AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON July 27, 2000
REGISTRATION STATEMENT NO. 333-94711
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ICY SPLASH FOOD & BEVERAGE, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEW YORK 2086 11-3329510
(STATE OR JURISDICTION OF (PRIMARY STANDARD (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) IDENTIFICATION NUMBER)
----------
9-15 166TH STREET, SUITE 5-B
WHITESTONE, NEW YORK 11357
(718) 746-3585
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
JOSEPH ASLAN
9-15 166TH STREET, SUITE 5-B
WHITESTONE, NEW YORK 11357
(718) 746-3585
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------
COPIES TO:
MICHAEL BECKMAN, ESQ.
LAURENCE D. PAREDES, ESQ.
BECKMAN, MILLMAN & SANDERS, LLP
116 JOHN STREET, SUITE 1313
NEW YORK, NEW YORK 10038
(212) 406-4700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================
Title of Each Class of Amount to Proposed Proposed Maximum Amount of
Securities to be Registered be Maximum Offering Aggregate Offering Registration Fee
Registered Price Per Unit(1) Price(1)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 950,000 $1.00 $950,000 $250.80
par value, issuable upon
the exercise of Common
Stock Purchase Warrants
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(g) under the Securities Act of 1933, as amended. The Common
Stock aggregate offering price is based on the warrant exercise price of
$1.00 per share.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
SUBJECT TO COMPLETION, DATED July 27, 2000
PRELIMINARY PROSPECTUS
950,000 Shares
ICY SPLASH FOOD & BEVERAGE, INC.
Common Stock
----------
This is an offering of shares of common stock of Icy Splash Food &
Beverage, Inc., a New York corporation (hereinafter "the Company;" "Icy Splash;"
"we;" "us;" and "our" will each refer to Icy Splash Food & Beverage, Inc.).
Certain stockholders of the Company (the "Selling Security Holders") are
offering to sell 950,000 shares of common stock issuable upon the exercise of
Common Stock Purchase Warrants (the "Resale Share") which we issued in
connection with a private placement during the period from March 1998 to October
1998.
The Resale Shares are being offered for sale from time to time by the
Selling Security Holders at the prevailing market price or in negotiated
transactions, directly by the Selling Security Holders or through underwriters,
dealers or agents.
There is currently no public market for the common stock. We intend to list
the common stock on the OTC - Bulletin Board under the proposed symbol "____",
although no assurance can be made.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 4 TO READ ABOUT FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF THE
COMMON STOCK.
----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER
REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATIONS MADE TO
THE CONTRARY IS A CRIMINAL OFFENSE
----------
THE DATE OF THIS PROSPECTUS IS __________________, 2000
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information from elsewhere in this
prospectus. It is not complete and may not contain all of the information that
is important to you. To understand this offering fully, you should read the
entire prospectus carefully, including the risk factors and financial statements
and the related notes to those statements included in this prospectus.
THE COMPANY
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 independent co-packer bottling facility. The
components include prelabeled bottles, caps, labels, 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.
We are a regional enterprise, with distribution and sales limited primarily
to the New York, New Jersey and Connecticut area. We are dependent on the
efforts of local distributors. We currently have no employees, with the
exception of two of our executive officers. The Company's expansion would depend
on the hiring of qualified employees and reliance on national distributors,
which would be a significant change from the operating policies followed by the
Company since its inception.
As part of our business operations, we expect to explore the prospect of
acquiring full-service distributors and marketers of our products and other
beverage products. Through direct ownership of distribution facilities, we
believe that it may lower distribution costs and increase distribution volume of
Icy Splash products. Also, the distribution of large name brand beverages would
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.
Our offices are located at 9-15 166th Street, Suite 5-B, Whitestone, New
York 11357. Our telephone number is (718) 746-3585.
1
<PAGE>
THE OFFERING
Common Stock offered by the Selling Security Holders.. 950,000 shares
Common Stock to be outstanding prior to offering...... 6,620,000 shares
Common Stock to be outstanding after the offering(1).. 7,570,000 shares
Proposed OTC - Bulletin Board Symbol(2)............... _____
Risk factors.......................................... For a discussion of the
risks, you should
consider before investing
in the common stock of
Icy Splash, see "Risk
Factors."
----------
(1) This includes 950,000 shares of common stock issuable upon the exercise of
the Common Stock Purchase Warrants by the Selling Security Holders. This also
includes 20,000 shares of common stock which Charles Tokarz, the Chief Financial
Officer, Treasurer and Director of the Company has the right to acquire
beneficially.
(2) Although the Company will be applying for initial quotation of its common
stock on the OTC - Bulletin Board, there can be no assurance that the Company
will be or will remain eligible for such listing under the rules and
requirements of the requisite exchanges and regulators.
2
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary of financial information has been derived from the
financial statements included elsewhere in this prospectus and should be read in
conjunction with such financial statements and the related notes.
<TABLE>
<CAPTION>
Quarter ended March 31, Fiscal Years ended December 31,
1999 2000 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales $ 114,234 $ 126,503 $ 320,802 $ 600,086
Gross profit 32,735 28,245 134,180 192,648
Operating profit (loss) (910) (26,775) 27,880 16,059
Profit (loss) before income taxes (2,535) (27,854) 25,345 11,681
Net profit (loss) $ (3,215) $ (28,024) $ 24,665 $ 16,775
Per share data:
Net profit (loss) $ -- $ -- $ -- $ --
Weighted average
shares outstanding(1) 7,750,000 7,750,000 6,653,741 7,750,000
<CAPTION>
March 31, 2000 December 31, 1999
----------------- -----------------
Actual Actual
----------------- -----------------
Balance Sheet Data:
Working capital $ 41,403 $ 70,997
Total Assets 222,886 246,209
Long-term debt -- --
Shareholders' equity 52,219 80,043
</TABLE>
(1) For an explanation of the determination of the number of shares used in per
share calculations, see Note 1 of Notes to Financial Statements.
3
<PAGE>
RISK FACTORS
Investing in our common stock will provide you with an equity ownership
interest in Icy Splash. As a stockholder of Icy Splash, you may be exposed to
risks inherent in our business. The performance of your shares will reflect the
performance of our business relative to, among other things, competition,
industry conditions and general economic and market conditions. The value of
your investment may increase or decrease and could result in a loss. You should
carefully consider the following factors as well as other information contained
in this prospectus before deciding to invest in shares of our common stock.
We have a limited operating history upon which you may evaluate us.
The company was incorporated on June 17, 1996. Accordingly, we have a
limited operating history upon which to evaluate the merits of investing in our
common stock. Our prospects are subject to the risks, expenses and uncertainties
encountered by companies with limited operating histories. These risks include
failure to continue to develop our name recognition and reputation, inability to
compete with other companies on the basis of advertising, price and price
promotions, retail space management, consumer points of access, packaging
innovation and distribution methods, and inability to attract, retain and
motivate highly qualified employees. These risks are discussed separately below.
Increases in prices of raw materials used in the Company's operations could
adversely effect our financial position.
The Company will be dependent upon a ready supply of raw materials
including, but not limited to, water, concentrates, syrups, carbon dioxide,
plastic bottles, closures and other packaging materials. The prices for these
materials are determined by the market, and may change at any time. Furthermore,
we are not engaged in any purchasing agreements with our suppliers which provide
for mechanisms alleviating price fluctuations of raw materials. Therefore,
increases in prices for any of these raw materials could have a material adverse
impact on our financial position. The loss of a supplier could disrupt the
Company's operations and the time to effect a change to a new supplier could
adversely impact our business in the short term should a change become
necessary.
We rely on one distributor for a significant amount of our business.
As a result of our arms-length distribution arrangement with NY Soft Drink
Distributors ("NYSD"), the primary distributor of Icy Splash products, a
significant portion of our sales during the year ended December 31, 1999 were to
NYSD. During this period, the Company's total sales were $600,086, of which
$308,700 of product was sold to NYSD. Such sales to NYSD can be attributed to
the launch of our latest product line Icy Splash - Second Generation. If sales
to NYSD were removed from our results of operations, our gross profit would
decrease from $192,648 to approximately $116,100. Accordingly, the loss of NYSD
as a distributor would have a material adverse effect on our sales and
operations.
4
<PAGE>
We may be unable to compete successfully in the highly
competitive beverage industry.
The beverage industry is highly competitive. Our products are sold in
competition with all liquid refreshments. The soft drink business is highly
competitive and there can be no assurance that we will be able to compete
successfully. Many of our competitors have far greater financial, operational
and marketing resources than the Company. Furthermore, the soft drink industry
is characterized by rapid changes, including changes in consumer tastes and
preferences, which may result in product obsolescence or short product life
cycles. As a result, competitors may be developing products of which we are
unaware which may be similar or superior to our products. Accordingly, there is
no assurance that we will be able to compete successfully or that our
competitors or future competitors will not develop products that render our
products less marketable.
Competitors in the soft drink industry include bottlers and distributors of
nationally advertised and marketed products as well as chain store and private
label soft drinks. The principal method of competition include brand
recognition, price and price promotion, retail space management, service to the
retail trade, new product introductions, packaging changes, distribution methods
and advertising. See "Business - Competition."
Bad weather in our peak season could result in lower sales.
