NOTES TO FINANCIAL STATEMENTS
March 31, 2003
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 March 31,
2003 and December 31, 2002 (audited) and the results of operations for the three
months ended March 31, 2003 and 2002 and cash flows for the three months ended
March 31, 2003 and 2002.
The results of operations for the three months ended March 31, 2003 and
2002 are not necessarily indicative of the results to be expected for the full
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, 2002, which is incorporated herein by reference.
Certain notes included in Form 10-KSB have been condensed or omitted from this
report in accordance with the rules for Forms 10-Q and 10-QSB.
NOTE 2 - GOING CONCERN:
As shown in the accompanying financial statements, the Company has incurred
a net operating profit of $9,435 for the three month period ending March 31,
2003 and has an accumulated deficit of $796,709 as of March 31, 2003 as well as
negative working capital. The ability of the Company to continue as a going
concern is dependent on obtaining additional capital and financing and operating
at a profitable level. Management is actively pursuing additional capital and
has initiated new distribution agreements with established distributors of its
products. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
NOTE 3 - LOANS PAYABLE - SHAREHOLDER:
At March 31, 2003 and December 31, 2002 the Company owed an aggregate of
$91,213 and $59,297, respectively to one of its shareholders. The loan is
non-interest bearing and has no formal repayment terms.
NOTE 4 - RELATED PARTY TRANSACTIONS:
(a) The Company has transactions with one corporate entity owned by one of the
During September 1999, the Company initiated sales of product to the corporation
which is owned by one of the Company's shareholders. For the year ended December
31, 2002, approximate sales to the distributor and accounts receivable were
$34,420 and $0, respectively. There were no sales for the three months ended
March 31, 2003.
Since the third quarter of 2002, the Company has borrowed from the corporation
which is owned by one of the Company's shareholders. The loan outstanding is
$37,285 at March 31, 2003. This loan which is unsecured and non-interest bearing
is payable upon demand. Accordingly, it has been reflected as a current
liability on the Company's balance sheet.
During the third quarter of 2002, the Company issued 2,000,000 shares of common
stock to the corporation which is owned by one of the Company's shareholders.
The stock issuance is compensation for consulting, marketing, distribution and
product development assistance services rendered (see Note 5).
(b) During the third quarter of 2002, the Company issued 200,000 shares of
common stock to a related party for marketing and consulting services. (see
NOTE 5 - CAPITAL STOCK:
During the year ended December 31, 2001, the Company issued 265,500 shares of
common stock upon exercise of outstanding common stock purchase warrants. The
Company was to receive $235,375 on exercise of such warrants which represented
the exercise price of $1.00 per share less direct offering costs of $3,575 and
less $.10 per share which were required to be paid to Southern Financial
Services, Inc. ("Southern"), the Company's financial consultant and escrow
agent. To date, the Company received only $92,275 in connection with such
exercise and 78,050 shares have been recovered by a successor escrow agent. At
December 31, 2001 the difference between the amount due and the amount received
had been recorded as equity and a subscription receivable. As funds are received
from recoveries, subscriptions receivable will be reduced until all recoveries
have been made, at which time equity and subscriptions receivable will be
adjusted accordingly. As of December 31, 2002 it appears that recoveries will be
limited to the sale of shares held in escrow. During 2002, 25,000 of the shares
held in escrow were transferred to an internet information vendor to provide
information about the Company to investors. At December 31, 2002 the 53,050
shares remaining in escrow were written-down to $0.25 per share to reflect the
market value of the common stock at that time.
On February 19, 2002, the Company signed a nine month consulting agreement with
a financial services group to review and analyze the Company's formal and
informal financial, strategic and business plans, prepare and update a formal
business plan, along with the appropriate financial projections, and perform
other financial services requested by the Company. Compensation is 330,000
shares of the Company's common stock, to be paid as follows: 100,000 upon
execution of the agreement, 75,000 shares on March 15, 2002, 75,000 shares on
May 15, 2002 and 80,000 shares on July 15, 2002. In March 2002, the Company
issued 330,000 registered shares of common stock to this consultant as
compensation for services rendered and to be rendered. The shares were valued at
$0.30 per share. At March 31, 2003, with the agreement of the financial services
group, 80,000 shares of stock, recorded as $24,000 of unearned compensatory
stock, was still held by the Company for the total value of services still to be
In March 2002, the Company issued 690,000 shares of common stock, which were
granted in 2001, to the Company's officers and consultants as compensation for
services rendered. These shares were valued at prices varying from $0.08 to
$0.16 per share, which were the market prices at the time of grant.
During the third quarter of 2002, the Company issued 2,000,000 Section 144
restricted common shares of stock for services rendered to a corporation which
is owned by one of the Company's shareholders. The shares were valued at $.14
per share, the market price at the time of the grant.
Additionally, during the third quarter of 2002, 350,000 Section 144 restricted
shares of common stock were issued to an entity and 200,000 Section 144
restricted shares of common stock were issued to a related party, for marketing
and financial consulting services pursuant to verbal consulting agreements
entered into by the Company. The consulting agreements have no specific terms
and can be terminated by either party at any time. The total 350,000 shares
issued to the entity, which were valued at $.12 per share, are being held in
escrow by management until certain performance criteria are met.
During the third quarter of 2002, 1,000,000 shares of Section 144 restricted
common stock were issued to an individual for $60,000.