<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, 2000
Commission File No. 33-4460-NY
--------------------------
TASTY FRIES, INC.
(Exact name of registrant as specified in its charter)
-------------------------
NEVADA 65-0259052
State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation of organization
650 SENTRY PARKWAY, SUITE ONE
BLUE BELL, PENNSYLVANIA 19422
(Address Of Principal Executive Offices)(Zip Code)
(610) 941-2109
(Registrant's telephone number, include 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, 2000: 30,004,011 shares of common stock were outstanding.
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TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
April 30, January 31,
2000 2000
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 191,090 $ 10,703
Prepaid expenses 5,000 .
------------ ------------
Total current assets 196,090 10,703
------------ ------------
Property and equipment, net 17,463 20,258
------------ ------------
Other assets:
Vending machines 195,000 195,000
------------ ------------
$ 408,553 $ 225,961
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses $ 697,526 $ 773,576
Shareholder loan payable 924,000 900,000
------------ ------------
Total current liabilities 1,621,526 1,673,576
------------ ------------
Unearned revenue 440,000 320,000
------------ ------------
Stockholders' deficiency:
Common stock, $.001 par value;
authorized 50,000,000 shares;
issued and outstanding 30,004,011
shares at April 30, 2000 and
27,719,011 at January 31, 2000 30,004 27,719
Additional paid-in capital 18,185,226 17,347,811
Deficit accumulated in development stage (19,868,203) (19,143,145)
------------ ------------
(1,652,973) (1,767,615)
------------ ------------
$ 408,553 $ 225,961
============ ============
</TABLE>
See notes to financial statements
1
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TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Since
Inception 2000 1999
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ $ $
------------ ------------ ------------
Costs and expenses:
Research, machine and product development 2,649,286 169,951 6,431
Selling, general and administrative 13,056,365 538,488 402,091
Reacquired distributorships 221,500
Litigation settlements 2,344,750
Non-recurring compensation charge 1,031,250 . .
------------ ------------ ------------
19,303,151 708,439 408,522
------------ ------------ ------------
Net loss before other income (expense) (19,303,151) (708,439) (408,522)
Other income (expense):
Interest income 21,274
Interest expense (601,326) (16,619)
Forfeited distributor deposits 15,000 . .
------------ ------------ ------------
(565,052) (16,619) .
------------ ------------ ------------
Net loss $(19,868,203) $ (725,058) $ (408,522)
============ ============ ============
Basic loss per share of common stock $ (0.03) $ (0.02)
============ ============
Weighted average shares outstanding 28,505,746 18,870,145
============ ============
</TABLE>
See notes to financial statements
2
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TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED APRIL 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Total
Common Paid-In Deficit Stockholders'
Stock Capital Accumulation Deficit
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, February 1, 2000 $ 27,719 $ 17,347,811 $(19,143,145) $ (1,767,615)
Issuance of 1,775,000 shares 1,775 598,225 600,000
Issuance of 510,000 shares
for services 510 239,190 239,700
Net loss for three months (725,058) (725,058)
------------ ------------ ------------ ------------
Balance, April 30, 2000 $ 30,004 $ 18,185,226 $(19,868,203) $ (1,652,973)
============ ============ ============ ============
</TABLE>
See notes to financial statements
3
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TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Since
Inception 2000 1999
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(19,868,203) $ (725,058) $ (408,522)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 297,089 2,796 22,890
Common stock issued for services 6,387,113 239,700 60,000
Common stock issued for interest on convertible notes 26,427
Common stock issued for repurchase of distributorships 250,000
Accrued interest on notes and convertible notes payable 398,577
Common stock issued for litigation settlement 649,689
Changes in assets and liabilities:
Other assets (200,000) (5,000) 64,560
Accounts payable and accrued expenses 697,526 (76,051) (200,012)
Unearned revenue 565,000 120,000 .
------------ ------------ ------------
Net cash used by operating activities (10,796,782) (443,613) (461,084)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of furniture and equipment (77,695) (7,519)
Loan costs (236,856) . .
------------ ------------ ------------
Net cash used by investing activities (314,551) . (7,519)
------------ ------------ ------------
Cash flows from financing activities:
Issuance of common stock 7,505,173 600,000 600,000
Proceeds from convertible notes payable 2,600,000
Note payable, current 1,117,250 24,000
Officer/director notes 80,000 . .