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.
We may incur material losses as a result of product recall and
product liability.
We may be liable if the consumption of any of our products causes injury,
illness or death. We also may be required to recall some of our products if they
become contaminated or are damaged or mislabeled. A significant product
liability judgement against us or a widespread product recall could have a
material adverse effect on our business, financial condition and results of
operations.
The government may adopt regulations that
could increase our costs or our liabilities.
Our operations and properties are subject to regulations by various
federal, state and local government entities and agencies. We cannot assure you
that we have been or will at all times be in compliance with all regulatory
requirements or that we will not incur material costs or liabilities in
connection with regulatory requirements. See "Business - Government Regulation."
5
<PAGE>
The liquidity of our common stock is uncertain
since it has not been publicly traded.
To date, there is no public market for the Company's common stock. While we
anticipate that our common stock will trade on the OTC - Bulletin Board after
the offering, an active public market may not develop or be sustained.
Furthermore, our common stock may not be or remain eligible to trade on the OTC
- Bulletin Board, which could result in an illiquid market for our common stock.
The market price of our common stock may fall below the exercise price of the
Common Stock Purchase Warrants causing an illiquid market for the Warrants.
The market price of our common stock may bear no relationship to the
exercise price of the Common Stock Purchase Warrants (the "Warrants").
Accordingly, after the offering, the market price of our common stock might fall
below the exercise price of the Warrants for an indefinite amount of time. In
such event, the Selling Security Holders will be discouraged from exercising the
Warrants for the Resale Shares, which could result in an illiquid market for
such securities. The market price of our common stock might fall below the
exercise price of the Warrants due to a number of factors, including:
o actual or anticipated fluctuations in our operating results;
o changes in expectations as to our future financial performance; and
o the operating and stock price performance of other comparable
companies
A substantial number of our shares will be available for sale in the public
market after the offering and sales of those shares could adversely
effect our stock price.
Sales of a substantial number of shares of common stock into the public
market after this offering, or the perception that such sales could occur, could
materially and adversely effect our stock price or could impair our ability to
obtain capital through an offering of equity securities. After the offering we
will have outstanding 7,570,000 shares of common stock. Of these shares, 864,500
Resale Shares sold in this offering will be freely transferable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except for any shares purchased by our affiliates as
defined in Rule 144 adopted under the Securities Act.
Our need for additional financing is uncertain as is our
ability to raise further financing, if required.
We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to meet our anticipated
working capital and capital expenditure requirements for at least 24 months
after the date of this prospectus. We may need to raise additional funds,
however, to respond to business contingencies which may include the need to:
o fund more rapid expansion;
o fund additional marketing expenditures;
o enhance our operating infrastructure;
o respond to competitive pressures; or
o acquire complementary businesses.
6
<PAGE>
We cannot assure you that additional financing will be available on terms
favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, our ability to fund our operations, take
advantage of opportunities, develop products or services or otherwise respond to
competitive pressures could be significantly limited.
Future financings could adversely effect your ownership interest and
rights in comparison with those of other stockholders.
If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of our stockholders will
be reduced, and these newly-issued securities may have rights, preferences or
privileges senior to those of existing stockholders, including, those acquiring
shares in this offering.
Many corporate actions will be substantially controlled by officers and
directors regardless of the opposition of other investors to pursue an
alternative course of action.
Our directors and executive officers own approximately 92% of our
outstanding common stock. These stockholders, if they acted together, could
exert substantial control over matters requiring approval by our stockholders.
These matters would include the election of directors and the approval of
mergers or other business combination transactions. This concentration of
ownership may also discourage, delay or prevent a change in control of the
Company, which could have a material adverse effect on our stock price. These
actions may be taken even if they are opposed by other investors.
The loss of key personnel could have a material adverse effect on the
business, operations and prospects of the Company.
The Company is significantly dependent upon the continued participation of
certain key persons including Joseph Aslan, the Company's President, and Shlomo
Aslan, the Company's Vice President and Secretary. Joseph and Shlomo Aslan
perform all of the day-to-day operations of the Company. In the event of the
loss or unavailability of Shlomo or Joseph Aslan to the Company, there can be no
assurance that the Company would be able to timely locate or employ qualified
personnel to replace them. Accordingly, the loss or unavailability of Joseph or
Shlomo Aslan to the Company would have a material adverse effect on the
Company's business, operations and prospects.
Our stock will be construed as a "penny stock" which will make
it more difficult to trade.
The Securities and Exchange Commission (the "Commission") has adopted rules
that regulate broker-dealer practices in transactions in "penny stocks." Penny
stock generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq System, provided that current price and volume information regarding
transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer to deliver to the customer a
standardized risk disclosure document prepared by the Commission that provides
information about penny stock and the nature and level or risks in the penny
stock market. The broker-dealer also must provide the customer with other
information. The penny stock rules require that prior to a transaction in a
penny stock, the broker-dealer must determine in writing that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transactions. These disclosure requirements may reduce the
level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. Because the Warrants are exercisable at the
rate of $1.00 per share, the Resale Shares will be construed as penny stock upon
exercise of the Warrants. Accordingly, investors in this offering may find it
more difficult to sell their common stock.
7
<PAGE>
The failure of Icy Splash or third party vendors to be Year 2000
compliant could adversely impact our operations.
We may realize exposure and risk if systems on which we are dependent to
conduct our operations are not Year 2000 compliant. 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.
The Company does not expect to be affected by Year 2000 as it does not rely
on date-sensitive software or affected hardware. The Company's current
accounting and other systems were purchased "off-the-shelf". The Company intends
to timely update its 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.
To date, the Company has not devised a contingency plan for a worst case
scenario resulting from Year 2000. The Company does not intend to create a
contingency plan at this time since management has determined that such a
contingency plan would not be cost beneficial to the Company where it only
relies on software and systems for internal accounting purposes.
Management has not yet contacted other companies on whose services the
Company depends to determine whether such companies' systems are Year 2000
compliant. If the systems of the companies or other companies on whose services
we depend, including the Company's customers, are not Year 2000 compliant, there
could be a material adverse effect on the Company's financial condition or
result of operations.
8
<PAGE>
USE OF PROCEEDS
The Selling Security Holders are selling the Resale Shares covered by this
prospectus for their own accounts. Accordingly, we will not receive any proceeds
from the resale of the shares. We will receive proceeds from the exercise of the
Warrants. If all the Warrants are exercised, we will receive $776,350, which is
net of commission and offering costs. We expect to use the net proceeds from
this offering as set forth below, in the order of priority in which proceeds
will be applied:
Repay Indebtedness $ 65,000
Working Capital:
Accounts Receivable $390,000
Inventory $120,000
Other $120,850
Marketing & Advertising $ 60,500
Product Development $ 20,000
======================= ========
TOTAL $776,350
We will bear all expenses relating to this registration except for
brokerage or underwriting commissions and expenses, if any, which the Selling
Security Holders will pay.
Pending use of the net proceeds for the above purposes, we intend to invest
these funds in short-term, interest-bearing, investment-grade securities and use
these funds for general corporate purposes.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock and
do not expect to do so in the foreseeable future. We currently intend to retain
any earnings to finance the expansion and development of our business. Any
future payment of dividends will be made at the discretion of the Board of
Directors based upon conditions then existing, including our earnings, financial
condition and capital requirements as well as such economic and other conditions
as our Board of Directors may deem relevant.
9
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2000.
March 31, 2000
Actual
-----------------
Short-term debt:
Note payable $ 65,000
Shareholder loans 31,725
---------
$ 96,725
---------
Shareholders' equity:
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 shares issued and outstanding 6,600
Additional paid-in capital 174,587
Accumulated deficit (128,968)
---------
$ 52,219
---------
10
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial information concerning Icy Splash has been
derived from the financial statements included elsewhere in this prospectus and
should be read in conjunction with such financial statements and the related
notes. The financial information as of December 31, 1999 and 1998 has been
derived from financial statements of the Company audited by Lazar Levine & Felix
LLP.
<TABLE>
<CAPTION>
Quarter ended March 31, Fiscal Years ended December 31,
1999 2000 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales $ 114,234 $ 126,503 $ 320,802 $ 600,086
Gross profit 32,735 28,245 134,180 192,648
Operating profit (loss) (910) (26,775) 27,880 16,059
Profit (loss) before income taxes (2,535) (27,854) 25,345 11,681
Net profit (loss) $ (3,215) $ (28,024) $ 24,665 $ 16,775
Per share data:
Net profit (loss) $ -- $ -- $ -- $ --
Weighted average
shares outstanding(1) 7,750,000 7,750,000 6,653,741 7,750,000
<CAPTION>
March 31, 2000 December 31, 1999
----------------- -----------------
Actual Actual
----------------- -----------------
Balance Sheet Data:
Working capital $ 41,403 $ 70,997
Total Assets 222,886 246,209
Long-term debt -- --
Shareholders' equity 52,219 80,043
</TABLE>
(1) For an explanation of the determination of the number of shares used in per
share calculations, see Note 1 of Notes to Financial Statements.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Month Period Ended March 31, 2000 and 1999
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 $29,547 in the first three months
of 2000, compared with $18,315 the first three months of 1999, 23.4% and 16.0%
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 $14,600 in the first three months
of 2000, compared with $9,454 in the first three months of 1999, 11.5% and 8.3%
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).
