<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

      FOR ANNUAL AND TRANSITIONAL REPORTS UNDER SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT
         OF 1934 FOR FISCAL YEAR ENDED DECEMBER 31, 2002

[ ]      TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  SECTION  15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____________ TO ______________


                        COMMISSION FILE NUMBER: 000-31403

                          INTERNATIONAL SURFACING, INC.
--------------------------------------------------------------------------------
      (Exact Name of Small Business Registrant as Specified in its Charter)

                DELAWARE                           52-2257557
                --------                           ----------
      (State or other jurisdiction              (I.R.S. Employer
    of incorporation or organization)          Identification No.)

                        5 Erie Street, Garfield, NJ 07026
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (973) 253-6131
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

              Securities Registered Under Section 12(B) Of The Act:

                                      None

         Securities Registered Under Section 12(G) of the Exchange Act:

                                (Title Of Class)
                         Common Stock, Par Value $0.001

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required


<PAGE>

to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [  ]

Check  if no  disclosure  of  delinquent  filers  in  response  to  Item  405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [__]

The  Registrant's  Common  Stock is not traded on any market at the date of this
report.

On June 30, 2003,  the Registrant had  outstanding  33,000,000  shares of Common
Stock, $0.001 par value.

The Registrant's revenues for the year ended December 31, 2002 were $0.

DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 13



<PAGE>



                                TABLE OF CONTENTS
                            FORM 10-KSB ANNUAL REPORT
                       FISCAL YEAR ENDED DECEMBER 31, 2002

                          INTERNATIONAL SURFACING, INC.

    ITEM
                                                                            PAGE
    PART I

1.  Description of Business                                                    4
2.  Description of Properties 29
3.  Legal Proceedings                                                         30
4.  Submission of Matters to a Vote of Security Holders                       30

    PART II

5.  Market for Common Equity and Related Stockholder Matters                  30
6.  Management's Discussion and Analysis                                      36
7.  Financial Statements                                                      58
8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
    Financial Disclosures                                                     59

    PART III

9.  Directors, Executive Officers, Promoters and Control Persons              59
10. Executive Compensation                                                    61
11. Security Ownership of Certain Beneficial Owners and Management            63
12. Certain Relationships and Related Transactions                            66
13. Exhibits and Reports on Form 8-K                                          67
14. Controls and Procedures                                                   68

F-1 Financial Statements with Footnotes                                       69

    Signatures                                                                93

Exhibits

99.1 Certifications                                                           94
99.2 Certifications                                                           95
99.3 Certifications                                                           96
99.4 Certifications                                                           98



                                       3
<PAGE>




THIS  REPORT ON FORM  10-KSB  CONTAINS  FORWARD-LOOKING  STATEMENTS  WITHIN  THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND WITHIN THE
MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHICH
ARE   SUBJECT  TO  THE  "SAFE   HARBOR"   CREATED  BY  THOSE   SECTIONS.   THESE
FORWARD-LOOKING  STATEMENTS INCLUDE BUT ARE NOT LIMITED TO STATEMENTS CONCERNING
OUR BUSINESS OUTLOOK OR FUTURE ECONOMIC PERFORMANCE;  ANTICIPATED PROFITABILITY,
REVENUES,   EXPENSES  OR  OTHER  FINANCIAL  ITEMS;  AND  STATEMENTS   CONCERNING
ASSUMPTIONS MADE OR EXCEPTIONS AS TO ANY FUTURE EVENTS, CONDITIONS,  PERFORMANCE
OR OTHER MATTERS WHICH ARE "FORWARD-LOOKING  STATEMENTS" AS THAT TERM IS DEFINED
UNDER THE  FEDERAL  SECURITIES  LAWS.  ALL  STATEMENTS,  OTHER  THAN  HISTORICAL
FINANCIAL INFORMATION, MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. THE WORDS
"BELIEVES,"  "PLANS,"  "ANTICIPATES",  "EXPECTS," AND SIMILAR EXPRESSIONS HEREIN
ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.  FORWARD-LOOKING STATEMENTS
ARE SUBJECT TO RISKS,  UNCERTAINTIES AND OTHER FACTORS, WHICH WOULD CAUSE ACTUAL
RESULTS   TO  DIFFER   MATERIALLY   FROM  THOSE   STATED  IN  SUCH   STATEMENTS.
FORWARD-LOOKING  STATEMENTS INCLUDE,  BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN
"FACTORS THAT MAY AFFECT FUTURE RESULTS," AND ELSEWHERE IN THIS REPORT,  AND THE
RISKS DISCUSSED IN THE COMPANY'S OTHER SEC FILINGS.

PART 1

ITEM 1. - DESCRIPTION OF BUSINESS

GENERAL

         International  Surfacing,  Inc. ("ISI" or the "Company") was founded to
develop,  manufacture,  market and distribute unique rubber horseshoes,  such as
our StealthShoe(TM) Product, and related products and services. We recognized an
opportunity  to  develop a Product  that will take less of a toll on the legs of
horses as compared to conventional iron or aluminum shoes. We expect our Product
to be attractive  to horses of any type.  The  Company's  initial  market is the
horseracing industry; however, the Product can be used on any horse.

         After  two  years of  research  and  development  by its  founder,  Mr.
Serritella,  the Company has tested its new Product in actual racing conditions,
with favorable  results.  The Company is moving to increase its pool of research
subjects to study the strength and wear characteristics of its Product.  Through
its ongoing  research  and  development,  ISI expects to continue to improve its
Products and eventually  move into commercial  production.  To date, the Company
has given its prototypes of the StealthShoe(TM) to certain horse trainers in the
New York City  Metropolitan area in return for test data and reports from users.
The test  subjects  have been  trotters and pacers  trained and raced in the New
York City area. Currently,  twenty-eight horses are using the StealthShoe(TM) in
racing and training conditions.



                                       4
<PAGE>

         The Company's new horseshoe consists of two layers of material,  bonded
in a  proprietary  way. The shoe has an aluminum  substrate and an outer face of
tire-grade rubber. We believe that the rubber layer protects the horse's legs by
cushioning the impact of each step.

         Over the next  twelve  months,  ISI intends to  complete  research  and
testing and rollout its first  commercial  Product at  racetracks  and  training
stables in the eastern  United  States.  ISI intends to  continually  update and
refine its Products and services to increase customer satisfaction. Although ISI
intends to  continually  update and refine its products and services to increase
customer satisfaction,  ISI does not need additional research and development to
sell its existing Product. See, "Plan of Operations."

         There are two distinct markets for ISI's product. The first consists of
owners and trainers of professional racehorses, which is the market on which the
Company is now  focused.  In the near  future,  the Company  intends to market a
product to general horse owners and veterinarians as a therapeutic shoe for lame
horses.  After  the  StealthShoe(TM)  becomes  established  in  the  horseracing
industry, we intend to broaden our market to include shoes for horses used in an
urban setting,  such as police horses and carriage horses, shoes for therapeutic
purposes for lame horses and shoes for the general horse owner market.

         ISI has two full time employees.

         There are  numerous  factors  that may have an impact on the  Company's
business, including, but not limited to, the following.

RISKS RELATED TO ISI'S BUSINESS

         Development  Stage  Company;  Limited  Operating  History.  ISI  is  an
early-stage  company  and  ISI  expects  to  encounter  risks  and  difficulties
frequently  faced by  early-stage  companies in new markets.  The Company is not
aware of any competitor in the horseshoe industry using similar technology,  but
there are numerous  companies that make and sell horseshoes of various types and
compositions.  ISI's founders have been developing their horseshoe product since
mid-2000.  Currently,  twenty-eight (28) horses are using the StealthShoe(TM) in
training  and  racing  conditions.  ISI's  limited  operating  history  makes an
evaluation of ISI's future  prospects  very  difficult.  ISI will  encounter the
risks and  difficulties  frequently  encountered by early stage companies in new
and rapidly evolving markets. ISI cannot be certain that ISI's business strategy
will be successful or that ISI will successfully address these risks.

