulated deficit (116,119) (142,384)
--------- ---------
127,718 67,616
--------- ---------
$ 261,009 $ 134,677
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
Page 2.
F.9
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
NET SALES (Note 5) $ 320,802 $ 224,490
--------- ---------
COST OF GOODS SOLD:
Inventory - beginning of year 35,316 55,048
Purchases 212,187 143,878
--------- ---------
247,503 198,926
Inventory - end of year 60,881 35,316
--------- ---------
TOTAL COST OF GOODS SOLD 186,622 163,610
--------- ---------
GROSS PROFIT 134,180 60,880
--------- ---------
OPERATING EXPENSES (Note 5):
Selling expenses - Schedule 1 55,319 52,860
General and administrative expenses - Schedule 2 49,381 32,304
--------- ---------
104,700 85,164
--------- ---------
INCOME (LOSS) FROM OPERATIONS 29,480 (24,284)
--------- ---------
OTHER INCOME (EXPENSES):
Interest expense (2,535) --
--------- ---------
INCOME (LOSS) BEFORE TAXES 26,945 (24,284)
Provision for income taxes (Note 2f) 680 680
--------- ---------
NET INCOME (LOSS) $ 26,265 $ (24,964)
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
Page 3.
F.10
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Additional
----------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 200 $ 200 $ 209,800 $(117,420) $ 92,580
Recapitalization (Note 6) 6,099,800 5,900 (5,900) -- --
Net loss, December 31, 1997 -- -- -- (24,964) (24,964)
--------- --------- --------- --------- ---------
Balance, December 31, 1997 6,100,000 6,100 203,900 (142,384) 67,616
Net proceeds from issuance of common stock
and warrants - private placement offering (Note 6) 500,000 500 33,337 -- 33,837
Net income, December 31, 1998 -- -- -- 26,265 26,265
--------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1998 6,600,000 $ 6,600 $ 237,237 $(116,119) $ 127,718
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
Page 4.
F.11
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 26,265 $ (24,964)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation 2,579 1,595
Provision for bad debts 16,570 8,402
Changes in assets and liabilities:
(Increase) in accounts receivable (45,822) (8,760)
(Increase) decrease in inventories (25,565) 19,732
Decrease in prepaid expenses -- 2,570
Increase (decrease) in accounts payable 47,557 (12,080)
(Decrease) increase in accrued expenses and other current liabilities (11,886) 17,491
--------- ---------
Net cash provided by operating activities 9,698 3,986
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (3,449) (5,945)
Advances to former owner -- (2,350)
Increase in note receivable (53,620) --
Repayments of note receivable 38,054 --
--------- ---------
Net cash (used) in investing activities (19,015) (8,295)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt 100,000 --
Repayments of short-terrm debt (35,000) --
Net proceeds from issuance of common stock 33,837 --
Proceeds from shareholders+A11 loans -- 24,070
Repayment of shareholders loans (34,442) --
Deferred offering costs (34,764) (27,886)
--------- ---------
Net cash provided (used) by financing activities 29,631 (3,816)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20,314 (8,125)
Cash and cash equivalents, at beginning of year -- 8,125
--------- ---------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 20,314 $ --
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
During the year ended December 31, 1998, the Company has transfered a customers
accounts receivable balance to notes receivable in the amount of $25,544
Cash during the period for:
Income taxes paid $ 1,527 $ --
Interest paid $ 131 $ --
</TABLE>
The accompanying notes are an integral part of these financial statements
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
Page 5.
F.12
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
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 drinks. The product line
is currently supplied in a variety of flavors to supermarkets,
grocery stores and convenience stores in the tri-state area. The
Company was incorporated in the State of New York on June 17,
1996.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with
generally accepted accounting principles. Outlined below are
those policies considered particularly significant.
(a) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain
estimates and assumptions, where applicable, that effect 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
Maintenance and repairs are charged to expense as incurred; major
renewals and betterments are capitalized.
[LOGO]Lazar Levine & Felix LLP
===================================================
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Page 6.
F.13
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 2 - 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 of only raw materials.
Inventory consists of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Finished product $ -- $ --
Flavoring, bottles and packaging materials 60,881 35,316
------- -------
$60,881 $35,316
======= =======
</TABLE>
(e) Deferred Offering Costs:
Deferred offering costs incurred by the Company in conjunction
with a proposed initial public offering will be charged against
additional paid-in capital upon the completion of the offering,
if successful, or charged to operations if abandoned.
(f) Income Taxes:
The Company utilizes Financial Accounting Standard 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 carryforward as of its year
end, December 31, 1998, of approximately $100,000 which may be
applied against future taxable income, and which expires in the
year 2012. Since there is no assurance that the Company will
generate future taxable income to utilize the deferred tax asset
resulting from the net operating loss carryforward, the Company
has not recognized this asset.
(g) Statements of Cash Flows:
For purposes of the statement of cash flows, the Company
considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
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<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(h) Comprehensive Income:
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130 "Reporting Comprehensive Income"("SFAS 130"),
which prescribes standards for reporting comprehensive income and
its components. SFAS 130 is effective for fiscal years beginning
after December 15, 1997. Since the Company currently does not
have any items of comprehensive income, a statement of
comprehensive income is not yet required.
(i) Advertising Costs:
Advertising costs, which are included in selling expenses, are
expensed as incurred. For the years ended December 31, 1998 and
1997 advertising costs aggregated $22,504 and $4,969,
respectively.
NOTE 3 - NOTES RECEIVABLE:
At December 31, 1998, the Company was owed $15,565 from a vendor
who is a co-packer of the Company's products. The vendor has
agreed to pay back the loan by providing services equal to $1,500
a month for 12 months beginning June 1, 1998. At December 31,
1998, the co-packer had not provided services to make payments,
but instead has paid two $1,500 payments. Management has an
agreement with the co-packer to provide services in February and
March of 1999 sufficient to bring the note current.
At December 31, 1998, the Company was owed $25,544 by a customer
(distributor) for the Company's products. The customer has agreed
to pay at least $1,000 a month beginning August 15, 1998, with no
interest if the entire balance is paid by June 1999 and 1.1%
interest per month on the unpaid balance thereafter. At December
31, 1998, the customer had paid approximately four of five
payments due. A new agreement with the customer for brokerage
services should accelerate the payments by providing services for
payments. Although Management is confident the balance due will
ultimately be paid, a collection allowance of $6,500 has been
recorded against this note.
NOTE 4 - NOTE PAYABLE:
On August 31, 1998, the Company received an unsecured loan
aggregating $100,000 with an annual interest rate of 10%, payable
on May 31, 1999. At December 31, 1998 the loan balance was
$65,000. There are no penalties to prepay the loan.
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<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 5 - RELATED PARTY TRANSACTIONS:
(a) At December 31, 1997, the Company was owed $13,466 by a former
shareholder. As of December 31, 1997 management deemed this
receivable uncollectible and accordingly reserved 100% as a bad
debt.
(b) The Company occupied warehouse and office space which is owned by
two of its shareholders. As of December 31, 1996 the Company
discontinued use of this warehouse. Rent expense, for this
facility, for the year ended December 31, 1997 was $3,900.
(c) During December 1998, the Company initiated sales of product to a
distributor who is engaged in a strategic alliance with the
Company. As a condition of this strategic alliance, certain
members of management have personally agreed to provide financing
and organizational support to the distributor. For the year ended
December 31, 1998, sales and accounts receivable were $40,630.
NOTE 6 - STOCKHOLDERS' EQUITY:
Recapitalization:
On February 13, 1997, the stockholders and directors of the
Company adopted resolutions to amend the Certificate of
Incorporation to change the capitalization of the Company from
200 shares no par value to 50,000,000 shares at $.001 par value
and to restate the number of issued and outstanding shares to
6,100,000 shares.
Private Placement Offering:
During 1998, the Company commenced selling common stock through a
private placement memorandum. The offering is for the sale of
10,000 units at an offering price of $5.00 per unit, of which,
each unit consists of 50 shares of common stock and 95 redeemable
common stock purchase warrants. The common stock and warrants may
be separately transferred at any time after issuance, subject to
restrictions contained in the private placement memorandum. Each
warrant entitles the holder to purchase one share of the
Company's common stock for $1. The exercise price of the warrants
and the number of shares issuable upon exercise of the warrants
are also subject to adjustment to protect against dilution. The
Company may also redeem the warrants at a price of $.01 per
warrant upon the occurrence of certain market conditions. Unless
extended by the Company, the warrants will expire on January 20,
2000. As of December 31, 1998, all 10,000 units have been sold.
The Company received $33,837, net of commission and offering
costs.
The common stock and warrants included in the unit have not been
registered, and are not required to be, under the Securities Act
of 1933 ("the Act"). These securities have been offered in the
absence of any registration under the Act through the Company's
intended compliance with Rule 504 under Regulation D promulgated
under the Act. Pursuant to Rule 504, the shares are freely
transferable subject to various state securities laws.
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<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 7 - COMMITMENTS AND CONTINGENCIES:
Litigation:
The Company was a defendant in a lawsuit involving leasehold
property for which the plaintiff claims the Company is
responsible. A motion to dismiss is pending before the court. The
likelihood of a favorable outcome is anticipated by the Company's
counsel, therefore no provision has been made in the financial
statements relating to this matter. As of December 31, 1998 this
lawsuit was dismissed.
The Company is a plaintiff in a lawsuit with a predecessor
company "Icy Splash Inc." and a former shareholder of Icy Splash,
Inc. This case is presently pending in the Supreme Court, Kings
County. The Company has secured a preliminary injunction against
the defendants enjoining them from misappropriating the Company's
intellectual property rights including the use of the trademark
"Icy Splash". The defendants initially filed a notice of appeal
relating to the injunction. However, their time to perfect the
appeal has expired. The case to convert the preliminary
injunction to a permanent injunction is proceeding on the merits.
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<PAGE>
[LOGO]Lazar Levine & Felix LLP
===================================================
Certified Public Accountants & Business Consultants
350 Fifth Avenue - Suite 6820 4 Becker Farm Road
New York, NY 10118-0170 Roseland, NJ 07068
(212) 736-1900 (973) 533-1040
Fax (212) 629-3219 Fax (973) 535-1603
- -----------------------------
www.lazarcpa.com
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION
To The Board of Directors and Shareholders
Icy Splash Food and Beverage, Inc.
Whitestone, New York
Our audits of the basic financial statements of Icy Splash Food and Beverage,
Inc. for the years ended December 31, 1998 and 1997 were made primarily to form
an opinion on such financial statements taken as a whole. The supplemental
information presented hereinafter is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the same audit procedures applied in the
audits of the basic financial statements and in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.
/s/ LAZAR LEVINE & FELIX LLP
------------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
March 10, 1999
Page 11.
F.14
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
SCHEDULES SUPPORTING STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(See Independent Auditors' Report on Supplemental Information)
1998 1997
-------- --------
SELLING EXPENSES - Schedule 1:
Freight and delivery $ 11,657 $ 24,370
Slotting fees 16,288 20,016
Advertising 22,504 4,969
Other selling expenses 4,870 3,505
-------- --------
TOTAL SELLING EXPENSES $ 55,319 $ 52,860
======== ========
GENERAL AND ADMINISTRATIVE EXPENSES - Schedule 2:
Administrative expenses $ -- $ 5,662
Automotive expenses 9,748 3,541
Bad debt expense 16,570 8,402
Depreciation 2,579 1,595
Insurance 1,483 697
Miscellaneous expense (income) 929 (1,279)
Professional fees 5,000 1,800
Rent -- 3,900
Office expense 2,038 658
Telephone 7,163 2,130
Temporary labor -- 3,931
Travel and entertainment 3,871 1,267
-------- --------
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES $ 49,381 $ 32,304
======== ========
The accompanying notes are an integral part of these financial statements.
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Page 12.
F.15
CERTIFICATE OF INCORPORATION
OF
ICY SPLASH FOOD & BEVERAGE, INC.
Filed by:
Beckman & Millman, P.C.