There was a loss from operations for the first quarter of 2000 of $26,775,
compared with a loss of $910 for the first quarter of 1999, with an operating
margin of (21.2%) for the first quarter of 2000 and (0.8%) for the first quarter
of 1999. Net loss and net loss as a percent of sales for the first three months
of 2000 were ($28,024) and (22.2%), compared to ($3,215) and (2.8%) 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.
Years Ended December 31, 1999 and 1998
Net sales for the Company increased 87.1%, from $320,802 in 1998 to
$600,086 in 1999. The increase reflects the introduction of a new line of
products, Icy Splash - Second Generation, at the end of December 1998. While the
Company's original product, Icy Splash - Clear, accounted for 86.4% of beverage
sales in 1998, it accounted for 33.9% of beverage sales in 1999. Icy Splash -
Second Generation sales are less seasonal than Icy Splash - Clear, making the
Company's sales volume less susceptible to dramatic decreases in sales volume.
The gross profit margin decreased to 32.1% in 1999 from 41.8% in 1998. The
decrease in profit margin was caused by the introduction of the lower profit
margin line of products, Icy Splash - Second Generation, into the sales mix.
Selling expenses were $63,105 in 1999, compared with $55,319 in 1998, 10.5%
and 17.2% of sales, respectively. The increase in the dollar volume of selling
expenses in 1999 is due to the increase in sales volume, while the decrease in
percentage of sales is due to the lower selling costs associated with the new
product line. During 1999, $24,592 of promotion expenses (sales discounts and
giveaways) were expended predominately to promote sales of the Icy Splash
-Second Generation product line, compared with $0 to promote Icy Splash - Clear
in 1998. However, during 1998 there were advertising expenditures of $22,504 for
advertising media, including video, compared to $4,072 in 1999.
General and administrative expenses were $113,484 in 1999, compared with
$50,981 in 1998, 18.9% and 15.9% of sales, respectively. While the percentage of
sales has remained constant, there have been disproportionate increases and
decreases in some items. Insurance increased from $1,483 in 1998 to $9,444 in
1999, 1.6% in 1999 versus 0.5% in 1998, due to more comprehensive insurance
coverage. Professional fees were $58,386 in 1999, compared with $6,600 in 1998,
9.7 % and 2.1 % of sales, respectively. As the Company completes its SB-2
registration with the Securities and Exchange Commission and continues filing
quarterly and annual reports, professional fees will probably continue to
increase. Bad debt expense was $15,786 for 1999 versus $16,570 for 1998, 2.6%
and 5.2% of sales, respectively. The Company anticipates continuing favorable
bad debt expense as a percentage of sales for 2000 due to the quality of its
current distributors (customers).
Income from operations in 1999 was $16,059, a decrease of $11,821 from
1998, with an operating margin of 2.7% for 1999 and 8.7% for 1998, reflecting an
increase in sales volume, an increase in operating costs, lower gross profit
margin for Icy Splash - Second Generation and a seasonal fluctuation of sales
volume. Net income and net income as a percent of sales for 1999 were $16,775
and 2.8%, compared to $24,665 and 7.7% for 1998.
The Company expects the gross profit for 2000 to remain similar to 1999 as
it continues to expand its market for Icy Splash - Second Generation. However,
the operating margin and net income as a percent of sales are expected to
increase, as the proceeds from the Company's sale of common stock provide funds
for expansion of sales volume.
Interest expense increased from $2,535 to $4,378 in 1999 versus 1998. There
was an outstanding $65,000 note payable for the whole year during 1999 and a
$100,000 note payable (paid down to $65,000) for only four months during 1998.
12
<PAGE>
Liquidity and Capital Resources
Three Month Period Ended March 31, 2000 and 1999
Working capital decreased $29,594 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.
Years Ended December 31, 1999 and 1998
Working capital increased $17,250 from December 31, 1998 to December 31,
1999 because proceeds of profitable operations were used to fund inventory and
receivables.
Net cash flow used by operating activities was $29,759 for 1999, while
$9,698 was provided by operations during 1998. During 1999 and 1998, cash was
predominately used to fund increases in accounts receivable and inventory in
order to facilitate increases in sales volume. However, during 1998 a more
significant increase in accounts payable created a net provision of cash from
operations.
During 1999, $15,282 was collected against notes receivable, while during
1998, $53,620 was loaned to a vendor and $38,054 of the loaned amount was
repaid. The Company made a loan to a vendor to help fund capital improvements.
Repayment was recorded as the vendor performed services for the Company. The
Company purchased $2,885 of fixed assets during 1999 and $3,449 in 1998.
During 1999, a $65,000 note payable was refinanced. During 1998, the
Company borrowed $100,000 from a third party and repaid $35,000 of the loan.
Also during 1998, shareholder loans of $34,442 were repaid Costs of $28,813 were
expended in 1998 for a private offering under Regulation D of the Securities Act
of 1933, as amended.
In prior years, Icy Splash recorded a valuation allowance against its
deferred tax asset "net operating losses." At December 31, 1999, Icy Splash
reduced this allowance due to the prior two years history of earnings (which
allowed it to use its "net operating losses") and the future outlook of Icy
Splash.
Year 2000 Compliance
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.
13
<PAGE>
The Company does not expect to be affected by Year 2000 as it does not rely
on date-sensitive software or affected hardware. The Company's current
accounting and other systems were purchased "off-the-shelf". The Company intends
to timely update its 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.
To date, the Company has not devised a contingency plan for a worst case
scenario resulting from Year 2000. The Company does not intend to create a
contingency plan at this time since management has determined that such a
contingency plan would not be cost beneficial to the Company where it only
relies on software and systems for internal accounting purposes.
Management has not yet contacted other companies on whose services the
Company depends to determine whether such companies' systems are Year 2000
compliant. If the systems of the companies or other companies on whose services
we depend, including the Company's customers, are not Year 2000 compliant, there
could be a material adverse effect on the Company's financial condition or
result of operations.
14
<PAGE>
BUSINESS
Overview
Icy Splash Food & Beverage, Inc. is a New York corporation which was
incorporated on June 17, 1996. We were authorized to issue an aggregate of 200
shares of no par common stock.
The Company is now 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 July 27, 2000, 6,620,000 shares of
our authorized shares of common stock were issued and outstanding assuming the
issuance of 20,000 shares of common stock to Charlie Tokarz, as described in Mr.
Tokarz's consulting agreement dated March 19, 1998.
Icy Splash maintains an office at 9-15 166th Street, Suite 5-B, Whitestone,
New York 11357.
Business of Icy Splash
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 independent co-packer bottling facility. The
components include prelabeled bottles, caps, labels, 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.
We are a regional enterprise, with distribution and sales limited primarily
to the New York, New Jersey and Connecticut area. We are dependent on the
efforts of local distributors. We currently have no employees, with the
exception of two of our executive officers. The Company's expansion would depend
on the hiring of qualified employees and reliance on national distributors,
which would be a significant change from the operating policies followed by the
Company since its inception.
Although our primary business is the production and distribution of Icy
Splash products, we have and will continue to distribute other beverage and
non-beverage products to supermarket chains, grocery stores and convenience
stores in the New York, New Jersey and Connecticut area.
Acquisition of Distributors
As part of our business operations, we expect to explore the prospect of
acquiring full-service distributors and marketers of our products and other
beverage products. Through direct ownership of distribution facilities, we
believe that it may lower distribution costs and increase distribution volume of
Icy Splash products. Also, the distribution of large name brand beverages would
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.
Icy Splash Products 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.
15
<PAGE>
We initially created Icy Splash - Clear in order to focus on the clear
carbonated beverage industry rather than competing with the larger beverage
corporations who offer a more extensive line of soft drinks. Also, we have
marketed Icy Splash as a leader of "new age" and water beverages in order to
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 products.
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 cases of 24 oz., 2 liter 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.
During the previous three fiscal years, the Company has only produced Icy
Splash - Clear and Icy Splash - Second Generation. In 1997, sales of Icy Splash
- Clear contributed $224,490 (100%) of revenue. In 1998, sales of Icy Splash -
Clear and Icy Splash - Second Generation contributed $277,321 (86.4%) and
$43,481 (13.6%) of revenue, respectively. In 1999, sales of Icy Splash - Clear,
Icy Splash - Second Generation and other products contributed $186,269 (31%),
$280,848 (46.8%) and $132,969 (22.2%), respectively. Sales of other products in
1999 included beverage and non-beverage products.
Distribution of Icy Splash Products and Dependence on Major Customers
The primary distributors of our products are I Epstein, Haddon House and
NYSD. The product line is distributed primarily to supermarket chains, and, to a
lesser extent, to grocery stores and convenience stores in the New York, New
Jersey and Connecticut area.
16
<PAGE>
As a result of our distribution arrangement with NYSD, a significant
portion of our sales during the year ended December 31, 1999 were to NYSD.
During this period, the Company's total sales were $600,086, of which $308,700
of product was sold to NYSD. Such sales to NYSD can be attributed to the launch
of our latest product line Icy Splash - Second Generation. If sales to NYSD were
removed from our results of operations, our gross profit would decrease form
$192,648 to approximately $116,100. Accordingly, management believes that the
loss of NYSD as a distributor would have a material adverse effect on our sales
and operations.
