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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
AMENDMENT NO. 2
[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
incorporation of organization Identification No.)
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.
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
ASSETS
April 30, January 31,
2000 2000
----------- -----------
(Unaudited)
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
------------ ------------
$ 213,553 $ 30,961
============ ============
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 28,719
Additional paid-in capital .................. 20,728,597 19,636,332
Deficit accumulated in development stage .... (22,607,574) (21,627,666)
------------ ------------
(1,847,973) (1,962,615)
------------ ------------
$ 213,553 $ 30,961
============ ============
See notes to financial statements 1
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND 1999
(Unaudited)
Cumulative
Since
Inception 2000 1999
--------- ---- ----
<S> <C> <C> <C>
Revenues $ .............................. $ -- $ -- $ --
------------ ------------ ------------
Costs and expenses:
Research, machine and product development 2,844,286 169,951 6,431
Selling, general and administrative ..... 18,095,467 793,338 578,591
------------ ------------ ------------
20,939,753 963,289 585,022
------------ ------------ ------------
Net loss before other income (expense) .. (20,939,753) (963,289) (585,022)
Other income (expense):
Interest income ......................... 21,274
Interest expense ........................ (1,704,095) (16,619)
Forfeited distributor deposits .......... 15,000 -- --
------------ ------------ ------------
(1,667,821) (16,619) --
------------ ------------ ------------
Net loss ................................ $(22,607,574) $ (979,908) $ (585,022)
============ ============ ============
Basic loss per share of common stock .... $ (0.03) $ (0.03)
============ ============
Weighted average shares outstanding ..... 28,505,746 18,870,145
============ ============
</TABLE>
See notes to financial statements 2
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD OCTOBER 18, 1985 (INCEPTION) TO APRIL 30, 2000
Total
Common Paid in Accumulated Stockholder
Stock Capital Deficit Equity
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, February 1, 1991 ....................... $ 157,307 $ (156,307) $ -- $ 1,000
Issued 1,114,679 shares for note conversion ..... 11,147 113,853 -- 125,000
Net loss for the year ended January 31, 1992 .... -- -- (198,425) (198,425)
----------- ----------- ---------- -----------
Balance, January 31, 1992 ....................... 168,454 (42,454) (198,425) (72,425)
Sold 4,275,000 shares ........................... 42,750 457,250 -- 500,000
Issued 150,000 shares for services .............. 1,500 36,000 -- 37,500
Net loss for the year ended January 31, 1993 .... -- -- (773,304) (773,304)
----------- ----------- ---------- -----------
Balance January 31, 1993 ........................ 212,704 450,796 (971,729) (308,229)
Issued 7,600,000 shares ......................... 76,000 464,000 -- 540,000
Issued 220,000 shares for services .............. 2,200 -- -- 2,200
Redeemed 3,145,000 shares ....................... (31,450) 31,450 -- --
Net loss for the year ended January 31, 1994 .... -- -- (658,820) (658,820)
----------- ----------- ---------- -----------
Balance January 31, 1994 ........................ 259,454 946,246 (1,630,549) (424,849)
Issued 3,129,999 shares ......................... 31,300 547,950 -- 579,250
Issued 2,151,622 shares for services ............ 21,516 121,294 -- 142,810
Issued 1,000,000 shares for litigation settlement 10,000 460,000 -- 470,000
Net loss for the year ended January 31, 1995 .... -- -- (2,148,933) (2,148,933)
----------- ----------- ---------- -----------
Balance, January 31, 1995 ....................... 322,270 2,075,490 (3,779,482) (1,381,722)
See notes to financial statements 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD OCTOBER 18, 1985 (INCEPTION) TO APRIL 30, 2000
Total
Common Paid in Accumulated Stockholder
Stock Capital Deficit Equity
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, January 31, 1995 .................. $ 322,270 $ 2,075,490 $(3,779,482) $(1,381,722)
Issued 36,415,000 shares ................... 364,150 3,000,350 -- 3,364,500
Issued 6,733,502 shares for services ....... 67,335 381,880 -- 449,215
Issued 625,000 shares for loan conversion .. 6,250 43,750 -- 50,000
Issued 1,000,000 shares for repurchase of
distributorship .......................... 10,000 90,000 -- 100,000
Reverse stock split ........................ (766,155) 766,155 -- --
Net loss for the year ended
January 31, 1996 ......................... -- -- (1,384,488) (1,384,488)
----------- ----------- ----------- -----------
Balance, January 31, 1996 .................. 3,850 6,357,625 (5,163,970) 1,197,505
Redemption of 730,000 shares issued to
Acumen Services, Ltd. in September 1995 .. (730) (2,091,270) -- (2,092,000)
Issued 1,455,000 shares .................... 1,455 1,506,045 -- 1,507,500
Issued 125,000 shares for services ......... 125 324,875 -- 325,000
Net loss for the year ended
January 31, 1997 ......................... -- -- (2,172,260) (2,172,260)
----------- ----------- ----------- -----------
