<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT OR [ ] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended April 30, 1998
Commission File No. 33-4460-NY
TASTY FRIES, INC.
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(Exact name of registrant as specified in its charter)
Nevada 65-0259052
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State or other jurisdiction (I.R.S. Employer
incorporation or organization Identification No.)
650 Sentry Parkway, Suite One
Blue Bell, PA 19422
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(Address Of Principal Executive Offices)(Zip Code)
(610) 941-2109
------------------------
(Registrant's telephone number,
including area code)
ADELAIDE HOLDINGS, INC.
11098 Biscayne Boulevard, Suite 403
Miami, Florida
(305) 899-0200
---------------------------------------------
(Former name and address)
Check whether the registrant (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
--- ---
As of April 30, 1998: 10,838,054 shares of common stock
were outstanding.
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
April 30, January 31,
1998 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 5,217 $ 380,136
Vending machines 70,000 70,000
Machine parts 36,503
Loan receivable, officers 9,197 30,377
----------- -----------
Total current assets 120,917 480,513
Property and equipment, net 33,631 36,581
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Other assets:
Loan costs, net of accumulated amortization of $47,812 189,045 208,782
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$ 343,593 $ 725,876
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----------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses $ 737,292 $ 633,042
----------- -----------
Total current liabilities 737,292 633,042
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Convertible notes payable 1,503,947 2,202,321
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Unearned revenue 251,000 376,000
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Stockholders' deficiency:
Common stock, $.001 par value; authorized
25,000,000 shares; issued and outstanding
10,838,054 shares at April 30, 1998 and
8,638,630 at January 31, 1998 10,837 8,638
Additional paid-in capital 10,475,295 9,570,693
Deficit accumulated in development stage (12,634,778) (12,064,818)
----------- -----------
(2,148,646) (2,485,487)
----------- -----------
$ 343,593 $ 725,876
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----------- -----------
</TABLE>
See notes to financial statements
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues $ $
----------- ----------
Costs and expenses:
Research, machine and
product development 67,598
Selling, general and administrative 475,514 389,914
----------- ----------
543,112 389,914
----------- ----------
Net loss before other income (expense) (543,112) (389,914)
Other income (expense):
Interest income 687 4,920
Interest expense (27,535) (1,000)
Litigation settlement (112,422)
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(26,848) (108,502)
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Net loss $(569,960) $(498,416)
------------ -----------
------------ -----------
Net loss per share of common stock ($0.06) ($0.11)
------------ -----------
------------ -----------
Weighted average shares outstanding 9,889,910 4,720,343
------------ -----------
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</TABLE>
See notes to financial statements
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Total
Common Paid-In Retained Stockholders'
Stock Capital Earnings Equity
------- -------- --------- --------------
<S> <C> <C> <C> <C>
Balance, February 1, 1998 $ 8,638 $9,570,693 $(12,064,818) $(2,485,487)
Issuance of 1,694,220 shares for
convertible notes 1,694 696,679 698,373
Issuance of 42,704 shares for interest
on convertible notes 43 26,385 26,428
Issuance of 212,500 shares for
services 212 56,788 57,000
Issuance of 250,000 shares for
repurchase of distributorship 250 124,750 125,000
Net loss for three months (569,960) (569,960)
---------- ------------ ----------- -----------
Balance, April 30, 1998 $ 10,837 $10,475,295 $ (12,634,778) $ (2,148,646)
---------- ------------ ----------- -----------
---------- ------------ ----------- -----------
</TABLE>
See notes to financial statements
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(569,960) $(498,416)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 22,687 1,810
Common stock issued for services 57,000 10,000
Common stock issued for litigation settlement 57,423
Common stock issued for interest on convertible notes 26,427
Changes in assets and liabilities:
Other assets (36,503) (4,920)
Unearned revenue
Accounts payable and accrued expenses 104,250 197,076
---------- -----------
Net cash used by operating activities (396,099) (237,027)
---------- ------------
Cash flows from investing activities:
Purchase of furniture and equipment
Cash flows from financing activities:
Sale of common stock 260,000
Loan receivable, officers 21,180
Repayment of note payable (20,000)
---------- ------------
Net cash provided by financing activities 21,180 240,000
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Net increase in cash (374,919) 2,973
Cash, beginning balance 380,136 1,519
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Cash, ending balance $ 5,217 $ 4,492
---------- ------------
---------- ------------
Supplemental disclosure of cash flow information:
Cash paid for interest $ $
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---------- ------------
Supplemental disclosure of non-cash financing activities:
Issuance of common stock for services $ 57,000 $ 10,000
---------- ------------
---------- ------------
Issuance of common stock for
litigation settlement $ 57,423
-----------
-----------
</TABLE>
See notes to financial statements
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(Unaudited)
1. Basis of presentation:
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three months ended April 30, 1998 are not
necessarily indicative of the results that may be expected for the year
ended January 31, 1999. The unaudited financial statements should be
read in conjunction with the financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
January 31, 1998.