116 John Street
Suite 1313
Now York, New York 10038
<PAGE>
CERTIFICATE OF INCORPORATION
ICY SPLASH FOOD & BEVERAGE, INC.
Under Section 402 of the Business Corporation Law.
The undersigned, for the purpose of forming a corporation pursuant to
Section 402 of the Business Corporation Law of the State of New York, does
hereby certify and set forth:
FIRST: The name of the corporation is ICY SPLASH FOOD & BEVERAGE, INC.
SECOND: The purposes for which the corporation is formed are:
To engage in any lawful act or activity for which corporations may be
organized under the business corporation law, provided that the corporation is
not formed to engage in any act or activity which requires the act or approval
of any state official, department, board, agency or other body without such
approval or consent first being obtained.
To manufacture, buy, sell, distribute, job, to be a franchise dealer
licensee, import, export and otherwise deal in food and food products of every
kind and description, and other related and unrelated products at wholesale and
at retail and as principal and agent.
To manufacture, prepare, buy, sell, deal in, trade in, import and export
bread, butter, butter substitutes; biscuits and crackers; milk, cream, eggs,
cheeses, cereals, grain, corn products, yeast, baking powder. flour, cakes,
pies; sugar, molasses, teas, coffees, cocoa, chocolate, honey, fruits,
confectionery meats, poultry, game, fish, sea food; vegetables; sauces,
relishes, condiments, spices, nuts, liquors, beer, tobacco; kitchen utensils and
appliances, soaps, cleaners, drugs, brooms; canned goods of every description;
preserves, jams, jellies, marmalades; groceries, dairy products, meat products,
delicatessen and food compounds, appetizers, delicacies and preparations of
every description.
To engage in the business of buying and selling the products of abattoirs,
bakers, beveragers, brewers, canners, condensers, dairymen,
<PAGE>
pressers and processers of food and food products of all kinds, drugs, cosmetics
and other products of all kinds, liquid or solid.
To buy, sell, deliver, distribute, job, to be a franchise dealer licensee,
import, export and otherwise deal in soft drinks, soda, beer, ale and beverages
of every kind and description, and other related and unrelated products at
wholesale or at retail and as principal and agent.
To engage in the business of selling, delivering and otherwise
distributing, by means of motor vehicles or otherwise, all liquids, liquors,
beverages and fluids that may legally be possessed, bottled and sold; to
purchase or manufacture said liquids, beverages and fluids and to manufacture,
buy, sell, import and export said liquids, beverages and fluids and the bottles
in which they are contained as well as the case necessary to hold said bottles
in distribution.
To create, manufacture, buy and sell and generally deal in plain, fancy and
siphon bottles of all kinds, shapes and description. To manufacture, buy and
sell machinery and equipment of all kinds and the parts and accessories therefor
for filling bottles with any substance, and for sealing, wrapping and packing
the same.
To acquire by purchase, subscription, underwriting or otherwise, and to
own, hold for investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of
every sort and description and wheresoever situated, including shares of stock,
bonds, debentures, notes, scrip, securities, evidences of indebtedness,
contracts or obligations of any corporation or association, whether domestic or
foreign, or of any firm or individual or of the United States or any state,
territory or dependency of the United States or any foreign country, or any
municipality or local authority within or without the United States, and also to
issue in exchange therefor, stocks, bonds or other securities or evidences of
indebtedness of this corporation and, while the owner or holder of any such
property, to receive, collect and dispose of the interest, dividends and income
on or from such property and to possess and exercise in respect thereto all of
the rights, powers and privileges of ownership, including all voting powers
thereon.
To construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, ease, mortgage,
create liens upon, sell, convey or otherwise dispose of and turn to account, any
and all plants, machinery, works, implements and things or property, real and
personal, of every kind and description, incidental to, connected with, or
suitable, necessary or convenient for any of the purposes enumerated herein,
including all or any part or parts of the properties, assets, business and
goodwill of any persons, firms, associations or corporations.
<PAGE>
The powers, rights and privileges provided in this certificate are not to
be deemed to be in limitation of similar, other or additional powers, rights and
privileges granted or permitted to a corporation by the Business Corporation
Law, it being intended that this corporation shall have all rights, powers and
privileges granted or permitted to a corporation by such statute.
THIRD: The office of the corporation is to be located in the County of New
York, State of New York.
FOURTH: The aggregate number of shares which the corporation shall have the
authority to issue is Two Hundred (200), all of which shall be without par
value.
FIFTH: The Secretary of State is designated as the agent of the corporation
upon whom process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the corporation
served on him is:
Beckman & Millman, P.C.
116 John Street
Suite 1313
New York, New York 10038
SIXTH: The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment or other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or that his acts
violated Section 719 of the Business Corporation Law.
<PAGE>
IN WITNESS WHEREOF, this certificate has been subscribed to this 14th day
of June, 1996 by the undersigned who affirms that the statements made herein are
true under the penalties of perjury.
/s/ Gerald Weinberg
---------------------------
GERALD WEINBERG
90 State Street
Albany, New York
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATiON
OF
ICY SPLASH FOOD & BEVERAGE, INC.
UNDER SECTION 805 OF THE
BUSINESS CORPORATION LAW
STATE OF NEW YORK
DEPARTMENT OF STATE
FILED APR 29 1999
Filed By: Beckman, Millman & Sanders L.L.P. TAX $ 22.20
116 John Street, Suite 1313 BY: J & W
New York, NY 10038 NEW YORK
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ICY SPLASH FOOD & BEVERAGE, INC
UNDER SECTION 805 OF THE
BUSINESS CORPORATION LAW
Pursuant to the provisions of Section 805 of the Business Corporation Law,
the undersigned. being the Officer of the corporation, hereby certifies
FIRST: The name of the corporation is ICY SPLASH FOOD & BEVERAGE, INC.
SECOND: That the Certificate of Incorporation was filed by the Secretary of
State of New York on the 17th day of June 1996.
THIRD: The Article Fourth of the Certificate of Incorporation containing
the number of shares authorized by the corporation is hereby amended to read as
follows:
FOURTH:
1. The total number of shares of stock which the Corporation shall
have authority to issue is Fifty One Million (51,000,000) shares,
consisting of two classes of capital stock:
(i) Fifty Million (50,000,000) shares of Common Stock, par value
$0.001 per share; and
(ii) One Million (1,000,000) shares of one or more series of
<PAGE>
Preferred Stock, par value $0.001 per share, which shares
shall have such voting rights, designations, preferences and
relative participating, optional or other rights,
qualifications, limitations or restrictions as may be
determined and set forth in resolution or resolutions
adopted from time to time by the Board of Directors of the
Corporation, which resolution or resolutions shall be
executed, acknowledged, filed and recorded and shall become
effective in accordance with Section 104 of the New York
Business Corporation Law
FOURTH: That the total number of shares of preferred stock are being added.
FIFTH: That the total number of issued shares changed is Two Hundred (200)
shares of common stock, no par value
SIXTH: That each issued share changed shall be converted into Thirty Three
Thousand (33,000) issued shares resulting from the increase in the shares of
common stock authorized.
SEVENTH: That the total number of issued shares resulting from the increase
in shares of common stock authorized is Six Million Six Hundred Thousand
(6,600,000) shares of common stock, par value $0.001 per share.
EIGHTH: That the number of unissued shares resulting from the increase in
shares of common stock authorized is Forty Three Million Four Hundred Thousand
(43,400,000) shares of common stock, par value $0.001 per share. These unissued
shares are part of the change in the shares of the common stock authorized.
<PAGE>
615 of the New York Business Corporation Law. Such action was taken without a
meeting on written consent, setting forth the amendment to the Certificate of
Incorporation, signed by the holders of a majority of all outstanding shares
entitled to vote thereon. Said authorization was given subsequent to unanimous
written consent of all the directors in accordance with the provisions of
Section 708 of the New York Business Corporation Law.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that the
statements made herein are true under the penalties of perjury, this 20th day of
April 1999.
/s/ Joesph Aslan
----------------------------
Joesph Aslan - President
BYLAWS
ARTICLE I
SHAREHOLDERS
1. Annual Meeting
A meeting of the shareholders shall be held annually for the election of
directors and the transaction of other business on such date in each year as may
be determined by the Board of Directors, but in no event later than 100 days
after the anniversary of the date of incorporation of the Corporation.
2. Special Meetings
Special meetings of the shareholders may be called by the Board of
Directors, Chairman of the Board or President and shall be called by the Board
upon the written request of the holders of record of a majority of the
outstanding shares of the Corporation entitled to vote at the meeting requested
to be called. Such request shall state the purpose or purposes of the proposed
meeting. At such special meetings the only business which may be transacted is
that relating to the purpose or purposes set forth in the notice thereof.
3. Place of Meetings
Meetings of the shareholders shall be held at such place within or outside
of the State of New York as may be fixed by the Board of Directors. If no place
is so fixed, such meetings shall be held at the principal office of the
Corporation.
4. Notice of Meetings
Notice of each meeting of the shareholders shall be given in writing and
shall state the place, date and hour of the meeting and the purpose or purposes
for which the meeting is called. Notice of a special meeting shall indicate that
it is being issued by or at the direction of the person or persons calling or
requesting the meeting.
If, at any meeting, action is proposed to be taken which, if taken, would
entitle objecting shareholders to receive payment for their shares, the notice
shall include a statement of that purpose and to that effect.
A copy of the notice of each meeting shall be given, personally or by first
class mail, not less than ten nor more than sixty days before the date of the
meeting, to each shareholder entitled to vote at such meeting. If mailed, such
notice shall be deeme
<PAGE>
to have been given when deposited in the United States mail, with postage
thereon prepaid, directed to the shareholder at his address as it appears on the
record of the shareholders, or, if he shall have filed with the Secretary of the
Corporation a written request that notices to him or her be mailed to some other
address, then directed to him at such other address.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken. At the adjourned meeting any business may be transacted
that might have been transacted on the original date of the meeting. However, if
after the adjournment the Board of Directors fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record on the new record date entitled to notice under this
Section 4.
5. Waiver of Notice
Notice of a meeting need not be given to any shareholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack of notice of
such meeting, shall constitute a waiver of notice by him or her.
6. Inspectors of Election
The Board of Directors, in advance of any shareholders' meeting, may
appoint one or more inspectors to act at the meeting or any adjournment thereof.
If inspectors are not so appointed, the person presiding at a shareholders'
meeting may, and on the request of any shareholder entitled to vote thereat
shall, appoint two inspectors. In case any person appointed fails to appear or
act, the vacancy may be filled by appointment in advance of the meeting by the
Board or at the meeting by the person presiding thereat. Each inspector, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of such inspector at such meeting with strict
impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote at the meeting, count and tabulate all votes,
ballots or consents, determine the result thereof, and do such acts as are
proper to conduct the election or vote with fairness to all shareholders. On
request of the person presiding at the meeting, or of any shareholder entitled
to vote thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and shall execute a certificate of any
fact found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated and of any vote certified by them.
<PAGE>
7. List of Shareholders at Meetings
A list of the shareholders as of the record date, certified by the
Secretary or any Assistant Secretary or by a transfer agent, shall be produced
at any meeting of the shareholders upon the request thereat or prior thereto of
any shareholder. If the right to vote at any meeting is challenged, the
inspectors of election, or the person presiding thereat, shall require such list
of the shareholders to be produced as evidence of the right of the persons
challenged to vote at such meeting, and all persons who appear from such list to
be shareholders entitled to vote thereat may vote at such meeting.
8. Qualification of Voters
Unless otherwise provided in the Certificate of Incorporation, every
shareholder of record shall be entitled at every meeting of the shareholders to
one vote for every share standing in its name on the record of the shareholders.
Treasury shares as of the record date and shares held as of the record date
by another domestic or foreign corporation of any kind, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held as of the record date by the Corporation, shall not be shares entitled
to vote or to be counted in determining the total number of outstanding shares.
Shares held by an administrator, executor, guardian, conservator, committee
or other fiduciary, other than a trustee, may be voted by such fiduciary, either
in person or by proxy, without the transfer of such shares into the name of such
fiduciary. Shares held by a trustee may be voted by him or her, either in person
or by proxy, only after the shares have been transferred into his name as
trustee or into the name of his nominee.