         ISI  Anticipates  Future  Losses and  Negative  Cash Flow.  ISI expects
operating  losses and negative cash flow to continue for the next twelve months.
ISI anticipates its losses will continue because ISI expects to incur additional
costs and expenses related to:

         -        brand development, marketing and other promotional activities
         -        expansion of ISI's operations
         -        continued development of ISI's Products
         -        implementation  of systems to  process  customers'  orders and
                  payments
         -        creation of a computer network



                                       5
<PAGE>

         -        expansion of ISI's Product manufacturing, and
         -        development of relationships with strategic business partners.

         As of December  31, 2002,  ISI had an  accumulated  deficit  during the
development  stage of  ($93,307).  ISI  incurred  net losses of  $93,307  and no
revenues in the fiscal year ended  December  31, 2002.  ISI's  ability to become
profitable  depends  on ISI's  ability  to  generate  and  sustain  sales  while
maintaining  reasonable expense levels. If ISI does achieve  profitability,  ISI
cannot be certain that ISI would be able to sustain or increase profitability on
a annual or annual basis in the future. See, "Plan of Operations."

         ISI's Limited  Operating  History Makes Future  Forecasting  Difficult.
Because of ISI's limited history as a development stage company with no revenues
from  operations,  ISI  finds it  difficult  to  forecast  its  sales  and costs
accurately.  ISI has limited meaningful  historical financial data upon which to
base planned  operating  expenses,  since it has been in the  development  stage
without sales since  inception.  We base ISI's current and future expense levels
on ISI's operating plans and estimates of future net sales.  Sales and operating
results are difficult to forecast  because they  generally  depend on the volume
and  timing of the orders ISI may  receive.  Consequently,  ISI may be unable to
adjust  ISI's  spending  in a timely  manner to  compensate  for any  unexpected
revenue  shortfall.  This  inability  could  cause  ISI's net  losses in a given
quarter to be greater than expected.

         ISI's  Operating  Results are Expected to be Volatile and  Difficult to
Predict.  If ISI Fails to Meet the  Expectations  of Public Market  Analysts and
Investors,  the Market Price of ISI's  Common Stock May Decrease  Significantly.
ISI's annual and quarterly operating results may fluctuate  significantly in the
future due to a variety of factors,  many of which are outside of ISI's control,
including,  among other things, the demand for ISI's products,  unpredictability
of consumer trends and technology  changes.  Because ISI's operating results are
expected  to  be  volatile  and   difficult  to  predict,   ISI  believes   that
quarter-to-quarter  comparisons  of  ISI's  operating  results  are  not a  good
indication of ISI's future performance. It is likely that in some future quarter
ISI's operating  results may fall below the expectations of securities  analysts
and investors.  In this event,  the trading price of ISI's Common Stock may fall
significantly.  Factors  that may harm ISI's  business or cause ISI's  operating
results to fluctuate include the following:

         -        ISI's inability to obtain customers at reasonable cost;
         -        decreases in the funds  available  for marketing and promoting
                  ISI's services;
         -        ISI's inability to manage rapid expansion of its services;
         -        the failure to develop  strategic  marketing and manufacturing
                  relationships;
         -        increases in the cost of advertising;
         -        the  amount  and  timing  of   operating   costs  and  capital
                  expenditures relating to expansion of ISI's operations.

         A number of factors  will cause ISI's  gross  margins to  fluctuate  in
future periods,  including timing of service area expansion, the mix of services
provided by ISI and the level of discount or introductory pricing. Any change in
one or more of these  factors  could  harm ISI's  gross  margins  and  operating
results in future periods.



                                       6
<PAGE>

         ISI's  Net  Sales are  Dependent  Upon  ISI's  Ability  To Offer  ISI's
Customers  Dependable Quality Products at Competitive Prices. If ISI is not able
to offer ISI's customers  dependable Products at competitive  prices,  ISI's net
sales and results of operations  will be harmed.  ISI's success depends on ISI's
ability to provide dependable Products to its customers at competitive prices.

         To Manage ISI's  Growth and  Expansion,  ISI Needs To  Implement  ISI's
Internal  Systems,   Procedures  and  Controls.  If  ISI  Is  Unable  To  Do  So
Successfully,  ISI's Business Would Be Seriously Harmed.  Once ISI's Products go
into  commercial  production  (which we cannot  assure),  if its  Products  gain
acceptance,  ISI will shift its main  focus from  research  and  development  to
manufacturing,  sales and  marketing.  This  shift  would  entail a  significant
expansion  in  ISI's  operations.  ISI's  growth  in  operations  will  place  a
significant strain on ISI's management,  information  systems and resources.  In
order to manage this growth effectively,  ISI needs to continue to improve ISI's
financial and managerial  controls and reporting  systems and procedures.  ISI's
failure to  successfully  implement,  improve and  integrate  these  systems and
procedures would harm ISI's results of operations.

         ISI must  Establish  Reliable  Manufacturing  Facilities or Third-Party
Manufacturing  Relationships.  Currently, ISI rents workshop space and makes its
prototype  StealthShoe(TM) by hand, using small scale stamping and manufacturing
equipment. If ISI's StealthShoe(TM) and other Products gain customer acceptance,
ISI must either: buy or lease larger-scale manufacturing facilities; or have its
Products made by a  third-party  manufacturer.  The Company has had  discussions
with several  third-party  manufacturers,  but ISI has not reached any agreement
with any party to make its Products.  We believe that, at least  initially,  the
Company must secure a  third-party  manufacturing  partner.  As part of any such
relationship,  ISI may  grant an  equity  interest  in ISI to its  manufacturing
partner, which would dilute the interests of the holders of Common Stock.

         ISI May Not Be Able To Compete  Successfully Against Current and Future
Competitors.  Existing  horseshoes  of rubber,  plastic or similar  construction
constitute a very small part of the overall  market for  horseshoes  and are not
designed for racing.  If ISI's Products gain customer  acceptance,  ISI may face
competition  from other horseshoe  manufacturers.  Such competition is likely to
result in price reductions,  reduced gross margins and loss of market share, any
of which could  seriously harm ISI's future net sales and results of operations,
if any.  Many of ISI's  competitors  have  longer  operating  histories,  larger
customer bases,  greater brand recognition and significantly  greater financial,
marketing  and other  resources  than does ISI.  Many of these  competitors  can
devote substantially more resources to marketing and promotion than can ISI.

         Intellectual  Property  Claims  Against  ISI Could Be Costly  and Could
Result In the Loss Of Significant Rights.  Other parties may assert infringement
or unfair  competition  claims  against ISI. ISI cannot  predict  whether  third
parties will assert  claims of  infringement  against ISI, or whether any future
assertions or prosecutions will harm ISI's business.  If ISI is forced to defend
against  any  such  claims,  whether  they  are  with or  without  merit  or are
determined  in ISI's favor,  then ISI may face costly  litigation,  diversion of
technical and management personnel,  or product shipment delays. Because of such
a  dispute,  ISI may have to  develop  non-infringing  technology  or enter into
royalty or  licensing  agreements.  Such  royalty or  licensing  agreements,  if
required,  may be unavailable on terms acceptable to ISI, or at all. If there is
a  successful  claim of product  infringement  against  ISI and ISI is unable to
develop non-infringing technology or license the infringed or similar technology
on a timely basis, it could harm ISI's business.



                                       7
<PAGE>

         If the  Protection  of ISI's  Technology,  Trademarks  and  Proprietary
Rights Is  Inadequate,  ISI's Business Will Be Seriously  Harmed.  The steps ISI
takes to protect ISI's proprietary  rights may be inadequate.  ISI regards ISI's
copyrights,  service marks,  trademarks,  trade dress, trade secrets and similar
intellectual property as critical to ISI's success. In addition,  ISI intends to
file for  patent  protection  for its  proprietary  technology.  ISI can give no
assurance  that  any  such  patent  will  be  granted  for  its  StealthShoe(TM)
technology.  ISI relies on trademark and copyright law, trade secret  protection
and  confidentiality  or license  agreements  with ISI's  employees,  customers,
partners and others to protect ISI's proprietary  rights.  ISI is in the process
of filing for trademark  protection  for  "StealthShoe"(TM)  and related  marks.
Effective patent, trademark, service mark, copyright and trade secret protection
may not be available in every country in which ISI will sell ISI's Products.

