U.S. Securities and Exchange Commission
Washington, D.C. 20549
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Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
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Commission file number 0-26155
ICY SPLASH FOOD & BEVERAGE, INC.
(Exact name of small business issuer as specified in its charter)
New York 11-3329510
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
9-15 166th Street, Suite 5-B
Whitestone, NY 11357
(Address of principal executive offices)
(718) 746-3585
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes [X] No [_]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,600,000 shares of common
stock as of August 14, 2000.
Transitional Small Business Disclosure Format (check one)
Yes [_] No [X]
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) Balance Sheets as of June 30, 2000 (unaudited)
and December 31, 1999 ............................... 1
b) Statements of Operations for the three and six months
ended June 30, 2000 and 1999 (unaudited) ........... 2
c) Statements of Cash Flows for the six months
ended June 30, 2000 and 1999 (unaudited) ........... 3
d) Notes to Financial Statements (unaudited) ........... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ...................... 5-6
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS ............................................ 7
b) REPORTS ON FORM 8-K ................................. 7
SIGNATURES .............................................................. 7
EXHIBIT 11.1 ............................................................ 8
EXHIBIT 27............................................................... 9
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ICY SPLASH FOOD AND BEVERAGE, INC.
BALANCE SHEETS
- ASSETS -
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 4,189 $ 3,802
Accounts receivable, net of allowance for doubtful accounts of
$4,000 and $2,000 for June 30 and December 31, respectively 60,641 96,529
Notes receivable -- 1,485
Inventory 222,385 129,147
Deferred taxes 6,000 6,000
--------- ---------
TOTAL CURRENT ASSETS 293,215 236,963
--------- ---------
FIXED ASSETS:
Warehouse equipment 5,000 5,000
Office equipment 14,749 12,279
--------- ---------
19,749 17,279
Less: accumulated depreciation 9,933 8,033
--------- ---------
9,816 9,246
--------- ---------
$ 303,031 $ 246,209
========= =========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Notes payable $ 65,000 $ 65,000
Accounts payable 62,508 78,157
Accrued expenses and other current liabilities 19,647 21,279
Shareholders' loans 107,708 850
Income taxes payable 469 680
--------- ---------
TOTAL CURRENT LIABILITIES 255,332 165,966
--------- ---------
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 (133,488) (100,944)
--------- ---------
47,699 80,243
--------- ---------
$ 303,031 $ 246,209
========= =========
</TABLE>
See notes to financial statements.
1
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF OPERATIONS
(Unaduited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $ 170,865 $ 200,780 $ 297,368 $ 315,014
COST OF SALES 127,087 127,738 227,345 209,237
--------- --------- --------- ---------
GROSS PROFIT 43,778 73,042 70,023 105,777
--------- --------- --------- ---------
OPERATING EXPENSES:
Selling expenses 23,892 20,129 47,365 35,459
General and administrative expenses 23,453 25,537 53,000 43,852
--------- --------- --------- ---------
47,345 45,666 100,365 79,311
--------- --------- --------- ---------
(LOSS) INCOME FROM OPERATIONS (3,567) 27,376 (30,342) 26,466
OTHER EXPENSES:
Interest expense (783) (1,625) (1,862) (3,250)
--------- --------- --------- ---------
(LOSS) INCOME BEFORE TAXES (4,350) 25,751 (32,204) 23,216
Provision for income taxes 170 -- 340 680
--------- --------- --------- ---------
NET (LOSS) INCOME $ (4,520) $ 25,751 $ (32,544) $ 22,536
========= ========= ========= =========
EARNINGS (LOSS) PER SHARE:
Basic $ -- $ -- $ -- $ --
========= ========= ========= =========
Diluted $ -- $ -- $ -- $ --
========= ========= ========= =========
</TABLE>
See notes to financial statements.