Shares standing in the name of another domestic or foreign corporation of
any type or kind may be voted by such officer, agent or proxy as the bylaws of
such corporation may provide, or, in the absence of such provision, as the board
of directors of such corporation may determine.
No shareholder shall sell his vote, or issue a proxy to vote, to any person
for any sum of money or anything of value except as permitted by law.
9. Quorum of Shareholders
The holders of a majority of the shares of the Corporation issued and
outstanding and entitled to vote at any meeting of the shareholders shall
constitute a quorum at such meeting for the transaction of any business,
provided that when a specified
<PAGE>
item of business is required to be voted on by a class or series, voting as a
class, the holders of a majority of the shares of such class or series shall
constitute a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders who are present in person or by proxy and who are entitled
to vote may, by a majority of votes cast, adjourn the meeting despite the
absence of a quorum.
10. Proxies
Every shareholder entitled to vote at a meeting of the shareholders, or to
express consent or dissent without a meeting, may authorize another person or
persons to act for him by proxy.
Every proxy must be signed by the shareholder or its attorney. No proxy
shall be valid after the expiration of eleven months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
The authority of the holder of a proxy to act shall not be revoked by the
incompetence or death of the shareholder who executed the proxy, unless before
the authority is exercised written notice of an adjudication of such
incompetence or of such death is received by the Secretary or any Assistant
Secretary.
11. Vote or Consent of Shareholders
Directors, except as otherwise required by law, shall be elected by a
plurality of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote in the election.
Whenever any corporate action, other than the election of directors, is to
be taken by vote of the shareholders, it shall, except as otherwise required by
law, be authorized by a majority of the votes cast at a meeting of shareholders
by the holders of shares entitled to vote thereon.
Whenever shareholders are required or permitted to take any action by vote,
such action may be taken without a meeting on written consent, setting forth the
action so taken, signed by the holders of all outstanding shares entitled to
vote thereon. Written consent thus given by the holders of all outstanding
shares entitled to vote shall have the same effect as an unanimous vote of
shareholders.
<PAGE>
12. Fixing The Record Date
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the Board of
Directors may fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be less than ten nor more
than sixty days before the date of such meeting, nor more than sixty days prior
to any other action.
When a determination of shareholders of record entitled to notice of or to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date for the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
1. Power of Board and Qualification of Directors
The business of the Corporation shall be managed by the Board of Directors.
Each director shall be at least eighteen years of age.
2. Number of Directors
The number of directors constituting the entire Board of Directors shall be
the number, not less than one nor more than ten, fixed from time to time by a
majority of the total number of directors which the Corporation would have,
prior to any increase or decrease, if there were no vacancies, provided,
however, that no decrease shall shorten the term of an incumbent director. Until
otherwise fixed by the directors, the number of directors constituting the
entire Board shall be three.
3. Election and Term of Directors
At each annual meeting of shareholders, directors shall be elected to hold
office until the next annual meeting and until their successors have been
elected and qualified or until their death, resignation or removal in the manner
hereinafter provided.
4. Quorum of Directors and Action by the Board
A majority of the entire Board of Directors shall constitute a quorum for
<PAGE>
the transaction of business, and, except where otherwise provided herein, the
vote of a majority of the directors present at a meeting at the time of such
vote, if a quorum is then present, shall be the act of the Board.
Any action required or permitted to be taken by the Board of Directors or
any committee thereof may be taken without a meeting if all members of the Board
or the committee consent in writing to the adoption of a resolution authorizing
the action. The resolution and the written consent thereto by the members of the
Board or committee shall be filed with the minutes of the proceedings of the
Board or committee.
5. Meetings of the Board
An annual meeting of the Board of Directors shall be held in each year
directly after the annual meeting of shareholders. Regular meetings of the Board
shall be held at such times as may be fixed by the Board. Special meetings of
the Board may be held at any time upon the call of the President or any two
directors.
Meetings of the Board of Directors shall be held at such places as may be
fixed by the Board for annual and regular meetings and in the notice of meeting
for special meetings. If no place is so fixed, meetings of the Board shall be
held at the principal office of the Corporation. Any one or more members of the
Board of Directors may participate in meetings by means of a conference
telephone or similar communications equipment.
No notice need be given of annual or regular meetings of the Board of
Directors. Notice of each special meeting of the Board shall be given to each
director either by mail not later than noon, New York time, on the third day
prior to the meeting or by telegram, written message or orally not later than
noon, New York time, on the day prior to the meeting. Notices are deemed to have
been properly given if given: by mail, when deposited in the United States mail;
by telegram at the time of filing; or by messenger at the time of delivery.
Notices by mail, telegram or messenger shall be sent to each director at the
address designated by him for that purpose, or, if none has been so designated,
at his last known residence or business address.
Notice of a meeting of the Board of Directors need not be given to any
director who submits a signed waiver of notice whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to any director.
A notice, or waiver of notice, need not specify the purpose of any meeting
of the Board of Directors.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time and place. Notice of any adjournment of
a meeting to another time or place shall be given, in the manner described
above, to the directors who were not present at the time of the adjournment and,
unless such time and place are announced at the meeting, to the other directors.
<PAGE>
6. Resignations
Any director of the Corporation may resign at any time by giving written
notice to the Board of Directors or to the President or to the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein;
and unless otherwise specified therein the acceptance of such resignation shall
not be necessary to make it effective.
7. Removal of Directors
Any one or more of the directors may be removed for cause by action of the
Board of Directors. Any or all of the directors may be removed with or without
cause by vote of the shareholders.
8. Newly Created Directorships and Vacancies
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the Board of Directors for any reason
except the removal of directors by shareholders may be filled by vote of a
majority of the directors then in office, although less than a quorum exists.
Vacancies occurring as a result of the removal of directors by shareholders
shall be filled by the shareholder. A director elected to fill a vacancy shall
be elected to hold office for the unexpired term of his predecessor.
9. Executive and Other Committees of Directors
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from among its members an executive committee and other
committees each consisting of three or more directors and each of which, to the
extent provided in the resolution, shall have all the authority of the Board,
except that no such committee shall have authority as to the following matters:
(a) the submission to shareholders of any action that needs shareholders'
approval; (b) the filling of vacancies in the Board or in any committee; (c) the
fixing of compensation of the directors for serving on the Board or on any
committee; (d) the amendment or repeal of the bylaws, or the adoption of new
bylaws; (e) the amendment or repeal of any resolution of the Board which, by its
term, shall not be so amendable or repealable; or (f) the removal or
indemnification of directors.
The Board of Directors may designate one or more directors as alternate
members of any such committee, who may replace any absent member or members at
any meeting of such committee.
Unless a greater proportion is required by the resolution designating a
<PAGE>
committee, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at a meeting at the time of such vote,
if a quorum is then present, shall be the act of such committee.
Each such committee shall serve at the pleasure of the Board of Directors.
10. Compensation of Directors
The Board of Directors shall have authority to fix the compensation of
directors for services in any capacity.
11. Interest of Directors in a Transaction
Unless shown to be unfair and unreasonable as to the Corporation, no
contract or other transaction between the Corporation and one or more of its
directors, or between the Corporation and any other corporation, firm,
association or other entity in which one or more of the directors are directors
or officers, or are financially interested, shall be either void or voidable,
irrespective of whether such interested director or directors are present at a
meeting of the Board of Directors, or of a committee thereof, which authorizes
such contract or transaction and irrespective of whether his or their votes are
counted for such purpose. In the absence of fraud any such contract and
transaction conclusively may be authorized or approved as fair and reasonable
by: (a) the Board of Directors or a duly empowered committee thereof, by a vote
sufficient for such purpose without counting the vote or votes of such
interested director or directors (although such interested director or directors
may be counted in determining the presence of a quorum at the meeting which
authorizes such contract or transaction), if the fact of such common
directorship, officership or financial interest is disclosed or known to the
Board or committee, as the case may be; or (b) the shareholders entitled to vote
for the election of directors, if such common directorship, officership or
financial interest is disclosed or known to such shareholders.
Notwithstanding the foregoing, no loan, except advances in connection with
indemnification, shall be made by the Corporation to any director unless it is
authorized by vote of the shareholders without counting any shares of the
director who would be the borrower or unless the director who would be the
borrower is the sole shareholder of the Corporation.
<PAGE>
ARTICLE III
OFFICERS
1. Election of Officers
The Board of Directors, as soon as may be practicable after the annual
election of directors, shall elect a President, a Secretary, and a Treasurer,
and from time to time may elect or appoint such other officers as it may
determine. Any two or more offices may be held by the same person. The Board of
Directors may also elect one or more Vice Presidents, Assistant Secretaries and
Assistant Treasurers.
2. Other Officers
The Board of Directors may appoint such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
3. Compensation
The salaries of all officers and agents of the Corporation shall be fixed
by the Board of Directors.
4. Term of Office and Removal
Each officer shall hold office for the term for which he is elected or
appointed, and until his successor has been elected or appointed and qualified.
Unless otherwise provided in the resolution of the Board of Directors electing
or appointing an officer, his term of office shall extend to and expire at the
meeting of the Board following the next annual meeting of shareholders. Any
officer may be removed by the Board with or without cause, at any time. Removal
of an officer without cause shall be without prejudice to his contract rights,
if any, and the election or appointment of an officer shall not of itself create
contract rights.
5. President
The President shall be the chief executive officer of the Corporation,
shall have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The President shall also preside at all meetings of the
shareholders and the Board of Directors.
The President shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation.
<PAGE>
6. Vice Presidents
The Vice Presidents, in the order designated by the Board of Directors, or
in the absence of any designation, then in the order of their election, during
the absence or disability of or refusal to act by the President, shall perform
the duties and exercise the powers of the President and shall perform such other
duties as the Board of Directors shall prescribe.
7. Secretary and Assistant Secretaries
The Secretary shall attend all meetings of the Board of Directors and all
meetings of the shareholders and record all the proceedings of the meetings of
the Corporation and of the Board of Directors in a book to be kept for that
purpose, and shall perform like duties for the standing committees when
required. The Secretary shall give or cause to be given, notice of all meetings
of the shareholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision the Secretary shall be. The Secretary shall
have custody of the corporate seal of the Corporation and the Secretary, or an
Assistant Secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by the Secretary's
signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his signature.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order designated by the Board of Directors, or in the absence
of such designation then in the order of their election, in the absence of the
Secretary or in the event of the Secretary's inability or refusal to act, shall
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
8. Treasurer and Assistant Treasurers
The Treasurer shall have the custody of the corporate funds and securities;
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation; and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors.
The Treasurer shall disburse the funds as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to
<PAGE>
the Board of Directors for the faithful performance of the duties of the office
of Treasurer, and for the restoration to the Corporation, in the case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the possession or
under the control of the Treasurer belonging to the Corporation.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order designated by the Board of Directors, or in the absence
of such designation, then in the order of their election, in the absence of the
Treasurer or in the event of the Treasurer's inability or refusal to act, shall
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
9. Books and Records
The Corporation shall keep: (a) correct and complete books and records of
account; (b) minutes of the proceedings of the shareholders, Board of Directors
and any committees of directors; and (c) a current list of the directors and
officers and their residence addresses. The Corporation shall also keep at its
office in the State of New York or at the office of its transfer agent or
registrar in the State of New York, if any, a record containing the names and
addresses of all shareholders, the number and class of shares held by each and
the dates when they respectively became the owners of record thereof.
The Board of Directors may determine whether and to what extent and at what
times and places and under what conditions and regulations any accounts, books,
records or other documents of the Corporation shall be open to inspection, and
no creditor, security holder or other person shall have any right to inspect any
accounts, books, records or other documents of the Corporation except as
conferred by statute or as so authorized by the Board.
10. Checks, Notes, etc.
All checks and drafts on, and withdrawals from the Corporation's accounts
with banks or other financial institutions, and all bills of exchange, notes and
other instruments for the payment of money, drawn, made, endorsed, or accepted
by the Corporation, shall be signed on its behalf by the person or persons
thereunto authorized by, or pursuant to resolution of, the Board of Directors.
