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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 October 31, 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 October 31, 2000: 33,179,011 shares of common stock were outstanding.
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
October 31, January 31,
2000 2000
------------ ------------
(Unaudited)
Current assets:
Cash $ 71,631 $ 10,703
Prepaid expenses 5,000 --
------------ ------------
Total current assets 76,631 10,703
------------ ------------
Property and equipment, net 12,435 20,258
------------ ------------
$ 89,066 $ 30,961
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses $ 828,879 $ 773,576
Shareholder loan payable 1,050,000 900,000
------------ ------------
1,878,879 1,673,576
------------ ------------
Unearned revenue 440,000 320,000
------------ ------------
Stockholders' deficiency:
Common stock, $.001 par value;
authorized 50,000,000 shares;
issued and outstanding 33,179,011
shares at October 31, 2000 and
28,719,011 at January 31, 2000 33,179 28,719
Additional paid-in capital 21,689,840 19,636,332
Deficit accumulated in development stage (23,952,832) (21,627,666)
------------ ------------
(2,229,813) (1,962,615)
------------ ------------
$ 89,066 $ 30,961
============ ============
See notes to financial statements
(1)
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2000 AND 1999
(UNAUDITED)
Cumulative Three Months Ended Nine Months Ended
Since ---------------------------- ----------------------------
Inception 2000 1999 2000 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Costs and expenses:
Research, machine and
product development 2,966,136 45,271 73,171 291,801 125,537
Selling, general and
administrative 19,229,100 429,551 935,651 1,926,971 3,946,421
------------ ------------ ------------ ------------ ------------
22,195,236 474,822 1,008,822 2,218,772 4,071,958
------------ ------------ ------------ ------------ ------------
Net loss before other
income (expense) (22,195,236) (474,822) (1,008,822) (2,218,772) (4,071,958)
------------ ------------ ------------ ------------ ------------
Other income (expense):
Interest income 21,273
Forfeited distributor deposits 15,000
Interest expense (1,793,869) (48,375) -- (106,394) (8,952)
------------ ------------ ------------ ------------ ------------
(1,757,596) (48,375) -- (106,394) (8,952)
------------ ------------ ------------ ------------ ------------
Net loss $(23,952,832) $ (523,197) $ (1,008,822) $ (2,325,166) $ (4,080,910)
============ ============ ============ ============ ============
Net loss per share of
common stock $ (0.02) $ (0.05) $ (0.08) $ (0.20)
============ ============ ============ ============
Weighted average shares
outstanding 30,981,091 21,386,880 30,592,423 20,626,641
============ ============ ============ ============
</TABLE>
See notes to financial statements
(2)
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD ENDED OCTOBER 31, 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)
</TABLE>
See notes to financial statements
(3)
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD ENDED OCTOBER 31, 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)
</TABLE>
See notes to financial statements
(4)
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD ENDED OCTOBER 31, 2000
Total
Common Paid in Accumulated Stockholder
Stock Capital Deficit Equity
------------ ------------ ------------ ------------
<S> <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)
</TABLE>
See notes to financial statements
(5)
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
Total
Common Paid-In Deficit Stockholders'
Stock Capital Accumulation Deficit
------------ ------------ ------------ ------------
<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 6,184,405 shares
for services 6,184 2,799,214 2,805,398
Issuance of 500,000 shares for
repurchase of distributorship 500 249,500 250,000
Net loss for the year ended
January 31, 2000 -- -- (5,783,657) (5,783,657)
------------ ------------ ------------ ------------
Balance, January 31, 2000 28,719 19,636,332 (21,627,666) (1,962,615)
Issuance of 2,400,000 shares 2,400 1,134,950 1,137,350
Issuance of 2,060,000 shares
for services 2,060 918,558 920,618
Net loss for nine months -- -- (2,325,166) (2,325,166)
------------ ------------ ------------ ------------
Balance, October 31, 2000 (unaudited) $ 33,179 $ 21,689,840 $(23,952,832) $ (2,229,813)
============ ============ ============ ============
</TABLE>
See notes to financial statements
(6)
<PAGE>
<TABLE>
<CAPTION>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2000 AND 1999
(UNAUDITED)