         The Loss of the  Services  of One Or More of ISI's  Key  Personnel,  or
ISI's Failure To Attract, Assimilate and Retain Other Highly Qualified Personnel
in the Future Would Seriously Harm ISI's  Business.  The loss of the services of
one or more of ISI's key personnel  could  seriously  harm ISI's  business.  ISI
depends on the continued services and performance of ISI's senior management and
other key personnel,  particularly Samuel Serritella,  ISI's President and Chief
Executive Officer and the inventor of ISI's proprietary technology. All of ISI's
officers and key employees are bound by employment agreements. ISI does not have
"key person" life insurance policies covering any of ISI's employees.

         Existing Stockholders Will Be Able to Exercise Significant Control Over
ISI. Executive officers,  directors and entities affiliated with them, if acting
together,  would  be able  to  significantly  influence  all  matters  requiring
approval by ISI's  stockholders,  including  the election of  directors  and the
approval  of  mergers  or  other  business   combination   transactions.   These
stockholders,  taken  together,  beneficially  own  approximately  54% of  ISI's
outstanding  Common  Stock  and can  elect  all  directors  and pass any  action
requiring  stockholder  approval.  See "Security Ownership of Certain Beneficial
Owners and Management."

         It May Be  Difficult  For A Third Party To Acquire ISI.  Provisions  of
ISI's Certificate of Incorporation,  ISI's Bylaws and Delaware law could make it
more  difficult  for a third  party to  acquire  ISI,  even if doing so would be
beneficial to ISI's stockholders. See "Description of Securities."

RISKS RELATED TO SECURITIES MARKETS

         Volatility  of  stock  prices.  The  stock  market  from  time  to time
experiences  significant  price  and  volume  fluctuations,  some of  which  are
unrelated to the operating performance of particular companies. In the event the
Common Stock is listed on a stock exchange or an automated  quotation system, we
believe  that a number of factors  could cause the price of our Common  Stock to
fluctuate, perhaps substantially. These factors include, among others:



                                       8
<PAGE>

         o        Announcements  of  financial  results  and other  developments
                  relating to our business;

         o        Changes in the general state of the economy; and

         o        Changes in market analyst  estimates and  recommendations  for
                  our Common Stock.

         ISI May Be Unable to Meet ISI's Future Capital Requirements. ISI cannot
be certain that additional financing will be available to ISI on favorable terms
when required, or at all. If ISI raises additional funds through the issuance of
equity,  equity-related  or debt  securities,  such  securities may have rights,
preferences  or  privileges  senior to those of the rights of ISI's Common Stock
and ISI's stockholders may experience additional dilution.  ISI requires working
capital to fund ISI's  business.  Since  ISI's  inception,  ISI has  experienced
negative  cash  flow from  operations  and  expects  to  experience  significant
negative cash flow from  operations for the  foreseeable  future.  ISI currently
anticipates  that ISI's  available  funds will not be  sufficient  to meet ISI's
anticipated needs for working capital and capital  expenditures through the next
6 months unless all outstanding  Options are exercised and ISI sells  additional
Common Stock or other securities.  ISI expects to need to raise additional funds
to remain in business and promote its Products.

         ISI May Be Unable To Continue Operations If Our Financial  Difficulties
Preclude ISI From  Funding Our  Operations.  ISI incurred net losses  during the
year ended December 31, 2002.  ISI's execution of its business plan depends upon
its ability to resolve its liquidity problems, principally by obtaining capital,
beginning commercial sales of its Products and generating sufficient revenues to
become profitable. See, "Plan of Operations."

         ISI's  Common  Stock  Price  May Be  Volatile,  Which  Could  Result in
Substantial  Losses For  Individual  Stockholders.  If and when the Common Stock
begins to trade on an  exchange or an  automated  quotation  system,  the market
price for the Common  Stock is likely to be highly  volatile and subject to wide
fluctuations in response to factors  including the following,  some of which are
beyond ISI's control:

         -        actual or anticipated  variations in ISI's quarterly operating
                  results;
         -        announcements  of new  products  or  services  by ISI or ISI's
                  competitors;
         -        changes in financial estimates by securities analysts;
         -        announcements  by  ISI or  ISI's  competitors  of  significant
                  acquisitions,   strategic  partnerships,   joint  ventures  or
                  capital commitments;
         -        additions or departures of key personnel;
         -        release  of lock-up or other  transfer  restrictions  on ISI's
                  outstanding  shares  of  Common  Stock or sales of  additional
                  shares of Common Stock by the Company; and
         -        potential litigation.

         If ISI's Common  Stock Price Is  Volatile,  ISI Could Face a Securities
Class Action Lawsuit. In the past, following periods of volatility in the market
price of their stock,  many companies have been the subjects of securities class
action  litigation.  If disgruntled  stockholders



                                       9
<PAGE>

sued ISI in a securities class action,  it could result in substantial costs and
a diversion of  management's  attention and resources and would harm ISI's stock
price.

         Substantial  Sales of ISI's  Common Stock Could Cause ISI's Stock Price
To Fall. If ISI's stockholders sell substantial amounts of ISI's Common Stock in
the public market, the market price of ISI's Common Stock could fall. Such sales
also  might  make it more  difficult  for ISI to sell  equity or  equity-related
securities in the future at a time and price that ISI deems appropriate.

         Reporting  Requirements May Delay or Preclude Acquisition.  Sections 13
and 15(d) of the  Exchange  Act  require  companies  subject  thereto to provide
certain   information  about  significant   acquisitions,   including  certified
financial  statements  for the  company  acquired,  covering  one or two  years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target  entities  to prepare  such  statements  may
significantly  delay  or  essentially  preclude  consummation  of  an  otherwise
desirable  acquisition  by ISI.  Acquisition  prospects  that do not have or are
unable to obtain the required  audited  statements  may not be  appropriate  for
acquisition  so long  as the  reporting  requirements  of the  Exchange  Act are
applicable.

Issuance of Future Shares May Dilute  Investors Share Value.  Our Certificate of
Incorporation  authorizes the issuance of 50,000,000 shares of common stock. The
future issuance of all or part of the remaining  authorized  common or preferred
stock may result in  substantial  dilution in the  percentage  of the  Company's
common stock held by the its then existing  shareholders.  Moreover,  any common
stock  issued  in the  future  may be valued on an  arbitrary  basis by us.  The
issuance of our shares for future  services or  acquisitions  or other corporate
actions  may have the  effect  of  diluting  the  value  of the  shares  held by
investors, and might have an adverse effect on any trading market for our common
stock.

Penny Stock Regulation. When and if the Company's Common Stock becomes traded on
an established  securities  exchange of automated  quotation system,  our common
stock may be deemed to be a penny  stock.  Penny  stocks  generally  are  equity
securities  with a price of less  than  $5.00 per share  other  than  securities
registered  on certain  national  securities  exchanges  or quoted on the NASDAQ
Stock Market, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system.

Our  securities  may be subject to "penny  stock  rules" that impose  additional
sales  practice  requirements  on  broker-dealers  who sell such  securities  to
persons other than  established  customers and accredited  investors  (generally
those with assets in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with their spouse).  For transactions  covered by these rules,
the broker-dealer must make a special suitability determination for the purchase
of such  securities  and have received the  purchaser's  written  consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the "penny stock rules" require the delivery,  prior
to the  transaction,  of a  disclosure  schedule  prescribed  by the  Commission
relating to the penny stock market.

The  broker-dealer  also  must  disclose  the  commissions  payable  to both the
broker-dealer and the registered  representative  and current quotations for the
securities.  Finally,  monthly  statements must be sent disclosing  recent price
information on the limited market in penny stocks.


                                       10
<PAGE>

Consequently, the "penny stock rules" may restrict the ability of broker-dealers
to sell our securities. The foregoing required penny stock restrictions will not
apply to our securities if such  securities  maintain a market price of $5.00 or
greater. Considering our stock currently has a bid price of 1.2 cents, there can
be no  assurance  that the price of our  securities  will ever reach or maintain
such a level.