Sources and Availability of Raw Materials and Suppliers
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.
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.
17
<PAGE>
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 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.
Government Regulation
The production, distribution and sale of our products are subject to the
Federal Food, Drug and Cosmetic Act, the Occupational Safety and Health Act and
various federal and state statutes regulating the production, sale, safety,
advertising, labeling and ingredients of such products. Compliance with all such
regulations may be time-consuming and expensive. To the best of management's
knowledge, the Company complies with necessary state and federal laws necessary
to operate a beverage production and distribution company in the state of New
York.
We cannot predict the impact of possible changes that may be required in
response to future legislation, rules or inquires made from time to time by
governmental agencies. Food and Drug Administration regulations may, in certain
circumstances, affect the ability of the Company, as well as others in the
industry, to develop and market new products. However, we do not presently
believe that existing applicable legislative and administrative rules and
regulations will have a significant impact on operations.
We believe that 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 $3,146 in 1998 and $2,617 in 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.
Trademarks
The Company's registered trademark is "Icy Splash". We intend to apply for
United States and International patent, trademark and copyright protection,
where applicable, in connection with certain of our products and property.
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. Additionally, there is no assurance
that we will be able to prevent competitors from using the same or similar
marks, products or appearances of the Company.
All trademarks or service marks appearing in this prospectus that do not
relate to our products are the property of their respective holders.
18
<PAGE>
Employees
The Company presently has no employees, with the exception of Joseph Aslan,
the Company's President, and Shlomo Aslan, the Company's Vice President and
Secretary, who conduct all of the operations of the Company. Charles Tokarz, the
Company's Chief Financial Officer and Treasurer, primarily provides bookkeeping
services and assistance in the preparation of audited and unaudited financials
statements and disclosure required under the Securities Exchange Act of 1934, as
amended. Mr. Tokarz serves as an independent contractor of the Company pursuant
to his consulting agreement. See "Certain Relationships and Related
Transactions."
Properties
Since December 1997, the Company has been conducting its business from
office space located at 9-15 166th Street, Suite 5-B, Whitestone, New York
11357. This property, aggregating approximately 2,500 square feet, is owned by
Joseph Aslan. From January 1, 1999 to July 1, 1999, we also occupied office
space leased by NYSD, the primary distributor of our products. We discontinued
use of such office space and continued to operate all of our business from the
office space owned by Mr. Aslan. To date, the Company has not made any lease
payments for the use of office space owned by Mr. Aslan or NYSD.
We signed an agreement to purchase a commercial property located at 494-504
Wortman Avenue, Brooklyn, New York 11208. The purchase price of the premises was
$800,000. We received an Inducement Resolution acknowledging that the New York
City Industrial Development Agency would provide certain tax benefits to us if
we acquired the property.
In early September 1999, management recognized that the Company could not
obtain any financing to purchase the property. As a result, the Company assigned
the contract to Aslan Holding Corp., a corporation wholly owned by Shlomo Aslan,
an executive officer and director of the Company.
In addition to the office space located in Whitestone, New York, the
Company currently occupies approximately 120 square feet of office space at 535
Wortman Avenue, Brooklyn, New York 11208. The space is sublet from Aslanco,
Inc., a corporation owned by Joseph Aslan, an executive officer and director of
the Company. Rent of $400 per month will be accrued from and paid commencing
January 1, 2000.
Legal Matters
On March 19, 1997, the Company filed suit against Icy Splash, Inc., a
predecessor of the Company, and a former shareholder of Icy Splash, Inc. This
case is presently pending in New York 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 no assurance can be given.
19
<PAGE>
MANAGEMENT
Directors and Executive Officers
As of July 27, 2000 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
Name Age Presently Held with 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
Business Experience
Joseph Aslan has served as the Company's President and Director since the
Company's inception in June of 1996. Prior to joining the Company, from 1994 to
1996, Mr. Aslan was the co-owner and manager of Tribeca Classics, Inc., his
family-owned textile business. Mr. Aslan has over 15 years of experience in
finance and business management.
Shlomo Aslan has served as the Vice President, Secretary and Director of
the Company since the Company's inception in June 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, developers of luxury condominiums and office
buildings. From 1976 to 1978, he served as Comptroller of the California Club,
Inc., a country club owned by Caesar's World, Inc., a company listed on the New
York Stock Exchange. He is a CPA and has over 20 years of business, financial
and financial planning experience. Mr. Tokarz holds a BS and an MBA.
Sy Aslan is a Director of the Company. He has held this position since the
Company's incorporation in June of 1996. Since 1989, he has served as Director
of Operations of United Management Technologies, a consulting firm focusing on
developing and supporting effective management practices. He has been involved
in the development and implementation of strategic management solutions for
numerous Fortune 500 financial institutions for over 20 years. Mr. Aslan holds
BS and MS degrees in management and Industrial Engineering.
20
<PAGE>
Directors of Other Reporting Companies
None of the directors are directors of other reporting companies.
Significant Employees
The officers and directors who are identified above are the significant
employees of the Company.
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.
Executive Compensation
To date, management has not collected any compensation from the Company in
excess of $100,000 in any fiscal year.
21
<PAGE>
CERTAIN TRANSACTIONS
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. The agreement with Mr. Tokarz was obtained on terms as
favorable as could have been obtained from a non-affiliated party.
During the Private Placement, certain immediate family members of two
directors of the Company purchased 300 units and 600 units for $1,500 and
$3,000, respectively. The amount paid in each transaction was the full offering
price of $5.00 per unit. See "Selling Security Holders." The sale of such units
were on terms as favorable as could have been obtained from a non-affiliated
party.
The Company currently occupies approximately 120 square feet of office
space sublet from Aslanco, Inc., a corporation wholly owned by Joseph Aslan, an
executive officer and director of the Company. See "Description of Property."
Rent of $400 per month will be accrued from and paid commencing January 1, 2000.
The sublet of the office space is on terms as favorable as could have been
obtained from a non-affiliated party.
All transactions and future transactions, if any, between us and our
officers, directors and principal shareholders and their affiliates and any
transactions between us and any entity with which our officers, directors or
principal shareholders are affiliated have been and will be subject to the
approval of a majority of our board of directors. Such transactions have been
and will be on terms no less favorable to us than could be obtained from
unaffiliated third parties.
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<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth certain information concerning those persons
known to the Company, based on information known to the Company and/or obtained
from such persons, with respect to the beneficial ownership of the Resale Shares
issuable upon exercise of the Warrants. Unless indicated otherwise, all Selling
Security Holders own less than 1% of the Company's issued and outstanding shares
of common stock prior to and after the offering.
<TABLE>
<CAPTION>
Number of Shares Beneficially Number of Shares Number of Shares
Selling Security Holders Owned Prior to Offering(1) Being Offered Owned After Offering
------------------------ -------------------------- ------------- --------------------
<S> <C> <C> <C>
Arvin Scott 58,000 38,000 20,000
Steven Michaels 58,000 38,000 20,000
Meshulam Elmaliach 14,500 9,500 5,000
Tova Sadka 43,500 28,500 15,000
Gatznyo Moshe 58,000 38,000 20,000
Emile Ohayon 29,000 19,000 10,000
George Tsatsos 58,000 38,000 20,000
Yehuda Tzur 58,000 38,000 20,000
Debra Millman 43,500 28,500 15,000
Bianka Dalal(2) 43,500 28,500 15,000
Victoria T. Tokarz(3) 87,000(4) 57,000 30,000
Robert Eaves
and Karen Eaves 145,000(5) 95,000 50,000
Dennis R. Olden 43,500 28,500 15,000
Edward Roach &
Elizabeth Cronin 72,500(6) 47,500 25,000
Elaine F. O'Neil 36,250 23,750 12,500
John J. O'Neil 36,250 23,750 12,500
John A. O'Neil 72,500(6) 47,500 25,000
Donna R. O'Neil 72,500(6) 47,500 25,000
George Gerson 72,500(6) 47,500 25,000
Deborah Kline 58,000 38,000 20,000
Arthur C. Krepps, III 72,500(6) 47,500 25,000
Krista Killius 14,500 9,500 5,000
James Killius 14,500 9,500 5,000
Gina Russo 14,500 9,500 5,000
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
W. Gordon Freeman
and Sharon L. Freeman 14,500 9,500 5,000
Huon Consulting, Inc. 72,500(6) 47,500 25,000
Quinn Truckenbrod 14,500 9,500 5,000
Mia Truckenbrod 14,500 9,500 5,000
Diane Leon Pekarek 29,000 19,000 10,000
Bruce Pekarek 29,000 19,000 10,000
</TABLE>
----------
(1) Includes 950,000 shares of common stock issuable upon exercise of the
Warrants by the Selling Security Holders.
(2) Bianka Dalal is the wife of Shlomo Aslan, our Vice President, Secretary and
Director.
(3) Victoria T. Tokarz is the wife of Charles Tokarz, our Chief Financial
Officer, Treasurer and Director.
(4) 1.3% of Icy Splash common stock issued and outstanding prior to the
offering.
(5) 2.2% of Icy Splash common stock issued and outstanding prior to the
offering.
