U.S. Securities and Exchange Commission
Washington, D.C. 20549
----------
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
----------
Commission file number 0-26155
ICY SPLASH FOOD & BEVERAGE, INC.
(Exact name of small business issuer as specified in its charter)
New York 11-3329510
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
9-15 166th Street, Suite 5-B
Whitestone, NY 11357
(Address of principal executive offices)
(718) 746-3585
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,600,000 shares of common
stock as of May 1, 2000.
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
<PAGE>
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) Balance Sheets as of March 31, 2000 (unaudited)
and December 31, 1999 ............................... 3
b) Statements of Operations for the three months
ended March 31, 2000 and 1999 (unaudited) ........... 4
c) Statements of Cash Flows for the three months
ended March 31, 2000 and 1999 (unaudited) ........... 5
d) Notes to Financial Statements (unaudited) ........... 6
e) Independent Accountants' Review Report .............. 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ...................... 8 to 9
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ......................... 10
a) EXHIBITS ............................................ 10
b) REPORTS ON FORM 8-K ................................. 10
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ICY SPLASH FOOD AND BEVERAGE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
- ASSETS -
March 31, December 31,
2000 1999
--------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 11,065 $ 3,802
Accounts receivable, net of allowance for doubtful accounts of
$3,000 and $2,000 for March 31 and December 31, respectively 71,942 96,529
Notes receivable 1,485 1,485
Inventory 121,578 129,147
Prepaid expenses 22,945 17,970
Deferred taxes 13,000 13,000
--------- ---------
TOTAL CURRENT ASSETS 242,015 261,933
--------- ---------
FIXED ASSETS:
Warehouse equipment 5,000 5,000
Office equipment 14,749 12,279
--------- ---------
19,749 17,279
Less: accumulated depreciation 8,933 8,033
--------- ---------
10,816 9,246
--------- ---------
$ 252,831 $ 271,179
========= =========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Notes payable $ 65,000 $ 65,000
Accounts payable 54,639 78,157
Accrued expenses and other current liabilities 18,908 21,279
Shareholders' loans 31,725 850
Income taxes payable 395 680
--------- ---------
TOTAL CURRENT LIABILITIES 170,667 165,966
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value, 1,000,000 shares authorized,
zero shares issued and outstanding for 2000 and 1999 -- --
Common stock, $.001 par value, 50,000,000 shares authorized,
6,600,000 shares issued and outstanding 6,600 6,600
Additional paid-in capital 174,587 174,587
Accumulated deficit (99,023) (75,974)
--------- ---------
82,164 105,213
--------- ---------
$ 252,831 $ 271,179
========= =========
</TABLE>
See notes to financial statements.
3
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF OPERATIONS
(Unaduited)
Three Months Ended March 31,
2000 1999
--------- ---------
NET SALES $ 126,503 $ 114,234
COST OF SALES 100,258 81,499
--------- ---------
GROSS PROFIT 26,245 32,735
--------- ---------
OPERATING EXPENSES:
Selling expenses 23,473 15,330
General and administrative expenses 24,572 13,315
--------- ---------
48,045 28,645
--------- ---------
(LOSS) INCOME FROM OPERATIONS (21,800) 4,090
OTHER EXPENSES:
Interest expense (1,079) (1,625)
--------- ---------
(LOSS) INCOME BEFORE TAXES (22,879) 2,465
Provision for income taxes 170 680
--------- ---------
NET (LOSS) INCOME $ (23,049) $ 1,785
========= =========
EARNINGS (LOSS) PER SHARE:
Basic $ -- $ --
========= =========
Diluted $ -- $ --
========= =========
See notes to financial statements.