REPORTS TO SECURITY HOLDERS

The  public  may read and copy any  materials  filed  with the SEC at the  SEC's
Public  Reference Room at 450 Fifth Street,  NW,  Washington,  D.C.  20549.  The
public may also obtain information on the operation of the Public Reference Room
by calling the SEC at 1- 800-SEC-0330.

The SEC maintains and Internet site that contains reports, proxy and information
statements,  and other information  regarding  issuers that file  electronically
with the SEC. This information,  once we complete our filing,  will be available
at http://www.sec.gov.

ITEM 2.  DESCRIPTION OF PROPERTIES

         ISI operates one facility at 5 Erie Street,  Garfield,  NJ 07026, which
is used as its executive offices and as a prototype manufacturing plant.


ITEM 3.  LEGAL PROCEEDINGS

         As of the  date  hereof,  the  Company  is  not a  party  to any  legal
proceedings, and none are known to be contemplated against the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were  submitted to a vote of security  holders during the fiscal year
ended December 31, 2002.

PART 2

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

The Company's Common Stock is not quoted or traded on any securities exchange or
automated   electronic   securities  trading  system.   There  is  currently  no
established  market for such shares; and there can be no assurance that any such
market will ever develop or be maintained. Any market price for shares of Common
Stock of the Company is likely to be very volatile,  and numerous factors beyond
the control of the Company may have a significant effect. In addition,  the over
the  counter  stock  markets  generally  have   experienced,   and  continue  to
experience, extreme price and volume fluctuations that have often been unrelated
to the operating performance of companies



                                       11
<PAGE>

listed on such exchanges.  These broad market  fluctuations,  as well as general
economic and political conditions,  may adversely affect the market price of the
Company's  common  stock in any market that may  develop.  Sales of  "restricted
securities"  under Rule 144 may also have an adverse  effect on any market  that
may develop. See the caption "Sales of Unregistered Securities."

We have never declared or paid cash dividends on our Common Stock.  We currently
intend to  retain  cash  earnings,  if any,  to  support  expansion,  and do not
anticipate paying any cash dividends for the foreseeable future.  Should we ever
produce  sufficient  earnings from  operations,  our Board of  Directors,  after
taking into account our earnings, capital requirements,  financial condition and
other factors,  has the  discretion to declare and distribute  cash dividends to
our stockholders.

ITEM 6.  -  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The matters discussed in this report contain  forward-looking  statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and within
the meaning of Section 21E of the  Securities  Exchange Act of 1934, as amended,
which  are  subject  to the  "safe  harbor"  created  by those  sections.  These
forward-looking  statements include but are not limited to statements concerning
our business outlook or future economic performance;  anticipated profitability,
revenues,   expenses  or  other  financial  items;  and  statements   concerning
assumptions made or exceptions as to any future events, conditions,  performance
or other matters which are "forward-looking  statements" as that term is defined
under the  Federal  Securities  Laws.  All  statements,  other  than  historical
financial information, may be deemed to be forward-looking statements. The words
"believes,"  "plans,"  "anticipates",  "expects," and similar expressions herein
are intended to identify forward-looking statements.  Forward-looking statements
are subject to risks,  uncertainties and other factors, which would cause actual
results   to  differ   materially   from  those   stated  in  such   statements.
Forward-looking  statements include,  but are not limited to, those discussed in
"Factors That May Affect Future Results," and elsewhere in this report,  and the
risks discussed in the Company's other SEC filings.

Critical Accounting Policies

The  Company  has  defined  a  critical  accounting  policy  as one that is both
important to the portrayal of the Company's  financial  condition and results of
operations  and  requires  the  management  of the  Company  to make  difficult,
subjective or complex  judgments.  Estimates and assumptions about future events
and their  effects  cannot be perceived  with  certainty.  The Company bases its
estimates on historical  experience  and on various other  assumptions  that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments.

These  estimates may change as new events occur, as more experience is acquired,
as additional information is obtained and as the Company's operating environment
changes.  We have  identified  the  policies  below as critical to our  business
operations and the understanding of our Plan of Operations.

In the  ordinary  course of  business,  we have made a number of  estimates  and
assumptions  relating to the  reporting of results of  operations  and financial


                                       12
<PAGE>

condition in the  preparation  of our financial  statements  in conformity  with
generally   accepted   accounting   principles.   Actual  results  could  differ
significantly  from those estimates under different  assumptions and conditions.
We believe that the following  discussion addresses our most critical accounting
policies,  which are  those  that are most  important  to the  portrayal  of our
financial  condition and results of operations  and require our most  difficult,
subjective,  and  complex  judgments,  often  as a  result  of the  need to make
estimates about the effect of matters that are inherently uncertain.

Going Concern Uncertainties

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going  concern.  However,  the  Company has  experienced  operating
losses  and  negative  cash  flows  since  inception.  The  Company's  continued
existence is dependent upon its ability to generate  operating  revenues  and/or
obtain additional equity or debt financing.


                               PLAN OF OPERATIONS

         Overview

         ISI was founded to develop,  manufacture,  market and distribute unique
rubber horseshoes and related services.  We recognized an opportunity to develop
a product  that will  take less of a toll on the legs of horses as  compared  to
conventional  iron or aluminum  shoes. We expect our Product to be attractive to
horses of any type. The Company's  initial market is the  horseracing  industry;
however, the Product can be used on any horse. After the StealthShoe(TM) becomes
established  in the  horseracing  industry,  we intend to broaden  our market to
include  shoes for horses used in an urban  setting,  such as police  horses and
carriage  horses,  shoes for therapeutic  purposes for lame horses and shoes for
the general horse owner market.

         After two years of research  and  development  by ISI's  founders,  the
Company has tested its StealthShoe(TM) Product in actual racing conditions, with
favorable  results.  The  Company  is moving to  increase  its pool of  research
subjects to study the strength and wear characteristics of its Product.  Through
its ongoing  research  and  development,  ISI expects to continue to improve its
Products and eventually  move into commercial  production.  To date, the Company
has  given  its  Product  to  certain  horse  trainers  in  the  New  York  City
Metropolitan  area in return  for test data and  reports  from  users.  The test
subjects  have been  trotters and pacers  trained and raced in the New York City
area.  Currently,  twenty-eight horses are using the StealthShoe(TM) in training
and racing conditions.

         The Company's  Product consists of two layers of material,  bonded in a
proprietary way. The StealthShoe(TM) has an aluminum substrate and an outer face
of tire-grade rubber. We believe that the rubber layer protects the horse's legs
by cushioning the impact of each step.

         Over the next  twelve  months,  ISI intends to  complete  research  and
testing and rollout its first  commercial  Product at  racetracks in the eastern
United  States.  ISI intends to  continually  update and refine its Products and
services to increase customer satisfaction.



                                       13
<PAGE>

         Liquidity and Capital Resources

         On the date of this Report,  ISI has cash  resources  of  approximately
$2,560,  with  currently  due  expenses  of  $119,393,  including  normal  trade
payables.  Of these  expenses,  approximately  $118,000  consists of accrued but
unpaid salaries that will be converted to shares of Common Stock as part of this
Offering. Based on ISI's existing expenses, ISI will need to raise approximately
$450,000 in new capital to fund six months of  operations  if ISI  generated  no
revenues from operations.

         In the next six  months,  however,  ISI plans to expand its  operations
greatly.  ISI may need to hire additional  administrative  and customer  service
personnel  as part of this  expansion.  To the extent ISI  receives net proceeds
from the  exercise  of Options  and the sales of its debt or equity  securities,
this will increase the Company's working capital.

         ISI has  significant  capital needs,  which to date ISI has met through
private  sales of its debt and  loans.  ISI will  continue  to need  substantial
infusions  of  capital,  which it expects to  continue  to fund  primarily  from
private sales of its equity and loans,  or by a public offering of its equity or
debt securities.


INCOME TAXES

There is no current or deferred  tax expense for the period from January 1, 2002
to December 31, 2002 due to net losses from operations by the Company.

