SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

      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 QUARTER ENDED JUNE 30, 2004

      [ ] 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 of       (I.R.S. Employer Identification No.)
       incorporation or organization)

                        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 $0.0001

 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 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-QSB or any
                      amendment to this Form 10-QSB. [__]

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

         As of August 5, 2004, the Registrant had outstanding 27,077,480
                   shares of Common Stock, $.0001 par value.

                 The Registrant's revenues for the quarter ended
                             June 30, 2004 were $0.

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                                FINANCIAL REPORT

                                  June 30, 2004

<PAGE>

                          INTERNATIONAL SURFACING, INC.

                         (A DEVELOPMENTAL STAGE COMPANY)

                                    CONTENTS

                                                                           PAGE
                                                                          NUMBER

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANICAL STATEMENTS

    Balance Sheets as of June 30, 2004 (UNAUDITED)
      and December 31, 2003....................................................1

    Statement of Operations (UNAUDITED) for the three and
      six months ended
       June 30, 2004 and June 30, 2003.........................................2

    Statement of Cash Flows (UNAUDITED) for the six months ended
       June 30, 2004 and June 30, 2003.........................................3

         Notes to Financial Statements (UNAUDITED).............................4


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS.........................9

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                                 BALANCE SHEETS
                    As of June 30, 2004 and December 31, 2003

                                                       June 30,      Dec. 31,
                                                         2004         2003
                                                       ----------    ---------
                                                      (Unaudited)    (Note 1)
                            ASSETS
CURRENT ASSETS:
Cash                                                   $     214    $   2,711
Loans receivable                                           2,500        2,500
                                                       ---------    ---------

        Total current assets                               2,714        5,211
                                                       ---------    ---------
FIXED ASSETS, less accumulated depreciation and
amortization of $7,129 at June 30,
2004 and $4,125 at December 31, 2003                      13,696       12,733
                                                       ---------    ---------
                                                          13,696       12,733
                                                       ---------    ---------
OTHER ASSETS:
  Other assets                                             5,000        5,000
                                                       ---------    ---------
                                                           5,000        5,000
                                                       ---------    ---------

        Total assets                                   $  21,410    $  22,944
                                                       =========    =========
              LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                       $  33,607    $  29,114
Accrued expenses                                         165,250      165,250
Due to officer                                            47,786       24,105
                                                       ---------    ---------
        Total current liabilities
                                                       $ 246,643    $ 218,469
                                                       ---------    ---------
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value; 100,000,000 shares
   authorized; 26,963,480 shares
issued and outstanding at
   June 30, 2004 26,424,080 shares issued
and outstanding at December 31, 2003                       2,696        2,642
Additional paid in capital                               474,920      350,505
Deficit accumulated during the developmental stage      (702,849)    (548,672)
                                                       ---------    ---------

          Total stockholders' deficit                   (225,233)    (195,525)
                                                       ---------    ---------

          Total liabilities and stockholders' equity   $  21,410    $  22,944
                                                       =========    =========

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                       1

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                             STATEMENT OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             Six Months Ended               Three Months Ended
                                                       ----------------------------    ----------------------------
                                                         June 30,        June 30,        June 30,        June 30,
                                                           2004            2003            2004            2003
                                                       ------------    ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>             <C>
EXPENSES:
Selling, general and administrative                    $    151,361    $    237,330    $     53,711    $    101,153
Depreciation                                                  2,816           1,687           1,408           1,126
                                                       ------------    ------------    ------------    ------------
      Total expenses                                        154,177         239,017          55,119         102,279
                                                       ------------    ------------    ------------    ------------
NET LOSS                                               $   (154,177)   $   (239,017)   $    (55,119)   $   (102,279)
                                                       ============    ============    ============    ============
BASIC AND DILUTED EARNINGS PER SHARE
                                                       $      (.006)   $      (.009)   $      (.002)   $      (.004)
                                                       ============    ============    ============    ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
                                                         26,758,280      25,500,000      26,886,080      25,500,000
                                                       ============    ============    ============    ============
</TABLE>

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                       2

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                             STATEMENT OF CASH FLOWS
                           Increase (Decrease) in Cash
                                   (UNAUDITED)