4
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: Ended March 31,
2000 1999
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(23,049) $ 1,785
Adjustments to reconcile net (loss)
income to net cash used in operating
activities:
Depreciation 900 750
Provision for bad debts 1,000 --
Changes in assets and liabilities:
Decrease in accounts receivable 23,587 16,924
Decrease (increase) in inventories 7,569 (7,895)
(Increase) in prepaid expenses (4,975) (6,680)
(Decrease) in accounts payable (23,518) (20,297)
(Decrease) increase in accrued expenses
and other current liabilities (2,656) 1,203
-------- --------
Net cash used by operating activities (21,142) (14,210)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (2,470) (2,885)
Repayments of note receivable -- 500
-------- --------
Net cash used in investing activities (2,470) (2,385)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shareholders loans 30,875 13,000
-------- --------
Net cash provided by financing activities 30,875 13,000
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,263 (3,595)
Cash and cash equivalents, at beginning of year 3,802 20,314
-------- --------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 11,065 $ 16,719
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash during the period for:
Income taxes paid $ 455 $ --
Interest paid $ 1,079 $ --
See notes to financial statements.
5
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,2000
(UNAUDITED)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
In the opinion of management, the accompanying unaudited interim financial
statements, which have been reviewed by our auditors, of Icy Splash Food
and Beverage, Inc. contain all adjustments necessary to present fairly the
Company's financial position as of March 31, 2000 and December 31, 1999
(audited) and the results of operations for the three months ended March
31, 2000 and 1999 and cash flows for the three months ended March 31, 2000
and 1999.
The results of operations for the three months ended March 31, 2000 and
1999 are not necessarily indicative of the results to be expected for the
full year.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements included in its Annual Report on Form
10-KSB for the year ended December 31, 1999.
NOTE 2 - SHAREHOLDERS' LOANS:
At March 31, 2000 and December 31, 1999 the Company owed an aggregate of
$31,725 and $850, respectively to one of its shareholders. The loan is
non-interest bearing and has no formal repayment terms.
6
<PAGE>
REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS
---------------------------------------------
Board of Directors
Icy Splash Food and Beverage, Inc.
We have reviewed the accompanying financial statements of Icy Splash Food and
Beverage, Inc. as of March 31, 2000, and for the three-month period then ended.
These financial statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ LAZAR LEVINE & FELIX LLP
----------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
May 4, 2000
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for Icy Splash Food & Beverage, Inc. (the "Company") increased
10.7%, from $114,234 in the three months ended March 31, 1999 to $126,503 in the
three months ended March 31, 2000. The increase reflects the introduction of new
beverage products manufactured by other companies. While sales of the Company's
in-house brands, Icy Splash - Clear and Icy Splash - Second Generation,
decreased from $114,234 in the first three months of 1999 to $33,418 in the
first three months of 2000, sales of other manufacturers' beverages increased
from $0 in 1999 to $93,085 in 2000. Although sales of other manufacturers' food
and beverage products are part of the Company's business plan, a
disproportionately large percentage of other manufacturers' products were sold
in the first quarter of 2000. There were two reasons: opportunities to establish
relationships with other distributors/manufacturers and payment terms for
purchase of other products more favorable to the Company than its co-packers'
terms to produce Icy Splash products.
The gross profit margin decreased to 20.8% in the first quarter of 2000
from 28.7% in the first quarter of 1999. The decrease in profit margin was
predominately caused by the disproportionately large percentage of sales of
other manufacturers' products. Management anticipates a product sales mix
significantly weighted towards the Company's own products for the remainder of
2000 and, consequently, a more favorable gross profit.
Selling expenses were $23,473 in the first three months of 2000, compared
with $15,330 in the first three months of 1999, 18.6% and 13.4% of sales,
respectively. The increase in the dollar volume and percentage of selling
expenses in 2000 is due to the increase in sales volume and the introduction of
new products.
General and administrative expenses were $24,572 in the first three months
of 2000, compared with $13,315 in the first three months of 1999, 19.4% and
11.7% of sales, respectively. Both the amount and percentage of expenses have
increased as the Company is positioning itself for higher sales volume after the
anticipated raising of equity through the exercise of warrants and sale of stock
during 2000. The following items specifically explain the increased activity.