<PAGE>
ARTICLE IV
CERTIFICATES AND TRANSFERS OF SHARES
1. Forms of Share Certificates
The share of the Corporation shall be represented by certificates, in such
forms as the Board of Directors may prescribe, signed by the President or a Vice
President and the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer. The shares may be sealed with the seal of the Corporation
or a facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or registered
by a registrar other than the Corporation or its employee. In case any officer
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of issue.
Each certificate representing shares issued by the Corporation shall set
forth upon the face or back of the certificate, or shall state that the
Corporation will furnish to any shareholder upon request and without charge, a
full statement of the designation, relative rights, preferences and limitations
of the shares of each class of shares, if more than one, authorized to be issued
and the designation, relative rights, preferences and limitations of each series
of any class of preferred shares authorized to be issued so far as the same have
been fixed, and the authority of the Board of Directors to designate and fix the
relative rights, preferences and limitations of other series.
Each certificate representing shares shall state upon the face thereof: (a)
that the Corporation is formed under the laws of the State of New York; (b) the
name of the person or persons to whom issued; and (c) the number and class of
shares, and the designation of the series, if any, which such certificate
represents.
2. Transfers of Shares
Shares of the Corporation shall be transferable on the record of
shareholders upon presentment to the Corporation of a transfer agent of a
certificate or certificates representing the shares requested to be transferred,
with proper endorsement on the certificate or on a separate accompanying
document, together with such evidence of the payment of transfer taxes and
compliance with other provisions of law as the Corporation or its transfer agent
may require.
3. Lost, Stolen or Destroyed Share Certificates
No certificate for shares of the Corporation shall be issued in place of
any certificate alleged to have been lost, destroyed or wrongfully taken,
except, if and to the extent required by the Board of Directors upon: (a)
production of evidence of loss, destruction or wrongful taking; (b) delivery of
a bond indemnifying the Corporation and its agents against any claim that may be
made against it or them on account of the alleged loss, destruction or wrongful
taking of the replaced certificate or the issuance of the new certificate; (c)
payment of the expenses of the Corporation and its agents incurred in connection
with the issuance of the new certificate; and (d) compliance with other such
reasonable requirements as may be imposed.
<PAGE>
ARTICLE V
OTHER MATTERS
1. Corporate Seal
The Board of Directors may adopt a corporate seal, alter such seal at
pleasure, and authorize it to be used by causing it or a facsimile to be affixed
or impressed or reproduced in any other manner.
2. Fiscal Year
The fiscal year of the Corporation shall be the twelve months ending
December 31st, or such other period as may be fixed by the Board of Directors.
3. Amendments
Bylaws of the Corporation may be adopted, amended or repealed by vote of
the holders of the shares at the time entitled to vote in the election of any
directors. Bylaws may also be adopted, amended or repealed by the Board of
Directors, but any bylaws adopted by the Board may be amended or repealed by the
shareholders entitled to vote thereon as herein above provided.
If any bylaw regulating an impending election of directors is adopted,
amended or repealed by the Board of Directors, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors the
bylaw so adopted, amended or repealed, together with a concise statement of the
changes made.
REVISED FINANCIAL CONSULTING AGREEMENT
Agreement made as of the 27th day of April 1999, by and between the following
parties:
Icy Splash Food & Beverage, Inc. "Company", being a corporate entity which is
duly organized and is validly existing pursuant to law, maintaining its
principal offices at: 9-15 166th Street, Suite 5B, Whitestone, NY 11357.
And,
Southern Financial Services, Inc., "Consultant", being a corporate entity which
is duly organized and is validly existing pursuant to law, maintaining its
principal offices at 3000 NE 30th Place, Suite 107, Ft. Lauderdale, FL 33306.
WHEREAS, the parties mutually desire to enter into a formal business
relationship, and do hereby agree that the following accurately reflects their
entire understanding.
IN CONSIDERATION of the covenants, terms and conditions herein stated, the
undersigned parties agree as follows;
1. Consultant's Obligations.
1.1 At all times for the duration of this Agreement, the Consultant shall
use its best efforts to assist the Company in obtaining equity financing through
the making of a secondary market in the common stock of the Company which, if
successful, will result in the exercise of 950,000 Warrants ("Offering"). And,
1.2 The Consultant, among other things, shall specifically be responsible
for procuring a broker/dealer who will file the appropriate 15c2-11, which will
allow the Company to obtain a symbol allowing it to be quoted on the OTC -
Bulletin Board.
2. Company Obligations. At all times for the duration of this Agreement and on a
timely basis, the Company shall:
2.1 provide all non-confidential documentation and information which may be
required for the Consultant to perform the requisite services;
2.2 arrange to participate in meetings and discussions with qualified
broker/dealers and/or financial public relations firms introduced by Consultant;
2.3 negotiate in good faith with all third party potential underwriters
and/or private investors introduced by Consultant;
<PAGE>
2.4 provide all documentation that may be required to prepare any necessary
applications and appropriate state "blue sky" filings so as to effectuate the
proposed Offering;
2.5 use its best efforts to ensure that "friends" of the Company purchase
common stock during the first thirty (30) days of the Offering (the "Quiet
Period"); and,
2.6 pay all of the costs, including filing, auditing and legal fees
associated with the Offering.
3. Consultant's Fee. For its services, the Consultant shall be entitled to
payments equal to ten percent (10%) of the monies raised from the exercise of
the Warrants. Said funds will be cut-out and paid as the Company receives the
investment funds. And,
4. Miscellaneous.
4.1 The Parties specifically acknowledge that:
a) Consultant has advised the Company that is not a duly licensed
securities broker/dealer or investment banking firm. And,
b) Consultant is not required to sell any securities or provide any
services that are exclusive to licensed securities broker/dealers or
investment bankers.
5. Non-Circumvent Agreement. The Company agrees that all third parties
introduced to it by the Consultant represent significant efforts and working
relationships that are unique to, and part of, the work product of the
Consultant. Therefore, without the prior specific written consent of the
Consultant, the Company agrees to refrain from conducting direct or indirect
business dealings of any kind, with any third party so introduced by the
Consultant, for a period of three years from the initial introduction made
during the course of this Agreement. In the event of a violation of this
provision the Consultant shall be entitled to obtain, on an ex parte
application, appropriate injunctive relief from any court of competent
jurisdiction, together with and including all remedies available at law. This
provision shall survive the remaining obligations and performance due hereunder.
6. Exclusive Agreement. This Agreement supersedes any and all prior oral or
written agreements, which provided for Consultant's performance on behalf of the
Company.
7. Assignability and Unenforceability. This Agreement or the rights, duties and
or obligations hereunder may not be assigned by either party without the express
written consent of the other. The unenforceability of any one or more provisions
hereof shall not invalidate any of the other provisions. This Agreement shall
remain valid until written notice to the contrary is provided by one party to
the other.
8. Counterparts And Facsimile Signatures. This Agreement may be executed in one
or more counterparts, each of which shall represent a binding obligation upon
the
<PAGE>
executing party respectively. The facsimile signature for the purposes of this
Agreement and shall be as binding upon the parties as such.
9. Captions. The paragraph captions are for descriptive purposes only and shall
have no effect with regard to the content or the validity of the content
thereof. And,
10. Controlling Law. This Agreement shall be construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ICY SPLASH FOOD & BEVERAGE, INC.
By /s/ Joseph Aslan
-----------------------------
Joseph Aslan
President
SOUTHERN FINANCIAL SERVICES, INC.
By /s/ Jeffrey Dale Welsh
-----------------------------
Jeffrey Dale Welsh
President
CHARLES TOKARZ
CERTIFIED PUBLIC ACCOUNTANT
March 19,1998
Mr. Joseph Aslan
Mr. Shlomo Aslan
Icy Splash Food & Beverage, Inc.
9-15 166th Street
Suite 5B
Whitestone, NY 11357
Dear Joseph & Shlomo:
Thank you for the time and courtesies you offered me on my trip to
Connecticut and New York. After meeting you, I am more excited about the
future of Icy Splash and my involvement with you and the company.
I am pleased to accept your offer to become the Treasurer & Chief Financial
Officer of Icy Splash Food & Beverage, Inc. At your request, this letter is
meant to outline the nature of the services that I will provide and the
terms and conditions under which they will be provided.
I will provide Chief Financial Officer services to Icy Splash Food &
Beverage, Inc. beginning March 20, 1998. These services will include
assistance in writing letters and due diligence documents, liaison 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.
To facilitate the delivery of such Chief Financial Officer services,
personnel should be instructed to cooperate with me and also to provide
relevant information to me upon request. All books and records of Icy
Splash Food & Beverage, Inc. remain the property of Icy Splash Food &
Beverage, Inc. and will not be retained by me.
In consideration of the above services, I will immediately be awarded
20,000 shares of Icy Splash Food & Beverage, Inc. stock as an incentive to
accept the position. Additionally, I will receive a deposit or retainer
payment of $500 to hold and be applied against my 7th monthly invoice or my
final invoice, whichever occurs first. If either invoice is not equal to or
greater than $500, I will remit the difference as a refund. I will bill you
at the rate of thirty-five dollars ($35.00) per hour on a monthly basis,
with the previous month's Chief Financial Officer services detailed as to
type of service provided, date provided and hours billed. Invoices are due
and payable within thirty (30) days of the date of presentation of such
invoice. Any objections to items contained in the invoice shall be made in
writing to me within fifteen (15) days from the date of presentation of the
invoice. Objections not made within this fifteen (15) day period will be
deemed waived.
This agreement may be canceled at any time by either party upon written
notice provided to the other party. Such cancellation shall be effective
immediately upon receipt of such notice. However, such cancellation shall
not discharge Icy Splash Food & Beverage, Inc. from the obligation to pay
the Chief Financial Officer fees herein described provided to Icy Splash
Food & Beverage, Inc. prior to the effective date of the cancellation.
If the foregoing accurately reflects your understanding of the nature of
Chief Financial Officer services that I will provide and the terms and
conditions under which they will be provided, please indicate by signing on
the designated signature line below.
/s/ Charles Tokarz
----------------------
Charles Tokarz, C.P.A.
Accepted By:
/s/ J. Aslan Shlomo Aslan
----------------------------- -----------------------------
Joseph Aslan, President Shlomo Aslan, Secretary
Date: 4-1-98 Date: 4-1-98
4721 Oak Run Drive o Sarasota, Florida 34243 (813) 954-9584
o (813) 355-1326 o Fax (813) 351-9135
NOTE: This form is intended to cover matters common to most transactions.
Provisions should be added, altered or deleted to suit the circumstances of a
particular transaction and to comply with local law and practice.
Contract of Sale -- Office, Commercial and Multi-Family Residential Premises
- --------------------------------------------------------------------------------
Table of Contents
Section 1. Sale of premises and acceptable title
Section 2. Purchase price, acceptable funds, existing mortgages, purchase
money mortgage, escrow of downpayment and foreign persons
Section 3. The closing
Section 4. Representations and warranties of seller
Section 5. Acknowledgements of purchaser
Section 6. Seller's obligations as to leases
Section 7. Responsibility for violations
Section 8. Destruction, damage or condemnation
Section 9. Covenants of seller
Section 10. Seller's closing obligations
Section 11. Purchaser's closing obligations
Section 12. Apportionments
Section 13. Objections to title, failure of seller or purchaser to perform
and vendee's lien
Section 14. Broker
Section 15. Notices
Section 16. Limitations on survival of representations, warranties, covenants
and other obligations
Section 17. Miscellaneous provisions
Signatures and receipt by escrowee
Section A. Descriptions of premises (to be attached)
Section B. Permitted exceptions
Section C. Purchase price
Section D. Miscellaneous
Section E. Rent schedule (to be attached)
Section F. Purchase money note and mortgage
(to be attached)
CONTRACT dated March _____, 1999 between
WORLD POLYMERS, INC. f/k/a ACE PLASTICS, INC.