NET LOSS

We have incurred net losses from  operations  since our inception.  The loss for
the first year of operations was approximately $93,400. The net loss consists of
working capital,  general and administrative  expenses and research expenses. We
anticipate  that these  expenses will continue to increase in 2003, as we engage
more  officers,  directors  and  employees.  To the extent that we are unable to
secure  additional  external  financing,   and/or  generate  cash  revenue  from
operations,  our results  and  ability to continue as an ongoing  concern may be
materially adversely affected.

Our primary  source of capital  since  inception has been the sale of promissory
notes to investors and cash invested by our principal stockholders.

CAPITAL EXPENDITURES

We require funding  primarily for computer  hardware and software,  research and
development,  prototypes,  furniture, fixtures and equipment and general working
capital needs.  Substantially all of our capital expenditures have been paid for
by our principal stockholders or the sale of convertible notes.



                                       14
<PAGE>

MATERIAL COMMITMENTS FOR CAPITAL EXPENDITURES

We have no material commitments budgeted for 2003.

ITEM 7.  FINANCIAL STATEMENTS

We are filing the following reports, financial statements and notes to financial
statements  with this Annual Report.  These reports may be found  following Part
III of this Annual Report.

Audited Financial Statements for the Year Ending December 31, 2002, with related
report of auditor and notes to financial statements.


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLCOSURES

None

PART 3

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT.

The directors and executive officers of ISI are as follows:

<TABLE>
<CAPTION>
                                            Director or
                                            Officer
Name and Address (1)                Age     Since             Position(s)
----------------                    ---     -----             -----------
<S>                                 <C>     <C>               <C>
Samuel M. Serritella                58      2002              President, Chief Executive Officer,
                                                              Chairman of the Board

Andrew Aboyoun                      39      2002              Secretary

Gary Kouletas                       27      2002              Vice President

Louis Paulucci                      39      2002              Vice President

Michael Luterzo                     43      2002              Director, member of the Compensation
243 Longworth Avenue                                          Committee and the Audit Committee
Hasbrouck Heights, NJ 07604

Russell Frantz                      61      2002              Director, member of the Compensation
256 Ross Road                                                 Committee
Wallington, NJ 07057

Richard Ciarletta                   38      2002              Director, member of the Audit
26 Kelsie Court                                               Committee
Matawan, NJ 07747

Thomas R. Miller                    65      2002              Director
405 East Oakview Drive
Waynesburg, Pa 15370
</TABLE>




                                       15
<PAGE>

(1) Unless  otherwise  noted,  address is c/o ISI, 5 Erie Street,  Garfield,  NJ
07026

Samuel  Serritella-President,  Chief Executive Officer and Chairman of the Board
of  Directors.  Mr.  Serritella  was  appointed  President and a director of the
Company in November 2002.  Before his  involvement in the Company,  and for more
than the past five years,  Mr.  Serritella  has been  self-employed  in the tire
recycling business.

Andrew  Aboyoun-Secretary.  From 1996 until his  retirement in January 2003, Mr.
Aboyoun was a police officer for the Police  Department of Passaic,  New Jersey.
Mr. Aboyoun graduated from Montclair State College in Montclair, New Jersey with
a degree  in  Accounting  in 1986 and was a  certified  public  accountant.  Mr.
Aboyoun is also a Life Member of the Passaic Policeman's Benevolent Association,
Local Number 14, and was recently elected  Executive  Secretary.  Mr. Aboyoun is
also Recording Secretary for the Policeman's Benevolent Association of the State
of New Jersey

Gary Kouletas-Vice  President.  Mr. Kouletas is a Vice President of the Company.
Before joining the Company in 2002, Mr. Kouletas has owned and operated a number
of  businesses.  Since 1996,  Mr.  Kouletas  has owned and  operated a number of
residential real estate projects in northern New Jersey.  Mr. Kouletas  attended
William  Paterson  College and Montclair State  University,  both located in New
Jersey.

Louis  Paulucci-Vice  President.  Mr. Paulucci has been involved in the training
and  racing of  standard  bred  racehorses  for  twenty  years and has owned and
operated Louis Paulucci Stables since 1983. As a driver,  Mr. Paulucci was named
the Rookie of the Year at Pocono Downs  Raceway in 1986. He has been a member of
the United States Trotting Association since 1983. In addition to his racing and
training  experience,  Mr.  Paulucci  also  brings to the Company  expertise  in
computer aided  design-computer aided manufacturing  ("Cad-Cam"),  creating dies
used in manufacturing the StealthShoe(TM).

Michael  Luterzo-Director,  Member of the  Compensation  Committee and the Audit
Committee.  Mr. Luterzo has over thirty years of experience in metal fabrication
and  manufacturing.  Since 1990,  Mr. Luterzo has been employed at Tappan Wire &
Cable,  Inc.,  where he currently  holds the position of Vice President of Sales
and Marketing.

Russell Frantz-Director,  Member of the Compensation Committee.  Since 1977, Mr.
Frantz has been involved in the  horseracing  industry since 1977.  From 1977 to
1993, Mr. Frantz was a licensed  trainer-driver  in the harness racing industry.
From 1993 until the present, Mr. Frantz has been an Assistant Starter and Acting
Patrol Judge for the New Jersey Sports Authority and holds an Associate  Judge's
license from the United States Trotting Association.



                                       16
<PAGE>

Richard  Ciarletta-Director,  Member of the Audit  Committee.  Mr. Ciarletta has
been a director of the Company since  November  2002.  Since August,  1994,  Mr.
Ciarletta has been a vice president the Equity Division of Credit Suisse,  First
Boston  in  New  York,  where  he  is  responsible  for  supervising  registered
representatives  and sales  assistants  and in  monitoring  activity in investor
accounts.

Thomas  Miller-Director.  Mr.  Miller  has had a  varied  career  in the  mining
industry as a developer of new mining methods and inventor of mining  machinery.
Mr.  Miller has been  granted  eight U.S.  patents and five  foreign  patents on
drilling  and mining  devices.  Since 1998,  Mr.  Miller has owned and  operated
Interstate Environmental Technologies,  Inc., a tire recycling business of which
he is president. He is an internationally recognized expert in mining issues and
has acted as a consultant to the United Nations and several foreign governments.

         The above listed  directors will serve until the next annual meeting of
the  stockholders or until their death,  resignation,  retirement,  removal,  or
disqualification,  and  until  their  successors  have  been  duly  elected  and
qualified.  Our  executive  officers  serve at the  discretion  of the  Board of
Directors.  Vacancies in the existing  Board of Directors are filled by majority
vote of the remaining Directors.  Officers of ISI serve at the will of the Board
of  Directors.  There are no  agreements  or  understandings  for any officer or
director to resign at the  request of another  person and no officer or director
is acting on behalf of or will act at the direction of any other  person.  There
is no family relationship between any executive officer or director of ISI.

Board  Committees.  The  Board  of  Directors  has  established  a  Compensation
Committee  consisting of Mr. Frantz and Mr. Luterzo and an Audit committee whose
members are Mr. Serritella, Mr. Luterzo and Mr. Ciarletta.

Compensation Committee Interlocks and Insider  Participation.  No members of the
Compensation  Committee  serve on any  other  boards  with any of the  Company's
officers or directors.

Director  Compensation.  ISI's  directors  do not  receive  any  cash  or  other
compensation  for their service as members of the Board of  Directors,  although
they  are  reimbursed  for  travel  and  lodging  expenses  in  connection  with
attendance at Board  meetings.  Members of the  Compensation  Committee  will be
automatically  granted options to purchase 25,000 shares of Company Common Stock
each year at the first Board of Directors  meeting each calendar year they serve
on the  Compensation  Committee under the Company's 2003  Non-Employee  Director
Stock Option Plan.  These options will have a ten-year term and are  exercisable
at an  exercise  price of 100% of the fair  market  value on the date of  grant.
Members of the Compensation  Committee are not eligible to receive options under
the Company's 2003 Stock Option Plan, described below.

Compliance with Section 16. The Company's officers,  directors and 5% or greater
stockholders have filed all reports necessary under Section 16, but such reports
were not timely filed.




                                       17
<PAGE>

Certain Relationships and Related Transactions

         None

                             SIGNIFICANT EMPLOYEES

We rely on our Board of Directors,  Executive Officers, and all of our employees
to further the development of our business.