Rent was $1,200 in the first three months of 2000, compared with $1,079 in the
first three months of 1999, 0.9% and 0.9% of sales, respectively. The Company
moved into a better equipped office in January 2000. While the 1999 first
quarter rent expense was a one-time expense for equipment rental, office rent
will continue in 2000. Professional fees were $9,625 in the first three months
of 2000, compared with $4,454 in the first three months of 1999, 7.6% and 3.9%
of sales, respectively. Telephone expenses were $2,996 in the first three months
of 2000, compared with $2,050 in the first three months of 1999, 2.4% and 1.8%
of sales, respectively. Travel and entertainment expenses were $1,971 in the
first three months of 2000, compared with $237 in the first three months of
1999, 1.6% and 0.2% of sales, respectively.
Bad debt expense was $1,000 for the first three months of 2000 versus $0
for the first three months of 1999, 0.8% and 0% of sales, respectively, because
there was no estimate for bad debt expense during the first quarter of 1999. The
Company anticipates continuing favorable bad debt expense as a percentage of
sales for 2000 due to the quality of its current distributors (customers).
8
<PAGE>
There was a loss from operations for the first quarter of 2000 of $21,800,
compared with a profit of $4,090 for the first quarter of 1999, with an
operating margin of (17.2%) for the first quarter of 2000 and 3.6% for the first
quarter of 1999. Net income (loss) and net income (loss) as a percent of sales
for the first three months of 2000 were ($23,049) and (18.2%), compared to
$1,785 and 1.6% for the first three months of 1999.
Interest expense decreased from $1,625 to $1,079 in the first quarter of
2000 versus the first quarter of 1999, because the Company refinanced a $65,000
note on June 30, 1999 at a more favorable interest rate.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased $24,619 from December 31, 1999 to March 31, 2000
predominately from the net loss in the first quarter of 2000.
Net cash flow used by operating activities was $21,142 and $14,210 for the
first quarters of 2000 and 1999, respectively, reflecting the least favorable
quarter of the year (January through March) for selling soft drink beverages,
because of colder weather in the Company's market area.
The Company purchased $2,470 of fixed assets during the first three months
of 2000 and $2,885 during the first three months of 1999.
During the first quarter of 2000, the Company borrowed $30,875 from
shareholders and during the first quarter of 1999 it borrowed $13,000 from
shareholders.
The Company believes that its cash flow from operations will be
sufficient to meet its financing requirements for at least the next twelve
months of operations.
9
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K during
the three month period ended March 31, 2000
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
ICY SPLASH FOOD & BEVERAGE, INC.
May 12, 2000 By: /s/ Joseph Aslan
----------------------------
Joseph Aslan,
President
11
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED MARCH 31, 2000 1999
----------- -----------
BASIC EARNINGS PER SHARE:
Net (loss) income $ (23,049) $ 1,785
----------- -----------
Weighted average shares outstanding 6,600,000 6,600,000
----------- -----------
Basic earnings per share
$ -- $ --
=========== ===========
Diluted earnings per share:
Net (loss) income $ (23,049) $ 1,785
----------- -----------
Weighted average and dilutive shares:
Weighted average shares outstanding 6,600,000 6,600,000
Dilutive shares (Antidilutive in 2000) -- 950,000
----------- -----------
6,600,000 7,550,000
----------- -----------
Diluted earnings per share $ -- $ --
=========== ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial inofrmation extracted from the financial
statements for the three months ended March 31, 2000 and is qualified in its
entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 11,065
<SECURITIES> 0
<RECEIVABLES> 74,942
<ALLOWANCES> 3,000
<INVENTORY> 121,578
<CURRENT-ASSETS> 242,015
<PP&E> 19,749
<DEPRECIATION> 8,933
<TOTAL-ASSETS> 252,831
<CURRENT-LIABILITIES> 170,667
<BONDS> 0
0
0
<COMMON> 6,600
<OTHER-SE> 75,564
<TOTAL-LIABILITY-AND-EQUITY> 252,831
<SALES> 126,503
<TOTAL-REVENUES> 126,503
<CGS> 100,258
<TOTAL-COSTS> 100,258
<OTHER-EXPENSES> 47,045
<LOSS-PROVISION> 1,000
<INTEREST-EXPENSE> 1,079
<INCOME-PRETAX> (22,879)
<INCOME-TAX> 170
<INCOME-CONTINUING> (23,049)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,049)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