                                                          Six Months Ended
                                                      ----------------------
                                                       June 30,     June 30,
                                                         2004         2003
                                                      ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                              $(154,177)   $(239,017)
                                                      ---------    ---------
Adjustments to reconcile net income to net
   cash used in operating activities:
Depreciation                                              2,816        1,687
Changes in assets and liabilities:
Increase (decrease) in accounts payable                   4,493           --
Increase (decrease) in accrued expenses                      --       66,651
Increase (decrease) in bank overdraft                        --       (3,102)
Increase (decrease) in due to officer                    23,682           --
                                                      ---------    ---------

          Total adjustments                              30,991       65,236
                                                      ---------    ---------

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES       (123,186)    (173,781)
                                                      ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment                                    (3,780)      (5,004)
                                                      ---------    ---------
NET CASH USED IN INVESTING ACTIVITIES                    (3,780)      (5,004)
                                                      =========    =========
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock through issuance of
   additional shares                                         54           29
Additional paid in capital through issuance
   of additional shares                                 124,415      181,606
                                                      ---------    ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES     124,469      181,635
                                                      ---------    ---------
INCREASE (DECREASE) IN CASH                              (2,497)       2,850
CASH, beginning of period                                 2,711           --
                                                      ---------    ---------
CASH, end of period                                   $     214    $   2,850
                                                      =========    =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
   cash paid during the six months for:
     Interest                                         $      --    $      --
                                                      =========    =========
     Income Taxes                                     $      --    $      --
                                                      =========    =========

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                       3

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - INTERIM RESULTS AND BASIS OF PRESENTATION

         The accompanying unaudited financial statements as of June 30, 2004 and
         June 30, 2003 and for the six month periods then ended have been
         prepared in accordance with generally accepted accounting principles
         for interim financial information and with the instructions to Form
         10-QSB and Items 303 and 310 of Regulation S-B. In the opinion of
         management, the unaudited financial statements have been prepared on
         the same basis as the annual financial statements and reflect all
         adjustments, which include only normal recurring adjustments, necessary
         to present fairly the financial position as of June 30, 2004 and June
         30, 2003 and the results of operations and cash flows for the six month
         periods then ended. The financial data and other information disclosed
         in these notes to the interim financial statements related to these
         periods are unaudited. The results for the six months ended June 30,
         2004, are not necessarily indicative of the results to be expected for
         any subsequent quarter or the entire fiscal year. The balance sheet at
         December 31, 2003 has been derived from the audited financial
         statements at that date.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted pursuant to the
         Securities and Exchange Commission's rules and regulations. The Company
         believes, however, that the disclosures in this report are adequate to
         make the information presented not misleading in any material respect.
         The accompanying financial statements should be read in conjunction
         with the audited financial statements of International Surfacing, Inc.
         as of December 31, 2003 and notes thereto included in the Company's
         report on Form 10-KSB as filed with the Securities and Exchange
         Commission.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         Description of Business:
         ------------------------

         Harmonica Acquisition Corporation, a Delaware corporation ("the
         Company") was formed on January 9, 1998, but did not conduct any
         operating activities nor generate any revenues and was dormant until
         January 2003.

         The Company was founded to develop, manufacture, market and distribute
         rubber horseshoes and related products. The Company's initial target
         markets are the horse racing and equestrian industries. Management
         believes that the product can be utilized throughout the equine world.

         In December 2003, International Surfacing Inc. ("ISI") purchased all of
         the outstanding common stock of the Company for $15,000 in a
         transaction deemed to be a recapitalization. As a part of the overall
         transaction, ISI, exchanged its common shares of the Company for its
         own common shares through an exchange agreement with its shareholder,
         and the Company subsequently changed its name to International
         Surfacing Inc. The Company previously accounted for the loss on the
         acquisition as an impairment loss. The accompanying financial
         statements have been restated to treat the loss on the acquisition as a
         reduction of paid-in capital; and the acquisition as a
         recapitalization.


                                       4

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

         Description of Business: (Continued)

         ------------------------------------
         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 that
         have been issued.

         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.

         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.

         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 assets
         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.

         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.


                                       5

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 3 - GOING CONCERN

         At June 30, 2004, the Company reported a stockholders' deficit of
         $225,233 and it 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.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
         Statement of Financial Accounting Standards No. 141, "Business
         Combinations" ("FAS No. 141") and FAS No. 142, "Goodwill and Other
         Intangible Assets." FAS No. 141 requires all business combinations
         initiated after June 30, 2001 be accounted for under the purchase
         method of accounting. FAS No. 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, 2003, the Company adopted FAS No. 142.