Cumulative Three Months Ended Nine Months Ended
Since ---------------------------- ----------------------------
Inception 2000 1999 2000 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(23,952,832) $ (523,197) $ (1,008,822) $ (2,325,166) $ (4,080,910)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 302,117 2,381 22,418 7,823 68,572
Common stock issued for services 7,450,031 230,669 755,576 896,618 1,438,527
Stock purchase discount 1,043,102 (1,600) 262,350 412,900
Common stock issued for litigation settlement 649,689 125,000
Common stock issued for interest
on convertible notes 1,129,196
Common stock issued for repurchase
of distributorships 250,000 250,000
Accrued interest on notes and convertible
notes payable 398,577
Changes in assets and liabilities:
Other assets (5,000) (5,000) 123,313
Unearned revenue 565,000 120,000 (41,000)
Accounts payable and accrued expenses 828,879 91,121 88,085 55,303 884,258
------------ ------------ ------------ ------------ ------------
Net cash used by operating activities (11,341,241) (199,026) (144,343) (988,072) (819,340)
------------ ------------ ------------ ------------ ------------
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:
Sale of common stock 7,780,173 50,000 875,000 850,000
Proceed from convertible notes payable 2,600,000
Note payable, current 1,267,250 150,000 150,000
Loan payable, officer 80,000 -- 10,567 24,000 10,567
------------ ------------ ------------ ------------ ------------
Net cash provided by financing activities 11,727,423 150,000 60,567 1,049,000 860,567
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash 71,631 (49,026) (83,776) 60,928 33,708
Cash, beginning balance -- 120,657 183,878 10,703 66,394
------------ ------------ ------------ ------------ ------------
Cash, ending balance $ 71,631 $ 71,631 $ 100,102 $ 71,631 $ 100,102
============ ============ ============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ ============ ============ ============
Supplemental disclosure of non-cash
financing activities:
Issuance of common stock for services $ 7,450,031 $ 230,669 $ 755,576 $ 896,618 $ 1,438,527
============ ============ ============ ============ ============
Issuance of common stock for
litigation settlement $ 649,689 $ 125,000
============ ============
Issuance of common stock for repurchase
of distributorships $ 475,000 $ 250,000
============ ============
Issuance of common stock for conversion
of note payable $ 2,675,000
============
Accrued interest on notes payable $ 398,577
============
See notes to financial statements
</TABLE>
(7)
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED OCTOBER 31, 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 nine months ended October 31, 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 ACCOUNTING 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 October 31,
2000 totaling $2,966,136. The Company is currently in the process of
completing its first 25 machines. 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 4,460,000 shares during the nine
months ended October 31, 2000. 2,400,000 shares were sold in private
placements by the Company and 2,060,000 shares were issued in payment
of services.
The Company issued an aggregate of 6,929,405 shares during the nine
months ended October 31, 1999. 3,000,000 shares were sold in private
placements by the Company, 3,179,405 shares were issued in payment of
services, 250,000 shares were issued for litigation settlement and
500,000 shares were issued for repurchase of distributorships.
(8)
<PAGE>
TASTY FRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE NINE MONTHS ENDED OCTOBER 31, 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 October 31, 2000 $1,375,000
of the $1,500,000 in proceeds has been received by the Company and
2,750,000 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 October 31, 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
October 31, 2000 the Company had approximately $71,631 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 results for future periods to
differ materially from any opinions or statements expressed with respect to
future periods in any current statements.
<PAGE>
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 and Vending, Inc. ("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 had usurped its basic
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 279,408 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
<PAGE>
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.
--------------------------------
Edward C. Kelly
Date: December 14, 2000 President and Principal Financial Officer