494 Wortman Avenue
Brooklyn, N.Y. 11208
("Seller") and
ICY SPLASH FOOD and BEVERAGE, INC.
929 Shepherd Avenue
Brooklyn, N.Y. 11208
with the right to assign this Contract to a wholly owned subsidiary
("Purchaser").
Seller and Purchaser hereby covenant and agree as follows:
Section 1. Sale of Premises and Acceptable Title
ss. 1.01. Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, at the price and upon the terms and conditions set forth in this
contract: (a) the parcel of land more particularly described in Schedule A
attached hereto ("Land"); (b) all buildings and improvements situated on the
Land (collectively, "Building"); (c) all right, title and interest of Seller, if
any, in and to the land lying in the bed of any street or highway in front of or
adjoining the Land to the center line thereof, and to any unpaid award for any
taking by condemnation or any damage to the Land by reason of a change of grade
of any street or highway; (d) the appurtenances and all the estate and rights of
Seller in and to the Land and Building; and (e) all right, title and interest of
Seller, if any, in and to the fixtures, equipment and other personal property
attached or appurtenant to the Building (collectively, "Premises"). The Premises
are located at or known as
494 Wortman Avenue
Brooklyn, N.Y.
Sect. 14, Block 4406, Lot 6
ss. 1.02. Seller shall convey and Purchaser shall accept fee simple title
to the Premises in accordance with the terms of this contract, subject only to:
(a) the matters set forth in Schedule B attached hereto (collectively,
"Permitted Exceptions"); and (b) such other matters as (i) the title insurer
specified in Schedule D attached hereto (or if none is so specified, then any
title insurer doing business in the state in which the Premises are located)
shall be willing, without special premium, to omit as exceptions to coverage or
to except with insurance against collection out of or enforcement against the
Premises and (ii) shall be accepted by any bank, savings bank, trust company,
savings and loan association or insurance company ("Institutional Lender") which
has committed in writing to provide mortgage financing to Purchaser for the
purchase of the Premises ("Purchaser's Institutional Lender"), except that if
such acceptance by Purchaser's Institutional Lender is unreasonably withheld or
delayed, such acceptance shall be deemed to have been given.
Section 2. Purchase Price, Acceptable Funds, Existing Mortgages, Purchase
Money Mortgage, Escrow of Downpayment and Foreign Persons
ss. 2.01. The purchase price ("Purchase Price") to be paid by Purchaser to
Seller for the Premises as provided in Schedule C attached hereto is $800,000.00
ss. 2.02. All monies payable under this contract, unless otherwise
specified in this contract, shall be paid by (a) certified checks of Purchaser
or any person making a purchase money loan to Purchaser drawn on any bank,
savings bank, trust company or savings and loan association having a banking
office in the state in which the Premises are located or (b) official bank
checks drawn by any such banking institution, payable to the order of Seller,
except that uncertified checks of Purchaser payable to the order of Seller up to
the amount of one-half of one percent of the Purchase Price shall be acceptable
for sums payable to Seller at the Closing.
<PAGE>
ss. 2.04. (a) If Schedule C provides for payment of a portion of the
Purchase Price by execution and delivery to Seller of a note secured by a
purchase money mortgage ("Purchase Money Mortgage"), such note and Purchase
Money Mortgage shall be drawn by the attorney for the Seller on the forms
attached hereto as Schedule F, as modified by this contract. At the Closing,
Purchaser shall pay the Mortgage recording tax and recording fees therefor and
the filing fees for any financing statements delivered in connection therewith,
as well as attorney fees to Seller's attorney in the sum of $350.00.
ss. 2.05. (a) If the sum paid under paragraph (a) of Schedule C or any
other sums paid on account of the Purchase Price prior to the Closing
(collectively, "Downpayment") are paid by check or checks drawn to the order of
and delivered to Seller's attorney or another escrow agent ("Escrowee"), the
Escrowee shall hold the proceeds thereof in escrow in a special bank account (or
as otherwise agreed in writing by Seller, Purchaser and Escrowee) until the
Closing or sooner termination of this contract and shall pay over or apply such
proceeds in accordance with the terms of this section. Escrowee need not hold
such proceeds in an interest-bearing account, but if any interest is earned
thereon, such interest shall be paid to the same party entitled to the escrowed
proceeds, and the party receiving such interest shall pay any income taxes
thereon. The tax identification numbers of the parties are either set forth in
Schedule D or shall be furnished to Escrowee upon request. At the Closing, such
proceeds and the interest thereon, if any, shall be paid by Escrowee to Seller.
If for any reason the Closing does not occur and either party makes a written
demand upon Escrowee for payment of such amount, Escrowee shall give written
notice to the other party of such demand. If Escrowee does not receive a written
objection from the other party to the proposed payment within 10 business days
after the giving of such notice, Escrowee is hereby authorized to make such
payment. If Escrowee does receive such written objection within such 10 day
period or if for any other reason Escrowee in good faith shall elect not to make
such payment, Escrowee shall continue to hold such amount until otherwise
directed by written instructions from the parties to this contract or a final
judgment of a court. However, Escrowee shall have the right at any time to
deposit the escrowed proceeds and interest thereon, if any, with the clerk of
the appropriate court of the county in which the Land is located. Escrowee shall
give written notice of such deposit to Seller and Purchaser. Upon such deposit
Escrowee shall be relieved and discharged of all further obligations and
responsibilities hereunder.
(b) The parties acknowledge that Escrowee is acting solely as a stakeholder
at their request and for their convenience, that Escrowee shall not be deemed to
be the agent of either of the parties, and that Escrowee shall not be liable to
either of the parties for any act or omission on its part unless taken or
suffered in bad faith, in willful disregard of this contract or involving gross
negligence. Seller and Purchaser shall jointly and severally indemnify and hold
Escrowee harmless from and against all costs, claims and expenses, including
reasonable attorneys' fees, incurred in connection with the performance of
Escrowee's duties hereunder, except with respect to actions or omissions taken
or suffered by Escrowee in bad faith, in willful disregard of this contract or
involving gross negligence on the part of Escrowee.
(c) Escrowee has acknowledged agreement to these provisions by signing in
the place indicated on the signature page of this contract.
ss. 2.06. In the event that Seller is a "foreign person", as defined in
Internal Revenue Code Section 1445 and regulations issued thereunder
(collectively, the "Code Withholding Section"), or in the event that Seller
fails to deliver the certification of non-foreign status required under ss.
10.12(c), or in the event that Purchaser is not entitled under the Code
Withholding Section to rely on such certification, Purchaser shall deduct and
withhold from the Purchase Price a sum equal to ten percent (10%) thereof and
shall at Closing remit the withheld amount with Forms 8288 and 8288A (or any
successors thereto) to the Internal Revenue Service; and if the cash balance of
the Purchase Price payable to Seller at the Closing after deduction of net
adjustments, apportionments and credits (if any) to be made or allowed in favor
of Seller at the Closing as herein provided is less than ten percent (10%) of
the Purchase Price, Purchaser shall have the right to terminate this contract,
in which event Seller shall refund the Downpayment to Purchaser and shall
reimburse Purchaser for title examination and survey costs as if this contract
were terminated pursuant to ss. 13.02. The right of termination provided for in
this ss. 2.06 shall be in addition to and not in limitation of any other rights
or remedies available to Purchaser under applicable law.
Section 3. The Closing
ss. 3.01. Except as otherwise provided in this contract, the closing of
title pursuant to this contract ("Closing") shall take place on the scheduled
date and time of closing specified in Schedule D (the actual date of the Closing
being herein referred to as "Closing Date") at the place specified in Schedule
D.
Section 4. Representations and Warranties of Seller
Seller represents and warrants to Purchaser as follows:
ss. 4.01. Unless otherwise provided in this contract, Seller is the sole
owner of the Premises.
ss. 4.02. If the premises are encumbered by an Existing Mortgage(s), no
written notice has been received from the Mortgagee(s) asserting that a default
or breach exists thereunder which remains uncured and no such notice shall have
been received and remain uncured on the Closing Date. If copies of documents
constituting the Existing Mortgage(s) and note(s) secured thereby have been
exhibited to and initialed by Purchaser or its representative, such copies are
true copies of the originals and the Existing Mortgage(s) and note(s) secured
thereby have not been modified or amended except as shown in such documents.
ss. 4.03. The information concerning written leases (which together with
all amendments and modifications thereof are collectively referred to as
"Leases") and any tenancies in the Premises not arising out of the Leases
(collectively, "Tenancies") set forth in Schedule E attached hereto ("Rent
Schedule") is set accurate as of the date set forth therein or, if no date is
set forth therein, as of the date hereof, and there are no Leases or Tenancies
of any space in the Premises other than those set forth therein and any
subleases or subtenancies. Except as otherwise set forth in the Rent Schedule or
elsewhere in this contract:
(a) all of the Leases are in full force and effect and none of them has
been modified, amended or extended;
(b) no renewal or extension options have been granted to tenants;
(c) no tenant has an option to purchase the Premises;
(d) the rents set forth are being collected on a current basis and there
are no arrearages in excess of one month;
(e) no tenant is entitled to rental concessions or abatements for any
period subsequent to the scheduled date of closing;
(f) Seller has not sent written notice to any tenant claiming that such
tenant is in default, which default remains uncured;
(g) no action or proceeding instituted against Seller by any tenant of the
Premises is presently pending in any court, except with respect to claims
involving personal injury or property damage which are covered by insurance; and
(h) there are no security deposits other than those set forth in the Rent
Schedule.
If any Leases which have been exhibited to and initialed by Purchaser or its
representative contain provisions that are inconsistent with the foregoing
representations and warranties, such representations and warranties shall be
deemed modified to the extent necessary to eliminate such inconsistency and to
conform such representations and warranties to the provisions of the Leases.
ss. 4.04. If the Premises or any part thereof are subject to rent control
or regulation, the rents shown are not in excess of the maximum collectible
rents, and, except as otherwise set forth in the Rent Schedule, no tenants are
entitled to abatements as senior citizens, there are no proceedings presently
pending before the rent commission in which a tenant has alleged an overcharge
of rent or diminution of services or similar grievance, and there are no
outstanding orders of the rent commission that have not been complied with by
Seller.
ss. 4.05. If an insurance schedule is attached hereto, such schedule lists
all insurance policies presently affording coverage with respect to the
Premises, and the information contained therein is accurate as of the date set
forth therein or, if no date is set forth therein, as of the date hereof.
ss. 4.06. If a payroll schedule is attached hereto, such schedule lists all
employees presently employed at the Premises, and the information contained
therein is accurate at of the date set forth therein or, if no date is set forth
therein, as of the date hereof, and, except as otherwise set forth in such
schedule, none of such employees is covered by a union contract and there are no
retroactive increases or other accrued and unpaid sums owed to any employee.
ss. 4.07. If a schedule of service, maintenance, supply and management
contracts ("Service Contracts") is attached hereto, such schedule lists all such
contracts affecting the Premises, and the information set forth therein is
accurate as of the date set forth therein or, if no date is set forth therein,
as of the date hereof.
ss. 4.08. If a copy of a certificate of occupancy for the Premises has been
exhibited to and initialed by Purchaser or its representative, such copy is a
true copy of the original and such certificate has not been amended, but Seller
makes no representation as to compliance with any such certificate.
ss. 4.09. The assessed valuation and real estate taxes set forth in
Schedule D, if any, are the assessed valuation of the Premises and the taxes
paid or payable with respect thereto for the fiscal year indicated in such
schedule. Except as otherwise set forth in Schedule D, there are no tax
abatements or exemptions affecting the Premises.
ss. 4.10. Except as otherwise set forth in a schedule attached hereto, if
any, if the Premises are used for residential purposes, each apartment contains
a range and a refrigerator, and all of the ranges and refrigerators and all of
the items of personal property (or replacements thereof) listed in such
schedule, if any, are and on the Closing Date will be owned by Seller free of
liens and encumbrances other than the lien(s) of the Existing Mortgage(s), if
any.
ss. 4.11. Seller has no actual knowledge that any incinerator, boiler or
other burning equipment on the Premises is being operated in violation of
applicable law. If copies of a certificate or certificates of operation therefor
have been exhibited to and initialed by Purchaser or its representative, such
copies are true copies of the originals.
ss. 4.12. Except as otherwise set forth in Schedule D, Seller has no actual
knowledge of any assessment payable in annual installments, or any part thereof,
which has become a lien on the Premises.
ss. 4.13. Seller is not a "foreign person" as defined in the Code
Withholding Section.