Family Relationships

There are no family relationships.

Involvement in certain legal procedures

None.

CODE OF ETHICS

The  Company  has not  adopted a Code of  Ethics as of the date of this  report.
Resources and time necessary to adopt written standards  reasonably  designed to
deter  wrongdoing  have not been  available as of the date of this  report.  The
Company plans to engage a consultant to assist in drafting of a Code of Ethics.

ITEM 10.  EXECUTIVE COMPENSATION

         The following table sets forth the  compensation  received for services
rendered to ISI during the fiscal year ended December 31, 2002 (since inception)
by  our  Chief  Executive   Officer.   No  officer  received  over  $100,000  in
compensation for those periods.


                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                    Annual Compensation
Name And Principal                  Salary($)  Bonus($)       Other Annual      Long-Term        All Other
Position                   Year     Compensation              Compensation      Compensation     Awards
--------                   ----     ------------              ------------      ------------     ------
<S>                        <C>      <C>                       <C>               <C>              <C>
Samuel M. Serritella       2002     $50,000                   $0                $0               $0
President
</TABLE>


         ISI did not pay to our Chief Executive Officer or any executive officer
any compensation  intended to serve as incentive for performance to occur over a
period longer than one year pursuant to a long-term  incentive  plan in the year
ended December 31, 2002

         ISI does not have any defined benefit or actuarial plan with respect to
our Chief  Executive  Officer or any executive  officer under which benefits are
determined  primarily by final  compensation and years of service.  Stock Grants
and Options



                                       18
<PAGE>

2003 Non-Employee Director Stock Option Plan

         On May 22, 2003, the Board of Director's approved the 2003 Non-Employee
Director  Stock Option Plan.  Under this Plan, on the first business day of each
year following  adoption of the Plan, each  non-employee  director who serves on
the  Compensation  Committee of the Board receives an automatic grant of options
to purchase  25,000  shares of Common Stock at the fair market value on the date
of grant. Options granted under this Plan have a life of ten years from the date
of grant.  The Plan may grant a maximum of options to purchase 500,000 shares of
Common  Stock  over the life of the  Plan.  The  Board  has  requested  that the
Company's  stockholders ratify the Plan at the next meeting of stockholders.  No
grants under this Plan will vest until the stockholders have approved the Plan.

2003 Stock Option Plan

         On May 22, 2003, the Board of Director's approved the 2003 Stock Option
Plan.  Under  the terms of this  Plan,  all  directors  (except  members  of the
Compensation Committee),  officers, employees and consultants of the Company are
eligible  to  receive  grants  of  options,  subject  to the  discretion  of the
Compensation Committee, which sets the exercise price, term and number of shares
subject to options under the Plan. The Plan provides for both incentive  (ISO's)
and non-incentive  stock options (NSO's).  ISO's may have a term of no more than
ten years and the  exercise  price must be no less than the fair market value of
the Common  Stock on the date of grant;  except that in some cases the  exercise
price must be 110% of fair market value on the date of grant. The Plan may grant
a maximum of options to purchase  5,000,000 shares of Common Stock over the life
of the Plan. The Board has requested that the Company's  stockholders ratify the
Plan at the next  meeting of  stockholders.  No grants under this Plan will vest
until the stockholders have approved the Plan.

Compensation of Directors

The  Company  does  not  pay  cash  compensation  to  directors.   During  2002,
independent  directors were not  compensated;  however,  officers that were also
directors were compensated as described in the Summary Compensation Table.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

Security Ownership of Certain Beneficial Owners and Management

(a) Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth the beneficial  ownership for ISI's sole
class of Common Stock  beneficially  owned by all directors,  officers and 5% or
more holders.



                                       19
<PAGE>

<TABLE>
<CAPTION>
Name and
Address of                          Nature of
Beneficial                          Beneficial                Number of
Owner (1)                           Ownership                 Shares                    Percent
------------------                  ---------                 -----------------         -------
<S>                                 <C>                       <C>
Samuel M. Serritella                Personal                  11,926,000                42.5%
Andrew Aboyoun                      Personal                     850,000                 3.0%
Gary Kouletas                       Personal                     500,000                 1.8%
Louis Paulucci                      Personal                   1,480,000                 5.3%
Michael Luterzo                     Personal                      50,000                 0.1%
Russell Frantz                      Personal                     250,000                 0.9%
Richard Ciarletta                   Personal                     250,000                 0.9%

All officers and directors
As a group (7 persons)                                        15,306,000                54.5%
</TABLE>


(1) Address c/o ISI at 5 Erie Street, Garfield, NJ 07026.




                                       20
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

List of Exhibits  attached or incorporated by reference  pursuant to Item 601 of
Regulation S-B.

Where so indicated by  footnote,  exhibits,  which were  previously  filed,  are
incorporated by reference.  For exhibits incorporated by reference, the location
of the exhibit in the previous filing is indicated in parentheses.

Index to Exhibits

Exhibit
Number   Description

3.       Articles of Incorporation and Bylaws

3.1      Articles   of   Incorporation   of   International   Surfacing,    Inc.
         (Incorporated  by reference  from exhibit 2.1 to Form SB-2 filed on May
         24, 2003)

3.2      By-Laws of  International  Surfacing,  Inc.  (Incorporated by reference
         from exhibit 2.2 to Form SB-2 filed on May 24, 2003)

4.       Instruments Defining the Rights of Security Holders

4.1      See Exhibit 3.1 "Articles of Incorporation"  (Incorporated by reference
         from exhibit 2.1 to Form SB-2 filed on May 24, 2003)

5.       Voting Trust Agreement

         None

6.       Material Contracts

10.      8K Filings Incorporated Herein by Reference.

10.1     Name change to "International Surfacing, Inc. filed July 10, 2003.

10.2     Changes in Control of Registrant  incorporated  by reference to Exhibit
         10.3 on Form 8-K filed July 10, 2003.

99.1     Certification of Chief Executive Officer

99.2     Certification of Chief Financial Officer

ITEM 14.  CONTROLS AND PROCEDURES

Under the supervision and with the  participation  of our management,  including
our Chief  Executive  Officer  and Chief  Financial  Officer,  we  conducted  an
evaluation of the  effectiveness  of our  disclosure  controls and procedures as
defined in Rule 13a-14(c)  promulgated under the Securities Exchange Act of 1934
within 90 days of the filing date of this report. Based on their evaluation,



                                       21
<PAGE>

our Chief  Executive  Officer and Chief  Financial  Officer  concluded  that the
design and operation of our disclosure controls and procedures were effective as
of the date of the evaluation.

There have been no significant changes (including corrective actions with regard
to significant  deficiencies or material weaknesses) in our internal controls or
in other factors that could  significantly  affect these controls  subsequent to
the date of the evaluation referenced in the preceding paragraph.

                  (Remainder of Page Left Intentionally Blank)



                                       22
<PAGE>


F-1 FINANCIAL Statements


           INTERNATIONAL SURFACING, INC. (A DEVELOPMENT STAGE COMPANY)
                        Consolidated Financial Statements
                                December 31, 2002


[GRAPHIC]



                    TEDDER, JAMES, WORDEN & ASSOCIATES, P.A.
                CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
--------------------------------------------------------------------------------
           AN INDEPENDENTLY OWNED MEMBER OF THE RSM MCGLADREY NETWOR

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

                                Table of Contents

Independent Auditors' Report .................................................1

Financial Statements:

     Consolidated Balance Sheet ..............................................2

     Consolidated Statement of Operations ....................................3

     Consolidated Statement of Stockholders' Deficit .........................4

     Consolidated Statement of Cash Flows ....................................5


Notes to Consolidated Financial Statements ...................................6

<PAGE>


                    TEDDER, JAMES, WORDEN & ASSOCIATES, P.A.
                CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
           AN INDEPENDENTLY OWNED MEMBER OF THE RSM MCGLADREY NETWORK

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To The Board of Directors
   International Surfacing, Inc.:

We have audited the  accompanying  consolidated  balance sheet of  International
Surfacing,  Inc. and subsidiary,  (a development stage company), (the "Company")
as of December 31, 2002, and the related consolidated  statements of operations,
stockholders'  deficit,  and cash flows for the year then ended. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit 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  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
International  Surfacing,  Inc. and  subsidiary as of December 31, 2002, and the
results  of their  operations  and their  cash  flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

The  accompanying   financial   statements  have  been  prepared  assuming  that
International  Surfacing,  Inc. and subsidiary will continue as a going concern.
As discussed in Note 1 to the consolidated  financial statements,  the Company's
cumulative  losses  during  the  development  period,  and the  need  to  obtain
substantial  additional  funding to complete its development  raises substantial
doubt about their ability to continue as a going concern.  Management's plans in
regard to these matters are also  described in Note 1. The financial  statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.