(6) 1.1% of Icy Splash common stock issued and outstanding prior to the
offering.
The actual number of shares of common stock beneficially owned is subject
to adjustment and could be materially less or more than the stated amount being
offered for sale depending on factors which cannot be predicted by the Company
at this time. These factors include, but are not limited to, whether or to what
extent dividends due the Warrant holders, if any, are paid in common stock of
the Company. The shares registered by the Selling Security Holders may be sold
from time to time directly by the Selling Security Holders. Alternatively, the
Selling Security Holders may from time to time offer such securities through
underwriters, dealers or agents. The distribution of securities by the Selling
Security Holders may be effected in one or more transactions that may take place
on the over-the-counter market, including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more broker-dealers
for resale of such shares as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Security Holders in connection with such
sales of securities. The Selling Security Holders and intermediaries through
whom such securities are sold may be deemed "underwriters" within the meaning of
the Securities Act with respect to the securities offered, and any profits
realized or commissions received may be deemed underwriting compensation.
24
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of shares of voting
stock of Icy Splash, as of July 27, 2000, 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 44.9%
Common Shlomo Aslan(1)(3)(6) 2,970,000 44.9%
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 91.5%
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 and Related Transactions."
25
<PAGE>
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.
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 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.
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.
Warrants
Common Stock Purchase Warrants were issued in connection with the Company's
private placement, pursuant to Rule 504 under Regulation D of the Securities
Act, from March 1998 to October 1998. See "Private Placement Units." Each
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 preceding the date fixed for redemption provided
that there is a registration statement in effect or there is an exemption from
such registration. The Company has extended the expiration date of the Warrants
to January 20, 2002. 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.
Private Placement Units
During the period from March 1998 to October 1998, we issued an aggregate
of 10,000 units pursuant to Rule 504 under Regulation D of the Securities Act
(the "Private Placement"). Each unit consists of 50 shares of common stock at
$5.00 per unit, and 95 redeemable Common Stock Purchase Warrants. All 10,000
units were sold to a total of thirty investors. The Company incurred costs of
$28,813 in excess of proceeds received.
26
<PAGE>
"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.
Limitation on Directors' Liability
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 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.
27
<PAGE>
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 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 no 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, 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 Commission, 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.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock is Florida Atlantic
Stock Transfer, Inc., 7130 Nob Hill Road, Tamarac, Florida 33321.
28
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
To date, there is no public market for the Company's common stock and no
assurance can be given that a market for the shares will develop, or if a market
does develop, that it will be sustained following the completion of this
offering. Therefore, investors of the Company may be unable to liquidate their
investment for any reason. See "Risk Factors." If such a market did develop,
sales of substantial amounts of the common stock in the public market, or the
perception that such sales may occur, could adversely affect the market price of
the common stock from time to time in the public market and could impair our
ability to raise additional capital through the sale of equity securities in the
future.
SHARES ELIGIBLE FOR FUTURE SALE
Assuming the full exercise of the Warrants and the issuance of 20,000
shares of common stock to Charlie Tokarz, as described in Mr. Tokarz's
consulting agreement dated March 19, 1998, we will have 7,570,000 shares of
common stock issued and outstanding. Of the 7,570,000 shares issued and
outstanding, 455,000 shares which were issued during the period from March 1998
to October 1998 in connection with the Private Placement, pursuant to Rule 504
under Regulation D of the Securities Act, are freely tradable. Assuming the full
exercise of the Warrants which were issued in the Private Placement, 864,500
shares, which in part are being offered in this prospectus, will be freely
tradable. Finally, 60,000 shares which were issued to former directors of the
company, and held for the requisite and statutory holding period under Rule 144
of the Securities Act, are also freely tradable. Accordingly, of the 7,570,000
shares of common stock issued and outstanding, a total of 1,319,500 shares will
be freely tradable. The balance of 6,147,000 shares are restricted as the term
is defined under Rule 144 of the Securities Act.
In general, under Rule 144, beginning 90 days after the date of this
prospectus, a person who has beneficially owned restricted shares for at least
one year, is entitled to sell within any three-month period a number of shares
that does not exceed the greater of:
o 1% of the then-outstanding shares of common stock; or
o the average weekly trading volume of our common stock during the four
calendar weeks before the date of the sale.
Sales under Rule 144 also are subject to requirements pertaining to the
manner and notice of the sales and the availability of current public
information pertaining to the Company.
Under Rule 144(k), a person who is not deemed to have been affiliated with
the Company at any time during the 90 days before a sale and who has
beneficially owned the shares proposed to be sold for at least two years would
be entitled to sell these shares without regard to the requirements described
above. To the extent that shares were acquired from an affiliate of the Company,
the transferee's holding period for the purpose of effecting a sale under Rule
144(k) commences on the date of transfer from the affiliate.
29
<PAGE>
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby will be
passed upon for the Company by the law firm of Beckman, Millman & Sanders, LLP,
116 John Street, Suite 1313, New York, New York 10038. A member of the firm owns
15,000 shares of common stock of the Company and 28,500 Warrants. The shares
issuable upon the exercise of such Warrants are being offered in this
prospectus.
EXPERTS
Lazar Levine & Felix LLP, independent certified public accountants, have
audited our financial statements for the years ended December 31, 1999 and 1998,
as set forth in their report, included in this prospectus and registration
statement. Our consolidated financial statements are included in this prospectus
and registration statement in reliance on their report, given on their authority
as experts in accounting and auditing.
AVAILABLE INFORMATION
We have filed with the Commission a registration statement on Form SB-2
under the Securities Act, and the rules and regulations promulgated thereunder,
with respect to the common stock offered under this prospectus. This prospectus,
which constitutes a part of the registration statement, does not contain all of
the information set forth in the registration statement and the attached
exhibits and schedules. Statements contained in this prospectus as to the
contents of any contract or other document that is filed as an exhibit to the
registration statement is qualified in all respects by reference to the full
text of such contract or document. For further information about us and our
common stock, refer to the principal office of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
regional offices of the Commission located at Seven World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and copies of all or any part of those
documents may be obtained at prescribed rates from the Commission's Public
Reference Section at such addresses. The public may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. Also, 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.
We are required to comply with the informational requirements of the
Securities and Exchange Act of 1934, as amended, and, accordingly, have filed
periodic reports and other information with the Commission. Such filings are
available for inspection and copying at the regional offices, public reference
facilities and Web site of the Commission referred to above.
30
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Balance Sheet as of March 31, 2000 (unaudited) and December 31,
1999............................................................. F-1
Statements of Operations for the three months ended March 31,
2000 and 1999 (unaudited)........................................ F-2
Statements of Cash Flows for the three months ended March 31,
2000 and 1999 (unaudited)........................................ F-3
Notes to Financial Statements (unaudited).......................... F-4 to F-10
Independent Auditors' Report for Audited
Financial Statements for the years ended
December 31, 1999 and 1998 ...................................... F-11
Audited Balance Sheets for the years
ended December 31, 1999 and 1998 ................................ F-12
Audited Statements of Income for
the years ended December 31, 1999 and 1998 ...................... F-13
Audited Statements of Changes in Shareholders'
Equity for the years ended December 31, 1999 and 1998 ........... F-14
Audited Statements of Cash Flow for
the years ended December 31, 1999 and 1998 ...................... F-15
Note to Financial Statements for the years
ended December 31, 1999 and 1998 ................................ F-16 to F-22
31
<PAGE>
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
Deferred taxes 6,000 6,000
--------- ---------
TOTAL CURRENT ASSETS 212,070 236,963
--------- ---------
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
--------- ---------
$ 222,886 $ 246,209
========= =========
- 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 (128,968) (100,944)
--------- ---------
52,219 80,243
--------- ---------
$ 222,886 $ 246,209
========= =========
</TABLE>
See notes to financial statements.
F-1
<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 29,547 18,315
--------- ---------
53,020 33,645
--------- ---------
(LOSS) INCOME FROM OPERATIONS (26,775) (910)
OTHER EXPENSES:
Interest expense (1,079) (1,625)
--------- ---------
(LOSS) INCOME BEFORE TAXES (27,854) (2,535)
Provision for income taxes 170 680
--------- ---------
NET (LOSS) INCOME $ (28,024) $ (3,215)
========= =========
EARNINGS (LOSS) PER SHARE:
Basic $ -- $ --
========= =========
Diluted $ -- $ --
========= =========
See notes to financial statements.
F-2
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: March 31,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(28,024) $ (3,215)
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 -- (1,680)
(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 $ --
</TABLE>
See notes to financial statements.
F-3
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
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-4
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
MARCH 31, 2000
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 mainly of raw materials.
<TABLE>
<CAPTION>
Inventory consists of the following: March 31, December 31,
2000 1999
--------- --------
<S> <C> <C>
Finished product $ -- $ 13,791
Flavoring , bottles and packaging materials 121,578 115,356
-------- --------
$121,578 $129,147
======== ========
</TABLE>
(e) 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, 1999, of approximately $50,000 which may be applied
against future taxable income, and which expires in the year 2012 (See
Note 5).
(f) Statements of Cash Flows:
For purposes of the statements of cash flows, the Company
considers all highly liquid investments purchased with an
original maturity of three months or less to be cash
equivalents.