2
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: June 30,
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (32,544) $ 22,536
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation 1,900 1,500
Provision for bad debts 2,000 8,445
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 33,888 (38,736)
Increase in inventories (93,238) (43,819)
Increase (decrease) in accounts payable (15,649) 4,968
Decrease in accrued expenses and other current liabilities (1,843) (5,110)
--------- ---------
Net cash used by operating activities (105,486) (50,216)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (2,470) (2,885)
Repayments of note receivable 1,485 21,281
--------- ---------
Net cash provided (used) in investing activities (985) 18,396
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt -- 65,000
Repayments of short-term debt -- (65,000)
Proceeds from shareholders loans 106,858 13,000
--------- ---------
Net cash provided by financing activities 106,858 13,000
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 387 (18,820)
Cash and cash equivalents, at beginning of year 3,802 20,314
--------- ---------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 4,189 $ 1,494
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash during the period for:
Income taxes paid $ 551 $ 680
Interest paid $ 1,534 $ --
</TABLE>
See notes to financial statements.
3
<PAGE>
ICY SPLASH FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30,2000
(UNAUDITED)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
In the opinion of management, the accompanying unaudited interim financial
statements of Icy Splash Food and Beverage, Inc. contain all adjustments
necessary to present fairly the Company's financial position as of June 30, 2000
and December 31, 1999 (audited) and the results of operations for the three and
six months ended June 30, 2000 and 1999 and cash flows for the six months ended
June 30, 2000 and 1999.
The results of operations for the three and six months ended June 30, 2000 and
1999 are not necessarily indicative of the results to be expected for the full
year.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements included in its Annual Report on Form 10-KSB for
the year ended December 31, 1999.
NOTE 2 - SHAREHOLDERS' LOANS:
At June 30, 2000 and December 31, 1999 the Company owed an aggregate of $107,708
and $850, respectively to one of its shareholders. The loan is non-interest
bearing and has no formal repayment terms.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the Company decreased 14.9% from $200,780 in the second quarter of
1999 to $170,865 in the second quarter of 2000 and decreased 5.6%, from $315,014
in the six months ended June 30, 1999 to $297,368 in the six months ended June
30, 2000. The decrease reflects the Company's lack of capital to fund an
increase in sales. The ongoing regulatory approval process to allow the Company
to raise equity by selling securities has taken longer than anticipated, and has
curtailed growth.
The gross profit margin decreased to 25.6% in the second quarter of 2000 from
36.4% in the second quarter of 1999 and decreased to 23.6% in the first six
months of 2000 from 33.6% in the first six months of 1999. The decrease in
profit margin was predominately caused by the disproportionately large
percentage of sales of other manufacturers' products during the first six months
of 2000 - $126,731 in 2000 versus $0 in 1999. There were two reasons:
(1)opportunities to establish relationships with other distributors and
manufacturers in accordance with the Company's long-term business plan and
(2)payment terms for purchase of other manufacturer's products more favorable
than the Company's co-packers' terms to produce its own products. Management
anticipates a product sales mix more heavily weighted towards the Company's own
products for the remainder of 2000 and, consequently, a more favorable gross
profit.
Selling expenses were $23,892 in the second quarter of 2000, compared with
$20,129 in the second quarter of 1999, 14.0% and 10.0% of sales, respectively.
Selling expenses were $47,365 in the first six months of 2000, compared with
$35,459 in the first six months of 1999, 15.9% and 11.3% of sales, respectively.
The increase in the dollar volume and percentage of selling expenses in 2000 is
due to the introduction of new products.
General and administrative expenses were $23,453 in the second quarter of 2000,
compared with $25,537 in the second quarter of 1999, 13.7% and 12.7% of sales,
respectively, and $53,000 in the first six months of 2000, compared with $43,852
in the first six months of 1999, 17.8% and 13.9% of sales, respectively. Both
the amount and percentage of expenses have increased for the year to date 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
$2,259 for the second quarter of 2000, compared with $0 for the second quarter
of 1999, 1.3% and 0% of sales, respectively, and $3,459 in the first six months
of 2000, compared with $1,079 in the first six months of 1999, 1.2 % and 0.3 %
of sales, respectively. The Company moved into a better equipped office in
January 2000. While the 1999 first six months rent expense was a one-time
expense for equipment rental, office rent will continue in 2000. Professional
fees were $10,191 in the second quarter of 2000, compared with $7,594 in the
second quarter of 1999, 6.0 % and 3.8 % of sales, respectively, and were $24,791
in the first six months of 2000, compared with $17,048 in the first six months
of 1999, 8.3 % and 5.4 % of sales, respectively. Insurance expenses were $4,776
in the second quarter of 2000, compared with $2,991 in the second quarter of
1999, 2.8 % and 1.5 % of sales, respectively, and were $7,754 in the first six
months of 2000, compared with $5,367 in the first six months of 1999, 2.6 % and
1.7 % of sales, respectively. Telephone expenses were $2,385 for the second
quarter of 2000, compared with $2,815 for the second quarter of 1999, 1.4 % and
1.4 % of sales, respectively, and were $5,381 in the first six months of 2000,
compared with $4,865 in the first six months of 1999, 1.8 % and 1.5 % of sales,
respectively. Travel and entertainment expenses were $0 in the second quarter of
2000, compared with $1,287 in the second quarter of 1999, 0 % and 0.6% of sales,
respectively, and were $1,971 in the first six months of 2000, compared with
$1,524 in the first six months of 1999, 0.7 % and 0.5% of sales, respectively.