Orlando, Florida
April 14, 2003

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                          (A Development Stage Company)

                           CONSOLIDATED BALANCE SHEET

                                December 31, 2002

Equipment, net                                                   $  8,319
Security deposits                                                   5,000
                                                                 --------
           Total assets                                          $ 13,319
                                                                 ========
               LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
      Bank overdraft                                             $  3,102
      Accrued expenses                                             49,964
                                                                 --------
          Total current liabilities                                53,066
 Stockholders' deficit:
       Preferred stock                                                 --
       Common stock                                                 2,521
       Additional paid-in capital                                  51,039
       Deficit accumulated during the developmental stage         (93,307)
                                                                 --------
           Total stockholders' deficit                            (39,747)
                                                                 --------
          Total liabilities and stockholders' deficit            $ 13,319
                                                                 ========

See accompanying notes to the consolidated financial statements.

                                        2

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                CUMULATIVE FROM
                                                         YEAR ENDED             JANUARY 1, 2002
                                                        DECEMBER 31,          (INCEPTION) THROUGH
                                                            2002               DECEMBER 31, 2002
                                                      ------------------    ------------------------
<S>                                                     <C>                            <C>
Expenses:
     General and administrative                         $    78,119                    78,119
     Depreciation                                               188                       188
     Impairment loss                                         15,000                    15,000
                                                        -----------               -----------
     Net loss                                           $    93,307                    93,307
                                                        ===========               ===========
     Basic and fully diluted loss per common share      $        --
                                                        ===========
     Weighted average number of shares outstanding       25,000,000
                                                        ===========
</TABLE>

See accompanying notes to the consolidated financial statements.

                                        3

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                          (A Development Stage Company)

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

                      For the year ended December 31, 2002

<TABLE>
<CAPTION>
                                                  COMMON STOCK
                                                     ISSUED                ADDITIONAL    DEFICIT ACCUMULATED         TOTAL
                                        -------------------------------     PAID-IN          DURING THE          STOCKHOLDERS'
                                            SHARES           AMOUNT         CAPITAL      DEVELOPMENT STAGE         DEFICIT
                                        --------------   --------------  -------------   ------------------      -----------
<S>                                      <C>             <C>                <C>              <C>                  <C>
Balances, December 31, 2001                    --        $     --              --                 --                   --
    Purchase of common stock                  1,200             760            --                 --                    760
    Exchange of shares with wholly
         owned subsidiary                24,998,800           1,740          (1,740)              --                   --
    Amount received for convertible
         debentures                         211,200              21          52,779               --                 52,800
Net loss                                       --              --              --              (93,307)             (93,307)
                                         ----------      ----------      ----------         ----------           ----------
Balances, December 31, 2002              25,211,200      $    2,521          51,039            (93,307)             (39,747)
                                         ==========      ==========      ==========         ==========           ==========
</TABLE>

See accompanying notes to the consolidated financial statements.

                                        4

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                        CUMULATIVE FROM
                                                                   YEAR ENDED           JANUARY 1, 2002
                                                                  DECEMBER 31,        (INCEPTION) THROUGH
                                                                      2002             DECEMBER 31, 2002
                                                                ------------------    ---------------------
<S>                                                               <C>                       <C>
Cash flows from operating activities:
    Net loss                                                      $(93,307)                 (93,307)
    Adjustments to reconcile net loss to net cash
       used in provided by operating activities:
           Depreciation                                                188                      188
           Impairment loss                                          15,000                   15,000
           Changes in assets and liabilities:
              Deposits                                              (5,000)                  (5,000)
              Bank overdraft                                         3,102                    3,102
              Accrued expenses                                      49,964                   49,964
                                                                  --------                 --------
                   Net cash used in operating activities           (30,053)                 (30,053)
Cash flows from investing activities:
    Investment in subsidiary                                       (15,000)                 (15,000)
    Purchase of equipment                                           (8,507)                  (8,507)
                                                                  --------                 --------
                   Net cash used in investing activities           (23,507)                 (23,507)
Cash flows from financing activities:
    Issuance of common stock                                           760                      760
    Amount received from convertible notes                          52,800                   52,800
                                                                  --------                 --------
              Net cash provided by financing activities             53,560                   53,560
                                                                  --------                 --------
              Net increase in cash                                    --                       --
Cash at beginning of period                                           --                       --
                                                                  --------                 --------
Cash at end of period                                             $   --                       --
                                                                  ========                 ========
</TABLE>

See accompanying notes to the consolidated financial statements.

                                        5

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002


(1)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       (A)    CORPORATE ORGANIZATION

              International   Surfacing,   Inc.  a  Delaware  corporation  ("the
              Company")  was  formed  on  January  9,  1998,  but did not  begin
              operation until 2002.

              The  Company  was  founded  to  develop,  manufacture,  market and
              distribute rubber  horseshoes and related products.  The Company's
              initial market is the horse racing industry;  however, the Company
              feels that the product can be used on any horse.

              In December  2002,  the Company  purchased all of the  outstanding
              common  stock of Harmonica  Acquisition  Corp.  ("Harmonica")  for
              $15,000. At the date of the acquisition Harmonica did not have any
              net  assets or  operations.  In  connection  with the  acquisition
              agreement,  Harmonica and the Company entered into an agreement to
              exchange  the  shares of the  Company  common  stock,  which  were
              increased to 25,000,000,  for 25,000,000 shares of Harmonica.  The
              share exchange was not completed until January 28, 2003;  however,
              the  exchange  has  been  treated  as a  recapitalization  and the
              25,000,000  shares has been  reflected as  outstanding at December
              31, 2002.

              The Company has 20,000,000  shares of preferred  stock  authorized
              with a par value of $.0001 and 100,000,000  shares of common stock
              authorized  with a par  value of  $.0001.  There  are no shares of
              preferred stock issued.

       (B)    EQUIPMENT

              Equipment  is recorded  at cost,  less  accumulated  depreciation.
              Depreciation  expense is provided on a straight-line  basis, using
              estimated  useful  lives of 3 years  for  equipment.  The costs of
              improvements  on leased  property  are  capitalized  as  leasehold
              improvements  and are amortized on a straight-line  basis using an
              estimated  useful life of 3 years which  represents the applicable
              lease  period,  plus any renewal  periods which are expected to be
              exercised.  Routine maintenance and repairs are charged to expense
              as incurred.  Major replacements and improvements are capitalized.
              When assets are sold or retired,  the related cost and accumulated
              depreciation  are removed  from the  accounts  and gains or losses
              from dispositions are credited or charged to income.

                                       6

<PAGE>

                          INTERNATONAL SURFACING, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

(1)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

       (C)    INCOME TAXES

              The Company  follows the asset and liability  method of accounting
              for  income  taxes.   Deferred  tax  assets  and  liabilities  are
              recognized for the estimated future tax consequences  attributable
              to differences  between the financial  statements carrying amounts
              of existing assets and liabilities and their respective tax bases.
              Deferred tax assets and liabilities are measured using enacted tax
              rates  expected  to apply to taxable  income in the years in which
              those  temporary  differences  are  expected  to be  recovered  or
              settled.  The effect on deferred tax assets and  liabilities  of a
              change in tax rates is  recognized  as income in the  period  that
              included  the  enactment  date.   Deferred  tax  assets  resulting
              principally from operating losses have not been recognized.