(g) Comprehensive Income:
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130 "Reporting Comprehensive Income"("SFAS 130"),
which prescribes standards for reporting other comprehensive
income and its components. SFAS 130 is effective for fiscal
years beginning after December 15, 1997. Since the Company
currently does not have any items of other comprehensive
income, a statement of comprehensive income is not yet
required.
F-5
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
MARCH 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(h) Advertising Costs:
Advertising costs, which are included in selling expenses, are
expensed as incurred. For the quarters ended March 31, 2000 and 1999
advertising costs, including promotion, aggregated $15,469 and $5,603,
respectively.
(i) Revenue Recognition:
The Company recognizes operating revenue at the point of passage of
title, which is upon shipment of goods to customers.
(j) Earnings Per Share:
The Company has adopted Financial Accounting Standards Board Statement
No. 128 "Earnings Per Share" ("SFAS 128"), which has changed the
method for calculating earnings per share. SFAS 128 requires the
presentation of basic and diluted earnings per share on the face of
the statement of operations. Earnings per common share is computed by
dividing net income by the weighted average number of common shares
outstanding and for diluted earnings per share, also common equivalent
shares outstanding.
The following average shares were used for the computation of basic
and diluted earnings per share:
Three months ended March 31, 2000 1999
------ ------
Basic 6,600,000 6,600,000
Diluted 7,550,000 7,550,000
(k) Stock-Based Compensation:
Financial Accounting Standards Board Statement No. 123 "Accounting For
Stock Based Compensation" ("SFAS 123") requires the Company to either
record compensation expense or to provide additional disclosure with
respect to stock awards and stock option grants made after December
31, 1994. The accompanying notes to financial statements include the
disclosures required by SFAS No. 123.
NOTE 3 - NOTES RECEIVABLE:
At March 31, 2000 and December 31, 1999, the Company was owed $1,485
from a vendor who is a co-packer of the Company's products. The vendor
had 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, 2000 the
co-packer has provided such services and made payments. Management
believes the remaining balance at March 31, 2000 is fully collectible.
F-6
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
MARCH 31, 2000
NOTE 3 - NOTES RECEIVABLE (Continued):
At December 31, 1998, the Company was owed $25,544 by a customer
(distributor) for the Company's products. The customer had agreed to
pay at least $1,000 a month beginning August 15, 1998, with no
interest if the entire balance was 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 and a
collection allowance of $6,500 was recorded. During 1999, only $1,200
was paid by the customer and the note was deemed uncollectible by
Management and accordingly reserved 100% as a bad debt.
NOTE 4 - NOTE PAYABLE:
On June 25, 1999, the Company received a bank loan aggregating $65,000
with an annual interest rate of 4.5%, payable on December 22, 1999,
which was subsequently renewed and is now due on June 22, 2000. The
bank loan is secured by certificates of deposit belonging to two major
shareholders. Proceeds from the note were used to repay a prior
$65,000 loan due on June 30, 1999.
NOTE 5 - INCOME TAXES:
The components of the provision for income taxes are as follows:
Quarter ended Quarter ended
March 31, March 31,
2000 1999
Current:
Federal $ -- $ --
State 170 680
------ ------
170 680
------ ------
Deferred:
Federal -- --
State -- --
------ ------
-- --
------ ------
Provision for income taxes $ 170 $ 680
====== ======
The tax effects of temporary differences that give rise to deferred
tax assets are presented below:
March 31, 2000
--------------
Net operating losses $ 13,000
Valuation allowances (7,000)
---------
$ 6,000
=========
F-7
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
MARCH 31, 2000
NOTE 5 - INCOME TAXES:
A reconciliation of the difference between the expected tax rate using
the statutory federal tax rate and the Company's effective tax rate is
as follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
U.S. Federal income tax statutory rate
-- (15.0)%
State income tax, net of federal income tax benefit
(0.6) (25.8)
---- ----
Effective tax rate
(0.6)% (40.8)%
---- ----
</TABLE>
NOTE 6 - RELATED PARTY TRANSACTIONS:
(a) During December 1998, the Company initiated sales of product to a
distributor. Certain members of management of the company personally
agreed to provide financing and organizational support to the
distributor although they own no equity in it. In exchange for the
financial support, the distributor agreed to provide experience, sales
representatives, contacts and a full-service operating distribution
business including a warehouse for, but not limited to, the Company's
product. The shareholders have not received any form of compensation
or other benefits for their loans and managerial assistance.
Management believes that all transactions between the Company and the
distributor are at arm's length. For the quarter ended March 31, 2000,
approximate sales to the distributor and accounts receivable were
$53,666 and $52,064, respectively. For the year ended December 31,
1999, approximate sales to the distributor and accounts receivable
were $308,700 and $61,100, respectively. At March 31, 2000, financing
provided to this distributor by members of management aggregated
approximately $160,000.
(b) During September 1999, the Company initiated sales of product to a
distributor which is owned by one of the Company's shareholders. For
the quarter ended March 31, 2000, approximate sales to the distributor
and accounts receivable were $31,306 and $885, respectively For the
year ended December 31, 1999 approximate sales and promotion expense
passthroughs were $19,700 and $2,400, respectively. Accounts
receivable at December 31, 1999 were approximately $21,000.
(c) During the Company's 1998 private placement (See Note 7) certain
immediate family members of one officer and one director of the
Company, purchased 300 units and 600 units for $1,500 and $3,000,
respectively. The amount paid in each transaction was the full
offering price of $5.00 per unit.
NOTE 7 - 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. Of these shares
5,940,000 were issued to two individuals in forgiveness of loans
extended to the Company aggregating $210,000. The Company also issued
160,000 shares to three directors for nominal consideration.
F-8
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
MARCH 31, 2000
NOTE 7 - STOCKHOLDERS' EQUITY (continued):
Private Placement Offering:
During 1998, the Company commenced selling common stock through a
private placement memorandum. The offering was 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, 2002. As of December 31, 1998, all 10,000 units had
been sold. Costs in excess of proceeds received aggregating $28,813
were reflected as a reduction of shareholders' equity at December 31,
1998.
The common stock and warrants included in the units 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.
Subsequent Event:
On January 7, 2000, the Company filed a Form SB-2 registration
statement with the Securities and Exchange Commission to register the
950,000 shares of common stock issuable upon the exercise of the
Common Stock Purchase Warrants. A comment letter was received from the
Securities and Exchange Commission during February 2000 and responded
to subsequent to the completion of the Company's Form 10-KSB. A second
comment letter was received in July 2000 and a response is being
prepared.
NOTE 8 - ECONOMIC DEPENDENCY:
For the quarter ended March 31, 2000 sales to three customers each
exceeded 10% of the Company's total sales. The approximate sales to
these customers were $53,666, $31,306 and $28,834, respectively. The
corresponding accounts receivable from these customers were $52,065,
$885 and $17,665, respectively.
For the year ended December 31, 1999 sales to two customers each
exceeded 10% of the Company's total sales. The approximate sales to
these customers were $308,700 and $152,000, respectively. The
corresponding accounts receivable from these customers were $61,100
and $15,700, respectively.
F-9
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
MARCH 31, 2000
NOTE 9 - COMMITMENTS AND CONTINGENCIES:
Litigation:
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. Depositions have been conducted and a
Notice of Trial was filed. Management believes this suit will be
resolved in favor of the Company.
Consulting Agreement:
On March 19, 1998, the Company entered into a consulting agreement
with an individual to act as the Company's Chief Financial Officer. As
part of the consideration for these services, the Company would issue
20,000 shares of common stock, at a value of $1,600. This value of
8(cent) per share was determined based upon the estimated value placed
on each share of the Company's stock, that was sold within each $5
unit (consisting of 50 shares of stock and 95 warrants) of the 10,000
units sold during 1998 through the private placement memorandum (see
Note 7). To date, the shares of stock have not been issued, although
the accompanying financial statements reflect an accrual for
compensation expense in 1998.
F-10
<PAGE>
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, 1999 and 1998, and the related statements of income, changes in
shareholders' equity and cash flows for the two years in the period ended
December 31, 1999. 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, 1999 and 1998, and the results of its operations and its cash
flows for the two years in the period ended December 31, 1999, in conformity
with generally accepted accounting principles.