         The FASB issued FAS No. 143, "Accounting for Asset Retirement
         Obligations" in August 2001. FAS No. 143, which became 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 No. 143 to have a material impact on its 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 No. 144, which became
         effective for the Company beginning with the first quarter of fiscal
         2003, 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
         No. 144 had no impact on the results of operations and financial
         position.

         In April 2003, 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 No. 145 eliminates the requirement that
         gains and losses from the extinguishments 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 No. 145 is effective for
         transactions occurring after May 15, 2003. The adoption of FAS No. 145
         had no impact on the results of operations and financial position.

         In June 2003, the FASB issued FAS No. 146, "Accounting for Costs
         Associated with Exit or Disposal Activities." FAS No. 146 requires that
         a liability for a cost associated with an exit or disposal activity be
         recognized when the liability is incurred. FAS No. 146 requires that
         the initial measurement of liability be at fair value. FAS No. 146
         became effective for the Company beginning in January 2004. The Company
         does not expect the adoption to have a material impact on its results
         of operations and financial position.


                                       6

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 5 - FIXED ASSETS:

         Fixed assets consisted of the following at:

                                JUNE 30,     Dec. 31,
                                  2004         2004
                                --------    --------
Computers                       $  4,257    $  4,257
Equipment                          3,779          --
Leasehold improvements            12,789      12,789
                                --------    --------
                                  20,825      17,046

Less accumulated depreciation     (7,129)     (4,313)
                                --------    --------

                                $ 13,696    $ 12,733
                                ========    ========

         For the six months ended June 30, 2004, depreciation expense amounted
         to $2,816.

NOTE 6 - COMMITMENTS:

         The Company leases its administrative facilities on a month-to-month
         basis. The annualized rental is $30,000.

NOTE 7 - LOSS PER SHARE:

         Loss per common share is computed pursuant to SFAS No. 128, "Earnings
         Per Share". Basic loss per share is computed as net loss available to
         common shareholders divided by the weighted average number of common
         shares outstanding for the period. Diluted loss per share reflects the
         potential dilution that could occur from common shares issuable through
         stock options, warrants and convertible preferred stock. Both basic
         loss per share and diluted loss per share are the same since the
         Company's outstanding options and warrants have not been included in
         the calculation because their effect would have been anti-dilutive.


                                       7

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 8 - SUBSEQUENT EVENTS:

         In connection with a proposed filing on Form SB-2 the Company has
         entered into an agreement with certain key employees to issue 661,000
         shares valued at an estimated fair value of $.25 per share for reduced
         salaries from November 1, 2003 through December 31, 2003, for services
         rendered. The Company recorded compensation expense of $48,107 for the
         year ended December 31, 2002 and $117,143 for the year ended December
         31, 2003 relating to the agreements. The compensation expense recorded
         is included in accrued liabilities at June 30, 2004 and December 31,
         2003 in the accompanying financial statements.

         The proposed Form SB-2 filing also includes 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.


                                       8

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements contained in this report which are not historical facts may be
considered forward-looking information with respect to plans, projections, or
future performance of the Company as defined under the Private Securities
litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected. The words "anticipate", "believe", "estimate", "expect",
"objective", and "think" or similar expressions used herein are intended to
identify forward-looking statements. The forward-looking statements are based on
the Company's current views and assumptions and involve risks and uncertainties
that include, among other things, the effects of the Company's business, actions
of competitors, changes in laws and regulations, including accounting standards,
employee relations, customer demand, prices of purchased raw material and parts,
domestic economic conditions, including housing starts and changes in consumer
disposable income, and foreign economic conditions, including currency rate
fluctuations. Some or all of the facts are beyond the Company's control.

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and related footnotes which provide additional
information concerning the Company's financial activities and condition.

CRITICAL ACCOUNTING POLICIES

Description of Business:
------------------------

Harmonica Acquisition Corporation, a Delaware corporation ("the Company") was
formed on January 9, 1998, but did not conduct any operating activities nor
generate any revenues and was dormant until January 2003.

The Company was founded to develop, manufacture, market and distribute rubber
horseshoes and related products. The Company's initial target markets are the
horse racing and equestrian industries. Management believes that the product can
be utilized throughout the equine world.