       (D)    ESTIMATES

              The  preparation  of  financial   statements  in  conformity  with
              accounting  principles  generally accepted in the United States of
              America requires management to make estimates and assumptions that
              affect  the  reported   amounts  of  assets  and  liabilities  and
              disclosure of contingent  asset and liabilities at the date of the
              financial  statements  and the  reported  amounts of revenues  and
              expenses during the reporting period.  Actual results could differ
              from those estimates.

       (E)    FAIR VALUE OF FINANCIAL INSTRUMENTS

              Fair value  estimates  discussed  herein  are based  upon  certain
              market   assumptions  and  pertinent   information   available  to
              management.    The   respective    carrying   value   of   certain
              on-balance-sheet  financial  instruments  approximated  their fair
              values. These financial instruments included accrued expenses, and
              other current liabilities. Fair values were assumed to approximate
              carrying  values for these  financial  instruments  since they are
              short-term in nature or they were payable on demand.

(2)    BASIS OF PRESENTATION AND GOING CONCERN

       At December 31, 2002, the Company has a stockholders'  deficit of $39,747
       and has  significant  capital  needs,  which to date has been met through
       private  sales  of  its  equity.   The  Company  will  continue  to  need
       substantial  infusions  of capital,  which it expects to continue to fund
       primarily  from  private  sales of its equity  and loans,  or by a public
       offering of its equity or debt securities.

                                       7

<PAGE>

                          INTERNATONAL SURFACING, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

(3)    RECENT ACCOUNTING PRONOUNCEMENTS

       In July 2001, the Financial  Accounting  Standards  Board ("FASB") issued
       Statement  of  Financial   Accounting   Standards   No.  141,   "Business
       Combinations"  ("FAS 141") and FAS 142,  "Goodwill  and Other  Intangible
       Assets." FAS 141 requires all business combinations  initiated after June
       30, 2001 be accounted for under the purchase  method of  accounting.  FAS
       141 also  specifies  the types of  acquired  intangible  assets  that are
       required to be recognized and reported separately from goodwill and those
       acquired intangible assets that are required to be included in goodwill.

       Effective January 1, 2002, the Company adopted FAS 142 (see Note 4).

       The  FASB  issued  FAS  No.  143,   "Accounting   for  Asset   Retirement
       Obligations" in August 2001. FAS 143, which will become effective for the
       Company  beginning  in 2003,  establishes  accounting  standards  for the
       recognition  and  measurement of asset  retirement  obligations and their
       associated  asset  retirement  costs.  The  Company  does not  expect the
       adoption of FAS 143 to have a material impact on its consolidated results
       of operations and financial position.

       The FASB issued FAS No. 144,  "Accounting  for the Impairment or Disposal
       of Long-Lived Assets" in August 2001. FAS 144, which became effective for
       the Company beginning with the first quarter of fiscal 2002,  establishes
       a single  accounting  model for  long-lived  assets to be  disposed of by
       sales and also broadens the  presentation of  discontinued  operations to
       include more disposal transactions. The adoption of FAS 144 had no impact
       on the consolidated results of operations and financial position.

       In  April  2002,  the  FASB  issued  FAS  No.  145,  "Rescission  of FASB
       Statements  No. 4, 44, and 64,  Amendment of FASB  Statement  No. 13, and
       Technical Corrections." FAS 145 eliminates the requirement that gains and
       losses from the  extinguishment  of debt be aggregated  and, if material,
       classified  as an  extraordinary  item,  net of the  related  income  tax
       effect,  and also eliminates an inconsistency  between the accounting for
       sale-leaseback  transactions  and certain lease  modifications  that have
       economic  effects  that  are  similar  to  sale-leaseback   transactions.
       Generally,  FAS 145 is effective for transactions occurring after May 15,
       2002. The adoption of FAS 145 had no impact on the  consolidated  results
       of operations and financial position.

       In June  2002,  the  FASB  issued  FAS No.  146,  "Accounting  for  Costs
       Associated  with Exit or Disposal  Activities."  FAS 146 requires  that a
       liability  for a cost  associated  with an exit or  disposal  activity be
       recognized  when the  liability  is incurred.  FAS 146 requires  that the
       initial  measurement  of liability be at fair value.  FAS 146 will become
       effective  for the Company  beginning  in 2003 and the  Company  does not
       expect the adoption to have a material impact on its consolidated results
       of operations and financial position.

                                       8

<PAGE>

(4)    GOODWILL

       Effective  January 1, 2002,  the Company  adopted  Statement of Financial
       Accounting  Standards  No. 142,  "Goodwill and Other  Intangible  Assets"
       ("FAS  142").  The  adoption of FAS 142  required  an initial  impairment
       assessment  involving  a  comparison  of the fair  value of  goodwill  to
       current  carrying  value.  In connection with the adoption of FAS 142 the
       Company  recorded an impairment  loss for the goodwill in connection with
       the acquisition of Harmonica.

(5)    EQUIPMENT

       Equipment consisted of the following at December 31, 2002:

          Office equipment                                     $ 1,475
          Leasehold improvements                                 7,032
                                                               -------
          Less accumulated depreciation                           (188)
                                                               -------
                                                               $ 8,319
                                                               =======

       For the year ended December 31, 2002,  depreciation  expense  amounted to
$188.

(6)    COMMITMENTS

       The Company leases its administrative  facilities under operating leases.
       Future minimum rentals due under non-cancelable leases are as follows for
       the year ending December 31:

          2003                                              $  30,000
                                                            =========

(7)    SUBORDINATED DEBENTURES

       During  2002,  the  Company  received  proceeds  of $52,800  relating  to
       subordinated  debenture agreements.  The Company received the proceeds at
       the same time the purchasers  elected to convert the debentures to common
       stock at four  shares of common  stock for every one of  debentures.  The
       accompanying balance sheet at December 31, 2002 reflects the common stock
       issuable  pursuant  to the  debentures  exercised  even though the common
       stock was not issued until 2003.

                                       9

<PAGE>

(8)    LOSS PER SHARE

       In  computing  the  loss  per  share  the  25,000,000  shares  issued  in
       connection with the recapitalization are considered to be outstanding for
       the entire year ended December 31, 2002.  Common shares issuable pursuant
       to  subordinated  debentures  converted are considered to be issued as of
       January 1, 2003 for  proceeds  received  with the shares not having  been
       issued as of December 31, 2002.

(9)    SUBSEQUENT EVENTS

       In connection with a proposed filing on Form SB-2 the Company has entered
       into an agreement to issue  661,000  shares  valued at an estimated  fair
       value of $.25 per  share  for  reduced  salaries  from  November  1, 2002
       through  May 31, 2003 and for  services  rendered.  The Company  recorded
       compensation  expense of $48,107  for the year ended  December  31,  2002
       relating to the agreements. The compensation expense recorded is included
       in  accrued   liabilities  at  December  31,  2002  in  the  accompanying
       consolidated financial statements.

       The  proposed  Form SB-2  filing  also  include  options to be issued for
       1,000,000 shares of common stock  exercisable at $.25 per share. The term
       of the options is ten years.

                                       10

<PAGE>




SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has dully  caused  this  report  to be  signed on its  behalf by the
undersigned hereunto duly authorized.

International Surfacing, Inc.

Dated:  August 12, 2003

By:


/s/ Samuel Serritella
-----------------------------------
President, Chief Executive Officer


/s/ Andrew Abouyon
------------------------------------
Chief Financial Officer

In  accordance  with the  Exchange  Act, the report has been signed below by the
following  persons on behalf of the  Company  and in the  capacities  and on the
dates indicated.

Date:  August 12, 2003            By: /s/ Samuel Serritella
                                      -----------------------------------
                                      Samuel Serritella, Director

Date:  August 12, 2003            By: /s/ Michael Luterzo
                                      -----------------------------------
                                      Michael Luterzo, Director

Date:  August 12, 2003            By: /s/ Russell Frantz
                                      -----------------------------------
                                      Russell Frantz, Director

Date:  August 12, 2003            By: / / Richard Ciarletta
                                      -----------------------------------
                                      Richard Ciarletta, Director

Date:  August 12, 2003            By: / / Thomas R. Miller
                                      -----------------------------------
                                      Thomas R. Miller, Director