Bad debt expense was $1,000 for the second quarter of 2000 versus $8,445 for the
second quarter of 1999, 0.6% and 4.2% of sales, respectively, and was $2,000 for
the first six months of 2000 versus $8,445 for the first six months of 1999,
0.7% and 2.7% of sales, respectively. Last year's expense was greater because
there was a bad debt allowance for a delinquent note receivable and this year's
estimated allowance is for accounts receivable only. The Company anticipates
continuing favorable bad debt expense as a percentage of sales for 2000 due to
the quality of its current distributors (customers).
5
<PAGE>
There was a loss from operations for the second quarter of 2000 of $3,567,
compared with a profit of $27,376 for the second quarter of 1999, with an
operating margin of (2.1%) for the second quarter of 2000 and 13.6% for the
second quarter of 1999. There was a loss from operations for the first six
months of 2000 of $30,342, compared with a profit of $26,466 for the first six
months of 1999, with an operating margin of (10.2%) for the first six months of
2000 and 8.4% for the first six months of 1999. Net income (loss) and net income
(loss) as a percent of sales for the second quarter of 2000 were ($4,520) and
(2.6%), compared to $25,751 and 12.8% for the second quarter of 1999. Net income
(loss) and net income (loss) as a percent of sales for the first six months of
2000 were ($32,544) and (10.9%), compared to $22,536 and 7.2% for the first six
months of 1999. The decrease in operating losses and net losses and increase in
gross profit percentage for the second quarter of 2000 compared to the first
quarter of 2000 was caused by lower sales volume of other manufacturer's
products - $37,226 in the second quarter versus $89,505 in the first quarter.
Interest expense decreased from $1,625 to $783 in the second quarter of 2000
versus the second quarter of 1999, and decreased from $3,250 to $1,862 in the
first six months of 2000 versus the first six months of 1999, because the
Company refinanced a $65,000 note on June 30, 1999 at a more favorable interest
rate.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased $33,114 from December 31, 1999 to June 30, 2000
predominately from the net loss in the first six months of 2000.
Net cash flow used by operating activities was $105,486 and $50,216 for the
first six months of 2000 and 1999, respectively, reflecting the least favorable
six months of the year (January through June) for selling soft drink beverages,
because of colder weather in the Company's market area. During the first six
months of 1999, $21,281 repayments of notes receivable were received, while only
$1,485 was received in the first six months of 2000.
The Company purchased $2,470 of fixed assets during the first six months of 2000
and $2,885 during the first six months of 1999.
During the first six months of 2000, the Company borrowed $106,858 from
shareholders and during the first six months of 1999 it borrowed $13,000 from
shareholders. During the first six months of 2000, the shareholder loan funds
were used predominately to fund a $93,238 increase in inventory, including
$30,180 increase in finished goods, in order to service additional customers for
the summer season.
OTHER
This report contains forward-looking statements and information that is based on
management's beliefs and assumptions, as well as information currently available
to management. When used in this document, the words "anticipate," "estimate,"
"expect," "intend" and similar expressions are intended to identify
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. Such statements are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should the underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated or expected.
6
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 11.1 - Computation of Earnings Per Share, is filed as an
exhibit to this report.
Exhibit 27 - Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K during
the three month period ended June 30, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
ICY SPLASH FOOD & BEVERAGE, INC.
August 11, 2000 By: /s/ Joseph Aslan
----------------------------
Joseph Aslan,
President
7