Section 5. Acknowledgments of Purchaser
Purchaser acknowledges that:
ss. 5.01. Purchaser has inspected the Premises, is fully familiar with the
physical condition and state of repair thereof, and, subject to the provisions
of ss. 7.01, ss. 8.01, and ss. 9.04, shall accept the Premises "as is" and in
their present condition, subject to reasonable use, wear, tear and natural
deterioration between now and the Closing Date, without any reduction in the
Purchase Price for any change in such condition by reason thereof subsequent to
the date of this contract.
ss. 5.02. Before entering into this contract, Purchaser has made such
examination of the Premises, the operation, income and expenses thereof and all
other matters affecting or relating to this transaction as Purchaser deemed
necessary. In entering into this contract, Purchaser has not been induced by and
has not relied upon any representations, warranties or statements, whether
express or implied, made by Seller or any agent, employee or other
representative of Seller or by any broker or any other person representing or
purporting to represent Seller, which are not expressly set forth in this
contract, whether or not any such representations, warranties or statements were
made in writing or orally.
<PAGE>
Section 6. Seller's Obligations as to Leases
ss. 6.01. Unless otherwise provided in a schedule attached to this
contract, between the date of this contract and the Closing, Seller shall not,
without Purchaser's prior written consent, which consent shall not be
unreasonably withheld: (a) amend, renew or extend any Lease in any respect,
unless required by law; (b) grant a written lease to any tenant occupying space
pursuant to a Tenancy; or (c) terminate any Lease or Tenancy except by reason of
a default by the tenant thereunder.
ss. 6.O2. Unless otherwise provided in a schedule attached to this
contract, between the date of this contract and the Closing, Seller shall not
permit occupancy of, or enter into any new lease for, space in the Building
which is presently vacant or which may hereafter become vacant without first
giving Purchaser written notice of the identity of the proposed tenant, together
with (a) either a copy of the proposed lease or a summary of the terms thereof
in reasonable detail and (b) a statement of the amount of the brokerage
commission, if any, payable in connection therewith and the terms of payment
thereof. If Purchaser objects to such proposed lease, Purchaser shall so notify
Seller within 4 business days after receipt of Seller's notice if such notice
was personally delivered to Purchaser, or within 7 business days after the
mailing of such notice by Seller to Purchaser, in which case Seller shall not
enter into the proposed lease. Unless otherwise provided in a schedule attached
to this contract, Purchaser shall pay to Seller at the Closing, in the manner
specified in ss. 2.02. the rent and additional rent that would have been payable
under the proposed lease from the date on which the tenant's obligation to pay
rent would have commenced if Purchaser had not so objected until the Closing
Date, less the amount of the brokerage commission specified in Seller's notice
and the reasonable cost of decoration or other work required to be performed by
the landlord under the terms of the proposed lease to suit the premises to the
tenant's occupancy ("Reletting Expenses"), prorated in each case over the term
of the proposed lease and apportioned as of the Closing Date. If Purchaser does
not so notify Seller of its objection, Seller shall have the right to enter into
the proposed lease with the tenant identified in Seller's notice and Purchaser
shall pay to Seller, in the manner specified in ss. 2.02, the Reletting
Expenses, prorated in each case over the term of the lease and apportioned as of
the later of the Closing Date or the rent commencement date. Such payment shall
be made by Purchaser to Seller at the Closing. In no event shall the amount so
payable to Seller exceed the sums actually paid by Seller on account thereof.
ss.6.03. If any space is vacant on the Closing Date, Purchaser shall accept
the Premises subject to such vacancy, provided that the vacancy was not
permitted or created by Seller in violation of any restrictions contained in
this contract. Seller shall not grant any concessions or rent abatements for any
period following the Closing without Purchaser's prior written consent. Seller
shall not apply all or any part of the security deposit of any tenant unless
such tenant has vacated the Premises.
ss.6.04. Seller does not warrant that any particular Lease or Tenancy will
be in force or effect at the Closing or that the tenants will have performed
their obligations thereunder. The termination of any Lease or Tenancy prior to
the Closing by reason of the tenant's default shall not affect the obligations
of Purchaser under this contract in any manner or entitle Purchaser to an
abatement of or credit against the Purchase Price or give rise to any other
claim on the part of Purchaser.
Section 7. Responsibility for Violations
ss. 7.01. Except as provided in ss. 7.02 and ss. 7.03, all notes or notices
of violations of law or governmental ordinances, orders or requirements which
were noted or issued prior to the date of this contract by any governmental
department, agency or bureau having jurisdiction as to conditions affecting the
Premises and all liens which have attached to the Premises prior to the Closing
pursuant to any applicable governmental ordinances, orders or requirements shall
be removed or complied with by Seller. If such removal or compliance has not
been completed prior to the Closing, Seller shall pay to Purchaser at the
Closing the reasonably estimated unpaid cost to effect or complete such removal
or compliance, and Purchaser shall be required to accept title to the Premises
subject thereto, except that Purchaser shall not be required to accept such
title and may terminate this contract as provided in ss. 13.02 if (a)
Purchaser's Institutional Lender reasonably refuses to provide financing by
reason thereof or (b) the Building is a multiple dwelling and either (i) such
violation is rent impairing and causes rent to be unrecoverable pursuant to law
or (ii) a proceeding has been validly commenced by tenants and is pending with
respect to such violation for a judgment directing deposit and use of rents
pursuant to law. All such notes or notices of violations noted or issued on or
after the date of this contrast shall be the sole responsibility of Purchaser.
ss. 7.02. If the reasonably estimated aggregate cost to remove or comply
with any violations or liens which Seller is required to remove or comply with
pursuant to the provisions of ss. 7.01 shall exceed the Maximum Amount specified
in Schedule D (or if none is so specified, the Maximum Amount shall be one-half
of one percent of the Purchase Price), Seller shall have the right to cancel
this contract, in which event the sole liability of Seller shall be as set forth
in ss. 13.02, unless Purchaser elects to accept title to the Premises subject to
all such violations or liens, in which event Purchaser shall be entitled to a
credit of an amount equal to the Maximum Amount against the monies payable at
the Closing.
ss. 7.03. Regardless of whether a violation has been noted or issued prior
to the date of this contact, Seller's failure to remove or fully comply with the
following violations shall not be an objection to title: any violations which a
tenant is required to remove or comply with pursuant to the terms of its lease
by reason of such tenant's use or occupancy. Purchaser shall accept the Premises
subject to all such violations without any liability of Seller with respect
thereto or any abatement of or credit against the Purchase Price, except that if
Purchaser's Institutional Lender reasonably refuses to provide financing by
reason of the violations described above, Purchaser shall not be required to
accept the Premises subject thereto and Purchaser shall have the right to
terminate this contract in the manner provided in ss. 13.02.
ss. 7.04. If required, Seller, upon written request by Purchaser, shall
promptly furnish to Purchaser written authorizations to make any necessary
searches for the purposes of determining whether notes or notices of violations
have been noted or issued with respect to the Premises or liens have attached
thereto.
Section 8. Destruction, Damage or Condemnation
ss. 8.01. The provisions of the Uniform Vendor and Purchaser Risk Act, if
effective in the state in which the Premises are located, shall apply to the
sale and purchase provided for in this contract.
Section 9. Covenants of Seller
Seller covenants that between the date of this contract and the Closing:
ss. 9.01. The Existing Mortgage(s) shall not be amended or supplemented or
prepaid in whole or in part, Seller shall pay or make, as and when due and
payable, all payments of principal and interest and all deposits required to be
paid or made under the Existing Mortgage(s).
ss. 9.02. Seller shall not modify or amend any Service Contract or enter
into any new service contract unless the same is terminable without penalty by
the then owner of the Premises upon not more than 30 days' notice.
ss. 9.03. If an insurance schedule is attached hereto, Seller shall
maintain in full force and effect until the Closing the insurance policies
described in such schedule or renewals thereof for no more than one year of
those expiring before the Closing.
ss. 9.04. No fixtures, equipment or personal property included in this sale
shall be removed from the Premises unless the same are replaced with similar
items of at least equal quality prior to the Closing.
ss. 9.05. Seller shall not withdraw, settle or otherwise compromise any
protest or reduction proceeding affecting real estate taxes assessed against the
Premises for any fiscal period which the Closing is to occur or any subsequent
fiscal period without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld. Real estate tax refunds and credits received
after the Closing Date which are attributable to the fiscal tax year during
which the Closing Date occurs shall be apportioned between Seller and Purchaser,
after deducting the expenses of collection thereof, which obligation shall
survive the Closing.
ss. 9.06. Seller shall allow Purchaser or Purchaser's representatives
access to the Premises, the Leases and other documents required to be delivered
under this contract upon reasonable prior notice at reasonable times.
<PAGE>
Section 10. Seller's Closing Obligations
At the Closing, Seller shall deliver the following to Purchaser:
ss.10.01. A deed in the form described in Schedule D, properly executed in
proper form for recording so as to convey the title required by this contract.
ss.10.02. All Leases initialed by Purchaser and all others in Seller's
possession.
ss.10.03 A schedule of all cash security deposits and a check or credit to
Purchaser in the amount of such security deposits, including any interest
thereon, held by Seller on the Closing Date under the Lease or, if held by an
Institutional Lender, an assignment to Purchaser and written instructions to the
holder of such deposits to transfer the same to Purchaser, and appropriate
instruments of transfer or assignment with respect to any lease securities which
are other than cash.
ss.10.04. A schedule updating the Rent Schedule and setting forth all
arrears in rents and all prepayments of rents.
ss.10.05. All Service Contracts initialed by Purchaser and all others in
Seller's possession which are in effect on the Closing Date and which are
assignable by Seller.
ss.10.06 An assignment to Purchaser, without recourse or warranty, of all
of the interest of Seller in those Service Contracts, insurance policies,
certificates, permit and other documents to be delivered to Purchaser at the
Closing which are then in effect and are assignable by Seller.
ss.10.07 (a) Written consent(s) of the Mortgagee(s), if required under
ss2.03(b), and (b) certificate(s) executed by the Mortgagee(s) in proper form
for recording and certifying (i) the amount of the unpaid principal balance
thereof, (ii) the maturity date thereof, (iii) the interest rate, (iv) the last
date to which interest has been paid thereon and (v) the amount of any escrow
deposits held by the Mortgagee(s). Seller shall pay the fees for recording such
certificate(s). Any Mortgagee which is an Institutional Lender may furnish a
letter in lieu of such certificate to the extent permitted by law.
ss.10.08. An assignment of all Seller's right, title and interest in escrow
deposits for real estate taxes, insurance premiums and other amounts, if any,
then held by the Mortgagee(s).
ss.10.09. All Original insurance policies with respect to which premiums
are to be apportioned or, if unobtainable, true copies or certificates thereof.
ss.10.10. To the extent they are then in Seller's possession and not posted
at the Premises, certificates, licenses, permits, authorizations and approvals
issued for or with respect to the Premises by governmental and
quasi-governmental authorities having jurisdiction.
ss.10.11. Such affidavits as Purchaser's title company shall reasonably
require in order to omit from its title insurance policy all exceptions for
judgments, bankruptcies or other returns against persons or entities whose names
are the same as or similar to Seller's name.
ss.10.12. (a) Checks to the order of the appropriate officers in payment of
all applicable real property transfer taxes and copies of any required tax
returns therefor executed by Seller, which checks shall be certified or official
bank checks if required by the taxing authority, unless Seller elects to have
Purchaser pay any of such taxes and credit Purchaser with the amount thereof and
(b) a certification of non-foreign status, in form required by the Code
Withholding Section, signed under penalty of perjury. Seller understands that
such certification will be retained by Purchaser and will be made available to
the Internal Revenue Service on request.
ss.10.13. To the extent they are then in Seller's possession, copies of
current painting and payroll records. Seller shall make all other Building and
tenant files and records. Seller shall make all other Building and tenant files
and records available to Purchaser for copying, which obligation shall survive
the Closing.
ss.10.14. An original letter, executed by Seller or by its agent, advising
the tenants of the sale of the Premises to Purchaser and directing that rents
and other payments thereafter be sent to Purchaser or as Purchaser may direct.
ss.10.15. Notice(s) to the Mortgagee(s), executed by Seller or by its
agent, advising of the sale of the Premises to Purchaser and directing that
future bills and other correspondence should thereafter be sent to Purchaser or
as Purchaser may direct.
ss.10.16. If Seller is a corporation and if required and by law, a
resolution of Seller's board of directors authorizing the sale and delivery of
the deed and a certificate executed by the secretary or assistant secretary of
Seller certifying as to the adoption of such resolution and setting forth facts
showing that the transfer complies with the requirements of such law. The deed
referred to in ss.10.01 shall also contain a recital sufficient to establish
compliance with such law.
ss.10.17. Possession of the Premises in the condition required by this
contract, subject to the Leases and Tenancies, and keys therefor. See Rider for
additional terms.
ss.10.18. Any other documents required by this contract to be delivered by
Seller.