/s/ LAZAR LEVINE & FELIX LLP
----------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
March 23, 2000
F-11
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
- ASSETS -
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,802 $ 20,314
Accounts receivable, net of allowance for doubtful accounts of
$2,000 and $4,163 for 1999 and 1998, respectively (Notes 6 and 8) 96,529 69,833
Notes receivable (Note 3) 1,485 34,610
Inventory (Note 2d) 129,147 60,881
Prepaid expenses -- 3,000
Deferred taxes (Note 5) 6,000 --
--------- ---------
TOTAL CURRENT ASSETS 236,963 188,638
--------- ---------
FIXED ASSETS (Note 2c):
Warehouse equipment 5,000 5,000
Office equipment 12,279 9,394
--------- ---------
17,279 14,394
Less: accumulated depreciation 8,033 4,673
--------- ---------
9,246 9,721
--------- ---------
$ 246,209 $ 198,359
========= =========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Notes payable (Note 4) $ 65,000 $ 65,000
Accounts payable 78,157 53,900
Accrued expenses and other current liabilities 21,279 15,537
Shareholders' loans 850 --
Income taxes payable (Notes 2e and 5) 680 454
--------- ---------
TOTAL CURRENT LIABILITIES 165,966 134,891
--------- ---------
COMMITMENTS AND CONTINGENCIES (Notes 6,8 and 9)
SHAREHOLDERS' EQUITY (Note 7):
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 shares issued and outstanding for 1999 and 1998 6,600 6,600
Additional paid-in capital 174,587 174,587
Accumulated deficit (100,944) (117,719)
--------- ---------
80,243 63,468
--------- ---------
$ 246,209 $ 198,359
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
--------- ---------
NET SALES (Notes 2i, 6 and 8) $ 600,086 $ 320,802
--------- ---------
COST OF GOODS SOLD:
Inventory - beginning of year 60,881 35,316
Purchases 475,704 212,187
--------- ---------
536,585 247,503
Inventory - end of year 129,147 60,881
--------- ---------
TOTAL COST OF GOODS SOLD 407,438 186,622
--------- ---------
GROSS PROFIT 192,648 134,180
--------- ---------
OPERATING EXPENSES (Note 6):
Selling expenses 63,105 55,319
General and administrative expenses 113,484 50,981
--------- ---------
176,589 106,300
--------- ---------
INCOME FROM OPERATIONS 16,059 27,880
OTHER INCOME (EXPENSES):
Interest expense (4,378) (2,535)
--------- ---------
INCOME BEFORE TAXES 11,681 25,345
Provision for income taxes (Note 2e and 5) (5,094) 680
--------- ---------
NET INCOME $ 16,775 $ 24,665
========= =========
EARNINGS PER SHARE (Note 2j):
Basic $ -- $ --
========= =========
Diluted $ -- $ --
========= =========
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 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, 1997 6,100,000 $ 6,100 $ 203,900 $(142,384) $ 67,616
Net costs from issuance of common stock
and warrants - private placement offering (Note 7) 500,000 500 (29,313) -- (28,813)
Net income, December 31, 1998 -- -- -- 24,665 24,665
--------- --------- --------- --------- ---------
Balance, December 31, 1998 6,600,000 6,600 174,587 (117,719) 63,468
Net income, December 31, 1999 -- -- -- 16,775 16,775
--------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1999 6,600,000 $ 6,600 $ 174,587 ($100,944) $ 80,243
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16,775 $ 24,665
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation 3,360 2,579
Provision for bad debts 15,786 16,570
Changes in assets and liabilities:
Increase In accounts receivable (24,638) (45,822)
Increase in inventories (68,266) (25,565)
Increase in prepaid expenses 3,000 --
Increase in deferred taxes (6,000) --
Increase in accounts payable 24,257 47,557
Increase (decrease) in accrued expenses and other current liabilities 5,967 (10,286)
--------- ---------
Net cash (used) provided by operating activities (29,759) 9,698
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (2,885) (3,449)
Increase in note receivable -- (53,620)
Repayments of note receivable 15,282 38,054
--------- ---------
Net cash provided (used) by investing activities 12,397 (19,015)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt 65,000 100,000
Repayments of short-term debt (65,000) (35,000)
Net cost from issuance of common stock -- (28,813)
Proceeds from shareholders loans 850 --
Repayments of shareholders loans -- (34,442)
Deferred offering costs -- 27,886
--------- ---------
Net cash provided by financing activities 850 29,631
--------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (16,512) 20,314
Cash and cash equivalents, at beginning of year 20,314 --
--------- ---------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 3,802 $ 20,314
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
During the year ended December 31, 1998, the Company transferred a customer's
accounts receivable balance to notes receivable in the amount of $25,544
Cash during the period for:
Income taxes paid $ 680 $ 1,527
========= =========
Interest paid $ 1,128 $ 131
========= =========
</TABLE>
F-15
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 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-16
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 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 mainly of raw materials.
Inventory consists of the following:
1999 1998
-------- --------
Finished product $ 13,791 $ --
Flavoring , bottles and packaging materials 115,356 60,881
-------- --------
$129,147 $ 60,881
======== ========
(e) 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, 1999, of approximately $50,000 which may be applied
against future taxable income, and which expires in the year 2012 (See
Note 5).
(f) Statements of Cash Flows:
For purposes of the statements of cash flows, the Company considers
all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
(g) Comprehensive Income:
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130 "Reporting Comprehensive Income"("SFAS 130"), which
prescribes standards for reporting other comprehensive income and its
components. SFAS 130 is effective for fiscal years beginning after
December 15, 1997. Since the Company currently does not have any items
of other comprehensive income, a statement of comprehensive income is
not yet required.
F-17
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(h) Advertising Costs:
Advertising costs, which are included in selling expenses, are
expensed as incurred. For the years ended December 31, 1999 and 1998
advertising costs, including promotion, aggregated $28,664 and
$22,504, respectively.
(i) Revenue Recognition:
The Company recognizes operating revenue at the point of passage of
title, which is generally upon shipment of goods to customers.
(j) Earnings Per Share:
The Company has adopted Financial Accounting Standards Board Statement
No. 128 "Earnings Per Share" ("SFAS 128"), which has changed the
method for calculating earnings per share. SFAS 128 requires the
presentation of basic and diluted earnings per share on the face of
the statement of operations. Earnings per common share is computed by
dividing net income by the weighted average number of common shares
outstanding and for diluted earnings per share, also common equivalent
shares outstanding.
The following average shares were used for the computation of basic
and diluted earnings per share:
Year ended December 31, 1999 1998
------- -------
Basic 6,600,000 6,290,945
Diluted 7,550,000 6,653,741
(k) Stock-Based Compensation:
Financial Accounting Standards Board Statement No. 123 "Accounting For
Stock Based Compensation" ("SFAS 123") requires the Company to either
record compensation expense or to provide additional disclosure with
respect to stock awards and stock option grants made after December
31, 1994. The accompanying notes to financial statements include the
disclosures required by SFAS No. 123.
NOTE 3 - NOTES RECEIVABLE:
At December 31, 1999 and 1998, the Company was owed $1,485 and
$15,565, respectively, from a vendor who is a co-packer of the
Company's products. The vendor had 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, 1999 the co-packer has provided such
services and made payments. Management believes the remaining balance
at December 31, 1999 is fully collectible.
F-18
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 3 - NOTES RECEIVABLE (Continued):
At December 31, 1998, the Company was owed $25,544 by a customer
(distributor) for the Company's products. The customer had agreed to
pay at least $1,000 a month beginning August 15, 1998, with no
interest if the entire balance was 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 and a
collection allowance of $6,500 was recorded. During 1999, only $1,200
was paid by the customer and the note was deemed uncollectible by
Management and accordingly reserved 100% as a bad debt.
NOTE 4 - NOTE PAYABLE:
On June 25, 1999, the Company received a bank loan aggregating $65,000
with an annual interest rate of 4.5%, payable on December 22, 1999,
which was subsequently renewed and is now due on June 22, 2000. The
bank loan is secured by certificates of deposit belonging to two major
shareholders. Proceeds from the note were used to repay a prior
$65,000 loan due on June 30, 1999.
NOTE 5 - INCOME TAXES:
The components of the provision for income taxes are as follows:
1999 1998
-------- --------
Current:
Federal $ -- $ --
State 906 680
-------- --------
906 680
-------- --------
Deferred:
Federal (2,000) --
State (4,000) --
-------- --------
(6,000) --
-------- --------
Provision for income taxes $ 5,094 $ 680
======== ========
The tax effects of temporary differences that give rise to deferred
tax assets are presented below:
1999 1998
-------- ---------
Net operating losses $ 13,000 $ 25,000
Valuation allowances (7,000) (25,000)
-------- ---------
$ 6,000 $ --
======== =========
F-19
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 5 - INCOME TAXES:
A reconciliation of the difference between the expected tax rate using
the statutory federal tax rate and the Company's effective tax rate is
as follows:
Years Ended December 31 1999 1998
----------------------- ---- ----
U.S. Federal income tax statutory rate (15.0)% --
State income tax, net of federal income tax benefit (25.8) 2.7%
----- ----
Effective tax rate (40.8)% 2.7%
===== ====
NOTE 6 - RELATED PARTY TRANSACTIONS:
(a) During December 1998, the Company initiated sales of product to a
distributor. Certain members of management of the company personally
agreed to provide financing and organizational support to the
distributor, although they own no equity in it. In exchange for the
financial support, the distributor agreed to provide experience, sales
representatives, contacts and a full-service operating distribution
business including a warehouse for, but not limited to, the Company's
product. The shareholders have not received any form of compensation
or other benefits for their loans and managerial assistance.
Management believes that all transactions between the Company and the
distributor are at arm's length. For the year ended December 31, 1999,
approximate sales to the distributor and accounts receivable were
$308,700 and $61,100, respectively. For the year ended December 31,
1998, approximate sales to the distributor and accounts receivable
were $43,500 and $40,600, respectively. At December 31, 1999,
financing provided to this distributor by members of management
aggregated approximately $160,000.