Balance, January 31, 1997 .................. 4,700 6,097,275 (7,336,230) (1,234,255)
See notes to financial statements 4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD OCTOBER 18, 1985 (INCEPTION) TO APRIL 30, 2000
Total
Common Paid in Accumulated Stockholder
Stock Capital Deficit Equity
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1997 ......................... $ 4,700 $ 6,097,275 $ (7,336,230) $ (1,234,255)
Issuance of 1,500,000 shares for
non-recurring compensation ...................... 1,500 1,029,750 -- 1,031,250
Issuance of 167,083 shares ........................ 167 80,650 -- 80,817
Issuance of 955,000 shares for services ........... 955 1,239,045 -- 1,240,000
Issuance of 43,750 shares for
litigation settlement ........................... 44 54,644 -- 54,688
Issuance of 700,000 shares for convertible notes .. 700 566,979 -- 567,679
Issuance of 452,772 shares for repayment
of notes payable ................................ 452 523,587 -- 524,039
Issuance of 120,000 shares for repayment
of notes payable officer/director ............... 120 175,830 -- 175,950
Net loss for the year ended January 31, 1998 ...... -- -- (4,995,655) (4,995,655)
------------ ------------ ------------ ------------
Balance, January 31, 1998 ......................... 8,638 9,767,760 (12,331,885) (2,555,487)
Issuance of 2,251,307 shares ...................... 2,252 1,299,526 -- 1,301,778
Issuance of 5,586,150 shares for
convertible notes ............................... 5,586 3,129,504 -- 3,135,090
Issuance of 42,704 shares for interest
on convertible notes ............................ 43 26,385 -- 26,428
Issuance of 1,226,815 shares for services ......... 1,227 490,652 -- 491,879
Issuance of 250,000 shares for repurchase
of distributorship .............................. 250 124,750 -- 125,000
Net loss for the year ended January 31, 1999 ...... -- -- (3,512,124) (3,512,124)
------------ ------------ ------------ ------------
Balance, January 31, 1999 ......................... 17,996 14,838,577 (15,844,009) (987,436)
See notes to financial statements 5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD OCTOBER 18, 1985 (INCEPTION) TO APRIL 30, 2000
Total
Common Paid in Accumulated Stockholder
Stock Capital Deficit Equity
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, January 31, 1999 .......................... $ 17,996 $ 14,838,577 $(15,844,009) $ (987,436)
Issuance of 3,789,000 shares ....................... 3,789 1,624,291 -- 1,628,080
Issuance of 250,000 shares for litigation settlement 250 124,750 -- 125,000
Issuance of 5,184,405 shares for service ........... 6,184 2,394,214 -- 2,399,398
Issuance of 500,000 shares for repurchase
of distributorship ............................... 500 249,500 -- 250,000
Net loss for the year ended January 31, 2000 ....... -- -- (5,377,657) (5,377,657)
------------ ------------ ------------ ------------
Balance, January 31, 2000 .......................... 28,719 19,231,332 (21,221,666) (1,962,615)
Issuance of 1,775,000 shares ....................... 1,775 853,075 -- 854,850
Issuance of 510,000 shares
for services ...................................... 510 239,190 -- 239,700
Net loss for three months .......................... -- -- (979,908) (979,908)
------------ ------------ ------------ ------------
Balance, April 30, 2000 ............................ $ 31,004 $ 20,323,597 $(22,201,574) $ (1,847,973)
============ ============ ============ ============
See notes to financial statements 6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND 1999
(Unaudited)
Cumulative
Since
Inception 2000 1999
--------- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss ...................................................... $(22,607,574) $ (979,908) $ (585,022)
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 ........................... 6,793,113 239,700 60,000
Stock purchase discount .................................... 1,035,602 254,850 176,500
Common stock issued for interest on
convertible notes ....................................... 1,129,196 -- --
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 ............................................... (5,000) (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 ......................... $ 6,793,113 $ 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
============
See notes to financial statements 7
</TABLE>
<PAGE>
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 $2,844,286. The Company is currently in the process of
completing its first 25 machines, which are approximately 70% complete.
The costs associated with the production of the machines have 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.
8
<PAGE>
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 have not been
received as of the date of this filing.
9
<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, 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
10
<PAGE>
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
ITEM 5. OTHER INFORMATION
See Part II, Item 1. Above
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
11
<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.
/s/ EDWARD C. KELLY
---------------------------------------------
Edward C. Kelly
President and Principal Financial Officer
Date: August 4, 2000