Section 11. Purchaser's Closing Obligations
At the Closing, Purchaser shall:
ss.11.01. Deliver to Seller checks in payment of the portion of the
Purchase Price payable at the Closing, as adjusted for apportionments under
Section 12, plus the amount of escrow deposits, if any, assigned pursuant to
ss.10.08.
ss.11.02. Deliver to Seller the Purchase Money Mortgage, if any, in proper
form for recording, the note secured thereby, financing statements covering
personal property, fixtures and equipment included in this sale and replacements
thereof, all properly executed, and Purchaser shall pay any mortgage recording
tax and recording fees for any Purchase Money Mortgage.
ss.11.03. Deliver to Seller an agreement indemnifying and agreeing to
defend Seller against any claims made by tenants with respect to tenants'
security deposits to the extent paid, credited or assigned to Purchaser under
ss.10.03.
ss.11.04. Cause the deed to be recorded, duly complete all required real
property transfer tax returns and cause all such returns and checks in payment
of such taxes to be delivered to the appropriate officers promptly after the
Closing.
ss.11.05. Deliver any other documents required by this contract to be
delivered by Purchaser.
Section 12. Apportionments
ss.12.01. The following apportionments shall be made between the parties at
the Closing as of the close of business on the day prior to the Closing Date:
(a) prepaid rents and Additional Rents (as defined in ss.12.03.);
(b) interest on the Existing Mortgage(s);
(c) real estate taxes, water charges, sewer rents and vault charges, if
any, on the basis of the fiscal period for which assessed, except that if there
is a water meter on the Premises, apportionment at the Closing shall be based on
the last available reading, subject to adjustment after the Closing when the
next reading is available;
(d) wages, vacation pay, pension and welfare benefit and other fringe
benefits of all persons employed at the Premises whose employment was not
terminated at or prior to the Closing;
(e) value of fuel stored on the Premises, at the price then charged by
Seller's supplier, including any taxes;
(f) charges under transferable Service Contracts or permitted renewals or
replacements thereof;
(g) permitted administrative charges, if any, on tenants security deposits;
(h) dues to rent stablization associations, if any;
(i) insurance premiums on transferable insurance policies listed on a
schedule hereto or permitted renewals thereof;
(j) Reletting Expenses under ss.6.02, if any; and
(k) any other items listed in Schedule D.
If the Closing shall occur before a new tax rate is fixed, the
apportionment of taxes at the Closing shall be upon the basis of the old tax
rate for the preceeding period applied to latest assessed valuation. Promptly
after the new tax rate is fixed, the apportionment of taxes shall be recomputed.
Any discrepancy resulting from such recomputation and any errors or omissions in
computing apportionments at Closing shall be promptly corrected, which
obligations shall survive the Closing.
ss.12.02 If any tenant is in arrears in the payment of rent on the Closing
Date, rents received from such tenant after the Closing shall be applied in the
following order of priority: (a) first to the month preceding the month in which
the Closing occurred; (b) then to the month in which the Closing occurred; (c)
then to any month or months following the month in which the Closing occurred;
and (d) then to the period prior to the month preceding the month in which the
Closing occurred. If rents or any portion thereof received by Seller or
Purchaser, after the Closing are payable to the other party by reason of this
allocation, the appropriate sum, less a proportionate share of any reasonable
attorney's fees, costs and expenses of collection thereof, shall be promptly
paid to the other party, which obligation shall survive the Closing.
<PAGE>
ss.12.03. If any tenants are required to pay percentage rent; escalation
charges for real estate taxes, operating expenses, cost-of-living adjustments or
other charges of a similar nature ("Additional Rents") and any Additional Rents
are collected by Purchaser after the Closing which are attributable in whole or
in part to any period prior to the Closing, then Purchaser shall promptly pay to
Seller Seller's proportionate share thereof, less a proportionate share of any
reasonable attorneys' fees, costs and expenses of collection thereof, if and
when the tenant paying the same has made all payments of rent and Additional
Rent then due to Purchaser pursuant to the tenant's Lease, which obligation
shall survive the Closing.
Section 13. Objections to Title, Failure of Seller or Purchaser to Perform and
Vendee's Lien
ss.13.01. Purchaser shall promptly order an examination of title and shall
cause a copy of the title report to be forwarded to Seller's attorney upon
receipt. Seller shall be entitled to a reasonable adjournment or ajournments of
the Closing for up to 60 days or until the expiration date of any written
commitment of Purchaser's Institutional Lender delivered to Purchaser prior to
the scheduled date of Closing, whichever occurs first, to remove any other
defects or objections which may be disclosed on or prior to the Closing Date.
ss.13.02. If Seller shall be unable to convey title to the Premises at the
Closing in accordance with the provisions of this contract or if Purchaser shall
have any other grounds under this contract for refusing to consummate the
purchase provided for herein, Purchaser, nevertheless, may elect to accept such
title as Seller may be able to convey with a credit against the monies payable
at the Closing equal to the reasonably estimated cost to cure the same (up to
the Maximum Expense described below), but without any other credit or liability
on the part of Seller. If Purchaser shall not so elect, Purchaser may terminate
this contract and the sole liability of Seller shall be to refund the
Downpayment to Purchaser and to reimburse Purchaser for the net cost of title
examination, but not to exceed the net amount charged by Purchaser's title
company therefor without issuance of a policy, and the net cost of updating the
existing survey of the Premises or the net cost of a new survey of the Premises
if there was no existing survey or the existing survey was not capable of being
updated and a new survey was required by Purchaser's Institutional Lender. Upon
such refund and reimbursement, this contract shall be null and void and the
parties hereto shall be relieved of all further obligations and liability other
than any arising under Section 14. Seller shall not be required to bring any
action or proceeding or to incur any expense in excess of the Maximum Expense
specified in Schedule D (or, if none is so specified, the Maximum Expense shall
be one-half of one percent of the Purchase Price) to cure any title defect or to
enable Seller otherwise to comply with the provisions of this contract, but the
foregoing shall not permit Seller to refuse to pay off at the Closing, to the
extent of the monies payable at the Closing, mortgages on the Premises, other
than Existing Mortgage(s), of which Seller has actual knowledge.
ss.13.03. Any unpaid taxes, assessments, water charges and sewer rents,
together with the interest and penalties thereon to a date not less than two
days following the Closing Date, and any other liens and encumbrances which
Seller is obligated to pay and discharge or which are against corporations,
estates or other persons in the chain of title, together with the cost of
recording or filing any instruments necessary to discharge such liens and
encumbrances of record, may be paid out of the proceeds of the monies payable at
the Closing if Seller delivers to Purchaser on the Closing Date official bills
for such taxes, assessments, water charges, sewer rents, interest and penalties
and instruments in recordable form sufficient to discharge any other liens and
encumbrances of record. Upon request made a reasonable time before the Closing,
Purchaser shall provide at the Closing separate checks for the foregoing payable
to the order of the holder of any such lien, charge or encumbrance and otherwise
complying with ss2.02. If Purchaser's title insurance company is willing to
insure both Purchaser and Purchaser's Institutional Lender, if any, that such
charges, liens and encumbrances will not be collected out of or enforced against
the Premises, then unless Purchaser's Institutional Lender reasonably refuses to
accept such insurance in lieu of actual payment and discharge Seller shall have
the right in lieu of payment and discharge to deposit with the title insurance
company such funds or assurances or to pay such special or additional premiums
as the title insurance company may require in order to so insure. In such case
the charges, liens and encumbrances with respect to which the title insurance
company has agreed so to insure shall not be considered objections to title.
ss.13.04. If Purchaser shall default in the performance of its obligation
under this contract to purchase the Premises, the sole remedy of Seller shall be
to retain the Downpayment as liquidated damages for all loss, damages and
expense suffered by Seller, including without limitation the loss of its
bargain.
ss.13.05. Purchaser shall have a vendee's lien against the Premises for the
amount of the Downpayment, but such lien shall not continue after default by
Purchaser under this contract.
Section 14. Broker
ss.14.01. If a broker is specified in Schedule D, Seller and Purchaser
mutually represent and warrant that such broker is the only broker with whom
they have dealt in connection with this contract and that neither Seller nor
Purchaser knows of any other broker who has claimed or may have the right to
claim a commission in connection with this transaction, unless otherwise
indicated in Schedule D. The Commission of such broker shall be paid pursuant to
separate agreement by the party specified in Schedule D. If no broker is
specified in Schedule D, the parties acknowledge that this contract was brought
about by direct negotiation between Seller and Purchaser and that neither Seller
nor Purchaser knows of any broker entitled to a commission in connection with
this transaction. Unless otherwise provided in Schedule D, Seller and Purchaser
shall indemnify and defend each other against any costs, claims or expenses,
including attorneys' fees, arising out of the breach on their respective parts
of any representations, warranties or agreements contained in this paragraph.
The representations and obligations under this paragraph shall survive the
Closing or, if the Closing does not occur, the termination of this contract.
Section 15. Notices
ss.15.01. All notices under this contract shall be in writing and shall be
delivered personally or shall be sent by prepaid registered or certified mail,
addressed as set forth in Schedule D, or as Seller or Purchaser shall otherwise
have given notice as herein provided.
Section 16. Limitations on Survival of Representations, Warranties, Covenants
and Other Obligations
ss.16.01 Except as otherwise provided in this contract, no representations,
warranties, covenants or other obligations of Seller set forth in this contract
shall survive the Closing and no action based thereon shall be commenced after
the Closing. The representations, warranties, covenants and other obligations of
Seller set forth in ss.4.03, ss.6.01 and ss.6.02 shall survive until the
Limitation Date specified in Schedule D (or if none is so specified, the
Limitation Date shall be the date which is six months after the Closing Date),
and no action based thereon shall be commenced after the Limitation Date.
ss.16.02. The delivery of the deed by Seller, and the acceptance thereof by
Purchaser, shall be deemed the full performance and discharge of every
obligation on the part of Seller to be performed hereunder, except those
obligations of Seller which are expressly stated in this contract to survive the
Closing.
Section 17. Miscellaneous Provisions
ss.17.01. If consent of the Existing Mortgagee(s) is required under
ss.2.03(b), Purchaser shall not assign this contract or its rights hereunder
without the prior written consent of Seller. No Permitted assignment of
Purchaser's rights under this contract shall be effective against Seller unless
and until an executed counterpart of the instrument of assignment shall have
been delivered to Seller and Seller shall have been furnished with the name and
address of the assignee. The term "Purchaser" shall be deemed to include the
assignee under any such effective assignment.
ss.17.02. This contract embodies and constitutes the entire understanding
between the parties with respect to the transaction contemplated herein, and all
prior agreements, understandings, representations and statements, oral or
written are merged into this contract. Neither this contract nor any provision
hereof may be waived, modified, amended, discharged or terminated except by an
instrument, signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
ss.17.03. This Contract shall be governed by, and construed in accordance
with, the law of the state in which the Premises are located.