In December 2003, International Surfacing Inc. purchased all of the outstanding
common stock of the Company for $15,000 in a transaction deemed to be a
recapitalization. As a part of the overall transaction, International Surfacing
Inc., exchanged its common shares of the Company for its own common shares
through an exchange agreement with its shareholder, and the Company subsequently
changed its name to International Surfacing Inc. The Company previously
accounted for the loss on the acquisition as an impairment loss. The
accompanying financial statements have been restated to treat the loss on the
acquisition as a reduction of paid-in capital; and the acquisition as a
recapitalization.

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 that have been issued.

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.


                                       9

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS 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.

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 assets 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.

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.

Going Concern
-------------

At June 30, 2004, the Company reported a stockholders' deficit of $225,233 and
it 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

PLAN OF OPERATIONS

Overview
--------

ISI was founded to develop, manufacture, market and distribute unique rubber
horseshoes and related services. The Company 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. The Company's initial target
markets are the horseracing and equestrian industries. Management believes that
the Product can be utilized throughout the equine world. After the
StealthShoe(TM) becomes established in the horseracing industry, the Company
intends to broaden its 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.


                                       10

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

PLAN OF OPERATIONS (CONTINUED)

Overview (Continued)
--------------------

After three 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,
fifty horses are using the StealthShoe(TM) in training and racing conditions.

The Company's Product consists of two layers of material, bonded together by
utilizing a proprietary bonding process. The StealthShoe(TM) has an aluminum
substrate and an outer face of tire-grade rubber. The Company believes 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.

Liquidity and Capital Resources
-------------------------------

As of June 30, 2004, the Company had cash resources of approximately $214, with
currently due expenses of $246,643, including normal trade payables. Of these
expenses, approximately $165,250 consists of accrued but unpaid salaries that
will be converted to shares of Common Stock upon any subsequent registration of
an offering to sell its shares. Based on the Company's existing expenses, it
will need to raise approximately $450,000 in new capital to fund six months of
operations if the Company generated no revenues from operations.

The Company anticipates that its operating requirements for the forthcoming six
months to be as follows:

         $150,000 to fund start-up costs of production and facility operating
         costs.
         $150,000 to purchase 30 forging dies at a cost of $5,000 each to enable
         the Company to produce a variety of horseshoe sizes.
         $150,000 to purchase a gluing system to dispense glue in a uniform and
         consistent pattern.

Unless the Company is able to attract capital through the sale of shares of its
stock by means of a public offering, it will be unable to meet the foregoing
costs. Assuming the Company is successful in the sale of its stock, it intends
to make a considerable expansion of its operations. The Company will need to
hire additional administrative and customer service personnel as part of this
expansion.

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


                                       11

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

Income Taxes
------------

There were no current or deferred tax expense for the six months ended June 30,
2004 and June 30, 2003 due to net losses from operations by the Company.

Net Loss
--------

The Company has incurred net losses in the aggregate of $702,849 since its
inception. The net loss for the year ended December 31, 2002 was $78,307. The
net loss for the year ended December 31, 2003 was $470,365, the net loss for the
six months ended June 30, 2004 was $154,177. The net loss consists of general
and administrative expenses and research and development expenses. To the extent
that the Company is unable to secure additional external financing, and/or
generate cash revenue from operations, the ability of the Company to continue as
a going concern may be adversely affected.

Capital Expenditures
--------------------

The Company requires funding primarily for computer hardware and software,
research and development, prototypes, furniture, fixtures and equipment and
general working capital needs. Substantially all of the Company's capital
expenditures have been paid for by its principal stockholders or through the
sale of convertible debt securities.


                                       12

<PAGE>

                          INTERNATIONAL SURFACING, INC.
                         (A DEVELOPMENTAL STAGE COMPANY)

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS



EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Management, under the supervision and with the participation of the President,
conducted an evaluation of our "disclosure controls and procedures" (as defined
in the Securities Exchange Act of 1934 Rules 13a-14(c)) within 90 days of the
filing date of this Report on Form 10-QSB. Based on their evaluation, the
President has concluded that as of the Evaluation Date, our disclosure controls
and procedures are effective to ensure that all material information required to
be filed in this Report on Form 10-QSB has been made known to them.

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 Evaluation Date set forth above.


                                       13


Date: August 13, 2004

-------------------------------
Samuel Serritella
President