------------ ------------ ------------
Net cash provided by financing activities 11,302,423 624,000 600,000
------------ ------------ ------------
Net increase in cash 191,090 180,387 131,397
Cash, beginning balance 10,703 66,394
------------ ------------ ------------
Cash, ending balance $ 191,090 $ 191,090 $ 197,791
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 0 $ 0 $ 0
============ ============ ============
Supplemental disclosure of non-cash financing activities:
Issuance of common stock for services $ 6,387,113 $ 239,700 $ 60,000
============ ============ ============
Issuance of common stock for conversion of note payable $ 2,675,000
============
Issuance of common stock for repurchase of distributorship $ 475,000
============
Issuance of common stock for litigation settlement $ 649,689
============
Accrued interest on notes payable $ 398,577
============
</TABLE>
See notes to financial statements
4
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TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND 1999
(Unaudited)
Note 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, 2000 are not necessarily indicative of the
results that may be expected for the year ended January 31, 2001.
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, 2000.
Note 2. Description of business and significant account policies:
The Company is a development stage company, having not yet
completed the process of 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, 2000 totaling $2,649,286. The Company
produced 10 preproduction machines for demonstration and sales
purposes. These machines have a book value of $7,000 each. The
Company is currently in the process of completing its first 25
machines, which are in process and included in inventory at
$125,000.00. The difference between the anticipated manufacturing
price per machine ($7,000) and the cost to obtain the machines has
been charged to research, machine and product development costs.
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.
Note 3. Issuance of common stock:
The Company issued an aggregate of 2,285,000 shares during the
quarter ended April 30, 2000. 1,775,000 shares were sold in
private placements by the Company and 510,000 shares were issued
in payment of services.
The Company issued an aggregate of 2,200,000 shares during the
quarter ended April 30, 1999. 1,900,000 shares were sold in
private placements by the Company and 300,000 shares were issued
in payment of services.
5
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TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND 1999
(Unaudited)
Note 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. 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 April 30, 2000, $1,250,000 of the $1,500,000 in
proceeds has been received by the Company and 2,500,000 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 July 31, 2000.
6
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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, 2000, the Company entered into the production stage of its
lifecycle, having spent the latter half of fiscal 1999 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 sale of securities to raise working
capital to fund operations. At April 30, 2000 the Company had
approximately $191,090 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
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
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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 the occurrence of
anticipated or unanticipated events.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In May 1991, the Company entered into a joint venture agreement with
California Food & Vending ("CFV"), another vending and food service
company with a high interest in the research and development of a
French fry vending machine. The companies planned to work together in
the manufacturing and marketing of a French fry machine. Disputes arose
between the parties, litigation was instituted by CFV and in July 1999
the disputes were settled and the litigation dismissed. Pursuant to the
settlement agreement, the Company regained our distributorship rights
for the State of California; agreed to pay CFV the sum of $1,000,000,
which has been paid; issue 250,000 shares of our common stock to CFV;
and CFV will receive $350 for each of the first 500 machines produced
and $450 thereafter and $.25 for each pound of potato product sold by
Tasty Fries.
On August 28, 1996, the Company, Edward C. Kelly and Premier Design,
Ltd., were added as defendants to a civil lawsuit in the Riverside
County Branch of the Superior Court of the State of California brought
by Prize Frize, Inc., William Bartfield and Larry Wirth. The suit also
named as defendants approximately 25 other parties, all allegedly
involved, in some manner, in the pursuit of the French fry vending
machine concept and/or business. The case was removed to Federal Court.
The Company successfully moved for dismissal of the claim on behalf of
itself and Mr. Kelly; the case was dismissed on June 2, 1997. The
dismissal was reversed on appeal by the Federal Court and the case was
remanded to State Court. The plaintiffs' claim against Tasty Fries was
severed. The claims against Edward C. Kelly and Premier Design, Ltd.
were dismissed. The claim brought by Prize Frize asserts that the
Company has usurped its trade secrets by developing a French fry
vending machine which utilizes the Basic American Food potato product.
The Company denies the allegations and is vigorously defending the
litigation. It is the opinion of the Company's counsel that Prize
Frizes' lawsuit lacks merit and that the Company will prevail.
ITEM 2. CHANGES IN SECURITIES
The Company issued 160,000 unregistered shares of its common stock in
payment of services rendered to the Company by third parties.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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ITEM 5. OTHER INFORMATION
See Part II, Item 1. Above
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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.
/s/ Edward C. Kelly
-----------------------------------------
Edward C. Kelly
Date: June 1, 2000 President and Principal Financial Officer