<PAGE>
FIRST RIDER TO CONTRACT OF SALE
Seller: WORLD POLYMERS, INC. f/k/a ACE PLASTICS, INC.
Purchaser: ICY SPLASH FOOD AND BEVERAGE, INC.
Premises: 494 Wortman Avenue, Brooklyn, N.Y. 11208
Dated: May 3,1999
1. Seller agrees that at its sole cost and expense it will remove the plastics
manufacturing equipment presently located at the premises, and that it will also
remove the silo structure at the property. The foregoing shall be performed in a
good and workmanlike manner and shall be completed prior to closing. Seller
shall also restore the premises to a neat and safe condition after removing it's
manufacturing equipment.
2. It is acknowledged by Seller and Purchaser that Purchaser will be seeking
financing for the acquisition of the Premises through the New York City
Industrial Development Agency and that this Agreement is conditioned upon the
receipt of an inducement resolution from said agency, in an amount and on terms
and conditions acceptable to Purchaser. If for any reason whatsoever an
inducement resolution complying with the foregoing requirements is not issued on
or before April 30, 1999 then this contract shall be null and void and no
further force and effect except that the Escrowees shall promptly remit to
Purchaser the $80,000.00 deposit given hereunder together with any and all
interest earned thereon. Seller agrees to cooperate with the Purchaser and the
New York City IDA with respect to the foregoing including executing any
documents which the IDA may reasonably desire.
3. It is specifically agreed that Seller shall be permitted to remain in
exclusive possession of the subject premises for up to 90 days from the day of
closing. During this period of post-closing
<PAGE>
possession, Seller shall pay rent at the rate of $5,000.00 per month (pro-rated
for any lesser term). the parties agree that at the closing of title of this
transaction, they shall execute a post-closing possession agreement,(which shall
be prepared by Purchaser's attorney) the terms of which shall be mutually agreed
upon.
4. That the land to be conveyed pursuant to this contract, notwithstanding the
annexation of the legal description for same, is somewhat smaller in area than
that set forth inasmuch as Seller has previously conveyed a small, irregular,
triangular shape section located at the rear (South) of the parcel comprising
approximately 375 total square feet. The precise metes and bounds description
for the parcel to be conveyed hereunder shall be determined prior to closing.
WORLD POLYMERS, INC.
Seller: By: /s/ John Calamia
------------------------------
JOHN CALAMIA, President
ICY SPLASH FOOD AND BEVERAGE, INC.
Purchaser: By: /s/ Joseph Aslan
--------------------------
Joseph Aslan, President
<PAGE>
SUPPLEMENTAL AGREEMENT
Seller: WORLD POLYMERS, INC. f/k/a ACE PLASTICS, INC.
Purchaser: ICY SPLASH FOOD AND BEVERAGE, INC.
Premises: 494 Wortman Avenue, Brooklyn, N.Y. 11208
Dated: May 3, l999
It is hereby agreed that in the event the Purchaser is denied financial
assistance from the New York City Industrial Development Agency (i.e. an
Inducement Resolution is not issued), as more particularly set forth in the
Contract of Sale, First Rider to Contract at paragraph 2, between the parties
hereto and dated simultaneous herewith, then in such event Purchaser agrees to
consummate the subject transaction as set forth in that Contract of Sale.
Specifically, Purchaser shall be obligated to remit an additional $670,000.00
cash on account of the purchase price and shall execute and deliver to Seller at
closing a First Mortgage in the sum of $50,000.00. When added to the Contract
Deposit of $80,000.00, these sums shall be sufficient to complete Purchaser's
obligation to Seller with respect to the payment of the full price of
$800,000.00
Further, the parties agree to close this transaction within 15 days of the
New York City's Industrial Development Agency's issuance of a denial to
Purchaser's request for an Inducement Resolution, or May 17, 1999 whichever
first occurs.
Finally, Purchaser represents that it has sufficient liquid capital to pay
all sums due Seller in connection with this transaction, as well as for all
related and associated costs and expenses.
WORLD POLYMERS, INC. f/k/a ACE PLASTICS, INC.
Seller: By: /s/ John Calamia
----------------------------------------
JOHN CALAMIA, Pres.
ICY SPLASH FOOD AND BEVERAGE, INC.
Purchaser: By: /s/ J. Aslan
-------------------------------------
J. ASLAN, Pres.
<PAGE>
Schedule A
ALL, that certain plot, piece or parcel of land, with the buildings and
improvements thereon erected, situate, lying and being in the Borough of
Brooklyn, County of Kings, City and State of New York, bounded and described as
follows:
BEGINING at the corner formed by the intersection of the Westerly side of Essex
Street with the Southerly side of Wortman Avenue;
RUNNING THENCE Westerly along the Southerly side, of Wortman Avenue, 100 feet;
THENCE Southerly parallel with Linwood Street, 95 feet;
THENCE Westerly parallel with Wortman Avenue, 100 feet to the Easterly side of
Linwood Street;
THENCE Southerly along the Easterly side of Linwood Street, 155 feet 9 3/4
inches to the center line of the Old Mill Road;
THENCE Easterly along the center line of Old Mill Road, 200 feet 0-1/2 inches to
the Westerly side of Essex Street;
THENCE Northerly along the Westerly side of Essex Street, 254 feet 5-3/4 inches
to the corner, the point or place of BEGINNING.
SAID PREMISES known as and by the street nunber 494-504 Wortman Avenue,
Brooklyn, County of Kings, State of New York. (SECTION 14, BLOCK 4406, LOT 6).
<PAGE>
ss.17 04. The captions in this contract are inserted for convenience of
reference only and in no way define, describe or limit the scope or intent of
this contract or any of the provisions hereof.
ss.17.05. This contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs or successors and
permitted assigns.
ss.17.06. This contract shall not be binding or effective until properly
executed and delivered by Seller and Purchaser.
ss.17.07. As used in this contract, the masculine shall include the
feminine and neuter, the singular shall include the plural and the plural shall
include the singular, as the context may require.
ss.17.08. If the provisions of any schedule or rider to this contract are
inconsistent with the provisions of this contract, the provisions of such
schedule or rider shall prevail. Set forth in Schedule D is a list of any and
all schedules and riders which are attached hereto but which are not listed in
the Table of Contents.
IN WITNESS WHEREOF, the parties hereto have executed this contract as of the
date first above written.
Seller: WORLD POLYMERS, INC.
By: /s/ John Calamia
--------------------------------------
JOHN CALAMIA, PRES.
Purchaser: ICY SPLASH FOOD AND BEVERAGE, INC.
By: /s/ J. Aslan
-----------------------------------
J. ASLAN, President
Receipt by Escrowee
The undersigned Escrowee hereby acknowledges receipt of $80,000.00, by check
subject to collection, to be held in escrow pursuant to ss.2.05
/s/ Scott Zamex
- ------------------------------
SCOTT ZAMEX, ESQ.
- --------------------------------------------------------------------------------
Schedule A
DESCRIPTION OF PREMISES
(to be attached separately and to include tax map designation)
Schedule B
PERMITTED EXCEPTIONS
1. Zoning regulations and ordinances which are not violated by the existing
structures or present use thereof and which do not render title uninsurable.
2. Consents by the Seller or any former owner of the Premises for the
erection of any structure or structures on, under or above any street or streets
on which the Premises may abut.
3. The Existing Mortgage(s) and financing statements, assignments of leases
and other collateral assignments ancillary thereto.
4. Leases and Tenancies specified in the Rent Schedule and any new leases
or tenancies not prohibited by this contract.
5. Unpaid installments of assessments not due and payable on or before the
Closing Date.
6. Financing statements, chattel mortgages and liens on personalty filed
more than 5 years prior to the Closing Date and not renewed, or filed against
property or equipment no longer located on the Premises or owned by Tenants.
7. (a) Rights of utility companies to lay, maintain, install and repair
pipes, lines, poles, conduits, cable boxes and related equipment on, over and
under the Premises, provided that none of such rights imposes any monetary
obligation on the owner of the Premises.
(b) Encroachments of stoops, areas, cellar steps, trim cornices, lintels,
window sills, awnings, canopies, ledges, fences, hedges, coping and retaining
walls projecting from the Premises over any street or highway or over any
adjoining property and encroachments of similar elements projecting from
adjoining property over the Premises.
(c) Revocability or lack of right to maintain vaults, coal chutes,
excavations or sub-surface equipment beyond the line of the Premises.
(d) Any state of facts that an accurate survey would disclose, provided
that such facts do not render title unmarketable. For the purposes of this
contract, none of the facts shown on the survey, if any, identified below shall
be deemed to render title unmarketable, and Purchaser shall accept title subject
thereto:
<PAGE>
Schedule C
PURCHASE PRICE
The Purchase Price shall be paid as follows:
(a) By check subject to collection, the receipt of
which is hereby acknowledged by Seller: $ 80,000.00
(b) By check or checks delivered to Seller at the
Closing in accordance with the provisions
of ss.2.02 $670,000.00
(c) By acceptance of title subject to the following
Existing Mortgage(s):
NOT APPLICABLE
(d) By execution and delivery to Seller by Purchaser
or its assignee of a note secured by a Purchase
Money Mortgage on the Premises, payable as follows: $ 50,000.00
without interest due and payable 90 days from the
date of closing
-----------
Purchase Price $800,000.00
===========
Schedule D
MISCELLANEOUS
1. Title insurer designated by the parties (ss.1.02):
2. Last date for consent by Existing Mortgagee(s) (ss.1.03(b)):
NOT APPLICABLE
3. Maximum Interest Rate of any Refinanced Mortgage (ss.2.04(b)):
NOT APPLICABLE
4. Prepayment Date on or after which Purchase Money Mortgage may be prepaid
(ss.2.04(c)):
NOT APPLICABLE
5. Seller's tax identification number (ss.2.05):
6. Purchaser's tax identification number (ss.2.05):
7. Scheduled time and date of Closing (ss.3.01): on or before June 15, 1999 or
such earlier date as may be set by the NYC IDA
8. Place of Closing (ss.3.01): Zamek & Preston, LLP 560 Broad Hollow Rd.,
#106, Melville, N.Y. or at Purchaser's Lending Institution's Attorney's
Office in Nasaau/Suffolk County
9. Assessed valuation of Premises (ss.4.09):
10. Fiscal year and annual real estate taxes on Premises (ss.4.09):
11. Tax abatements or exemptions affecting Premises (ss.4.09):
12. Assessments on Premises (ss.4.12):
13. Maximum Amount which Seller must spend to cure violations, etc. (ss.7.02)
$8,000.00
14. Form of deed (ss.1O.O1): Bargain and Sale with Covenants
15. Maximum Expense of Seller to cure title defects, etc. (ss.13.02): $8,000.00
16. Broker, if any (ss.14.01):
Greiner-Maltz Company, Inc.
42-12 28th Street
Long Island City, N.Y. 11101
17. Party to pay broker's commission (ss.14.01): Seller
18. Address for notices (ss.l5.01):
If to Seller: Mark Lurie/John Calamia
World Polymers, Inc.
494 Wortman Avenue
Brooklyn, N.Y. 11208
with a copy to Seller's attorney:
Scott Zamek
Zamek & Preston, LLP
560 Broad Hollow Rd., #106
Melville, N.Y. 11147
If to Purchaser: Shlomo Aflan
Icy Splash Food and Beverage, Inc.
929 Shepherd Avenue
Brooklyn, N.Y. 11208
with a copy to Purchaser's Attorney: Mike Beckman
Beckman, Millman & Sanders
116 John Street
New York, N.Y. 10038
19. Limitation Date for actions based on Seller's surviving representations and
other obligations (ss.16.01):
6 months from closing of title
20. Additional Schedules or Riders (ss.17.08):
First Rider To Contract Of Sale
Schedule E
RENT SCHEDULE
(to be attached separately)
NOT APPLICABLE
Schedule F
PURCHASE MONEY NOTE AND MORTGAGE
(to be attached separately)