2. Description of Business and Significant Accounting Policies:
The Company is a development stage company, having not yet completed
the process of designing, manufacturing and marketing its sole product,
a vending machine which will cook and dispense french fries. The
Company has incurred research and development costs from inception to
April 30, 1998 totaling $1,942,113. The Company has received ten
machines and it is anticipated that each machine can be sold for
approximately $9,000. The difference between the anticipated selling
price and the cost to obtain the machines has been charged to research,
machine and product development costs. From the corporation's date of
inception, October 18, 1985, to date it has engaged in various business
activities that were unprofitable. The Company had no revenues from
operations since inception and its ability to continue as a going
concern is dependent on the continuation of equity financing to fund
the expenses relating to successfully manufacturing and marketing the
vending machine. The Company is currently in the process of producing
its first 25 machines.
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997
(Unaudited)
3. Issuance of Common Stock:
After the return to treasury of a total of 287,500 shares, an aggregate
of 2,199,424 shares were issued during the quarter ended April 30,
1998. The following shares were issued during the quarter: 1,736,924
shares were issued pursuant to the terms of the Company's convertible
note financings (this figure includes shares issued for interest on the
notes); 212,500 shares were issued in payment of services; 250,000
shares were issued as consideration for the re-acquisition of an
existing distributorship;
After the return to treasury of 294,950 shares, an aggregate of 323,750
shares were issued during the quarter ended April 30, 1997. 260,000
shares were sold in private placements by the Company, 20,000 shares
were issued in payment for legal services and 43,750 shares were issued
for settlement of litigation.
4. April 1998 Financing:
In April 1998, the Company entered into an agreement to receive
$1,500,000 in proceeds from the sale of restricted stock to a U.S.
corporation. The Company issued 3,000,000 shares of common stock as
consideration for the investment. The Company also issued warrants to
purchase 1,500,000 post-split shares of common stock at an exercise
price of $1.90; the warrants expire April 12, 2001. The Company also
issued 150,000 post-split shares of restricted stock as a commission on
the transaction. As part of the transaction, the Company also agreed to
register all of the restricted shares and warrant shares associated
with the transaction as soon as is practicable. The Company and the
investor have entered into an escrow agreement for this transaction and
all of the shares were issued into escrow, pending funding. As of June
11, 1998, $300,000 of the $1,500,000 in proceeds has been received by
the Company and 600,000 of the 3,000,000 shares of restricted common
stock held in escrow have been released to the investor. The balance of
funds due are anticipated to be received by June 30, 1998.
<PAGE>
ITEM 2. PLAN OF OPERATION
General
The Company is a development-stage company having not yet completed the
exercise of manufacturing, marketing and selling its sole product, a vending
machine which will cook and dispense french fries (the "Machine"). The Company
has tested the Machine both internally and on various beta locations since
December of 1995. During the period ending April 30, 1998, the Company entered
into the production stage of its lifecycle, having spent the latter half of
fiscal 1997 preparing for commercial manufacturing through the process of
pre-production tooling and completion of final production design work.
Liquidity and Capital Resources
Since its inception, the Company has had virtually no revenues from
operations and has relied almost exclusively on shareholder loans, limited
distribution deposits and sales of securities to raise working capital to fund
operations. At April 30, 1998 the Company had approximately $5,217 in cash.
While management currently anticipates that the April 1998 financing
will allow it to complete the Company's initial production run of machines, no
assurances can be given that the Company will be able to do so. Further, the
Company will need to secure additional funds to allow it to enter into its
second production run of machines, in line with management's current plan of
operation. No assurances can be given that the Company will be able to secure
adequate financing from any source to pursue its current plan of operation, to
meet its obligations or to expand its marketing efforts over the next 12 months.
Based upon its past history, management believes that it may be able to obtain
funding in such manner but is unable to predict with any certainty the amount
and terms thereof. If the Company is unable to obtain needed funds, it could be
forced to curtail or cease its activities.
The Company has, in the past, issued shares of common stock and
warrants to purchase common stock to various parties as payment for services
rendered. The Company intends to continue this practice.
ITEM 3. FORWARD-LOOKING STATEMENTS
When used in this report and in future filings by the Company with the
Commission, in the Registrant's press releases or other public or stockholder
communications, and in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result", "are expected to",
"will continue", "is anticipated", "estimate", "project" or similar expressions
are intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties, including the Company's liquidity constraints,
potential increases in manufacturing costs and delays, pending litigation,
availability of raw materials, competition, demand for the Machine and other
proprietary products, and delays in the distribution process that could cause
actual results to differ
<PAGE>
materially from those presently anticipated or projected. The Company wishes
to caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Company wishes to
advise readers that actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in
any current statements.
The Company does not undertake--and specifically declines any
obligation--to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
See Part II, Item 1. Above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the exchange act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TASTY FRIES, INC.
Date: June 15, 1998 /S/ EDWARD C. KELLY
-------------------
Edward C. Kelly, President
and Principal Financial
Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 5,217
<SECURITIES> 0
<RECEIVABLES> 9,197
<ALLOWANCES> 0
<INVENTORY> 70,000
<CURRENT-ASSETS> 120,917
<PP&E> 33,631
<DEPRECIATION> 22,687
<TOTAL-ASSETS> 343,593
<CURRENT-LIABILITIES> 737,292
<BONDS> 1,503,947
0
0
<COMMON> 10,837
<OTHER-SE> (2,148,646)
<TOTAL-LIABILITY-AND-EQUITY> 343,593
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 543,112
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,535
<INCOME-PRETAX> (569,960)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (569,960)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