(b) During September 1999, the Company initiated sales of product to a
distributor which is owned by one of the Company's shareholders. For
the year ended December 31, 1999 approximate sales and promotion
expense passthroughs were $19,700 and $2,400, respectively. Accounts
receivable at December 31, 1999 of approximately $21,000 was paid in
January 2000.
(c) During the Company's 1998 private placement (See Note 7) certain
immediate family members of one officer and one director of the
Company purchased 300 units and 600 units for $1,500 and $3,000,
respectively. The amount paid in each transaction was the full
offering price of $5.00 per unit.
NOTE 7 - 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. Of these shares
5,940,000 were issued to two individuals in forgiveness of loans
extended to the Company aggregating $210,000. The Company also issued
160,000 shares to three directors for nominal consideration.
Private Placement Offering:
During 1998, the Company commenced selling common stock through a
private placement memorandum. The offering was 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, 2002. As of December 31, 1998, all 10,000 units had
been sold. Costs in excess of proceeds received aggregating $28,813
were reflected as a reduction of shareholders' equity at December 31,
1998.
F-20
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 7 - STOCKHOLDERS' EQUITY (continued):
Private Placement Offering (continued):
The common stock and warrants included in the units 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.
Subsequent Event:
On January 7, 2000, the Company filed a Form SB-2 registration
statement with the Securities and Exchange Commission to register the
950,000 shares of common stock issuable upon the exercise of the
Common Stock Purchase Warrants. A comment letter was received from the
Securities and Exchange Commission during February 2000. A response to
the comment letter has been prepared and will be submitted subsequent
to the completion of the Company's Form 10-KSB.
NOTE 8 - ECONOMIC DEPENDENCY:
For the year ended December 31, 1999 sales to two customers each
exceeded 10% of the Company's total sales. The approximate sales to
these customers were $308,700 and $152,000, respectively. The
corresponding accounts receivable from these customers were $61,100
and $15,700, respectively.
For the year ended December 31, 1998 sales to three customers each
exceeded 10% of the Company's total sales. The approximate sales to
these customers were $43,500, $157,300 and $53,600, respectively. The
corresponding accounts receivable from these customers were $40,600,
$32,200 and $0, respectively.
NOTE 9 - COMMITMENTS AND CONTINGENCIES:
Litigation:
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. Depositions have been conducted and a
notice of trial will be filed on or before May 1, 2000. Management
believes this suit will be resolved in favor of the Company.
F-21
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 9 - COMMITMENTS AND CONTINGENCIES (continued):
Consulting Agreement:
On March 19, 1998, the Company entered into a consulting agreement
with an individual to act as the Company's Chief Financial Officer. As
part of the consideration for these services, the Company would issue
20,000 shares of common stock, at a value of $1,600. The value of
8(cent) per share was determined based upon the estimated value placed
on each share of the Company's stock that was sold within each $5 unit
(consisting of 50 shares of stock and 95 warrants) of the 10,000 units
sold during 1998 through the private placement memorandum (see Note
7). To date, the shares of stock have not been issued, although the
accompanying financial statements reflect an accrual for compensation
expense in 1998.
F-22
<PAGE>
No dealer, salesperson or other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
or to buy only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
-----------------------
TABLE OF CONTENTS
Page
Prospectus Summary.................................................... 1
Risk Factors.......................................................... 4
Use of Proceeds....................................................... 9
Dividend Policy....................................................... 9
Capitalization........................................................ 10
Selected Financial Data............................................... 11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................................ 12
Business.............................................................. 15
Management ........................................................... 20
Certain Transactions ................................................. 22
Selling Security Holders.............................................. 23
Stock Ownership of Management and
Principal Stockholders.................................... 25
Description of Securities............................................. 26
Market for Common Equity and Related
Stockholder Matters ...................................... 29
Shares Eligible for Future Sale....................................... 29
Legal Matters......................................................... 30
Experts............................................................... 30
Available Information................................................. 30
Index to Financial Statements......................................... 31
950,000 Shares
Common Stock
ICY SPLASH FOOD &
BEVERAGE, INC.
-----------------
PROSPECTUS
-----------------
DATED _________, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of common stock being registered. All
amounts are estimates except for the registration fee:
Registration fee $ 250.80
Legal fees and expenses $50,000
Accounting fees and expenses $18,500
Blue Sky fees and expenses $ 4,500
Transfer agent and registrar fees
and expenses $ 2,400
Printing and engraving expenses $ 500
Miscellaneous $ 2,500
Total $78,650.80
Item 14. Indemnification of Directors and Officers
Our Certificate of Incorporation contains certain provisions permitted
under the New York Business Corporation Law (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 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
<PAGE>
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 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 no 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, 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 Commission, 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.
Item 15. Recent Sales of Unregistered Securities
During 1997, the Company issued 6,100,000 shares of common stock as
follows: Joseph Aslan, 2,970,000; Shlomo Aslan, 2,970,000; Sy Aslan, 100,000;
Frederick Mandelson, 30,000; and Felix Henckel, 30,000. The shares of common
stock owned by Joseph and Shlomo Aslan were issued in forgiveness of loans
extended to the Company in 1997 by such individuals in the amount of $210,000.
The shares owned by Sy Aslan were issued in consideration for services rendered
as a director of the Company, such services having nominal value. The shares
owned by Frederick Mandelson and Felix Henckel were issued in consideration for
services rendered as former directors of the Company, such services having
nominal value.
During the period from March 1998 to October 1998, we issued an aggregate
of 10,000 private placement units pursuant to Rule 504 under Regulation D of the
Securities Act. All 10,000 units were sold to a total of thirty investors. The
aggregate gross consideration received from the sale of the units was $50,000
cash. However, the Company incurred costs of $28,813 in excess of proceeds
received.
Each unit consists of 50 shares of common stock at $5.00 per unit, and 95
<PAGE>
redeemable Common Stock Purchase Warrants. Each 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
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
During the Private Placement, certain immediate family members of two
directors of the Company purchased 300 units and 600 units for $1,500 and
$3,000, respectively. The amount paid in each transaction was the full offering
price of $5.00 per unit. See "Selling Security Holders."
Item 16. Exhibits and Financial Statement Schedules
Number Description
------ -----------
3.1 Certificate of Incorporation(1)
3.2 Certificate of Amendment of Certificate of Incorporation(2)
3.3 By-laws(3)
4.1 Specimen Common Stock Certificate of Icy Splash
4.2 Specimen Common Stock Purchase Warrant Certificate of Icy
Splash
<PAGE>
5.1 Legal Opinion of Beckman, Millman & Sanders, LLP regarding the
legality of the securities being issued
10.1 Revised Financial Consulting Agreement between Icy Splash and
The Southern Companies, dated April 27, 1999(4)
10.2 Consulting Agreement between Icy Splash and Charles Tokarz,
dated March 19, 1998(5)
10.3 Contract of Sale for 494-504 Wortman Avenue, Brooklyn,
N.Y.(6)
21.1 List of Subsidiaries (the Company has no subsidiaries)
23.1 Consent of Lazar Levine & Felix, LLP
27.1 Financial Data Schedule for the three month period ended March 31,
2000.
27.2 Financial Data Schedule for the year ended December 31, 1999.
----------
(1) Such document is hereby incorporated herein by reference to Exhibit 3.1 of
the Company's registration statement on Form 10-SB dated May 21, 1999.
(2) Such document is hereby incorporated herein by reference to Exhibit 3.2 of
the Company's registration statement on Form 10-SB dated May 21, 1999.
(3) Such document is hereby incorporated herein by reference to Exhibit 3.3 of
the Company's registration statement on Form 10-SB dated May 21, 1999.
(4) Such document is hereby incorporated herein by reference to Exhibit 10.1 of
the Company's registration statement on Form 10-SB dated May 21, 1999.
(5) Such document is hereby incorporated herein by reference to Exhibit 10.2 of
the Company's registration statement on Form 10-SB dated May 21, 1999.
(6) Such document is hereby incorporated herein by reference to Exhibit 10.3 of
the Company's registration statement on Form 10-SB dated May 21, 1999.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to (i)
include any prospectus required by Section 10(a)(3) of the
Securities Act; (ii) reflect in the prospectus any facts or
events which, individually or together, represent a fundamental
change in the information in the registration statement; and
<PAGE>
(iii) include any additional or changed material information on
the plan of distribution;
(2) For determining any liability under the Securities Act, treat
information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant under
Rule 424(b)(1) or (4) or Rule 497(h) under the Securities Act as
part of this registration statement as of the time the Commission
declared it effective; and
(3) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus
as a new registration statement for the securities offered in the
registration statement; and that offering of the securities at
that time as the initial bona fide offering of those securities.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, therunto duly authorized, in the City of New York, State of New
York, on July 27, 2000.
ICY SPLASH FOOD & BEVERAGE, INC.
By: /s/ Joseph Aslan
--------------------
Joseph Aslan,
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form SB-2 has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Joseph Aslan President and Director July 27, 2000
------------------------
Joseph Aslan
/s/ Shlomo Aslan Vice President, Secretary July 27, 2000
------------------------ and Director
Shlomo Aslan
/s/ Charles Tokarz Chief Financial Officer, July 27, 2000
------------------------ Treasurer and Director
Charles Tokarz
/s/ Sy Alsan Director July 27, 2000
------------------------
Sy Alsan
